A dead battery cannot jumpstart another

The benefits of Employee Engagement

As the evidence of the positive financial impact of Employee Engagement is becoming evident, CEO’s are increasingly looking to gain competitive advantage through Engagement. The yearly satisfaction survey has not produced actionable output and is used as an excuse for preserving status quo.

The view of people as resources and HR as the factory that processes them, makes it logical to assume that if we don’t have Engaged Employees, then let’s go and recruit some Engaged people.

 

About Engagement

The assumption that people are either engaged or not, changed the recruitment processes to one of identifying ”highly engaged individuals” and recruiting them. Unfortunately employee engagement is not a characteristic of the employee, it is the strength of the emotional relationship the employee has to one or more actors. This moves the responsibility for engagement from the employee firmly back to the company. If the company accepts this responsibility significant productivity gains are within reach.

 

The engine of engagement

Many studies have investigated the different drivers of engagement and always the direct manager comes out on top. 70% of the variance in Gallup’s surveys is down to the direct manager. Even in companies that have greedy top managers, a pure exploitation purpose and poor reputation you still have people staying as their direct manager shields them from the corporate evil. The direct manager is responsible for creating a reality for the employees that make them part of something worthwhile and noble and create an environment where they are allowed to participate and grow.

 

The engaged manager

There are many strategies and behaviours that a manager can use to create engagement, many of them are centred on how you treat, involve and inspire people and if you behave fairly to others. As engagement is an emotional and relational concept it is very difficult to measure. However Gallup uncovered that Engaged managers had a much higher degree of engaged employees – employees working for an Engaged manager is 59% more likely to be engaged.

 

Are managers engaged?

That an engaged manager creates engaged employees are not a surprise – the number of engaged managers are. Gallup found that only 35% of managers were engaged, this is still significantly higher than the worldwide average of 13% engaged employees and slightly above the US average of 30%. 14% of all managers are actively disengaged.

Although there are both great female and male leaders, Gallup’s research showed that female leaders were more likely to be engaged (41% vs 35%) and their employees were more likely to be engaged.

 

 

What about your managers?

The focus of most leadership development is to give the leaders tools to manage their people rather than engage them. What is often forgotten is the process of Engaging the manager, not just developing their leadership skills. How Engaged are your managers? When is sufficient not sufficient anymore?

 

"Only 35% of Managers are Engaged" Gallup

 

 

 

 

 

 

"70% of Engagement variance is down to the manager" Gallup

 

 

 

"Employees working for an Engaged manager is 59% more likely to be engaged" Gallup

5 Signs your people are looking for a new job

Does your latest satisfaction survey look fine? Do you have 80% satisfied employees, as usual? Then you probably don’t need to do anything – as usual. Before you proudly present the numbers on your “We value our people” slide it is worth understanding that all your competitors have the same satisfaction levels, making it irrelevant from a competitive perspective. The problem with satisfied employees is that they are not necessarily motivated employees and even if they believe that they have a fair deal they could still be longing for something else.

 

LinkedIn knows your people are looking

With 313m members LinkedIn has taken over the role of the most important job fair in the history, 60% of LinkedIn’s 534M$ revenue comes from recruiters. With a 25B$ market valuation some analysts are betting that they also will have a bright future.

In a recent comment in the Economist, Dan Shapero, head of sales in the firm’s talent-solutions business shared that 25% of the LinkedIn members are actively looking for a new job and an additional 35% are considered passive job seekers. This leaves only 40% of the members motivated sufficient to stay with their current employer.

 

Are 60% of your employees ready to leave?

A satisfaction survey is not able to uncover if employees are motivated or if they are contributing, but it has been used to predict retention level in companies – up until now.

HBR has identified the 5 signs people should be looking for to judge if the time is right for a new job

These issues are not easily caught by a satisfaction survey: If you are paid enough you might accept that you are undervalued and hate your boss. You could also be satisfied that nobody is kicking you out as a result of you under performing and that you are able to avoid learning.

 

The signs you are ready to leave your job:

  • You are not learning.

  • You are under performing.

  • You feel undervalued.

  • You are just doing it for the money.

  • You hate your boss.

How to uncover these issues

The signs could very well be a symptom of low engagement

A well designed Engagement survey has a high probability of being able to uncover these issues and identify the causes. There are 6 main drivers of engagement that needs to be covered in a survey combined with employee meetings. The signs and the corresponding engagement driver can be seen below.

An Engagement survey can not only help you uncover some of these issues, but also help you understand what will motivate your employees and make them want to perform and grow. As Gallup have shown there are significant differences in performance between highly engaged work forces and the opposite.   

The signs and Engagement Category

  • You are not learning. (Growth)
  • You are under performing. (Purpose, Growth)
  • You feel undervalued. (Identity)
  • You are just doing it for the money. (Purpose, Identity, Fairness)
  • You hate your boss. (Leadership, Culture)

 

How we work with Employee Engagement

We believe in human potential

Companies true sustainable competitive advantage is always through people even though it is presented as competition though products, services, processes, brands, patents, or knowledge. All of these are created though the ingenuity of people.

As the industry boundaries collapse and small innovative companies have easy access to alternative funding, customers, manufacturing and knowledge, the employee is becoming increasingly important. It used to be sufficient to keep people satisfied to be able to compete - this is not enough anymore. Now you also have to turn them on!

 

 

For a paycheck an reasonable conditions they will give you obedience, diligence and intellect which used to be enough to compete, but it will just be a job. If you can ignite then though engagement their value will increasing significantly and they will love you for doing it.

 

HR get blamed for low Engagement

Employee Engagement is generated through strategic processes outside the natural scope of an HR department - but HR takes the blame although they rarely have the authority . The important processes in HR are necessary for the company's survival and the extrinsic motivation (Pay, benefits, conditions) of people but they have little or no influence over the intrinsic motivation (Autonomy, meaning, mastery).

Engagement Group works with employee engagement at a strategic level. We do not try and tell your Human Resource function what to do or correct it, we bridge the gap between HR and strategy. In our experience we get the best results when HR is deeply involved in the engagement process with us, however the responsibility for employee engagement has to reside with senior management to succeed.

 

Understanding what really goes on in your company

Understand your stakeholders and their goals

Define strategic processes that creates Engagement

Develop managers to create engagement through the way that they work with their people

Our Engagement Process

An Engagement Strategy is not something that can be standardised. This represents both a problem and an opportunity. The problem is that it requires effort from the leadership team and mid level management to pull through. The opportunity is that it creates a unique competitive advantage for your company - something your competitors cannot copy as it is completely tailored to your company and situation.

Engagement Group does not to play on several horses in the race. If we are having meaningful activities with you, we are not working with your competitors.

 

Engage

The first stage of the Engagement Group process is the Pilot Workshop with a representative group of employees or mid level managers. A full day workshop designed to give us an insight of what goes on in the organisation - not just on an official level but what really goes on. This knowledge is vital to be able to interpret the data and design the Engagement strategy.

It also serve as an introduction of Engagement and of Engagement Group to a number of ambassadors that will help the organisation through the process of change. In our experience the pilot workshop creates a great deal of reflection for the participants at the same time as it inspires them.

Survey

Our Engagement Surveys are tailored to your situation and our findings in the Pilot Workshop. In our experience it is not possible to understand what drives Engagement or Disengagement unless the context is clearly understood and we have had qualitative inputs from the employees. Employee Engagement is not a generalised process that can be automated, it has to be specifically designed to the company and the situation. If you want to understand if there could be an Engagement issue in your company, we will be able to deliver a standardised Engagement Survey.

The survey itself is free and we will deliver the actual responses to each of the questions along with our assessment of the overall Engagement level.

The assessment will not include recommendations or drivers of Engagement.

 

"Make decisions based on data, not managers opinions." Lazlo Bock, Google

 

“In God we trust; all others must bring data.” Edward Deming

Analyse

The engagement survey data combined with the information from the Pilot workshop creates the foundation for the analysis. The analysis  allow us to look at overall Engagement in different departments and other dimensions at the same time as we are able to identify the individual drivers of Engagement.

We are working with 6 individual drivers of Engagement

We check for quantitative evidence for what we have learned in the Pilot and identify potential low hanging fruits that easily can remove obstacles for engagement. The output is a formal report that gives you the analysis for each relevant department and dimension along with a set of recommendations and potential benefits.

The report is not a formal Employee Engagement Strategy.

 

Define

Based on the analysis and what is viable given the situation a number of Engagement goals needs to be established. It could be to address specific departments or employees with certain engagement levels. 

A set of KPI's needs to be established. The KPI history will be used for the business case for Engagement and monitored to track the return of the Engagement strategy. These KPI's will be monitored regularly and can form the basis of corrective actions.

Design

Designing the Engagement strategy is completely tailored to the strategic situation of the company and the current Engagement insight gained from the analysis. At this highest level this can involve a redefinition or a re branding of the company's purpose, mission and vision. This can also be done at a departmental level.

The Engagement strategy is developed so it fits the corporate strategy. Is there a merger taking place? Is there a crisis or a growth opportunity? To increase Employee Engagement it is very impotant how you develop your strategy that the strategy itself although it is important that the strategy benefits a broad level of stakeholder.

Our strategy process includes enabling implementation and making the organisation change ready right from the early stages of strategy work.

This stage includes a formal Engagement strategy plan.

Facilitate

The strategic implementation itself is adapted to the individual need and the company culture. I many companies the change process consist of a number of powerpoint slides with facts and figures. Unfortunately people do not change as a result of new information. Change is an emotional journey with specific stages that needs to be addressed. 

Implementation can involve inspirational Engagement session for all the employees but more often it operates at a the mid management level and up. The direct manager is the most powerful force of engagement for the employees, there is a direct link between the engament levels of managers and their employees.

It involves Engagement training, mentoring and coaching. Our sessions are workshop based as people themselves need to identify the need for development - it does not work when they get told.

The final element in our process is report back of activities, insights and results of our activities. This can take the form of a formal report or a presentation to senior leadership or the board.

 "Change efforts often crumble into excruciatingly dull meetings and PowerPoint presentations." Behnam Tabrizi

 

One dead battery will not jumpstart another

 

¨The first step to change is self-awareness. The second is acceptance" Nathalian Branden

 

Why is Employee Engagement Important?

In business it is common to measure what is possible rather than what is important. The number of meetings a sales representative is conducting instead of the effectiveness of the meetings and similarly. It is very simple and easy to measure satisfaction and employee retention, this is why these KPI’s have been chosen to establish if the corporation has an effective system of managing people or not. Unfortunately these KPI‘s does not correlate with company performance and at best are irrelevant. It is much more difficult to measure the motivation, initiative, creativity and passion of individuals, which is likely why most companies still are not measuring Employee Engagement. Even if it is difficult it is of vital interest for companies to understand their engagement levels as they strongly correlate with company performance and can give insight into what is needed to survive and thrive. The business case for Employee Engagement is strong

 87% of C-Suite executives recognize that disengaged employees is one of the biggest threats to their business.
Re-engaging With Engagement, The Economist, 2011.

Gallup Research

Researching more than 1.4 Million employees in close to 50.000 work units, Gallup has conducted some of the most compelling evidence for Employee Engagement. Their 12 simple questions have made it possible to identify a strong correlation between Employee Engagement and 9 performance outcomes. The difference between the lowers quartile and highest quartile teams are shown in the graph. Their research also showed that the performance gap between a 99 percentile work group was 4x higher than a 1 percentile group. The financial business case for investment in Employee Engagement is strong.

With high levels of engagement, firms can see revenue growth 2.5 times that of their peers and a 40 percent reduction in expensive staff turnover.  "Giving Everyone the Chance to Shine", Hay Group, 2010.

Towers Watson Research

In their research of operating margin of 50 global companies, Towers Watson uses 3 different levels of Employee Engagement - Low traditional, High traditional and High Sustainable. Their research demonstrated a link between Employee Engagement and the same year operating margin of the global companies. They also found that Highly Engaged organisations had less "Presenteism" meaning activities that did not contribute to results.

"Simply stated, highly engaged employees provide higher value. They are more effective at producing high quality, innovative products/services, and they more positively impact customer satisfaction, cost, and revenue growth."  AON Hewitt

AON Hewitt Research

The strong connection between Employee Engagement and Customer Engagement is visible in AON Hewitt's research. It also makes it clear how important Engagement is for other key business outcomes like revenue, cost and quality as demonstrated by Gallup. AON Hewitt's research also shows that there is a significant link between innovation and engagement. It is not enough to hire bright people - you need to Engage them aswell

“Despite the difficulties and weaknesses it is hard to ignore the volume of studies which show, to varying degrees, with varying sophistication, a positive relationship between high performance/involvement work practices and outcome measures.” Professor John Purcell

Other Research

The Corporate Leadership Council reported that engaged organisations grew profits as much as three times faster than their competitors. They report that highly engaged organisations have the potential to reduce staff turnover by 87% and improve performance by 20%.

Shifting levels of employee engagement upwards also correlates with improved performance. For example, Gallup research for a UK retailer with 174 stores in a study over two years concluded that stores that improved engagement year on year grew their profits by 3.8%. Stores that did not improve their engagement saw their profits decrease by 2%.

CLC’s 2004 Driving Performance and Retention through Employee Engagement report, found that companies with above average employee commitment were in 71% of cases achieving above average company performance for their sectors. Companies with below average employee commitment found only 40 per cent of their organisations achieving above average company performance.

The Institute of Work Psychology at Sheffield University in 2001 demonstrated that among manufacturing companies in their study, people management practices were a better predictor of company performance than strategy, technology, research and development.

Companies in the Best Companies to Work for in the period 2004 – 2008 increased their turn-over by 94% and their profits by 315%.
The Chartered Management Institute Quality of Working Life 2007 research program found a significant association and influence between employee engagement and innovation

A Watson Wyatt study of 115 companies suggested that a company with highly engaged employees achieves a financial performance four times greater than companies with poor engagement. They also reported in 2008/9 that the highly engaged are more than twice as likely to be top performers – almost 60% of them exceed or far exceed expectations for performance. Moreover the highly engaged missed 43% fewer days of work due to illness

Gallup found that engagement levels can be predictors of sickness absence, with more highly engaged employees taking an average of 2.7 days per year, compared with disengaged employees taking an average of 6.2 days per year.

Hewitt reported that companies with a greater than 10% profit growth had 39% more engaged employees and 45% fewer disengaged employees than those with less than 10%

Development Dimension International (DDI) reported that in a Fortune 100 manufacturing company, turnover in low engagement teams averaged 14.5%, compared with 4.8% in high engagement teams. Absenteeism in low engagement teams hovered around 8%, but was down to 4.1% in high engagement teams. Quality errors were significantly higher for poorly engaged teams.

Towers Perrin found that broadly three-quarters of the highly engaged believe they can impact costs, quality and customer service; and only 25% of the disengaged believe they can.

PricewaterhouseCoopers, who use staff and customer engagement levels as one of their four Key Performance Indicators (KPIs) have found a strong correlation between highly engaged staff and client satisfaction.

 

What is making Employee Engagement more Important?

It is becoming obvious that Stakeholder Engagement in general and Employee Engagement in particular are becoming increasingly more important to companies. More than 85% of all CEO's identifies it as a critical issue.

We believe there are 4 main drivers behind this development and that it will only accelerate in the future.

 

1. Companies are looking for new ways of competing

  • On the surface all looks great. Corporate profits are on the rise and so are stocks
  • However most of the growth is through financial activities, not value creation.
  • The model is not sustainable as companies don’t reinvest into future growth.
  • Large corporations are looking more and more alike and have difficulties differentiating
  • They have all moved functions to lowest cost jurisdiction. This is not differentiation
  • Competition through Stakeholder Engagement is still embryonic and can create future value

 

"Companies exist to do something worthwhile. They should make a contribution to society" David Packhard

2. New management models can offer competitive advantages

  • The current management models are inherited from the industrial age and focuses on Employee Satisfaction.
  • The models are focused on intrinsic motivation to get people to stay long hours
  • There are new models available that focus on intrinsic motivation though autonomy, mastery and meaning that creates Employee Engagement
  • The new models bring out the best in people: Initiative, creativity and passion.
  • Engagement creates higher productivity without need for higher pay

 

"Companies are running 21st-century businesses with 20th-century workplace practices and programs.” Towers Watson

3. Disruption and market boundary collapse change competitive challenges

  • Most traditional competitive markets are under attack from new innovative companies
  • The market boundaries are collapsing as companies reach into other markets for growth
  • Having large assets, capital, factories, patents is not protecting companies anymore
  • To survive in the future, companies will need a high degree of innovative thinking
  • Innovative thinking requires Engaged Employees to challenge Status Quo

 

"You cannot foster true innovation without engaged employees.” Julian Birkinshaw, London Biz School

4. The rise of the Millennials

  • They are the first connected and social generation and they think very differently
  • They are more motivated by purpose than any other generation. They ask “Why?
  • They will outperform all former generations if motivated in the right way
  • They expect autonomy, purpose, mastery and to be involved – truly the Engaged Generation.

 

Worth Reading

Capitalism 2.0 and new Business Models

Profits without Prosperity by William Lazonick

This article highlight that large companies are more focused on value extraction that value creation. The reinvestment into the future of the corporation has never been lower.

 Redefining capitalism by Eric Beinhocker and Nick Hanauer

Despite its ability to generate prosperity, capitalism is under attack. By shaking up our long-held assumptions about how and why the system works, we can improve it.

 

Corporate Culture

Charles O’Reilly: Finding a Corporate Culture that Drives Growth

It is not easy to define what corporate culture is or who are responsible for it. You will need to get it aligned with your strategy

 

Psychology

Ellen Langer on the Value of Mindfulness in Business

The basic principles of social psychology is that behavior is context-dependent. Who controls your context? In business, there are a lot of automatic mind-sets that dictate what people do. 

 

The Classics

Kaplan & Norton: Strategy Maps

They show you how to describe, measure and align your intangible assets to achieve superior performance and become more profitable.

 

Change Management

The Key to Change Is Middle Management by Behnam Tabrizi

Research found that the majority of the efforts failed. The successful 32% was the involvement of mid-level managers two or more levels below the CEO. In those cases, mid-level managers weren’t merely managing incremental change; they were leading it by working levers of power up, across and down in their organizations.

 

Do you have an Engagement Issue

Most companies do not know what their engagement levels are. They measure Employee Satisfaction and normally have good results that does not indicate a need for action.

“A satisfied employee is not necessarily a motivated employee.”

However Gallup research has shown that the number of engaged employees are alarmingly low – especially in Europe.

Bla bla gallup

Gallup Research

 

The indicators below can give you an idea if you have and Engagement issue. Low Engagement does not only represent an opportunity, it also represents a significant threat to your company – especially if you have Disengaged employees interfacing to customers.

 

Indications of low engagement:

Direct reports are arriving later, leaving earlier, and/or taking longer lunches than usual.

Direct reports have higher incidents of absenteeism and/or sick days.

Direct reports take longer to complete routine tasks.

Direct reports are producing lower-quality work.

Direct reports often appear anxious or worried.

Direct reports frequently ask questions and voice concerns about how to get all of their work done.

Direct reports appear to have increased health problems (often expressed through informal conversations and absenteeism).

Direct reports frequently mention feeling stressed.

Direct reports have trouble concentrating when you deliver instructions, guidance, or feedback (e.g., they frequently ask you to repeat statements or forget key pieces of information).

Customer complaints about lower-than-expected levels of customer service have noticeably increased.

Mistakes or accidents in the workplace have increased.

Workplace morale is lower than it has been in the past.

Direct reports have trouble prioritizing assignments and strongly resist efforts to re-prioritize their workloads.

Direct reports are hesitant or slow to incorporate manager’s and colleagues’ feedback into their work.

Direct reports are resistant to any sort of change (in the workplace, operating procedures, daily work, etc.).

Direct reports lack interest in new development opportunities

The definitions of Employee Engagement

There are many definitions of Engagement, some more academic than others but one of the simplest was made by David McLeod in his report to the British Government of the state of engagement in the UK: “You know it when you see it”

It would be very easy to accept the term “Employee Engagement” as a more modern or advanced description of Employee Satisfaction – a term we all understand. This assumption makes most people misunderstand the concept and power of engaging people.

“Employee Engagement is when the business values the employee and the employee values the business” Engaging for Success

Engagement is not satisfaction

Where Employee Satisfaction is a rational state that is based on what the employee deliver in terms of work compared to the benefits received, Employee Engagement represents an emotional relationship. This relationship is not only to the company itself, it extends to all the company’s stakeholders and to the company’s purpose.

This also reveals that Engagement is not only about the exchange between the company and the employee but also about other exchanges between the company and its stakeholders – exchanges that does not directly impact the employee.

As Engagement is a complex relationship it challenges the traditional industrial HR view of the world. It is not viable to identify humans that “have engagement” therefore it is not possible to hire and fire your way to Engagement – you have to create it. You have to change from selecting and changing the employee to fit the corporation to change the corporation to fit humans.

Gallup’s definition of Engagement

Gallup that regularly surveys the state of engagement worldwide defines engagement as different emotional states employees are in.

They highlight that not only is Engagement and opportunity, it also represents a threat as disengaged employees are working to sabotage the organisation.

The Institute of employment studies has a definition that highlights it is not only about what you do, but also how you do it:

“A positive attitude held by the employee towards the organisation and its values. An engaged employee is aware of the business context, and works with colleagues to improve performance within the job for the benefit of the organisation. The organisation must work to develop and nurture engagement, which requires a two-way relationship between employee and employer.”

Engagement is strongly connected to motivation – especially intrinsic motivation like passion, purpose and personal growth. Extrinsic motivators like pay and working conditions can impact negatively but does not have a positive effect.

“There is an increasing understanding that people are the source of productive gain, which can give you competitive advantage.” Tim Besley, Economist

The Surgeon model of Employee Engagement

Employee Engagement can be seen as a hierarchy which we do in Engagement Group – we call it the surgeon model to highlight the impact that Employee Engagement has on the subjects – be it customers, colleagues or patients.

What is needed to bring employees from Disengaged to Engaged is very different from what it takes to move them on to Actively Engaged.

This also highlights that the creation of Engagement is not a prescriptive process that can be standardised like most people processes. Engagement is a strategic process that depends on people’s current level of engagement, the company, the market situation – it has to be tailored.

The creation of Employee Engagement is extremely important as it impacts: Motivation, Company performance, Learning, Knowledge and Innovation.

Other definitions of Employee Engagement

"Full discretionary effort and living up to their full potential and doing what it takes to help their organisation succeed." Towers Perrin

"Engagement is a positive fulfilling work related state of mind that is characterised by vigor, dedication and absorption." Schaufeli et al

"Engagement or passion for work involves feeling positive about your job as well as wanting to go the extra mile to make sure you do your job to the best of your ability." Truss et al

"The extent to which the employees commit to something or someone in their organisation, how hard they work and how long they stay as a result of that commitment." Corporate Leadership Council