Employee engagement as key to recovery: the management challenge
In this article, author and researcher Linda Holbeche examines the link between employee engagement and organisational success and shares her findings about what works. Linda’s book Engaged, co-authored with Geoffrey Matthews, was shortlisted for the 2013 CMI Management Book of the Year. This article summarises some of the book’s key points and includes references to other research.
In a stalling economy, with many businesses struggling or failing, employee engagement or ‘the intellectual and emotional attachment that an employee has for his or her work’ (Heger, 2007) could be the key to recovery and growth.
In our book Engaged, Geoffrey Matthews and I base this claim on three assumptions:
- In today’s knowledge and service-intensive economies, people are the main source of innovation, production and service excellence.
- How people feel about their work makes a difference to their performance and innovation. High-performance theory places employee engagement at the heart of performance – especially among knowledge workers. When employees are engaged they are more productive, more service-oriented, less wasteful, more inclined to come up with good ideas, take the initiative and generally do more to help organisations achieve their goals than people who are disengaged.
- In today’s context of more for less and ongoing change, employee engagement is at significant risk.
We therefore argue that, if leaders want their organisations to survive and thrive in today’s challenging economy, they must become intensely focused on improving employee engagement.
What’s the evidence?
Research has linked employee engagement with higher earnings per share, improved sickness absence, higher productivity and innovation – the potential business benefits go on and on. For instance, a Corporate Leadership Council (CLC) study found that companies with highly engaged employees grow twice as fast as peer companies. A three-year study of 41 multinational organisations by Towers Watson found those with high engagement levels had 2-4 per cent improvement in operating margin and net profit margin, whereas those with low engagement scores showed a decline of about 1.5–2 per cent. Other studies suggest that highly engaged employees tend to support organisational change initiatives and are more resilient in the face of change. Therefore, rather than a ‘nice to have’ to be addressed only in good times, employee engagement may be key to business survival and growth.
Yet the UK is generally reported to suffer from a growing ‘engagement deficit’ relative to many other countries, including the US. Engagement is thought to be barometer of the health of the employment relationship between employees and employers. CIPD research in 2010 (Alfes, 2010) found that only three in ten UK employees were engaged with their work. Aon Hewitt reported in June 2010 that 46 per cent of the companies they surveyed had seen a drop in engagement levels to a record low level over the 15 year period during which they have conducted this survey. While engagement levels currently appear to be improving slightly, many managers report feeling under pressure at work and a level of insecurity both about their job and the future generally. And while many organisations continue to downsize or implement other cost-reduction measures, employee engagement is likely to become a major casualty of change.
The consequences for organisations could be severe. First there is the medium-term challenge of retaining of key people: UK recruitment firms are aware of wide-scale, pent-up career frustration and, with employment set to grow in the first quarter of 2013, significant employee turnover can be anticipated. Then there is the risk of protracted industrial action, especially in the public sector, where there is growing protest about unilateral changes to pensions, job cuts, work intensification (‘more for less’) and the general destabilisation of the employment relationship. The longer the downturn goes on, and the tougher the measures taken to keep organisations viable, the greater the risk of strained employee relations and ‘survivor’ employees simply doing the minimum necessary to get by. Given that tough times are when organisations most need people to willingly go the extra mile, this really would be the worst of all worlds.
Indeed, so concerned was the previous Government about the UK’s ‘engagement deficit’ that the Department for Business, Innovation and Skills (BIS) sponsored Engaging for success (aka the ‘MacLeod report’) to explore the assumed links between employee engagement, performance and productivity. The report’s conclusion - that the business case for employee engagement is overwhelming - has been strongly reinforced since then, as more research is published.
So should business leaders be worried? We think so. Yet, instead of seeking to understand how to maintain or enhance employee engagement, many UK top leaders appear to ignore it, possibly because they are simply unaware of employee engagement or do not understand its importance:
‘The issue seems to lie in their unwillingness to ‘talk the talk’ and truly relinquish command and control styles of leadership in favour of a relationship based on mutuality’.
(Engaging for success, 2009)
Interestingly, the MacLeod report found that ‘engaging managers’ and ‘engaging leadership’ are pivotal to creating work contexts conducive to engagement. The defining contribution of great managers is that they boost the engagement levels of the people who work for them (Michelman, 2004). But how do they do this, and is it possible to generalise about what employees want from work and about how managers can influence engagement levels?
Stimulating growth through employee engagement
This is why Geoffrey Matthews and I wrote our book Engaged. We wanted to demystify this contested topic and provide practical guidance for managers who want to create a work context conducive to engagement.
What employees want
We examined a wide variety of studies concerning what employees appear to want and need from work. While we know that no ‘one-size-fits-all’ on engagement and, acknowledging the risk of generalisation, we categorised these as desires for connection, support, voice and scope:
Most employees want job security, strong workplace relationships and to work for organisations whose purposes they can embrace – we found this is closely associated with motivation, commitment and ultimately the energy and effort workers are prepared to put in. Employees want to be valued for their contribution, and to be dealt with in a fair and consistent manner.
Valuing employees is crucial. While pay remains important, other forms of recognition and reward - such as flexibility - are also important.
Employees want to be able to influence matters which affect their working lives and therefore need to be able to participate in the direction of the organisation.
They also want opportunities for growth and high quality work that offers a degree of meaning, stretch, control and task discretion.
What does this look like in practice?
We looked for examples of management practice in organisations where employee engagement levels are high despite the challenging context. We concluded that, to respond to the engagement challenge in this new era, leaders must evolve beyond command and control towards more collaborative styles as the basis of mutual trust and respect.
Here are some examples of what works:
1. Creating connection
Engaging leaders look beyond the current challenges, anticipate the big business issues and plot a way through to recovery taking short-term decisions with the longer-term in mind. They reshape the work environment and culture to enhance performance and match their unique basis of competitive advantage. They actively lead culture change, working to create shared purpose and a positive sense of the future: something to aim for that people can connect with.They set a clear direction and priorities so that employees know what is required and feel empowered to deliver the right outputs without the need for micro-management. Vision and values that are truly lived provide parameters for people’s actions so engaging leaders strive to role model the values. They use and act on 360 degree and other feedback to show commitment. They nurture leadership at every level.
2. Supporting people
Line managers in particular shoulder the day-to-day challenge of supporting people and maintaining or boosting employee morale, even though they may themselves be under pressure from every angle, juggling both business as usual and managing change. They too need to feel supported by top management and should be developed as leaders, giving them access to new tools, techniques and ideas.
Engaging managers get to know people as individuals, care for employees, create an open and positive work environment and build teams. They execute tasks but in an enabling way, aiming to keep staff motivated and develop people’s performance potential. They are versatile, able to judge when to involve employees, and when to direct them. In the current context, old-fashioned stick and carrot incentives to stimulate performance are unlikely to be effective. Engaging line managers set clear objectives so that people know what is required but allow staff to work out how to deliver them. They support people best by designing interesting and worthwhile jobs and ensuring employees have the skills, authority and resources they need to deliver results that matter. They ‘de-clutter’ jobs of unnecessary bureaucracy so that people have a clear line of sight through their day job to the purpose, mission and goals of the organisation.
Engaging managers strive to deliver on the employer brand promise and ensure employees get a fair deal. While no organisation can guarantee job security, engaging managers help employees cope with stress and anxiety. Providing meaningful support not only shows employees that they are valued, even though their job may be at risk, but it can also help survivor employees (those whose jobs remain after downsizing) remain productively focused on their work.
Since some of the human reactions to change can be anticipated, HR can help managers take actions to minimise the negative impact of change on people. Employee assistance programs can help, and simply giving people opportunities to talk – in one to ones and in groups - can be enough. Therefore managers need more of a coaching style, to be willing and able to involve staff in implementing change. When making change becomes part of every employee’s job, it can become the spur to innovation and improvement.
Especially in tough times, frequent and honest communication is vital for (re)building employee trust, resilience and engagement. Engaging leaders and managers are visible, accessible and approachable; they communicate authentically and consistently about the bigger picture, strategy and direction. They are also willing to listen and act on what they hear. Communication is not just top-down, but also genuine dialogue at team level. Whether dealing with business problems or building for growth, engaging leaders take a joint approach to developing new ideas, involving dialogue and consensus-building between different groups and individuals within the business. Signs of progress are important so engaging managers mark milestones, celebrate successes, stabilise and share the benefits of change.
For all its challenges, change can also open up opportunities for development, better work-life balance and growth as people gain new skills, new networks and new responsibilities. Engaging managers work at improving the skills and competencies people really need, focusing in particular on people in new roles. They spot opportunities for employee development and actively coach their teams, involving them in working on real business issues, providing job shadowing and mentoring. They deliberately encourage people to change roles/re-energise themselves by moving between domestic and international divisions or from one country to another. This allows them to gain new experiences and helps develop different parts of the business - and is also a great motivator. After all, when people feel valued and have opportunities to grow, they are likely to perform well.
So, as organisations plot their way to recovery, today’s challenges could prove a blessing in disguise since they signal that leaders who become and remain focused on engagement can motivate and retain valued employees. However, rather than attempting to force engagement, it is healthier to encourage it by managing change with a human touch. After all, employees will welcome change if, as a result, they work in a positive environment, are part of a winning team, are more capable and empowered, have learned from their experiences and have the tools to be self-managing. Employers who are forward-looking, who sustain their investment in people and continue to develop the abilities of their workforce are likely to maintain their competitiveness and be well-positioned for growth when the economy picks up.
This is the time above all where the ‘values on the wall’ need to work in practice. So even if business leaders cannot provide job security, they can keep people informed and listen to what employees are telling them. While they cannot provide meaning for their employees, as this is individual and subjective, they can offer a clear purpose for their organisations. They can ensure that values-based behaviours are reflected in appraisals and promotion criteria, and that line managers are recognised for their efforts in engaging employees. They can demand that good intent, in the form of work-life balance, wellbeing or diversity policies, is translated into practice, and make every effort to close any ‘say-do’ gap of their own.
The engagement-performance potential is there – delivering the results is a shared effort. Leaders, managers, HR and employees themselves have key roles to play since employee engagement flows up, down and across the organisation. Ensuring mutual benefits (as well as risks) for both organisations and employees is potentially the most sustainable and honest basis for an employment relationship better suited to the demands of today’s volatile global economy.
About the author
Linda Holbeche PhD is an independent writer, researcher, consultant and developer whose special interests include leadership, the development of HR professionals, change, organisation development and employee relations. She is visiting professor at four UK University Business Schools: Bedfordshire, Cass, Imperial College and London Metropolitan.
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