Employee engagement

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Employee engagement is a concept that is generally viewed as managing discretionary effort, that is, when employees have choices, they will act in a way that furthers their organization's interests. An engaged employee is a person who is fully involved in, and enthusiastic about, his or her work.

In his book, Getting Engaged: The New Workplace Loyalty, author Tim Rutledge explains that truly engaged employees are attracted to, and inspired by, their work ("I want to do this"), committed ("I am dedicated to the success of what I am doing"), and fascinated ("I love what I am doing").[citation needed]

Contents

[edit] Studies

Engaged employees care about the future of the company and are willing to invest the discretionary effort[1]. Engaged employees feel a strong emotional bond to the organization that employs them. (Robinson)

[edit] Emotional attachment

Only 29% of employees are actively engaged in their jobs.[2] These employees work with passion and feel a profound connection to their company. People that are actively engaged help move the organization forward. 84% of highly engaged employees believe they can positively impact the quality of their organization's products, compared with only 31% of the disengaged.[citation needed] 72% of highly engaged employees believe they can positively effect customer service, versus 27% of the disengaged.[citation needed] 68% of highly engaged employees believe they can positively impact costs in their job or unit, compared with just 19% of the disengaged[1]. Engaged employees feel a strong emotional bond to the organization that employs them.[3] This is associated with people demonstrating a willingness to recommend the organization to others and commit time and effort to help the organization succeed.[4] It suggests that people are motivated by intrinsic factors (e.g. personal growth, working to a common purpose, being part of a larger process) rather than simply focusing on extrinsic factors (e.g., pay/reward).[5]

[edit] Involvement

Eileen Appelbaum and her colleagues (2000) studied 15 steel mills, 17 apparel manufacturers, and 10 electronic instrument and imaging equipment producers. Their purpose was to compare traditional production systems with flexible high-performance production systems involving teams, training, and incentive pay systems. In all three industries, the plants utilizing high-involvement practices showed superior performance. In addition, workers in the high-involvement plants showed more positive attitudes, including trust, organizational commitment and intrinsic enjoyment of the work[3]. The concept has gained popularity as various studies have demonstrated links with productivity. It is often linked to the notion of employee voice and empowerment.[6]

[edit] Commitment

It has been routinely found that employee engagement scores account for as much as half of the variance in customer satisfaction scores. This translates into millions of dollars for companies if they can improve their scores. Studies have statistically demonstrated that engaged employees are more productive, more profitable, more customer-focused, safer, and less likely to leave their employer.

Employees with the highest level of commitment perform 20% better and are 87% less likely to leave the organization, which indicates that engagement is linked to organizational performance.[7] For example, at the beverage company of MolsonCoors, it was found that engaged employees were five times less likely than non-engaged employees to have a safety incident and seven times less likely to have a lost-time safety incident. In fact, the average cost of a safety incident for an engaged employee was $63, compared with an average of $392 for a non-engaged employee. Consequently, through strengthening employee engagement, the company saved $1,721,760 in safety costs in 2002. In addition, savings were found in sales performance teams through engagement. In 2005, for example, low-engagement teams were seen falling behind engaged teams, with a difference in performance-related costs of low- versus high-engagement teams totaling $2,104,823.3 (Lockwood).

[edit] Life insurance industry

Two studies of employees in the life insurance industry examined the impact of employee perceptions that they had the power to make decisions, sufficient knowledge and information to do the job effectively, and rewards for high performance. Both studies included large samples of employees (3,570 employees in 49 organizations and 4,828 employees in 92 organizations). In both studies, high-involvement management practices were positively associated with employee morale, employee retention, and firm financial performance[3]. Watson Wyatt found that high-commitment organizations (one with loyal and dedicated employees) out-performed those with low commitment by 47% in the 2000 study and by 200% in the 2002 study.[8]

[edit] Productivity

In a study of professional service firms, the Hay Group found that offices with engaged employees were up to 43% more productive.[9]

The most striking finding[citation needed] is the almost 52% gaps in operating incomes between companies with highly engaged employees and companies whose employees have low-engagement scores. High-engagement companies improved 19.2% while low-engagement companies declined 32.7% in operating income during the study period[citation needed]. For example, New Century Financial Corporation, a U.S. specialty mortgage banking company, found that account executives in the wholesale division who were actively disengaged produced 28% less revenue than their colleagues who were engaged. Furthermore, those not engaged generated 23% less revenue than their engaged counterparts. Engaged employees also outperformed the not engaged and actively disengaged employees in other divisions[1].

[edit] Generating engagement

Recent research has focused on developing a better understanding of how variables such as quality of work relationships and values of the organization interact and their link to important work outcomes.[10] 84% of highly engaged employees believe they can positively impact the quality of their organization's products, compared with only 31 percent of the disengaged[1]. From the perspective of the employee, "outcomes" range from strong commitment to the isolation of oneself from the organization.[11] The study done by the Gallup Management Journal has shown that only 29% of employees are actively engaged in their jobs. Those "engaged" employees work with passion and feel a strong connection to their company. About ⅔ of the business units scoring above the median on employee engagement also scored above the median on performance[3]. Moreover, 54% of employees are not engaged meaning that they go through each workday putting time but no passion into their work. Only about ⅓ of companies below the median on employee engagement scored above the median on performance[3].

Access to a reliable model enables organizations to conduct validation studies to establish the relationship of employee engagement to productivity/performance and other measures linked to effectiveness.[10]

It is an important principle of industrial and organizational psychology (i.e. the application of psychological theories, research methods, and intervention strategies involving workplace issues) that validation studies should be anchored in reliable scales (i.e. organized and related groups of items) and not simply focus on individual elements in isolation. To understand how high levels of employee engagement affect organizational performance/productivity it is important to have an a priori model that demonstrates how the scales interact.[12] There is also overlap between this concept and those relating to well-being at work and the psychological contract.[3]

As employee productivity is clearly connected with employee engagement, creating an environment that encourages employee engagement is considered to be essential in the effective management of human capital.[11]

[edit] Influences

  • Employee perceptions of job importance. According to a 2006 study by Gerard Seijts and Dan Crim, "...an employees attitude toward the job['s importance] and the company had the greatest impact on loyalty and customer service then all other employee factors combined."[11]
  • Employee clarity of job expectations. "If expectations are not clear and basic materials and equipment not provided, negative emotions such as boredom or resentment may result, and the employee may then become focused on surviving more than thinking about how he can help the organization succeed."[4]
  • Career advancement/improvement opportunities. "Plant supervisors and managers indicated that many plant improvements were being made outside the suggestion system, where employees initiated changes in order to reap the bonuses generated by the subsequent cost savings."[12]
  • Regular feedback and dialogue with superiors. "Feedback is the key to giving employees a sense of where they’re going, but many organizations are remarkably bad at giving it."[4] "'What I really wanted to hear was 'Thanks. You did a good job.' But all my boss did was hand me a check.'"[9]
  • Quality of working relationships with peers, superiors, and subordinates. "...if employees' relationship with their managers is fractured, then no amount of perks will persuade the employees to perform at top levels. Employee engagement is a direct reflection of how employees feel about their relationship with the boss."[11]
  • Perceptions of the ethos and values of the organization. "'Inspiration and values' is the most important of the six drivers in our Engaged Performance model. Inspirational leadership is the ultimate perk. In its absence, [it] is unlikely to engage employees."[9]
  • Effective Internal Employee Communications - which convey a clear description of "what's going on". "'If you accept that employees want to be involved in what they are doing then this trend is clear (from small businesses to large global organisations). The effect of poor internal communications is seen as its most destructive in global organisations which suffer from employee annexation - where the head office in one country is buoyant (since they are closest to the action, know what is going on, and are heavily engaged) but its annexes (who are furthest away from the action and know little about what is happening) are dis-engaged. In the worst case, employee annexation can be very destructive when the head office attributes the annex's low engagement to its poor performance... when its poor performance is really due to its poor communications.

[edit] Potential red flags

  • Inappropriate use of Benchmark Data - some of the more well established Employee Engagement survey companies will state that the most important part of post survey follow up is related to comparison of internal survey data to numerous external benchmarks. This seems to have rubbed off onto internal sponsors who demand very specific benchmarks, being unaware that they are diluting the accuracy of their analysis. Steve Bicknell, research analyst in over 100 Employee Engagement global projects concluded that the standard comparisons by industry sector are flawed. Is it right to compare a Bentley employee to one from Vauxhall (GM) because they are in the same automotive sector? He concluded that more information can be obtained by looking at the kind of organisation that employees were a part of (and its employee proposition), its stage in development, internal communication, its brand, motivation and culture.

[edit] See also

[edit] References

  1. ^ a b c d Seijts, Gerard H. and Dan Crim (2006). "The Ten C's of Employee Engagement". Ivey Business Journal. 
  2. ^ BlessingWhite (April 2008). "2008 Employee Engagement Report". 
  3. ^ a b c d e f Konrad, Alison M. (March 2006). "Engaging Employees through High-Involvement Work Practices". Ivey Business Journal. 
  4. ^ a b c Engage Employees and Boost Performance. Hay Group (2002). Retrieved on 2006-11-09.
  5. ^ Robinson, Dilys and Sue Hayday (2003). "Employee Engagement". In Brief (129). 
  6. ^ Wilkinson, Adrien, et al (2004). "Changing patterns of employee voice". Journal of Industrial Relations 46,3: 298–322. doi:10.1111/j.0022-1856.2004.00143.x. 
  7. ^ Lockwood, Nancy R. "Leveraging Employee Engagement for Competitive Advantage: HR's Strategic Role." HRMagazine Mar. 2007: 1-11. SearchSpot. ABI/INFORM Global (PQ). McIntyre Library, Eau Claire. 22 Apr. 2007 <http://proquest.umi.com/pqdweb?did=1231781861&Fmt=4&VInst=PROD& VType=PQD&RQT=309&VName=PQD&>
  8. ^ Employee Commitment. Susan de la Vergne (2005). Retrieved on 2007-02-03.
  9. ^ a b c Employee Commitment Remains Unchanged..... Watson Wyatt Worldwide (2002). Retrieved on 2006-11-07.
  10. ^ a b Harter, James K., Frank L. Schmidt, and Corey L. M. Keyes (2003). "Well-Being in the Workplace and its Relationships to Business Outcomes". Flourishing: The Positive Person and the Good Life: 205–244. doi:10.1037/10594-009. 
  11. ^ a b c d Ryan, Richard M. and Edward L. Deci (January 2000). "Self-Determination Theory and Facilitation of Intrinsic Motivation, Social Development, and Well-Being" ([dead link]). American Psychologist Association 55: 68–78. 
  12. ^ a b Hulme, Virginia A. (March 2006). "What Distinguishes the Best from the Rest". China Business Review.