Chapter 2: What Employee Engagement Is And Why It Matters

Chapter 2: What Employee Engagement Is And Why It Matters

3,177 views

THIS IS AN INSTALLMENT IN EMPLOYEE ENGAGEMENT IN RUSSIA BY JON HELLEVIG

EMPLOYEE ENGAGEMENT – WHAT IT IS AND WHY IT MATTERS

In the last few years, the management theory of employee engagement has gained increasing recognition. This theory tackles the question of how a company can achieve its strategic goals by creating the conditions for human resources to thrive and for each staff member, manager, and executive to eagerly deliver their best efforts in the best interest of the business.

The theory makes so much common sense that it is even difficult to define it. In fact the difficulties here are entirely caused by the past history of failed practices and wrong theories in the field of organizational management. With employee engagement theoreticians and best practices have finally caught up with reality.

Briefly, according to the theory, the leaders of an organization have to ensure that all staff members function at their highest capacity in their jobs: that they are fully “switched on,” we might say, bringing not just their body to the job, but their minds also. That they are fully committed to and involved in the work the same way an entrepreneur would care for her business or the way one cares for one’s own household. This is called being engaged: being fully involved with great interest in an activity that really holds one’s attention and in which one has an urge to do one’s best.

This really is common sense. Which employer would not want its workers to be switched on at work? So what do we need the theory for? We need the theory as a tool to demolish the bad management practices rooted in hundreds (if not thousands) of years of mismanagement. The fact is that very few employees are fully engaged in their work, and few leaders know how to go about changing that. According to studies conducted in the UK only 12% of the work force (in any company on average) are actively engaged, while the European average is slightly less yet (Towers Perrin, European Talent Survey, 2004). But even so, that figure is based on employees’ own assessments, how the employees judge their own level of engagement, and one would suppose that such self-assessment is informed by the human propensity to inflate one’s own contribution. According to the same study 65% consider that they are “moderately engaged,” which means that they rationally care for the job but they don’t bring their whole emotional capacity into it. Another result confirms this conclusion telling that more than half of employees feel that they are actually not giving their best, whereas only 40% on self-assessment said they did (Macleod, Brady: The Extra Mile. 2008. Prentice Hall). And according to the consulting firm BlessingWhite only 31% of employees are actively engaged at their work (BlessingWhite (December 2010). Employee Engagement Report 2011. http://www.blessingwhite.com Retrieved 2010-12-12). Imagine how a football team would fare if only 12% of the players were actually engaged in the game and the rest had their minds on their next vacation, their upcoming dinner date, or some jokes they had read on the Internet. The thing is that successful sports teams have always been driven by the principles of engagement even if the concept might not have been explicitly spelled out.

A theory, or a concept, serves two functions: firstly, as a symbol to make us aware of a new way of thinking of something. (Intuitively we have always known that an engaged workforce will outperform a passive one. The new theory makes us aware of what we have always intuitively known.) And secondly, to provide advice on how to achieve the ideal state promulgated by the theory. In regard to employee engagement, I think that the first function is already hugely valuable – once you start thinking about this you will find means to achieve it. But employee engagement is also about charting the course that the leadership should take in order to fully engage all the staff members in the business of the firm, or as it is popular to say nowadays: provide a road map for engagement. In my view this culminates in creating a corporate culture of engagement, or an engaging culture, which will serve as a perpetual automatic means of sustaining engagement on all levels of the organization. I will venture to tell in this book how this is done.

I am not a big fan of definitions but if they are not too rigid, a definition may serve as a guideline for thinking about the underlying idea. Thus, I would define employee engagement like this:

• Employee engagement is about striving to ensure that each employee fully cares for his job, the company he works for, and its customers, and ensuring that the employee is always committed to do his best in these respects. This will be manifest in the way the employee shows proactive enthusiasm for the job and takes ownership of his tasks. Employee engagement is a two-way street, a reciprocal relationship of trust and respect between employer and employee. To bring about engagement the employer (executives and managers) must clearly and extensively communicate and show what is expected from the employee and coworkers, empower the employees within the level of each one’s competence, as well as create the working environment and the kind of corporate culture in which engagement will thrive.

Or more briefly we can say:

• Employee engagement is about how to achieve a company’s strategic goals by creating the conditions for human resources to thrive and for each staff member, manager and executive to eagerly deliver his best efforts in the best interest of the business.

There has been a host of management theories that are easily confused with employee engagement on a superficial level. Among these: the theory that the employer must ensure the employee’s happiness at work or job satisfaction (especially popular since the 1970s); employee commitment (fashionable since the 1980s); and employee empowerment (in vogue since the 1990s). These are all connected also with the idea of motivation. I would not say that these theories are necessarily wrong, but that it is better to think of them as deficient and misleading when applied on a stand-alone basis beyond the teachings of employee engagement. But by merging them all into a unified whole with the addition of some other cardinal new insights into management, they add up to the proper engagement theory. Below I will briefly discuss these predecessor theories.

ENGAGEMENT vs. JOB SATISFACTION

In a discussion with people not previously familiar with the concept of employee engagement, they initially associate the concept with the management theory popular with progressive companies especially in the 1980s and 1990s, according to which employers should guarantee an employee’s job satisfaction. The idea was that the happier people are within their jobs, the better they perform. Engagement specialists agree with me in thinking that this was a misguided theory. The problem is that the theory set out a one-way street, where the contributions towards the employee’s satisfaction were coming from the employer, while there were no clear pronouncements as to what was expected from the employee in return. The problem was aggravated by the habit of doing employee job satisfaction surveys with the idea that the higher the level of employee satisfaction the surveys evidenced, the better the management was. The extreme consequence of this was that management was tempted to “bribe” the employees, that is, buy their satisfaction with unwarranted benefits, perks and a theme park job environment, while not adequately demanding that they reciprocate the contribution. Now it is increasingly recognized that satisfaction per se does not lead to better job performance; on the contrary, it is quite conceivable that an employee is satisfied with his job precisely for the reason that it, for example, gives a decent salary, good benefits, a nice environment, whereas the employee will be able to concentrate his time and energy on other things that matter more beyond the work, things with which he is more truly engaged. Satisfaction may mean contentment and actually contradict the need to challenge the status quo and be innovative, which is precisely what is expected from an engaged employee. Satisfaction does not capture the aspects of urgency, focus, and intensity which are essential to true engagement (Macey, Schneider, Barbera and Young: Employee Engagement. 2009. Wiley-Blackwell).

The job satisfaction surveys are based on an inherent logical contradiction or confusion as to cause and effect. There is the classical problem of whether the chicken or the egg comes first. Are companies with satisfied employees successful because they have invested in the satisfaction of the employees, or do employees report satisfaction because the successful company has in reality intuitively been running engagement policies? And how do we know if the success has come from job satisfaction policies or from something else, perhaps the success has other reasons and the profitability of the company has only allowed it to share the benefits with employees. (Of course, that is nice, too.)

Job satisfaction is also a question of comparatives. A person can report job satisfaction for various reasons, most of which remain unconscious. And we always need to keep in mind the human propensity to be dissatisfied with one’s lot.

One more problem with job satisfaction surveys is that they are exclusively designed to ask the employees how satisfied they are with their jobs, and by consequence with their management and employers. But I think it would be equally relevant to ask managers (on various levels) about their satisfaction with the employees. This would already put us on the two-way street.

ENGAGEMENT vs. COMMITMENT

Until recently when engagement theory gained recognition, progressive leaders and HR people spoke about employee commitment. And now the specialists debate what the difference in these two management paradigms is, if any. Some claim that they are different terms for the same thing, but I think that these theories are distinct. We could say that engagement represents a higher evolutionary stage of commitment, being a more refined and complete theory.

Here I need to point out that I am not one for parsing over concepts, and all the more not one to think that a certain concept inherently means one thing or another. But what I want to point out is that, as I have understood it, the commitment theory is lacking certain key elements present in engagement theory and contains other elements that don’t go in the right direction.

In my view commitment theory is more based on compulsion, on creating such conditions that the employee will feel compelled to work for the organization, whereas engagement theory aims to bring about a situation where the employee by free choice has an intrinsic desire to work in the best interests of the organization. While characterizing commitment as one-sided compulsion, we could say that engagement is reciprocal; both employer and employee engage. Somewhat simplifying we could also say that in commitment the person is rational about her commitment, she weighs pros and cons; whereas in engagement the person makes a personal choice, not because his calculations show so but because he wants to. It is a more emotional choice. Management guided by commitment theory also wants to bring about the emotional bond, but contrary to engagement theory, it is done by trying to make the employee feel that he owes something to the company for past favors; or by binding people with spectacular salaries, or an even more popular form of temptation, stock options and other incentive programs. The problem with all these methods is that they might well work in terms of succeeding to retain the people. But…will the people thus retained be really engaged to make the best efforts for the company? I doubt it.

We could also understand engagement as the behaviors of commitment plus the intrinsic motivations of engagement.

An analysis of Meyer and Allen’s three-component model of commitment helps to differentiate between these two theories (Meyer, JP and Allen, NJ (1991). A three-component conceptualization of organizational commitment: Some methodological considerations, Human Resource Management Review, 1, pp. 61-98). These scholars divided commitment into three component categories: affective commitment, continuance commitment, and normative commitment. The two later components point to the compulsion character of commitment.

Continuance commitment is said to be based on the deliberations of the gains versus losses of working for an organization. In this thinking the person remains in the organization if the perceived cost of leaving it would be higher than the benefits of staying. Naturally all the factors that go into the calculations are not directly measurable in money, and include, for example, questions of status, or of one’s membership in a community, and so forth.

Normative commitment is about the person’s perceived or real feelings of obligation to stay with an organization because of a sense of obligation.

Normative commitment is about the persons perceived or real feelings of obligation to stay with an organization because of feelings of obligation.

According to proper engagement theory management would not try artificially to bring about continuance and normative commitment, but the remaining component, affective commitment, is more suitable for the engagement paradigm. It is defined as the employee’s positive emotional attachment to the organization, the “desire” component of organizational commitment. In this case, an employee is said to strongly identify with the goals of the organization and desires to remain a part of the organization because she wants to.

ENGAGEMENT vs. EMPOWEREMENT

Engagement differs also from another management concept which has been popular in the last two decades, empowerment. Empowerment is the idea that you have to endow your employees with authority to make business decisions. It is certainly very important to empower your employees to take decisions within the scope of their tasks, and in this sense empowerment is an important feature of engagement. But the problem is that empowerment does not make sense and it is not properly enforceable without considering all the other aspects of employee engagement. You may properly empower only employees who are adequately engaged. One important aspect of the question is that you also need to have the right people on board; you cannot empower just anybody. And most importantly you need to back up empowerment with a corporate culture that operates on the principles of engagement. A culture of self-disciplined and self-organizing people is needed to establish the right levels of empowerment for different levels of job duties and competence.

ENGAGEMENT vs. MOTIVATION

Engagement is about motivation. But here we need to turn around the question from as the traditional understanding of motivation. The Merriam-Webster defines “motivation” either as “the act or process of motivating” or “the condition of being motivated.” It is typical that in a context of management theory people refer to motivation in the sense of “the act or process of motivating,” with the stick and carrot mentality of how to propel an employee to act in a desired way. But in engagement theory we mean the other sense of the concept “the condition of being motivated,” that is, the task of management is to bring about such conditions that the employee feels intrinsically motivated, or self-motivated as I like to call it. The motivating force has to be internalized so that the drive to do one’s best comes from the inside and not by external pressure (positive or negative) and control by management.

Guided by the traditional usage of the concept, employers were racking their brains in order to devise attractive new ways to externally motivate their employees. What comes to mind most easily in this vein of thinking is salary, salary, and more salary, and pay in form of bonuses, or other incentives such as stock options and other material benefits. Yes, and job titles, and positions in the hierarchy. Not to forget punishments of various kinds. When this is the management thinking then it creates a system of constant bargaining: you do this, you get this; if I don’t get this, I don’t do that.

In engagement theory the idea is reversed. Here the employer strives to tap into the intrinsic motivators of the person, to create such working conditions and relationships within the company (its executives, managers and employees) that people have an inner motivation to do their best. Obviously salary and material benefits remain important, but they are no longer the sole drivers of motivation.

Here we then move from efforts to motivate one or another behavior with sticks and carrots to start the engine that ignites the employee’s inner motivation. We create the conditions for the person to be self-motivated by the job and the general work conditions.

ENGAGEGEMENT IS ESSENTIAL FOR BUSINESS SUCCESS

As I stressed above, engagement is not practiced for the purpose of ensuring employee satisfaction, although that usually follows from proper engagement. Rather, companies invest in employee engagement in order to ensure the success of the business strategy and ultimately profit and shareholder value. Surely, nobody can doubt that people that are genuinely interested in their work and each day do their best for the sake of it create more value than non-engaged people.

Levels of engagement directly affect: customer service, quality, productivity, innovation, staff attraction and retention, lower levels of absenteeism, and other things.

For those who continue to doubt, we can point to various surveys and studies that confirm this:

• A European wide study demonstrated that companies with higher average employee engagement have significantly higher operating margins relative to industry standards (Macleod, Brady: The Extra Mile. 2008. Prentice Hall). 88% of highly engaged employees believe they can positively impact the quality of their organization’s products, compared with only 38% of the disengaged (Towers Perrin Global Workforce Study 2007-2008 http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2008/200802/GWS_handout_web.pdf). Most importantly this means that employees actually are concerned with quality and they feel bad if they don’t experience that the company management reciprocates this concern. This was confirmed by another study: 84% of highly engaged employees believe they can positively impact the quality of their organization’s products, compared with only 31% of the disengaged (Seijts, Gerard H. and Dan Crim (2006). “The Ten C’s of Employee Engagement”. Ivey Business Journal) .

• What was said above is also true for customer service (another aspect of quality): 72% of highly engaged employees believe they can positively affect customer service, versus 27% of the disengaged (http://en.wikipedia.org/wiki/Employee_engagement). This means that there is a real reason to consider that the disengaged are that way because they do not experience that the company reciprocates their concern for customer service. A study by Gerard Seijts and Dan Crim confirmed that an employee’s attitude toward the job’s importance and the company had a greater impact on loyalty and customer service than all other employee factors combined.

• Again, the same considerations are valid for the concern for cost control: 68% of highly engaged employees believe they can positively impact costs in their job or unit, compared with just 19% of the disengaged.

• Correlations between employee engagement and desirable business outcomes such as retention of talent, customer service, individual performance, team performance, business unit productivity, and even enterprise-level financial performance have been shown by Rucci et al, 1998; McKay, Avery, Morris et al., 2007; and Schneider, Hanges, & Smith (2003) (McKay, Avery, & Morris (2008). Mean racial and ethnic differences in sales performance: The moderating role of diversity climate. Personnel Psychology, 61, 349-374; Rucci, Quinn, Kim (1998). The employee-customer profit chain. Harvard Business Review, pp. 83–97; Schneider, Hanges, & Smith (2003). Which comes first: employee attitudes or organizational financial and market performance? Journal of Applied Psychology) .

• It has been found that a company that manages to engage it employees is 87% more likely to retain the best talent (Lockwood, Nancy R. “Leveraging Employee Engagement for Competitive Advantage: HR’s Strategic Role.” HRMagazine Mar. 2007: 1-11).

• In a study involving the company MolsonCoors it was shown that frequency of safety incidents were five times less with a team of engaged employees as opposed to non-engaged employees (Lockwood, Nancy R. “Leveraging Employee Engagement for Competitive Advantage: HR’s Strategic Role.” HRMagazine Mar. 2007: 1-11).

WHAT AN ENGAGED EMPLOYEE IS LIKE

A maximally engaged employee puts discretionary efforts into each task and is fully committed to the work both intellectually and emotionally, and is willing to put in as much time as is necessary to get the work done. His intellect is switched on to its full capacity, so he analyzes any given work situation with a view to finding the best solution for the customer and the company. He does not take the rules and traditional methods of doing things at face value, but instead proactively challenges the way things are done and brings in fresh ideas to improve the processes. He does not just go through the motions; rather, he makes an effort to do his very best. The engaged employee is intrinsically concerned with quality, costs, customer service, and safety, as was reported above in reference to the studies.

In table 2 follows a list of selections from the engagement literature about adjectives and characteristics that consultants and scholars use for describing an engaged employee:

TABLE 2. WHAT ENGAGED PEOPLE ARE LIKE

• Absorbed in the work – “time flies at work”
• Maintains the focus for an extended period
• Feels a strong emotional bond to the company
• Is enthusiastic and passionate about the job
• Expands the work role, flexible, not tied to a job description
• Adapts to change
• Wants to develop the job related skills
• Does not need reminding and prodding
• Feels a sense of urgency
• Is persistent
• Takes initiative
• Is goal-oriented
• Conscientious
• Accountable, feels a sense of ownership
• Responsible
• Dedicated to the work

The central idea behind employee engagement is that the company leaders should make active efforts to bring about these positive characteristics in the employees. They do this by creating the appropriate corporate culture of engagement and self-discipline. But we do need to acknowledge that there are differences in the individual capacity of people to engage, and for some people no amount of engagement effort will bring about the desired outcome. This is why staff and recruitment policies will still be a crucial element of a proper engagement strategy. The company has to hire and retain people who are suitably self-disciplined and self-motivated for a culture of engagement.

If engaged employees are like that, then what are non-engaged employees like? The easy answer is that they demonstrate the opposite characteristics; let’s point out some of them. The non-engaged employees don’t really care about the work and the best interest of the company. They come to work in order to get their salary and without much other motivation. They don’t really contribute to the business, or worse yet, push it in the wrong direction. Their work hours are spent lounging around with coworkers, in private phone- calls, surfing the internet about non-work related matters, and so on. Among the younger generations Facebook is the center of the universe of the non-engaged.

They are not interested in what is going on in the company, they don’t ask questions about the business and don’t offer any useful input, doing only the minimum that is actively required from them. Initially when new in the organization or young in their field they might have been enthusiastic and inquisitive, but after years of being hammered down by apathy and neglect from bad management, they turn sour and start to resent the dismal conditions in which they have been stranded.

I frequently think about the paradox of terrible service and even the sometimes inhuman conditions which Russian doctors and nurses inflict on their patients at Russian state- owned clinics and hospitals. It is a paradox as I also see the young talented and enthusiastic people that graduate from medical colleges and universities. I know that patients and their relatives often need to procure medicine and supplies themselves, as the hospital cannot offer what is needed, or worse, does not want to offer it. I have heard about cases where relatives need to bribe doctors to give treatment and bribe nurses to change seats and even to be able to urinate and defecate. The attitude of the staff is often harsh, cold, impassive and indifferent. I wonder how these people, who in their private life are caring and loving mothers, fathers, relatives and friends, switch on to such behavior. But the reply is quite simple. They initially joined the clinic or hospital full of hope and energy. But over time they see their hopes crushed by bad management, underfinancing, dilapidated physical environment, corruption and the ensuing bad morale. At the same time I can point out that in privately owned and financed clinics and hospitals in Russia, the situation is already far better. They have normal material conditions, and anyway, even if surrounded by bad practices, private operators are driven by clients, patients, although the focus might not yet be quite up to the needed levels. At some point the behavior of most people starts to mirror the conditions they are put into and the behavior of the people around them. This same observation is true for the Russian police. Fortunately, the Russian president Putin has been able to increase the prosperity of the country so as to allow in recent years strong measures to improve the material conditions of both health care and law enforcement. This is the condition sine qua non for a healthy organizational culture in those spheres. The next step would be to actively teach the culture of engagement to the respective managements and to implement it on a large scale across the country.

Non-engaged employees actively defend their job turf in the sense of trying to avoid any new tasks and not wanting others to interfere in their own. They rarely turn to coworkers for help or offer it themselves. “I’m doing what I’m being told to do. I will do nothing more and nothing less.” Here teamwork does not come naturally.

If the manager finds that he has to spend a lot of time tightly managing a person, then it is a clear sign of a possible case of non-engagement.

WHAT CORPORATE CULTURE IS AND THE DRIVERS OF ENGAGEMENT

In my view the paramount issue about employee engagement is the corporate culture: Engagement has to be anchored in a corporate culture that stimulates and sustains engagement, a self-sustainable culture of engagement.

In the final analysis, a company is a collection of people working together. What their work results in depends on the way they work and on their working practices: in short, their culture of working together. From this simple insight we may define a company’s corporate culture as the way business is done in the firm. Corporate culture is therefore the aggregate reflection of all actions of a company, decisions and behavior of its management and all of its employees, as well as all the business practices and business processes. Knowing this, we know how to modify a corporate culture to suit our goal of innovation, customer service and employee engagement: We simply need to work simultaneously on all aspects of the corporate culture, that is, the organizational structure and all the business decisions and their implementation have to be so designed as to bring about engagement. We need to change the behaviors and rules and practices which the behaviors reflect. But changing behavior is not, as many think, an issue that should be left to psychologists. Changing organizational behavior is a leadership task for the executives involving all aspects of the business.

Corporate culture is the aggregate reflection of all actions of a company, decisions and behavior of its management and all of its employees, as well as all the business practices and business processes.

We should not perceive corporate culture as one aspect of the business along with other areas of business such as strategy, marketing policies, assets, financials, organizational structure, and others. Instead we stress that the sum total of all those issues is the corporate culture. As Lou Gerstner said: “Culture is not just one aspect of the game – it is the game” (Gerstner, Louis: Who Says Elephants Can’t Dance? 2003. HarperCollinsPublishers). Therefore to make a firm more successful and profitable management has to ensure that all the strategic choices and attempts to change are reflected in the behavior of all employees, in the corporate culture itself. Knowing this about corporate culture, we realize that all strategic choices that aim at growth, improved profitability and long-term success will have to be implemented at the level of the corporate culture. If the corporate culture does not change so as to reflect the new strategy, then the strategy fails. Too often the results of a strategic change remain lackluster because company management focuses too narrowly on the material assets involved in the strategic decision and the related financial and technological aspects while ignoring the need to change the behavioral practices that affect the overall performance.

We say that corporate culture is the aggregate performance of each individual employee, but the performance of the individual is influenced by a multitude of factors. These factors form the constraints or drivers of a corporate culture. The behavioral elements that add up to a corporate culture are dependent on many considerations starting from the broadest of all categories, that of human nature. But the beauty of engagement theory is that we need not worry about attempting to change human nature. Instead we make use of the insights into the ways of bringing out the best of human nature in a culture of engagement.

ENGAGEGEMENT DRIVERS – WHAT INFLUENCES A CORPORATE CULTURE

I have chosen to illustrate the engagement drivers (or drivers and influences on a corporate culture) by dividing them into 12 categories as was done in table 3.

TABLE 3. Engagement Drivers

1. Trust, fairness, respect
2. Alignment
3. Communication
4. Empowerment
5. Efficient processes
6. Organizational structure
7. Self-discipline
8. Total focus on customer satisfaction and quality
9. Behaviors required from leaders and managers
10. Individual drivers:
11. Individual drivers – quality of life
12. The job itself
13. Pay and rewards
14. The soft side of corporate culture

I will below expand on these and present the main features of all these engagement drivers under separate headings. But first I need to alert the reader to the various misconceptions about the nature of corporate culture which circulate in academic literature.