Employee Engagement A Review of the Most Current Research

Empirical research on "employee engagement" is relatively new. "Employee retention" has received the lion's share of the spotlight. This focus on retention however has spawned several studies on "engagement" - since retaining employees is dependent upon the need to "engage" them. Hence, engagement studies are beginning to take center stage.

One of the most significant threads in the current research is the discovery that employee engagement is linked to customer satisfaction which is linked to organizational financial success. Employee engagement/satisfaction distinctly affects the bottom line. These findings are detailed in the studies referenced in this article.

What is "Employee engagement?" Take a look at the definitions below:

• Employees' willingness and ability to contribute to company success. (Towers Perrin)
• Staff commitment and a sense of belonging to the organization. (Hewitt)
• Employee's commitment to the organization and motivation to contribute to the organization's success. (Mercer)
• Employees' exertion of "discretionary effort". . . going beyond meeting the minimum standards for the job. (Hay)
• Creating the sense that individuals are a part of a greater entity. (Best Practices, LLC)

What are the specific benefits of employee engagement and how is it achieved?

Melcrum, a research and information company, recently surveyed 1,000 corporate communications and HR professionals and conducted 40 case studies and found that many respondents credit offering employee engagement programs with the following benefits:

• More than 50% report improvements in employee retention and customer satisfaction
• 33% report higher productivity
• 28% report improvements in employee advocacy
• 27% improved status as a "great place to work"
• 27% report increased profitability
• 25% report improved absenteeism

A snapshot of the corporations in this study show that:

• 74% began focusing on employee engagement between 2000 and 2004 and report performance improvements each year
• 36% have a dedicated employee engagement program
• 64% apply the philosophy to employee engagement to their people practices

The Forum for People Performance Management and Measurement at Northwestern University released their report in November 2004, "The Impact of Employee Attitudes on Market Response and Financial Performance" which also links employee satisfaction to customer satisfaction and a company's financial success. This finding is true even if employees have no direct contact with customers. 110,000 surveys were mailed to media companies, with a 34% response rate.

Below are key findings from the report:

• The key characteristic for explaining employee satisfaction is organizational communication.
• Employee satisfaction is a key precursor to employee engagement.
• Organizational culture is a significant driver of employee engagement, where employees must be expected to work together and provide a voice for the customer within the organization.
• When individuals and teams compete to implement optimal behaviors oriented to the market and its customers, such competition can benefit both the organization and its customers.
• 64% apply the philosophy of employee engagement to their people practices.
• Organizations with engaged employees have customers who use their products more.
• It is an organization's employees who influence the behavior and attitudes of customers, and it is customers who drive an organization's profitability through the purchase and use of its products.

Incentive programs, as a way to engage employees, have been found to increase organizational performance. The International Society for Performance Improvement released a study last year, "Incentives, Motivation, & Workplace Performance" which showed that incentive programs can increase performance by as much as:

• 44% among employee teams
• 24% among individuals

The study consisted of an analysis 45 existing scientific studies which was also compared to current practices through surveys of 145 U.S. organizations that use incentive programs.

Below are additional key findings of the report:

• Incentive programs improve performance.
• Incentive programs engage participants and increase interest in work.
• Incentive programs attract quality
employees.
• Longer-term programs outperform short-term programs.
• Executives and employees value incentive programs.
• Quota-based incentive measures work best.

What are some best practices for engaging employees?

Best Practices LLC, a research and consultant firm, recently released a new benchmarking report "Employee Engagement and the Service-Profit Chain" which shares best practices for engaging employees in their jobs and companies.

Based on primary and secondary research of leading worldwide corporations, the report's key findings are below:

• A reduction in turnover rates by just two percentage points, can result in a savings of $3 million annually.


• An effective performance management system is the cornerstone of engagement -- from goal-setting to reward, recognition and incentive programs.
• 75% of high performing companies hold managers accountable for engaging their employees. This is in comparison to 35% across the entire study group that holds managers accountable.
• High performing companies engage employees by cutting across functional silos to create a sense of connectedness through communities of practice, cross-functional teams, and by creating common work areas.
• High performing companies recognize employees for their suggestions, employ group brainstorming and utilize group listservs to enhance the feeling of connectedness.
• Employee and customer loyalty attributes reflect each other, supporting the premise behind the importance of engagement which is based on a correlation between customer satisfaction and engagement.
• Key factors in engagement are alignment of employees toward strategy, enabling employees to have the capability to engage themselves, and creating the sense of engagement -- creating the sense that individuals are a part of a greater entity.
• Top performing companies rank cross-functional teams and councils as the most effective vehicle to help employees understand how their -- as well as team and/or business unit -- efforts contribute to corporate performance.

The research above is powerful - not only for organizations seeking to ensure their financial success, but for those seeking to harness their people power.

For employees, or those seeking employment, it offers a tremendous sense of comfort. Their employers (or future employers), if enlightened by the type of research portrayed above, will be interested in finding ways to create an "engaging" workplace.