Human Resources consultant ANDREW SONNENBERG delves into a not-so-secret ingredient for business success.
What is employee engagement?
Whilst companies continue to debate the merits of customer-centric, product-centric and people-centric strategies amongst others, the one thing that is beyond debate is that people execute strategy. Although customers may be at the heart of a company (and products regarded as the lifeblood) without people serving their needs albeit in an ever increasingly digitised manner, they become irrelevant.
The need for a motivated and inspired workforce, energised to exceed customer needs is becoming increasingly important for modern organisations (Bakker & Demerouti, 2008). Organisations of all sizes are striving to achieve improved results through increased attendance, retention and customer loyalty. Employee engagement is widely regarded as an answer to this (Magem, 2017).
From an academic perspective, several theoretical approaches defining the employee engagement concept have emerged, including: (1) Kahn’s (1990) personal role engagement, (2) Maslach et al.’s (2001) burnout antithesis approach, (3) Demerouti et al’s job demands-resources (JD-R) model (4) Harter et al.’s (2002) satisfaction-engagement approach, and (5) Sack’s (2006) multidimensional approach. (Shuck, 2010).
Employee engagement is the extent to which an employee feels emotionally attached and proudly committed to the organisation, its values and goals.
Although definitions of engagement tend to be numerous and inconsistent, all sources generally agree that “engaged employees feel a sense of attachment toward their organisation, investing themselves not only in their role, but in the organisation as a whole (Robertson-Smith & Markwick, 2009, p. 5). Most definitions tend to define engagement by its outcomes and the outputs of an employee to the benefit of the company (Magem, 2017), often highlighting the attachment toward the company felt by engaged employees who invest themselves in both the job and the entire organisation. (Robertson-Smith & Markwick, 2009). Based on research of the theory outlined above, the following definition of employee engagement, is proposed:
Employee engagement is the extent to which an employee feels emotionally attached and proudly committed to the organisation, its values and goals, delivering over and above what the job requires through the investment of their discretionary effort.
Why is it so important?
The increasing importance of employee engagement was highlighted by Johnson (2004, p. 1) when he proposed that “the ability to engage employees, to make them work with our business, is going to be one of the greatest organisational battles of the coming 10 years”. In addition, an engaged workforce, associated with passionate, committed employees who are willing to go the extra mile in their performance, has become a key source of competitive advantage for businesses today (Shuck, Rocco & Albernoz, 2011).
Like culture, employee engagement is becoming a CEO-level issue. Approximately nine out of ten executives who responded to the 2016 Deloitte Global Human Capital Trends survey, rated engagement as an important (38 percent) or very important (48 percent) company priority. The factors driving this focus include the increasing transparency and accessibility of the organisation’s employment brand, an increasing need to attract technologically-skilled workers fuelled by increased digitisation and the intense competition for Millennial talent (Bersin, Geller, Wakefield, & Walsh, 2016).
An increasingly mobile, diverse and multigenerational workforce, which includes up to five generations of workers, is comprised of a mix of various cultures, races, genders and sexual orientations who demand a more flexible, employee-centric work environment. Yet research indicates that only 11 percent of companies have a highly inclusive work environment and only 4 percent indicate that they are very good at engaging Millennials and other generations in the workplace (Bersin et al., 2016).
The Saratoga Institute (2006) believes that “the war for talent has shifted from a battle of acquisition to one of retention”.
Mann and Harter (2016) note that for the 15 years that Gallup has been tracking employee engagement in the United States of America (U.S.), 32 percent of employees in the U.S. are engaged in their jobs and workplaces and are thus involved in, enthusiastic about and committed to their work and workplace. Only 13 percent of employees across the globe were found to be engaged in their work. Results of a recent Gallup survey indicate that only 9 percent of the South African (S.A.) workforce is actively engaged, with 91 percent disengaged and, of that 91 percent, 45 percent were found to be actively disengaged (Kelley Group, 2017).
The high levels of employee engagement – or the lack thereof – highlight a key issue for employers as engagement is becoming a ‘temperature gauge’ for a company’s ability to proactively address employee issues (Bersin et al., 2016) and “…every interaction with employees can have an impact on engagement and organisational performance” (Mann & Harter, 2016, p. 1).
Numerous studies have found a positive correlation between a disengaged workforce and higher labour turnover (Kelly & Quest, 2017). The consequences of labour or organisational turnover has been the focus of many studies (Wells & Peachery, 2011) and include, amongst other things, adverse impacts on customer service, employee morale, efficiencies (Abbasi & Hollman, 2000) and organisational performance (Waltrous, Huffman, & Pricherd, 2006).
Compounding this adverse impact is the fact that, according to Abbasi et al. (2000), the brightest talent are the most likely employee group to leave the organisation. Grobler, Warnich, Carrell, Elbert and Hatfield (2006) note that the disruptive and costly impact of turnover makes it an outcome that positive, healthy organisations avoid. They add that high staff turnover is costing S.A. millions of rand a year as a result of lower productivity, quality problems and increased accidents.
The Saratoga Institute (2006) believes that “the war for talent has shifted from a battle of acquisition to one of retention”. They note that employee turnover costs are significant and often hidden in items such as training, recruitment, selection and temporary staffing. Hinkin and Tracey (2000) estimate the cost of losing each employee to be as much as twice the person’s salary. Although 200 percent may be bullish, projected costs of between 100 and 150 percent more management level jobs are not.
The following simple example may illustrate the lost return on investment to companies as a result of disengagement:
A manager on a total annual cost to company of R1 000 000 who is only 50% engaged essentially delivers only R500 000 per annum value to the company. This equates to a R500 000 ‘loss’. Should this manager remain with the company for 3 years at the same level of (dis)engagement, the lost return escalates to R1.5 million over the three year period. The likelihood of this manager being an inspirational leader is very slight. Team members are more likely to become uninspired and thus less engaged, delivering to the minimum requirements of their job; as they too will struggle to see a value proposition that excites and motives them beyond perhaps the initial excitement of joining a new company or team.
Assuming that the manager has accountability to lead a team of five people with a combined cost to company of
R2.5 million, the potential further loss of compounded
disengagement could conservatively equate to a further R750 000. Apply this logic across an organisation of scale and one sees either the frightening loss or massive opportunities that exist within organisations across the globe today. This is admittedly an over-simplification, but illustrates the loss of ROI at a basic level effectively.
The changing structure of companies is placing an increasing focus on empowered teams and team leadership (Bersin et al, 2016). Research indicates that managers account for up to 70 percent of variance in employee engagement scores with one in two job-leaving American adults indicating that they had left their job to get away from their line manager and improve their lives (Harter & Adkins, 2015). Swindall (2007) endorsed a similar view, indicating that the vast majority of employees don’t leave companies, but leave bosses.
A recent Gallup survey (cited by the Kelley Group, 2017) indicated that 67 percent of the staff who were surveyed would like their managers to lead and communicate better. In their study of Pharmaceutical salespersons, Mulki, Fernando and Locander (2006) established that trust in a supervisor is a critical element enabling an ethical climate resulting in enhanced job satisfaction, increased organizational commitment and reduced turnover intention.
Classifying employee engagement types
Gallup differentiates between three types of employees: Engaged, not-engaged and actively disengaged. Engaged employees work with passion and feel a profound connection to the company. They drive innovation and move the organisation forward. Not-engaged employees are essentially ‘checked out’. They are sleepwalking thorough their workday, putting in time but not energy or passion into their work.
Actively disengaged employees are not only unhappy but are acting out their unhappiness. Every day these employees undermine what engaged co-workers accomplish. (Robertson-Smith & Markwick, 2009); (Lolitha & Johnson, 2016).
Irrespective of how employees are classified, many employees are generally disengaged in the workplace today. This is harmful and costly to organizations, including the high cost of staff turnover. The fourth industrial age characterised by cyber-physical systems, big data, super analytics and advanced communications infrastructure is upon us. Industry 4.0 is best described by Warren Bennis (1991) when he prophetically stated that: “the factory of the future will be staffed by a man and a dog…the man will be there to feed the dog, and the dog will be there to make sure the man doesn’t touch anything”. As employers get their heads around exponential technological advancement both inside and outside the workplace driving an abundance of data, there is a tendency to focus more on spreadsheets and numbers than on people.
Ironically, in this age of hyper-connectivity and hyper-everything we seem less connected and engaged on a human level than we ever were. Companies tend to view their annual employee engagement survey, or the more recent phenomenon of abridged quarterly ‘pulse surveys’, as sufficient to ensure an engaged workforce. Asking employees how they feel repeatedly is simply not enough. Just as it seems natural to build a business around the needs of external customers, it is the internal customers, or staff members, who ensure that these needs are sustainably met.
In this age of hyper-connectivity and hyper-everything we seem less connected and engaged on a human level than we ever were.
Accountability for people’s wellbeing and productivity sits with leadership. According to Flynn (in Sinek, 2014, p. xii) “…a leader who takes care of their people and stays focused on the wellbeing of the organization can never fail”. Furthermore, as leaders “…it is our soul responsibility to protect our people and, in turn, our people will protect each other and advance the organization together” (Sinek, 2014, p. 18). Leadership creates culture, or “the way we do things around here”, which in turn serves as the framework or template from which employees operate. The culture of an organisation can either serve to enhance or detract from levels of employee engagement.
An engaged workforce is clearly a fundamental component of sustainable business success. Employee engagement should be the foundation on which an employee value proposition is built. This translates into an employee experience, which directly impacts on the customer experience and hence the success and sustainability of the business. In my experience, a consistent communication and engagement methodology and framework throughout the organisation is an essential vehicle for strategy execution and an engaged workforce. It is primarily what I have driven for the past decade realising phenomenal results.
There is no silver bullet for success in business but the solution (in theory at least) illustrated by the (admittedly over-simplified) virtuous Leadership-People-Customer (LPC) Model© below seems simple enough:
It takes connected, caring and focused leadership to motivate, inspire and engage employees who in turn nurture customer relationships, reinforcing leadership connectedness, care and focus, creating a winning culture and a sustainably successful business.
Engaged employees are key to this equation and the ‘unlock’ is LEADERSHIP (more of that in a future article). Unleashing the human energy and potential requires effort beyond engagement surveys. It requires leadership to move beyond the comfort zones of their offices and spreadsheets and make themselves vulnerable through building real relationships with their people.
- Andrew Sonnenberg is an HR consultant, an associate at Yellowtreehub and former Head of HR: Retail Operations at Woolworths in South Africa. Andrew@yth.co.za
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