Employee Engagement

What it is and why it is important

Phil Walker

WTT Results Ltd

www.wttresults.co.uk

Employee Engagement

Defining Employee Engagement

• Many, many definitions, from very short phrases to an entire chapter of a book

• Only one I have found refers to customers

• “How each individual employee connects with your company and how each individual employee connects with your customers“ (Lucey,

Bateman and Hines 2005)

Engaging employees

Gallup Management Journal – 1000 employed adults

The results?

Employee engagement & results

• A U.S. specialty mortgage company, found that account executives in their wholesale division who were actively disengaged produced 28% less revenue than their colleagues who were engaged

• Those not engaged generated 23% less revenue than their engaged counterparts

• This study was replicated in other divisions and has been replicated in other countries such as Canada, Japan and Mexico

Results 2

• 88% of highly engaged employees believe they can positively impact the quality of their organisation’s products, compared with only 38% of the not engaged

• 85% of highly engaged employees believe they can positively affect customer service, versus 42% of the not engaged

• 65% of highly engaged employees believe they can positively impact profitability, compared with just 20% of the not engaged

Employees want to engage!

• Most want to work with organisations that allow them to grow and develop a career

– “Career opportunities and training”

• They want to feel good about their organisation including that it is a good citizen with a trusted brand

• Only 11% of engaged employees thinking about/planning to leave (disengaged 50%)

• They are willing to give more to help the company succeed

– “More opportunities to do what I do best”

Company Results & E.E. (1)

• Companies in which 60% (or more) of the workforce is engaged have average five-year total returns to shareholders of more than 20%.

• That compares to companies where only 40% of the employees are engaged, which have an average five-year return of about 6%.

• Another study in the United States found that engaged employees achieve 12% more of their goals than employees with low engagement.

Company Results & E.E. (2)

• Global studies data from 2004-2011 from 11,000 to over 6 million people

• “Organizations with high levels of engagement (65% or greater) continue to outperform the total stock market index and posted total shareholder returns 22% higher than average in 2010. On the other hand, companies with low engagement (45% or less) had a total shareholder return that was 28% lower than the average”

So, what’s the problem?

• Why is EE low in the UK (and elsewhere)?

• Do organisations and their leaders understand their roles in EE?

• Two assumptions:

– Workers are the problem

– It’s all down to the immediate supervisor

Top 10 Global drivers of EE

1. Senior mgmnt sincerely interested in employee well-being

2. Improved my skills and capabilities in the last year

3. Organisation’s reputation for social responsibility

4. Input into decision-making in my department

5. Organisation quickly resolves customer concerns

6. Set high personal standards

7. Have excellent career advancement opportunities

8. Enjoy challenging work assignment that broaden skills

9. Good relationship with supervisor

10. Organisation encourages innovative thinking

Top 10 Global drivers of EE

1. Senior mgmnt sincerely interested in employee well-being

2. Improved my skills and capabilities in the last year

3. Organisation’s reputation for social responsibility

4. Input into decision-making in my department

5. Organisation quickly resolves customer concerns

6. Set high personal standards

7. Have excellent career advancement opportunities

8. Enjoy challenging work assignment that broaden skills

9. Good relationship with supervisor

10.Organisation encourages innovative thinking

Satisfaction vs Engagement

• A positive workforce that seeks to improve the organisation is essentially a satisfied workforce. However, an engaged workforce in addition has “a clear understanding of their company’s culture, and business strategy” to which they closely align themselves (Coleman 2005)

• Engagement is more than job satisfaction – it includes an emotional and intellectual alignment between the individual and organisation, striving jointly to improve business results

Engagement

People

Work

Quality of life

Company

Growth

Total reward

Work/Life balance Physical environment Working hours Attitude to socialising

Work activities - relevance, worth & measurability Resources Processes

Policies & procedures Performance management Results Reputation Inclusion and diversity

Career growth Training & development Ownership with whom?

Pay rates Overtime Benefits R & R

Leadership Management Colleagues Customers Suppliers Value of people?

A model for E.E.

Patrick Lencioni - The Three Signs of a Miserable Job: A Fable for Managers (And Their Employees)

When it’s bad

Anonymity

• People can’t be fulfilled if they are anonymous

• All humans need to be appreciated for their unique qualities by someone in a position of authority

• People who see themselves as invisible, generic or anonymous cannot love their jobs

• Supervisors need to take a genuine personal interest in employees to increase satisfaction and fulfilment – and not just a one-off

Irrelevance • Everyone needs to know their job matters to

someone; anyone

• Without seeing the connection between the work and the satisfaction of another person or group, an employee will not find lasting fulfilment

• Supervisors need to help them see why their work matters to someone

• Ask the question “whose life do you impact?”

“Immeasurement” • Lack of tangible means of assessing progress or success

in a job • People need to be able to gauge their progress and

level of contribution for themselves • They cannot be fulfilled if their success depends on the

whims or opinions of someone else • Motivation deteriorates if people feel unable to control

their fate • Too often people try to rally employees around some

macro objective like company profitability • Most employees are looking for a measure more

closely tied to their actual jobs.

UK – top 5 Engagement drivers

2010 RANK DRIVER

1 SENIOR MANAGEMENT SINCERELY INTERESTED IN EMPLOYEE WELL-BEING

2 IMPROVED MY SKILLS AND CAPABILITIES OVER THE LAST YEAR

3 ORGANISATION QUICKLY RESOLVES CUSTOMER CONCERNS

4 APPROPRIATE AMOUNT OF DECISION-MAKING AUTHORITY TO DO MY JOB

5 ORGANISATION’S REPUTATION FOR C.S.R.

Remember

• Those who were actively disengaged produced 28% less revenue than their colleagues who were engaged

• Those not engaged generated 23% less revenue than their engaged counterparts

• 88% of highly engaged employees believe they can positively impact the quality of their organisation’s products, compared with only 38% of the not engaged

• 85% of highly engaged employees believe they can positively affect customer service, versus 42% of the not engaged

• 65% of highly engaged employees believe they can positively impact costs in their job or unit, compared with just 20% of the not engaged

Company Results & E.E.

• Companies with high levels of EE produce 3 times the shareholder returns over 5 years, and posted returns 22% higher than average in 2010

• Engaged employees achieve 12% more goals

• Engaged employees are made, not born

• Employees want to be engaged!

• It’s about more than the employees, and the direct supervisors

Causation or not?

• Is the company successful because of high levels of EE, or are there high levels of EE because the company is successful?

• “Workplace measures like employee engagement might be even more important as predictors of an organization’s economic health (than EPS)” – Gallup

• “We simply accept the premise that an Engaged workforce is essential for the success of the company” - Experian

The best 100 companies to work for in USA • “That this subset of companies from the 1998 100

Best list performed better than other companies provides, to our knowledge, the strongest evidence to date of a direct positive link between employee relations and employee attitudes and financial performance at the firm level. Being an attractive employer may create an important intangible asset, positive employee relations, that differentiates firms in a value-producing way. At the very least, our study finds no evidence that positive employee relations comes at the expense of financial performance. Firms can have both.” 2003

Engaged employees

www.wttresults.co.uk

Thank you

Phil Walker WTT Results Ltd

www.wttresults.co.uk