The Convergence Between Employee Engagement and Business Success

Introduction

For decades, employee engagement has been the gold standard in measuring the way employees interact with the business. In today’s world it’s not just about the interaction but also the level of commitment to the company. While all human resources professionals would like to believe their employees are committed to their organization, the statistics simply don’t paint that type of picture.

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Over the last two decades, Gallup reports the percentage of employees disengaged at work has averaged 70 percent. And it’s been costly. Disengaged employees have 18 percent lower productivity with profitability being 15 percent lower. When put into dollars and cents – “an actively disengaged employee costs their organization $3,400 for every $10,000 of salary, or 34 percent. That means an actively disengaged employee who makes $60,000 a year costs their company $20,400 a year!”

So, what’s the answer to increasing engagement across the enterprise and, in doing so, increasing productivity and profits? That’s the question this report aims to answer.

“An actively disengaged employee costs their organization $3,400 for every $10,000 of salary, or 34 percent. That means an actively disengaged employee who makes $60,000 a year costs their company $20,400 a year!”

Source: Gallup

What Causes Employee Engagement and Disengagement?

Defining what employee engagement is in reality is critical to understanding its benefits and its challenges. Generally speaking, every HR professional has a different definition but all include the basic component that an engaged employee is one who commits to the organization and gives of him or herself freely to the success of the company.

Engagement

But what causes employee engagement? Let’s take a psychological approach.

The term was first coined by psychologist William Kahn in a 1990 study titled Psychological Conditions of Personal Engagement and Disengagement at Work. In the piece, Khan studied two different workplaces: a very structured and formal architecture firm and a casual summer camp. From his observations, he defined engagement as “the harnessing of organization members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performances”.

Also read: Recruiting in the labor shortage era

Additionally, Kahn outlined three psychological conditions that allow engagement to exist:

1.   Meaningfulness

Is the work meaningful enough to the employee that he/she engages with their full self?

2.   Safety

Is the work environment such that a person can bring their full self without fear of criticism?

3.  Availability

Is the employee mentally and physically able to express their full self in the work environment?

Kahn further stated those individuals who are fully engaged with the organization will take ownership of their work and will be loyal to the organization. Additionally, he said engagement isn’t a constant. Any number of experiences can cause engagement to change.

Of course, Kahn’s original definition has changed somewhat over the three decades since it was first coined. As previously mentioned, engagement has become more about the employee’s willingness to go “above and beyond” to benefit the organization.

“People are wanting to feel that investment from their organization and that doesn’t necessarily mean it has to be a massive thing, but they want it to feel like it’s a two-way street,” Christopher Lind said. He’s the Head of Global Digital Learning for GE Healthcare. “It’s not so much a ‘you’re here to serve the employer’ thing. People are looking for that partnership. ‘I’m here to serve you. You’re here to serve me. And how are we meeting in the middle?”

Disengagement

Understanding how engagement works is only half the battle. For HR to move the needle and make significant improvements, there needs to be an understanding of what can cause disengagement. A key indicator of disengagement is apathy.

Other factors occur when there is a lack of:

• Autonomy
• Communication
• Flexibility
• Development
• Trust
• Personal and/or Workplace Challenges

While it’s not an exhaustive list, it is a very real possibility one or more of these can exist within an organization. The challenge lies in trying to figure out how best to address each consistently and constantly.

If we were to rank these factors on a spectrum of difficulty where 10 is the most difficult and one is the least difficult, it might look something like this:

“It’s not so much a ‘you’re here to serve the employer’ thing. People are looking for that partnership. ‘I’m here to serve you. You’re here to serve me. And how are we meeting in the middle?”

Christopher Lind

Head – Global Digital Learning, GE Healthcare

As you notice, not a one of the factors is easily overcome. Personal and/or workplace challenges are difficult because some of those situations are not internal. They are external and companies are in a limited position of power when it comes to impacting those factors. Apathy isn’t far behind, but it is often a symptom of those perceived challenges. If a person is having an issue at home, it may present itself as a lack of interest or enthusiasm at work.

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Now, that’s not to say human resources or leadership can’t offer some ways of dealing with these issues. In some instances, a wellness benefit can be of use i.e. counselling of any type be it emotion or legal. When it comes to autonomy, there is often a disconnect about what this actually entails. It is not:

• Working in isolation without supervision.
• Allowing employees to do whatever they like, but rather employers creating guidelines that put boundaries around employee autonomy.
• Working without a net, but rather employers providing a picture of what success looks like and tips on how to achieve it.

It’s more about providing the means by which employees have the latitude to make their own decisions and employers provide both the tools and the guidelines to help employees succeed. Success often leads to engagement.

Autonomy is often the result of trust. Leaders who trust their employees allow them to be more autonomous. But trust goes both ways. From a disengagement standpoint, the employee who feels they are not trusted by leadership at any level will be less likely to give of themselves. Trust within this context can also mean the employee does not feel the company has his or her best interest at heart; that they are seen as nothing more than a number rather than a person.

Communication ranked lower than some might consider, but its difficulty lies in the messaging. Anyone can send an email, make a phone call or share something on social media. It’s the context of the message; what are you as a company, as an HR professional trying to convey to the employ? How is the employee perceiving that message and acting upon it as a result.

From the employee perspective, it’s about communicating with the organization about any number of things be it needs or desires. Sometimes that communication is of a sensitive nature. How is that communication handled? If it is handled poorly, the employee will disengage. If it is properly handled, the translation is often an increase in engagement.

Flexibility presents unique challenges as it is often related to scheduling and working environment. Can an employee work different hours to complete his or her job and function at the same productivity levels as other members of the team? Flexibility is also critical in today’s environment especially when considering work-life balance. Can a parent still get their child to soccer practice on time and provide great service to their employer?

Finally, we come to development. Development is not easy. Not by any means. The challenges often lay in meeting people where they are, but also what they desire. There are also challenges in making sure that learning presents a return on investment.

Engagement in the Context of the Employee Lifecycle

So how do HR professionals address all of these challenges and expect to see an increase in employee engagement across the organization?

Look to the employee lifecycle.

It consists of six stages. Those include attraction, recruitment, onboarding, development, retention and separation. Each one has a particular role to play when it comes to engagement.

1.  Attraction

This is mostly about branding and using employees as ambassadors. Engaged employees serve best here as they will talk positively about the organization. That translates to attracting a high-quality candidate.

2.  Recruitment

Similarly, engaged employees want to spread the good news about the organization and will refer jobs to family and friends. In other words: if the company has been good to the employee, that same company can also be good to family and friends.

3.  Onboarding

This is critical to both new employees and current employees. New employees are typically more engaged and ready to work for the organization.

Current employees who are engaged are eager to help the new employees succeed in their roles.

4.  Development

Engaged employees are always looking for new skills and ways to make their teams and the overall organization better.

5.  Retention

Engaged employees will stay within the organization longer than those who are disengaged. Again, this comes down to the overwhelming desire to support and benefit the organization as a whole.

6.  Separation

Engaged employees leave organizations, not because they no longer believe in the organization, but often it is to continue their personal growth. That said, engaged employees continue to respect the company and represent it positively to others.

Of the six stages orientation, retention and development are the most important and equally so.

Orientation & Retention

From an orientation perspective, this is the organization’s first best opportunity to infuse the new employee with engagement energy. Most of that is driven by other, equally engaged employees. The beginning of employment is the best place to start as these employees are ready and excited to serve. Employees who feel welcomed and supported walk away with a good first impression. With it comes a stronger chance to commit the employee to engagement.

There are a couple of ways to approach this challenge.

The first is digitizing the onboarding process. Much of it can be completed online and before the first day of work. That leaves more opportunities for the new employee to engage with his or her new co-workers. It also allows HR to help the employee build new relationships and focus on integrating them into the culture.

Also read: Employee engagement and experience for the post covid world

Another strategy includes augmenting the onboarding process with more employee-focused activities. That can be anything from a scavenger hunt in the office to team building exercises. Remember, the emphasis must be on the employee, not the paperwork he or she needs to complete.

A successful onboarding experience increases a higher likelihood the employee will be retained. As previously stated, employees who are engaged will be less likely to leave and, in many ways, represent the company to co-workers (specifically those who show signs of disengagement) and to those outside the organization.

“We have to keep employee engagement scores high,” Rhonda Hall said. She is the vice president of human resources and organizational development for University Federal Credit Union. “We also need to be known in our local community specifically as a “Best Places to Work”. Not only that, but we need to keep the talent we have through increasing our internal promotion.”

“We have to keep employee engagement scores high. We also need to be known in our local community specifically as a “Best Places to Work”. Not only that, but we need to keep the talent we have through increasing our internal promotion.”

Rhonda Hall

VP of HR and Organizational Development, University Federal Credit Union

Development

Thinking about the workforce today, development is one of the most effective strategies to bolster employee engagement within an organization.

“We believe in the 70-20-10 philosophy,” Rob Ollander-Krane said. He’s the Head of Talent Planning and Performance for Gap, Inc.

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The 70-20-10 model for Learning and Development breaks down in this manner. It states 70 percent of an employee’s knowledge is gained from job-related experiences. 20 percent comes from interactions with others, and 10 percent from formal education. It was created in the 1980s by three researchers and authors researching the key developmental experiences of successful managers. Those individuals were Morgan McCall, Michael M. Lombardo, and Robert A. Eichinger.

Ollander-Krane said, “We want people to believe that it’s all about learning. We want people to get their satisfaction from having the opportunity to get better at what they love to do and to do it in a company that they are excited to be at; that they agree with and are aligned with our purpose.”

Studies by Bersin by Deloitte show companies with strong learning cultures lead to 30-50% higher engagement and retention rates. 80% of employees feel learning new skills would make them feel more engaged.

“You can pay people an equitable salary and then give them more money. That really does not drive them to engage,” Ollander-Krane said. “What drives and engages them are purpose, autonomy, and mastery.”

“You can pay people an equitable salary and then give them more money. That really does not drive them to engage. What drives and engages them are purpose, autonomy, and mastery.”

Rob Ollander-Krane

Head of Talent Planning and Performance Gap Inc.

The Role of Data

Knowing all of that, human resources doesn’t just point a finger at someone and say that’s an engaged employee. It’s not that easy?

That’s where the role of data comes in to the mix.

The Impact of Engagement

Study after study has shown an organization with high engagement reaps the benefits. Those include increased productivity, retention and profitability.

The challenge with data is twofold:

1. Gathering the data

2. Leveraging the data

When it comes to measuring engagement, there are several schools of thought on the issue. Some suggest an organic approach. Gathering data through conversations such as one-on-one meetings or team meetings. Others suggest a formal approach like engagement surveys that happen once or twice a year. These surveys can provide a wealth of data that helps indicate what engagement initiatives are working and how engaged employees actually are with the organization.

“Choosing the right employee engagement survey vendor is an important decision,” Elkay Manufacturing chief human resources officer Larry Brand said. “The company must end up with the ability to cut data into a number of categories and sections in order to ensure that employee input is received and understood accurately.”

Engagement surveys differ from other types of surveys. According to SHRM, engagement surveys measure “employees’ commitment, motivation, sense of purpose and passion for their work and the organization” while other surveys, satisfaction surveys for instance, measure workers’ “views, attitudes and perceptions of their organization.”

The most important piece of measuring engagement isn’t the measurement itself, however. It’s all about how the results are shared and how the findings are put into action. If leaders have access to this information, share it and then don’t capitalize on it, they can expect engagement scores to suffer in the future.

“From this data, action teams and tasks can be created in a priority order in order to drive change. Sharing the results with employees is important, but then also being transparent with those items the company sees as addressable and un-addressable is even more critical. It is important to only commit on those items which can be delivered. Similarly, it is important to share sound reasons with employees why certain areas will not or cannot be addressed.”

Elkay’s efforts have shown real benefit to the company who just celebrated its 100th birthday.

“Happily, Elkay shows an 82% engagement rate from our most recent employee engagement survey in 2018,” Brand said. “We attribute this score to our values, culture, leadership style open door communication, and responsiveness to employee requests and complaints.”

“Choosing the right employee engagement survey vendor is an important decision. The company must end up with the ability to cut data into a number of categories and sections in order to ensure that employee input is received and understood accurately.”

Larry Brand

CHRO, Elkay Manufacturing

The Intersection of Engagement and Business Success

Employee engagement continues to be one of the most important metrics an organization can track. It is, after all, not just a check box issue. It requires constant and consistent attention. Otherwise, human resources runs the risk of seeing gaps in engagement leading to an increase in disengagement.

As evidenced throughout this report, employees aren’t simply looking for a 9-to-5, Monday through Friday job. They want to be involved, committed and enthusiastic. An organization that creates the right environment can continuously feed those employee needs. In return, the organization sees continued growth and success within their industry.

Employee Engagement Q&A – Peakon

Patrick Cournoyer

Chief Evangelist, Peakon

For the last two decades, the number of employees who are disengaged at work has averaged 70%. In your opinion and in general, what factors contribute to such a high percentage?

There are many factors that contribute to employee engagement. These can be external factors, such as reward, workload and goal setting; or internal factors such as feeling a sense of accomplishment from what you do, or seeing a path to develop in the future. High levels of disengagement suggest that businesses have been failing to fulfil employees’ needs in both of these areas.

On top of this, we’ve seen over the past decade that what employees expect from their employer is always changing. Employees these days expect an end-to-end employee experience and want to have their voices heard in the workplace. I believe that engagement hasn’t improved over the past two decades because organizations haven’t kept up with what these expectations are.

How can HR/organizations address those issues?

I believe that the solution starts with the employee and works its way upwards. Work should work for everyone in an organization, not just the leadership. Start by instilling a feedback culture in your business and give everyone the opportunity to have their voice and expectations heard. Then empower managers to act on this feedback at the ground level. Provide access to insights and training to support them. HR and Senior Leadership can use these insights too, to provide additional support and shape strategy at a higher level. Finally, close the feedback loop. Demonstrate to employees that action has been taken based on the feedback that was provided and start the whole process again. The result will be a culture of continuous improvement.

What role does employee interconnectedness play in engagement? What are some strategies to boost interconnectedness?

Interconnectedness is extremely important in engagement, and it stems from the psychological need that we all have to belong to something, whether that’s a friendship group, a community, or an organization that shares our personal values.

Many businesses are currently facing the challenge that comes with having five different generations working on the same team. Each generation has a different approach to work, and different expectations of the workplace — facilitating interconnectedness among everyone in a team can be tricky. At the risk of repeating myself, I believe the key is to start by listening to your employees to understand the common needs and expectations. Empower team leaders to take action on the most appropriate areas and include all members of the team in planning and executing these actions. This will encourage both lateral and hierarchical interconnectedness and collaboration.

With respect to change management, what techniques can HR/organizations implement to make sure leadership is working toward better employee engagement?

First, you need to understand the current employee landscape in your organization — that is critical. Then you can identify the most appropriate areas for leadership to focus on. By implementing a continuous employee listening strategy, you will be able to iterate on your initiatives and course correct based on how employees are responding to the change. Ultimately, this should allow you to emerge from the change management process successfully — perhaps even with an increase in engagement at the end.

How does technology fit into the employee engagement strategy?

Implementing a continuous listening strategy is a requirement for any business — especially one that is navigating change or wanting to improve employee engagement. You really can’t do this without the support of technology. Traditional survey methods are too time consuming — they can be arduous to set up (especially if your organization operates in multiple regions, languages or across many brands) and the analysis can take weeks. Technology providers can now support HR teams by offering multiple employee surveys, operating on different schedules, with different questions targeting different groups of employees. And the analysis can be done — and results distributed to leaders — in real-time. I just wish this sort of thing existed at the start of my HR career!

How should HR/organizations leverage data to drive engagement?

Data is at the core of any successful employee engagement strategy. Any feedback you receive from employees will be in the form of data, whether that is qualitative (text comments) or quantitative (scores and ratings). To bring meaning to this feedback, you will need to use benchmarks and track changes over time. And to act on it, you will need to distribute the data among people leaders and provide the right level of support and training. The present and future of employee engagement is rooted in data — there really is no other way to go about it.

Generally speaking, what engagement metrics should HR/organizations track?

You need to keep track of your overall engagement score, obviously. But also, your participation rates, as the engagement process is dependent on employee involvement. As well, you need to maintain an understanding of how employee expectations and needs are trending by monitoring employee comments, or drivers of engagement such as recognition, growth or goal setting.

Does employee engagement present any risks?

The main risk of an employee engagement strategy is a lack of action and follow-through. If a company is going to implement a listening strategy, they have to commit to responding to, and acting on, employee feedback. Employees do not suffer from “survey fatigue”, in reality the fatigue comes from sharing their voice and not seeing any outcomes — which is perfectly understandable. You must show employees that they actually benefit from the engagement process. Otherwise, response rates will decline, and the strategy will fall at the first hurdle.

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