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

A Call for Stakeholder Activists – Marc Benioff – CEO Salesforce

At the World Economic Forum in Davos last month, I joined 2,500 global leaders in business, government, academia and the arts to discuss the state of the world. It was my 14th visit to Davos, and as in past years, the agenda was packed with sessions on the global economy, environmental risks, geopolitics and health care.

Not surprisingly, technology moved from being one of many conversations to a fundamental part of all conversations at Davos. Every day the world is becoming more connected and open. Ericsson predicts that by 2020, 90 percent of the world’s population over 6 years old will have a mobile phone. The mobile phone makes everything go faster and it democratizes communication, information, knowledge and even commerce. As The Gates Foundation wrote in its 2015 letter, having a mobile phone opens a wide range of possibilities for economic advancement, such as having a bank account for the first time and access to online education.

But throughout the conference, the debilitating effects of economic inequality and the rising dangers of climate change were at the forefront of discussions. Rising youth unemployment is a constant source of instability, and it is being amplified by the coming wave of artificial intelligence and robotics. The UN estimates that there are more than 200 million unemployed worldwide — 33 million in the US and Europe. Talent development, lifelong learning and career reinvention will be critical to addressing the global unemployment problem.

As practiced today, capitalism too often becomes a race to the bottom. In low-growth economies, a focus on earnings-per-share (EPS) is leading to more unemployment and deepening inequality. According to Oxfam, the richest 1 percent in the world are expected to hold more than 50 percent of the world’s wealth by 2016. In fact, today just 80 individuals account for the same amount of wealth as more than 3.5 billion people. Imagine what would happen if those 80 individuals made a simple decision to give a large portion of their wealth back before they die? What progress could we make?

Greenhouse gas concentrations in the atmosphere are estimated to be at their highest level in 800,000 years, with strong evidence that climate change could have profoundly adverse effects on economic and human development. The oceans have risen to record levels, rising an average of 3.2 millimeters per year, about twice the average of the preceding 80 years.

As UN Secretary General Ban Ki-moon said in Davos, “We are the first generation that can end poverty and the last generation that can take steps to avoid the worst impact of climate change. Future generations will judge us harshly if we fail to uphold our moral and historical responsibilities.”

We now have an imperative to address expanding economic disparity and environmental hazards, which are adding fuel to geopolitical tensions around the world, and to reassess the role of business can play in improving the world for future generations.

The renowned economist Milton Friedman preached that the business of business is to engage in activities designed to increase profits. He was wrong. The business of business isn’t just about creating profits for shareholders — it’s also about improving the state of the world and driving stakeholder value.

That was the vision of Professor Klaus Schwab when he founded the World Economic Forum in 1971, and it remains the core principle underlying the annual Davos gathering. He believes that we have an imperative to shift from creating shareholder value to stakeholder value. His “stakeholder theory” asserts that corporate management isn’t just accountable to shareholders, and that businesses must focus on serving the interests all stakeholders — customers, employees, partners, suppliers, citizens, governments, the environment and any other entity impacted by its operations.

To be successful in business, we have to be ready to buy into the stakeholder theory. When I launched Salesforce, we created the Salesforce Foundation, a 501(c)(3) public charity and the 1-1-1 model of integrated philanthropy-donating 1 percent each of equity, employee time and product to our communities and causes. It is integral to our company and employee values, and adheres to the notion that no business should remain at odds with its community — whether it’s a small town or the entire world.

But we have to do more. We have to build radically higher levels of trust and transparency with all of our stakeholders. We need legions of “stakeholder activists” who seek to hold companies accountable for all constituents, going beyond the role of investor activists, who focus on holding CEOs and boards of directors accountable in terms of share price.

Ultimately, the most effective way to create shareholder value is to serve the interests of all stakeholders.

Wall Street analysts recently asked Mark Zuckerberg whether Facebook initiatives to connect people in less developed countries to the Internet should matter to investors. “It matters to the kind of investors that we want to have, because we are really a mission-focused company. We wake up every day and make decisions because we want to help connect the world. That’s what we’re doing here.” Zuckerberg said. “If we were only focused on making money we might put all of our energy on just increasing ads to people in the U.S. and the other most developed countries, but that’s not the only thing that we care about here.” Over time, bringing the Internet to underserved communities will be a good business for Facebook.

As I wrote my 2004 book, Compassionate Capitalism, which was inspired by Prof. Schwab, “The competitive advantage you gain from being a caring and sharing company is significant; it instills in your people a higher integrity level. In turn, stakeholders want to be associated with a company that has heart. Community service: You do it because it’s the right thing to do, but it’s also the profitable thing to do.”

________________

Marc Benioff is the Chairman and CEO of Salesforce.

http://www.huffingtonpost.com/marc-benioff/a-call-for-stakeholder-activists_b_6599000.html

 

If you lose the Millennials – you lose!

 

Corporations with long tenure in mature industries often operate based on a number of principles that is reasonably stable. The most important one is that the future success of the corporation is based on the same principles as the historic success. The leads to an operating principle focusing on continuous improvement: Evolution over revolution or small incremental changes to what was done last year. The model is also based on a view of the market as a place with stable boundaries and actors that are quite similar and unchanging – a place of competition.With the rise of first the internet and later the revolution of social networks, unlimited power of the cloud and the rapid move to mobile technologies, no industry is immune to disruptive changes.It is well known that the disruption can come from a change in product offerings, like the iPhone changed the mobile industry. It can also come from outside the market boundaries like Google’s absorption of advertising budgets or it can be a disruption of the supply chain the way Blockbuster died from Netflix competition. Most mature companies are aware that they need to keep an eye on changes in the market structure, customer preferences.
There is however a significant change underway that will fundamentally change the way corporations has to operate in order to succeed independent of what industry or market they operate in. The rise of the Millennials or generation Y as people born in the 1980 -2000 time span has been categorised. This is not a surprise to the marketing departments of consumer based corporations – they know Millennials are different customers to the prior generations (generation x and baby boomers) and work hard to position offerings attractive to them.
What seems to come as a surprise is that Millennials are also becoming a significant factor as employees. 

geny

 

Before 2020 Millenials and younger generations  will become the dominant part of the labour market everywhere, and most of them will work in an environment designed by generation X for generation X. This is likely to fail, just ask your marketing department.

 

genyhr

survey done by beyond.com shows that the gap between Millennials perception of themselves and that of HR professionals are very different, This indicates the expectations of the corporations based on Gen X thinking and that of Millennial employees are very different – a recipe for disaster.
The problem has still not become visible as very few corporations has been in talent acquisition mode since the financial crisis but as Gen X moves towards retirement it will become an issue
It is easy to point fingers at HR and HR policies and blame them for not adapting to attract and retain the new employees but the problem goes a lot deeper. Millenials don’t see work as a chore like the baby boomers and they don’t see it as means to an enjoyable life outside work like generation x. They are hard workers but not motivated the same way as earlier generations. Millennials want freedom, trust, support, fun and they need a higher level purpose to really engage. Corporations need to develop a purpose above and beyond profit and revenue. To attract and keep Millenials, it is imperative to create an environment of personal growth, equality, Social/Environmental responsibility, freedom and team spirit.

Are your company’s policies designed to enable employees or limit them?

This might sound alien to companies firmly based in command and control thinking but it is already being implemented by successful companies in the new economy. Google, Amazon, Netflix, Tesla and similar companies are ahead and design their people policies very different.

You are not only competing with these companies for the consumer
You are also competing with them for the employees.

The 6 Drivers of Employee Engagement

The world of management is still obsessed with the mechanistic view of employees as resources, something that can be acquired and exploited in the quests for profit. This has been covered up by improvement in working conditions, benefits and skill training programs and it has even made the executive wall: People are our greatest strength. Despite this apparent progress most corporations still treats people as a commodity. HR departments are tasked with getting the best resource, shaping the resource with skills training, keeping the resource with competitive compensation packages and finally getting rid of the resource if it does not live up to expectations.

The employee is seen as something that has certain characteristics that can be changed (skills) and something that cannot (personality and motivation). When something goes wrong the problem is assigned to the employee rather than the corporation and the personal improvement process starts often resulting in a termination and a search for more appropriate resource.

Assuming that employees are  “good” or “bad” and corporations are always “right” makes the life of management a lot easier but not necessarily the company more effective and profitable. It is not going to be possible to find Engaged employees and hire them. Employee Engagement is a strategic process that creates an emotional relationship between the company and the employee. The best of companies understand this an know that Engagement is the responsibility of the company - not the employee. When successful Employee Engagement creates significant intrinsic motivation in the employee and a feeling of being part of something important and worthwhile.

 

Employee Engagement is impacted by 6 main drivers:

Fairness:

The concept of fairness being important for employee engagement is not new. What is often forgotten is that fairness is completely subjective and changes over time. People don’t see their parents work contract as fair. For younger generations, the concept of fairness goes well beyond the psychological contract between the corporation and the employee – it involves the fairness towards all stakeholder groups. An important part of fairness that is often forgotten is the relative fairness - people can be happy with what they got until they find out somebody gets more.

 

Identity:

Through the development of social psychology it has become apparent that people’s decisions are heavily influenced by social settings and what group people belong to. As work represents a significant part of most people’s lives they derive a lot of their identity from work. Great corporations understand this and create jobs and an organisation that individual are proud of being associated with. 

Identity is significantly influenced by what other people think of you, what you do and your role. This is not people inside the organisation, the view of your friends and family matters.

 

Growth

Being appropriately challenged and given the opportunity to learn and grow is a key element in employee engagement. Is the corporation a place where mistakes are seen as learning opportunities or where they are punished? Is HR and their policies and procedures seen as enabling people or limiting them? Do employees have the opportunity to be promoted at appropriate points in their career or are they locked in their current position.

Getting people on a path to mastery is a powerful motivator and a key driver of Employee Engagement. Great corporations know that growing people is the responsibility of the corporation.

 

Purpose

The days of pure focus on shareholders are over. Money, profits and growth is not a purpose – it is an outcome of successfully pursuing a purpose. Being the very best “x” in the “x” industry is a very common vision, but not a powerful purpose. A powerful purpose is in its essence something that benefits many if not all stakeholders of the corporation – a purpose that benefits society and humanity. This might sound soft to hardnosed finance people but customers and employees do not get engaged by cost cutting and headcount reductions in a race to zero margin as most mature companies are engaged in.

Companies that believe in people and in their ability to create value for customers and society have the potential to rally all stakeholder groups around a strong purpose and will prosper as they will create engagement in all groups.

 

"Think of your work as a calling with a mission that matters." Lazlo Bock, Head of People Ops, Google

Culture:

The company culture has a significant impact on Employee Engagement. It is not just the stated culture hanging on the boardroom wall but also the lived culture. What Enron said and did were two completely different things. It is also important to understand how measurements and rewards interacts with culture: Individual bonuses and a culture of teamwork are working against each other. Culture is not something that has been written on stone tablet and remain fixed in time. Culture needs to change as the strategy changes.

 

"You’ll see culture mostly talked about as stories or anecdotes. It’s a vague concept that people sort of know is important, but they don’t quite know how to apply."

"You need  to get the people, structure, metrics, and culture aligned with the strategy." Charles A. O’Reilly, Stanford

Leadership:

The most important source of Employee Engagement is the direct manager. Even though the creation of Employee Engagement is a strategic process, it is vital to make sure the middle managers are trained and supported to create highly Engaged Employees. Direct managers are responsible for defining a reality and a purpose for the employee that creates motivation. Then create opportunities for participation, growth and involvement in decision processes.

51% of managers are not engaged; 14% are actively disengaged

 

Managers who work for Engaged Leaders are 39% more likely to be Engaged

 

Employees working for Engaged Managers are 59% more likely to be Engaged Gallup

 

You cannot separate strategy and implementation

For a very long time the process of strategy formation and the process of strategy implementation has been seen as two separate areas and part of a two-step process. This has its roots in the assumption that strategy is predominantly a financial process best left to senior management and financial consultants that delivers a fait d’accompli to the line businesses and HR to implement. Change process research has demonstrated that most change initiatives fail to bring the intended benefits to the corporation. That does not prevent managers from declaring victory even for implementations that destroyed shareholder value. Even a good strategy can fail as a result of a poor implementation and the other way around.

Nice landing – wrong airport!
 
By integrating the strategy and the implementation process it is possible to increase the probability of success significantly. Here are 7 steps to integrating Strategy formation and Implement the change process.

1.  Have a clear non-financial goal with the strategy.

It is fine to have a financial goal for the strategy but it is not a strategy; a financial goal is an outcome of a successful strategy. Strategies are in their core about creating future sustainable competitiveness as either a response to external events or as an attempt to create events. Too often the financial goal is communicated as a strategy bearing no meaning to most of the stakeholders.

2. Make sure your strategy makes the world a better place (it also ok to make a profit).

This vital element of a strategy has been known for a long time but has been forgotten in recent years. Carl von Clausewitz put it: “There can be no strategy without noble purpose”. With a noble purpose it will be possible to move the organisation through a change process. Profit and revenue might be powerful motivators for management and executive staff but as Daniel Pink demonstrates it does not really motivate significantly.

3. Make the cost of doing nothing clear.

It is often assumed that doing nothing is the lowest risk option. In this time of disruption it is never the case. When Stephen Elop, CEO of Nokia, declared: “Nokia is on a burning platform” he made it very clear that change was needed and even that would not guarantee success. People don’t change as a result of information. They change either to get away from a bad situation or to get to a better place or both. For the change process to succeed, the strategy has to create tension between these to states.

4. To secure implementation, it is important for the strategy to benefit all or most stakeholders.

Most strategies have a short term aim to create monetary benefits for the shareholders often at the expense of other stakeholders. Profits can be increased by reducing headcount at the expense of the people that stay; they will have to work harder. Profits can also be increased by reducing service staff at the expense of the customer. These kinds of strategies are rarely implemented effectively and although short term profits can be demonstrated it also destructs shareholder value in loss of employee engagement and customer defection. For a strategy to be effective it has to benefit most or all stakeholders not just shareholders. If the strategy benefits employees, customers, external organisations and society, it should also benefit the shareholders. Even if this is not the most common way of operating it is quite obvious that there are a number of companies that have taken this path and are in a league of their own. Companies like Google, Tesla, Netflix and Virgin are willing to make their strategy work through their employees and not at their expense.

5. Convince your shareholders of the long term perspective or change them.

It can be challenging or even scary to take a long term strategy to the shareholder community. Stories are countless of stocks being punished for initiatives that create long term shareholder value. When Paul Polman took over Unilever after 10 years of cost cutting he declared that his goal was to double the revenue and the days of cost cutting where over. If an investment made sense it would be implemented no matter what the quarter looked like. He decided to stop giving guidance to the stockmarket and was immediately punished with an 8% drop in shareprice when the quarter-rapers left the stock. As he put it “Like you select what customers you want to serve, you also need to select what shareholders you want to work with. You need to find shareholders that share your long term sustainable vision for creating shareholder value without exploiting other stakeholders. Since then, the Unilever stock price has doubled.

6. Involve stakeholders in the strategy creation.

It is not common to involve stakeholders into the process of strategic formation. Senior management often believes that it is best to keep this process behind closed doors to limit damage. The assumption is that the speculation stakeholders has outside the door is less damaging that if they were on the inside of the process. This is a reminiscent of the ancient view of heroic leadership – senior management knows best and just do what you are told. Most implementations fail, not as a result of people being change resistant but as a result of people resisting being manipulated. By involving stakeholders into the process, the strategy might change in ways that benefits different groups and as advocates are involved the implementation has started before the strategy process has finished.

7. Communication of the Strategy has to involve Emotional Persuasion as well as rational arguments.

New neurological research that has proven that human behaviour is modulated heavily by emotions and social context. Many years of study has failed to establish a strong link between employee and customer satisfaction and corporate results. More recent research by Gallup has shown that employee and customer engagement directly predicts corporate performance. Where satisfaction has it base in a rational exchange between the corporation and the stakeholders – engagement is a fully emotional connection.
Management theory has a lot of research on both strategy formation and change processes for successful transformation of organisations. However most of these models assume that people and organisations predominantly behave rationally. There has been a lot of new neurological research that has proven that human behaviour is not predominantly rational and does not change as a result of getting new information. But we already knew – if we were rational there would be no wars, stock market crashes, substance abuse, obesity, poverty or exploitation of resource.