Employee engagement is a concept that's both old and new—it's been around in various forms for a long time, but it's only in the last decade or two that it's become more of a mainstream concept. If correctly applied, the principles of employee engagement can have profound and long-lasting effects on a company's success.
In the 2009 report “Engaging for Success: enhancing performance through employee engagement,” David MacLeod (MacLeod Review Chair) and Nita Clarke (MacLeod Review Vice-Chair) examined the concept of employee engagement, outlined its importance to the UK's economic future, and looked at what's needed to make it effective in the workplace. There are several factors critical to employee engagement, as well as a number of obstacles.
Employee engagement is easily defined: an engaged employee is one who has a positive attitude towards the company for which they work. They are familiar with the context in which the business operates, and they're invested in working for the benefit of their employer. Employee engagement is a two-way relationship, however: for an employee to be effectively engaged, the company they work for must foster those attitudes and behaviours by operating with integrity to inspire trust and loyalty.
Or to put it another way, when an organisation operates with integrity, its employees are more likely to feel as though they have a personal investment in the organisation's success, and are therefore more likely to work to the best of their ability.
“...if employee engagement and the principles that lie behind it were
more widely understood, if good practice was more widely shared, if the potential
that resides in the country’s workforce was more fully unleashed, we could see a
step change in workplace performance and in employee well-being, for the
considerable benefit of UK plc.” Engaging for Success
Statistics clearly show that employee engagement can significantly improve a company's bottom line. A 2012 survey conducted by the UK consulting company Surveylab showed that when employees feel like they're part of a cohesive team, they're more committed to producing quality work, and more likely to contribute more than is expected of them. They're more likely to say they're proud of their organisation, and less likely to leave the company they work for.
In the same survey, Surveylab found that just 59% of people trust their line managers—but the data also point to two clear paths for substantially improving that figure. Employees are more likely to trust their managers if they feel like they're part of a team (73%), and that the level of trust is further enhanced when employees feel that they know what's going on within the department in which they work (80%).
Another significant statistic Surveylab recorded is that 95% of employees who trust their company's senior management are committed to producing high quality work. The downside? Only 47% of employees surveyed trust their senior management and believe they're performing competently. The data pinpoint trust as a highly important factor for developing engagement in the workplace.
Finally, Surveylab's data show that recognizing employee effort and achievements is an extremely effective way of driving engagement and the benefits that it brings. When employee achievements are recognised:
• 94% of employees are committed to working to a high standard
• 90% try to contribute more to the company
• 86% of employees are satisfied with the company
• 80% are likely to recommend the company as a place of employment
In Engaging for Success, MacLeod and Clarke cite a global study carried out by Towers Perrin-ISR, in which data from 50 companies from all over the world was examined to compare the financial performance of highly-engaged companies to those with low levels of employee engagement. The results were very clear:
• Companies with a highly engaged workforce improved their operating income by 19.2% in a 12-month period, and improved net income growth by 13.7%
• In the same period, companies with low employee engagement lost 32.7% in operating income, and net income growth declined by 3.8%
Gallup analyses carried out in 2006 also demonstrated significant benefits to high employee engagement levels:
• Businesses with employee engagement levels in the top 50% had 27% higher profitability than those with engagement levels in the bottom 50%
• Employees with low engagement levels took more than twice as many sick days per year than employees with high engagement levels
• Growth rates of organisations in the top quartile for engagement were 2.6 times higher than organisations in the lowest quartile, and were an average of 12% more profitable
Engaged employees work harder and are more committed to the company they work for, and that translates into greater profits, both from improved productivity and from reduced spending on hiring and training new employees.
There are clear and effective strategies for improving employee engagement, but there are also potential problems that can limit how well those strategies work for any given organisation.
• Lack of awareness—many leaders aren't aware of employee engagement, or don't believe in its importance
• Lack of knowledge—leaders who are interested in the concept don't know how to implement it
• Lack of consistency—even when an organisation's leaders are invested in improving engagement, it's an impossible task if line-managers aren't similarly enthusiastic (and vice versa)
Time is a significant limiting factor. In a workplace where levels of trust are low, it's virtually impossible to enact rapid changes, because developing trust is something that requires consistency over time. This can be a problem because it takes time to see the results of employee engagement strategies, which means it's easy for upper-level management to assume that those strategies aren't working, and stop taking them seriously. The consequent erosion of a trust that's already in short supply can be extremely damaging.
It's not enough to simply minimise the barriers to employee engagement; it's just as important to actively promote engagement. So what drives employee engagement, and what makes it work? In Engaging for Success, MacLeod and Clarke identified four essential factors for developing employee engagement within organisations.
Leadership that shows as well as tells. Simply put, people in leadership positions shouldn't just provide guidelines that tell employees what types of behaviour are expected, they should also model that behaviour themselves. Company culture operates from the top down, and that means management need to take employee engagement—and everything it entails—seriously.
Managers who, at all levels of the company's hierarchy, treat employees as individuals, appreciate their efforts and nurture their talents, and provide them with the support they need to do their jobs. Effective managers are people who empower their employees, rather than trying to control them. The relationship between line managers and employees is particularly important, because it's line managers, rather than upper-level management, that employees interact with most often.
Employees who are able to voice their concerns and put forth ideas, and are acknowledged and valued for doing so. An engaged employee knows what their place and role in the company is, understands their job description, and has the resources they need to do their job.
Belief at all levels of the company that the organisation—and its employees—lives up to the values it espouses. It's easy for an organisation to say the right things, but it's harder to ensure that the company's stated values are embodied by employees at all levels. When there's a gap between company values and management behaviour, it's difficult, if not impossible, to develop trust.
All of these factors are important, but in each case, the key to effectively engaging employees is consistency and integrity. Company policies that are designed to facilitate engagement need to be enacted consistently or not at all, otherwise the end result is that trust is lost rather than gained.
Arriving at objective measurements of employee engagement is difficult, simply because measuring engagement involves surveying employees—who will by definition give subjective answers to survey questions. Measuring engagement is about surveying opinions, and correlating survey results with concrete data relating to the company's performance is not always straightforward. It's relatively easy to compare companies to one another at a single point in time. To quantify the effects of employee engagement within a single organisation, however, it's necessary to establish a baseline in order to look at how the company's performance changes over time.
Another issue is that getting accurate survey results is contingent on having employees who feel comfortable giving honest answers, which may be difficult if engagement levels are low.
Gallup identifies a dozen questions which are particularly useful for measuring engagement, called the Q12. Employees can answer these by indicating how strongly they identify with each statement.
• I know what is expected of me at work.
• At work, my opinions seem to count.
• I have the materials and equipment I need to do my work right.
• The mission or purpose of my company makes me feel my job is important.
• At work, I have the opportunity to do what I do best every day.
• My associates or fellow employees are committed to doing quality work.
• In the last seven days, I have received recognition or praise for doing good work.
• I have a best friend at work.
• My supervisor, or someone at work, seems to care about me as a person.
• In the last six months, someone at work has talked to me about my progress.
• There is someone at work who encourages my development.
• This last year, I have had opportunities at work to learn and grow.
In general, Gallup finds, employees with strongly positive responses are employees who are actively engaged at work—they feel connected to the organisation they work for, and they work with energy and passion. Employees with neutral responses are not engaged. They put the time into their workday, but not the energy or passion. Employees with strongly negative responses are actively disengaged. They're unhappy at work, and their unhappiness negatively affects other employees and the company.
In Engaging for Success, MacLeod and Clarke cite a number of case studies that clearly show how beneficial improving employee engagement can be, and point to a number of effective strategies.
Babcock Marine Clyde: This company improved employee engagement by first creating a detailed graphic that outlined the organisation's vision and mission and its relevance to employees at all levels of the company's hierarchy. Employees were encouraged to discuss their hopes, goals, and achievements in relation to the company's goals. Next, a business plan was created that showed all employees exactly how their contributions to the company were important to its success, and leaders were encouraged to identify key contributions and objectives that were relevant to their department. The benefits? A 30% reduction in absence due to illness, a 50% reduction in accidents, and improved project performance, correlated to improved employee engagement scores.
Freshfields Bruchhaus Deringer: This law firm was having major problems with employee retention, despite the company's commitment to providing training for new candidates. After conducting staff surveys, Freshfields realised that employees were dissatisfied with their level of involvement in the company's development and direction. Freshfields created the Associate Engagement Group, an information and consultation link between associates and partners, and other measures designed to give associates more input. As a result, Freshfields has managed to improve employee engagement levels, and reduce employee turnover.
No Quick Fixes—Just Hard Work
Employee engagement is huge in terms of its potential to drive major improvements in UK workplaces, but there's also a lot of work that needs to be done, particularly in terms of raising awareness of the importance of engagement. Apart from this issue, the biggest barrier to improving employee engagement is simply that it takes time. Organisations that are looking for quick fixes are unlikely to find them—but putting in the effort in the long term will be rewarding.
We provide facilitated events which address the issues within this article. Contact us for further information.