Employee Engagement: The Push-Pull Cycle of Employment

More than 40 years ago, workers could retire from the same company where they started their career. That implied employment guarantee shifted when the American economy changed from consistent growth to a boom/bust cycle that created uncertainty and volatility, impacting job stability. Since then, the employee-company relationship has entered a push-pull cycle. Companies push employees away via layoffs or involuntary job changes because of updated business models, advances in technology, mergers/acquisitions, consumer habits, and globalization.

Employees, in turn, push companies away by decreasing their level of engagement, causing companies to try to pull workers toward the business with programs or branding designed to re-engage them. According to Gallup, "The first quarter of 2024 continued this downward trend, with engagement dropping three percentage points to 30% among both full- and part-time employees. This decline represents 4.8 million fewer employees who are engaged in their work and workplace, marking the lowest reported level of engagement since 2013." The cost of lost productivity is estimated at 8.8 trillion dollars.

When employees are fully engaged, they tend to give a company more of their discretionary effort to help their organization achieve its goals. Less engaged employees tend to not feel excited about their job or experience fulfillment at the workplace. The downward trend of engagement was exacerbated by the COVID 19 pandemic which resulted in many more employees choosing to use their discretionary effort for their personal lives, and not their work.  Although employee survey data can pave the way for incremental improvement in employee engagement, one layoff can remind employees of their tenuous relationship with work. Companies will continue to navigate this volatile world with an inevitable impact on their people so maybe it is time to ask a new question – how can companies satisfy employees instead of engaging them?

Factors that affect employee satisfaction with their job include work conditions, total rewards, nature of the work, relationships, advancement, career development, balance, recognition, leadership quality etc. These factors work together to influence an employee’s decision to stay or leave a company. Therefore, focusing on satisfaction is critical to retention and company success because talented individuals produce the products and services that keep a company going and growing. Of all the factors to prioritize, the one that can significantly impact retention is total rewards. According to Randstad, studies show a direct link between higher pay and higher employee retention rates. A recent study conducted by Harvard University shows that a $1 per hour pay increase among warehouse workers resulted in a 2.8% increase in retention.

Even more alarming results show that every $1 per hour loss in pay resulted in a 28% increase in turnover rates. It's quite simple, if a company isn't offering competitive salaries, workers are more likely to leave.

Many people are rethinking their relationship with work and their employers. It’s not just about more pay, more time off, or more expansive benefits. People view total rewards as a continuing negotiation of what they get for what they give. Therefore, a rigorous and ongoing analysis of a company’s total reward program is critical to ensure fair, competitive and equitable pay and benefits. A holistic organizational assessment of compensation and benefit programs can inform how to rebalance total rewards in a fiscally responsible way.  Compensation includes guaranteed components like salary and other non-guaranteed parts like incentive, production bonuses, extra shift pay, to name a few.  

Sometimes those components become unbalanced, and an assessment can inform the required changes. Even if more investment is required to bolster compensation and benefit programs, those costs can be offset. For example, in the healthcare industry, if average base salaries are below market, and staffing bonuses are overutilized, a company can increase base salaries which enable recruitment of staff and reduce the use and amount of staffing bonuses which contribute to burn-out.  Regarding benefits, hearing the voice of the customer is extremely important. Although changing benefit programs can be stymied by the enormity of effort required, a thorough analysis of program utilization and perceived value of benefits is critical to enable recruitment and retention. Focus groups or surveys can ensure that the benefits offered are valued by employees.  Conduct a deep analysis of plan costs and utilization to determine the required changes. This review is also required to fulfill fiduciary responsibilities.  Rather than viewing the assessment of total rewards as having the potential to add expense, view the balancing process as a mechanism to shuffle existing investments leading to a more effective use of budgeted dollars.

The shift from engagement to satisfaction can be predicated on a more practical and transparent employee value proposition that resets mutual employment expectations. Transparency in business means that leadership is open, honest, and straightforward about the true nature of the employment relationship. Here is what that proposition could be:

“We will operate our business with the utmost thoughtful decision-making. We will invest in programs to bolster your job satisfaction in exchange for your services and support of the company. However, there may be times when we must make difficult business decisions that will directly affect our people. During those occasions, we will be transparent, fair and respectful to all, especially those impacted.”

An employee proposition such as this one is honest and balanced. Business reality and the importance of employee satisfaction are not mutually exclusive. They can coexist because one does not negate the other. Focusing on employee satisfaction and retention in the context of a new employee proposition can help workers and companies find a healthier, balanced and realistic relationship.

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