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Transcript of Enabling, Engaging, and Rewarding Employees Performance Development International, LLC. 1038 W....
Enabling, Engaging, and Rewarding Employees
Performance Development International, LLC.1038 W. Loyola Avenue #1
Chicago, IL 60626-5206312.915.6597 www.pdii.net
for
Dow Scott, Ph.D.Professor of Human ResourcesLoyola University Chicago
Performance Development International, LLC.
Why or why not?
How engaged are your employees?
Very engaged
Engaged
Neither engaged nor disengaged
Disengaged
Very Disengaged
If so, why? In not, why not?
What does it mean for employees to be engaged?
Performance Development International, LLC.
“Employee engagement”
The commitment employees feel toward their organization and work team.
Employees’ discretionary effort…their willingness to go the extra mile for the organization
Performance Development International, LLC.
Engagement is important
Increasing importance of engagement is a function of:
Knowledge-based economy
Focus on lean operations and ROI
Fast-changing environments
Employee emphasis on personal fulfillment
Performance Development International, LLC.
Work environments must transform motivation into productivity
Str
ateg
ic in
tent
Bus
ines
s re
sults
Enablement
Engagement
Employee effectiveness
Performance Development International, LLC.
The business case for engaging and enabling employees
Increase in employees above
performance expectations
Reduction in turnover rates
Customer satisfaction rates
Revenue growth
Employee retention
Employee performance
Customer satisfaction
Financial success
10% -40% 71% x2.5High engagement only
50% -54% 89% x4.5High
engagement & high enablement
Performance Development International, LLC.
Value of engagement
I believe our efforts to engage employees have:% Strongly agree / agree
72
72
67
69
82
84
85
94
83
94
0 20 40 60 80 100
Most Admired Peer Group
Reduced turnover
Created a competitive advantage
Reduced complaints about pay fairness and equity
Strengthened customer relationships
Reduced employee performance problems
Performance Development International, LLC.
“MAC” engage employees
% Favorable
Most Admired Peer Group
Our company has a specific definition of employee engagement
Our company has developed an explicit employer brand
Line managers own engagement initiatives
HR staff across our company have a good understanding of what
employee engagement is
Performance Development International, LLC.
Research objectives Identify reward practices impacting
employee engagement
Identify what works and what can be improved in the reward space in engaging employees
Identify reward and engagement attributes and activities that enhance organization performance
Performance Development International, LLC.
Survey overviewOver 650 WorldatWork members participated
Methods of analysis:
• Descriptive analysis (e.g., means and frequencies)
• Content analysis, factor analysis, and reliability analysis to create meaningful variables
• Correlation analysis to identify relationships
Performance Development International, LLC.
ROI on engagement efforts
Efforts to engage employees through reward programs have:
Increased organization innovation
Created a competitive advantage
Resulted in better relationships with
customers
Increased organization’s financial performance
35%
40%
40%
38%
46%
44%
49%
39%
18%
16%
11%
23%
0% 20% 40% 60% 80% 100%
% Agree % Neither % Disagree
Performance Development International, LLC.
ROI on engagement efforts
Efforts to engage employees through reward programs have:
Reduced employee performance problems
Reduced complaints on pay fairness
Reduced turnover
Reduced absenteeism
46%
53%
26%
23%
39%
36%
41%
32%
49%
54%
39%
40%
14%
15%
25%
23%
22%
24%
0% 20% 40% 60% 80% 100%
% Agree % Neither % Disagree
Created a more positive work culture
Resulted in better collaboration and relationships
Performance Development International, LLC.
Retention as a key priority
I am very confident in my organization’s ability to retain key talent as the
economic outlook improves
53% 22% 24%
0% 20% 40% 60% 80% 100%
% Agree % Neither % Disagree
Performance Development International, LLC.
Defining engagement and ensuring accountability
Employee engagement performance metrics are built
into variable pay programs
Our organization has a specific definition of
‘employee engagement’
Employee engagement is explicitly included in our
organization strategy
44%
53%
60%
17%
16%
15%
39%
31%
25%
0% 20% 40% 60% 80% 100%
% Agree % Neither % Disagree
Performance Development International, LLC.
Measurement and monitoring
Most organizations conduct surveys every one to two years (59 percent); Only 20 percent indicate that they do not use surveys
Most view surveys as effective in generating action and change (60%)
Conducting surveys was related to perceived effectiveness in fostering engagement (r = .22), but taking action is more important (r = .54)
Performance Development International, LLC.
Reward professionals believe:
Intangible rewards and leadership have more impact on engagement than base-pay, benefits, and incentives
Short term incentives are the tangible rewards that have the most impact on engagement
Quality of work, work environment, career development, and senior leadership are the intangible rewards that have the most impact
Performance Development International, LLC.
Impact of rewards on engagement
Short-term or bonus programs
Base salary level
Base salary increase
Benefits and perquisites programs
32%
32%
54%
48%
42%
41%
50%
44%
30%
37%
39%
44%
18%
24%
16%
14%
20%
15%
0% 20% 40% 60% 80% 100%
% High % Neither % Low
Long-term or bonus programs
Financial recognition programs
Performance Development International, LLC.
Impact of intangible rewards on engagement
Career development opportunities
Work environment or organizational climate
Work-life balance
The nature of the job or quality of the work
37%
55%
59%
61%
69%
47%
31%
29%
28%
26%
16%
14%
11%
10%
5%
0% 20% 40% 60% 80% 100%
% High % Neither % Low
Non-financial recognition
Performance Development International, LLC.
Impact of leadership on engagement
Organizational objectives
Manager’s assessment of employee performance
Coaching from managers or supervisors
Quality of senior leadership 49%
53%
55%
65%
37%
34%
36%
25%
14%
13%
9%
9%
0% 20% 40% 60% 80% 100%
% High % Neither % Low
Performance Development International, LLC.
3%
4%
4%
18%
17%
16%
39%
42%
40%
40%
37%
40%
0% 20% 40% 60% 80% 100%
% Always % Often % Seldom % Never
Employee involvement in reward programs
Design
Implementation
Evaluation
Performance Development International, LLC.
6%
12%
8%
27%
31%
29%
37%
35%
40%
39%
22%
23%
0% 20% 40% 60% 80% 100%
% Always % Often % Seldom % Never
Manager involvement in reward programs
Design
Implementation
Evaluation
Performance Development International, LLC.
Involvement in reward design on engagement
Conventional thinking and research suggests that participation in program design builds ownership and commitment.
This study found reward program involvement is linked to more positive views of effectiveness of reward strategies in engaging employees (r ≥ .35)
We found very low levels of employee and manager involvement in reward program design, implementation, and evaluation.
Performance Development International, LLC.
Why or why not?
Why is employee and management involvement in reward decisions so low?
What role does your reward function play in employee engagement in your organization?
What should the reward function do to enhance employee engagement?
Some more questions
Performance Development International, LLC.
Engagement and Rewards
• Base-Pay
• Benefits
• Incentives (i.e., financial and non-financial)
• Development and career advancement opportunities
• Work environment
Performance Development International, LLC.
High performance work environment requires
Performance Development International, Inc.
Employee have:
• Opportunity to participate
• Information to participate intelligently
• Good reason to participate
“The average worker knows his job better than anyone else.” –
Joe Scanlon
Performance Development International, LLC.
Our top ten list
Organizational Priorities1. Make a business case for
engaging employees
2. Measure and monitor engagement
3. Take action on survey results
4. Make everyone responsible for engagement
5. Connect people with the future
Reward Priorities6. Go beyond comp & benefits to a
total rewards mindset
7. Include employees & managers in reward design and launch
8. Tailor total rewards to workforce segmentation
9. Use engagement metrics in performance criteria
10.Communicate the value of what you have
Performance Development International, LLC.
1. Make a business case for engaging employees
Identify connections between engagement and business outcomes
• Use internal business & engagement measures if you have them
• Otherwise, begin a dialogue with your leaders around external norms and internal opportunity
Involve managers in initiatives to promote employee engagement
Performance Development International, LLC.
2. Measure and monitor engagement
Employee opinion surveys are important tools for monitoring and managing employee engagement
Surveys are two-way communication tools
• What is measured sends important signals to employees about values and priorities.
• Sharing results and a plan for action demonstrates respect for employee input
Performance Development International, LLC.
3. Take action on survey results
The best companies make more frequent use of surveys than their peers and they use the input more effectively
• They indicate employee surveys are more effective in generating action and change
• They report doing more to link employee survey results to performance outcomes, such as customer satisfaction
• They say their best managers are more likely to take action
Performance Development International, LLC.
4. Make everyone responsible for employee engagement
Senior Leaders
• Share engagement index scores across functions
• Communicate expectations about engagement to management team
• Model engaging leadership behaviors
• Hold engagement conversations with top talent
• Incorporate engagement into performance evaluations
People Managers
• Understand and align with functional leaders’ expectations
• Examine personal engagement
• Build skill in management behaviors that impact employee engagement
• Hold engagement conversations with top talent
Human Resources
• Align employer branding to key engagement drivers
• Measure engagement levels and consult on key actions
• Coach and support people managers in engaging their teams
Employees
• Discuss individual engagement factors with manager
• Participate in the employee survey and other feedback opportunities
• Provide feedback to managers about the effectiveness of engagement efforts
Performance Development International, LLC.
5. Connect people with the future
To maintain high levels of engagement requires connecting people with jobs and organizations and helping them to see a positive future for themselves and their organizations.
Focus areas should include:
• Confidence in leadership
• Clear and promising direction
• Development opportunities
• Strategic rewards
Performance Development International, LLC.
6. Go beyond compensation and benefits to a total reward mindset
Help leaders and managers understand that rewards go far beyond compensation and benefits
Build the core organization messages (employment value proposition) around what is meant by total rewards
Develop tools for managers so they can effectively reward employees beyond the confines of compensation and benefits
Develop and reinforce communications around total rewards
Performance Development International, LLC.
7. Include employees and managers in reward design and launch
Benefits Long term incentives
Intangible reward
Annual variable
Guaranteed cash
“We do employee surveys every two years and make action plans based upon the survey results. One key finding is that we need
to do a better job at communicating the total value of
reward to our employees.”
Heineken
“The real power is when you actually start talking with your employees. We design
our reward programs, invest in new programs, and beef up current programs
based upon the feedback we receive from our employees.”
McDonalds
Performance Development International, LLC.
8. Tailor total rewards to workforce segmentation
Identify the most meaningful and valued ‘rewards’ in the organization: Do reward values vary across the organization and work units?
Recognize that different employees value different rewards: What do your boomers, generation X and Ys value?
Build the manager’s reward tool kit based on how can they use
» career development
» organization and job design
» non-financial recognition programs
» organizational work climate
… to reward employees?
Performance Development International, LLC.
9. Use engagement metrics in performance criteria
The Most Admired Companies have more balance performance scorecards
• Balances timeframes, measurement level and measurement types
• MACs using human capital measures are double their peer groups
Recognition that financial performance is driven by engagement
Establish baseline measures so you can monitor trends Financial
Non-financial
Corporate
Individual
Short term
Long term
Financial
Non-financial
Corporate
Individual
Short term
Long termNon-financialNon-financial
FinancialFinancialCorporateCorporate
IndividualIndividual
Short term Short term
Long termLong term
CustomerHuman Capital OperationalSocial
Responsibility
Performance Development International, LLC.
10. Communicate the value of what you offer
‘Best’ practices and sophisticated designs fail if they are not properly rolled out.
Clarify and focus on a few direct messages and tools
Use total reward statements
Help line managers understand and use their tool kit to communicate reward value
Performance Development International, LLC.
Employee are engaged because . . .
Performance Development International, Inc.
They believe the organization is doing something important and they are making a meaningful contribution
They believe they are doing something important and will be recognized for the contribution
Management believes that employees are assets to be developed and not a cost to be reduced
Management treats employees fairly for the contribution they make.
Performance Development International, LLC.
Dow Scott, Ph.D. is a Professor of Human Resources in the School of Business Administration at Loyola University Chicago and President of Performance Development International, LLC, a human resource consulting firm.
Dr. Scott’s practical approaches to teaching, research, and consulting focus on helping business leaders create more productive and satisfying work environments. He has over 100 publications which includes his recent book Incentive Pay: Creating a Competitive Advantage.
He consults with diverse organizations on pay and other human resources issues including AT&T, Groendyke Transport, Landstar Systems, Sara Lee Corporation, HNI Risk, Marsh, Inc., Xaloy, Hay Group, and USG. He often is called upon by organizations to evaluate compensation programs and other human resources programs.
Dow Scott, Ph.D.
312.915.6597 or [email protected]