Motivating and Retaining Top Talent through Employee Engagement

August 05, 2008

According to a recent poll conducted by The Gallup Management Group only 30% of U.S. employees are fully engaged in their jobs. Improving employee engagement can increase productivity and profitability while also reducing employee absenteeism and turnover.

According to Ted Marusarz, Hewitt Associates, prior to the 1990’s ‘employee surveys were focused on employee satisfaction. [They] found, however, that satisfied employees did not necessarily produce the type of performance that helped organizations to succeed.’

Marusarz’s comment echoes Frederick Herzberg’s theory of motivation which states that the factors which motivate people at work are different to, and not necessarily the opposite of, the factors which cause dissatisfaction. Herzberg claimed that ‘positive hygiene factors’ such as work conditions and salary simply satisfy basic employee needs, whereas motivators (e.g. achievement and recognition) encourage employees to work above and beyond the minimum requirements. In 2006, the HR Daily Advisor reported that 89% of employers think their people leave for more money, while only 12% of employees actually do leave for that reason.

‘Compensation alone is not enough to keep the highly skilled, motivated and experienced workforce your business needs to excel’ (Greenburg, 2008). In a four year analysis of more than 100,000 employees worldwide, the Corporate Leadership Council discovered that while workers ‘join companies for rational motives (better compensation, benefits, and career opportunities), they stay and work hard for emotional ones’. – Jean Martin (Lawler, 2008, p. 51).

The Gallup Management Group (reported in Dernovsek, 2008) showed that improving employee engagement is important because engaged employees have:

51% lower turnover
27% less absenteeism
18% more productivity
12% higher profitability

What is Employee Engagement?

As we can see from the definitions below, a definitive definition is difficult to develop as each organization develops its own interpretation:

‘Employees’ willingness and ability to contribute to company success.’ (Towers Perrin)
‘Staff commitment and a sense of belonging to the organization.’ (Hewitt)
‘Employees’ 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 of the job.’ (Hay)
‘Creating a sense that individuals are a part of a greater entity.’ (Best Practices, LLC)
‘Engagement represents the energy, effort, and initiative employees bring to their jobs’ (Harvard Business Review)

Engagement is about motivating employees to go the extra mile in the workplace. It is about encouraging employees to have a passion for their work, and identifying the organization as more than a place to earn money. A recent Harvard Business Review article explained that ‘employees are motivated by jobs that challenge them and enable them to grow and learn, and they are demoralized by those that seem to be monotonous or to lead to a dead end’ (Nohria et al, 2008, p. 81). According to Tim Rutledge, owner and publisher of Mattanie Press and author of Getting Engaged: The New Workplace Loyalty, ‘truly engaged employees are:

attracted to and inspired by their work (‘I want to do this’),
committed (‘I am dedicated to the success of what I am doing’),
and fascinated (‘I love what I am doing’).’

The concept of employee engagement was first developed in response to increasing globalization (Theresa Welboure, University of Michigan). Such global competition forced businesses to become more flexible in responding to employee needs. More recently, Paula Ketter (2008) attributed the rising interest in employee engagement to the dotcom bubble burst in 2000, and the 9/11 tragedy in 2001, causing the economy to dip, and the subsequent rise in unemployment.

Furthermore, according to W. Stanton Smith (2008), a new generation of workers, the Millennials, is entering the workforce with a desire for long-term employer relationships on their own terms. This new group is shaking up the workforce and demanding more from their employer than simply financial compensation for their work and ability to be ‘on-call’ at all times thanks to communication technologies. According to Towers Perrin, employees are more interested in ‘talent friendly’ organizations that offer a good work-life balance than those that offer high salaries.

As the economy changes and employee demands become more specific, employee engagement provides an opportunity to increase productivity and in turn profitability while satisfying employee needs.

Engaged employees perform 20% better than non-engaged employees (Gallup Management Group)
Offices with engaged employees are 43% more productive (The Hay Group)
Employees with the highest percentage of engaged employees, on average, increase operating margins 3.64% and net profit margins by 2.06% (Towers Perrin_ISR, June 2007)
Organizations with the lowest percentage of engaged employees showed declines of 2% in operating margins and 1.38% in profit margins (Towers Perrin_ISR, June 2007).

The Best Companies Guide UK 2008 highlights eight possible organizational factors that can improve employee engagement:

Leadership: good leadership leads to a happy team
My Company: how much people value their company, and are proud to work there.
Personal growth: whether employees feel challenged by their job
My Manager: the employee-manager relationship
Giving something back: community service and volunteering opportunities
Fair deal: how well employees are treated in terms of pay and benefits compared to similar organizations
Wellbeing: balance between work and home life.

Two of the highest rated best companies to work for, Foreign Currency Direct and Jenrick Recruitment Group focused heavily on the well-being and satisfaction of their employees while also creating a strong sense of ‘team’ within the workplace. According to the Best Companies Guide 2008:

100% of employees at Foreign Currency Direct agreed that their team is fun to work with,
and 96% disagreed that they had stress related symptoms in the last 12 months because of their job.

Similarly at Jenrick Recruitment Group:

98% of employees agreed that they felt a strong sense of family in their team,
and 93% disagreed that their health was suffering because of their work.

Another exceptional example of employee engagement success involves McDonald’s UK, which recently won the “Outstanding Employee Engagement Strategy” Award presented by Insala at the HR Excellence Awards 2008. In an effort to eradicate the negative public perception and reputation of working for McDonald's, the HR team implemented a ‘multi-pronged reputation program’ including external press and a poster ad campaign mocking the ‘McJob’ nickname, while also revamping internal communications in order to reinforce their commitment to staff. A new intranet allowing staff to see skills gaps and offer access to learning content contributed to the rise from 60:40 to 75:25 in favor of McDonald’s as an employer, reported by BBC News. Additionally, prior to the campaign only 51% of staff said they would recommend working for McDonald's; as evidence of the success of the program, today 86% would recommend the job.

Increasing Employee Engagement

“What is it that your organization is doing to ensure that people don’t feel like numbers?” asks Judy Corner, Director of Consulting Services at Insala.

When asked in the Strategic HR Review why managers were switching from employee satisfaction to engagement, Ray Baumruk, Hewitt Associates, responded: ‘employee satisfaction was really a measure of “how people like it here” as opposed to measuring behaviors that will help organizations become more successful for employees, shareholders and customers. Through research of best engagement practices, I have devised a list of key factors for increasing employee engagement.

Remember that employees are seeking to gain more than just money from their job and career. By working with you they hope to gain both professional and personal skills.
Engage employees through direct communication by involving them in important decisions and keeping them informed of new developments or changes within the company.
Get to know your employees as well as their goals and aspirations, so that together you can develop a clear path for advancement and opportunities for growth.
Develop a strong employee-manager relationship. It is often true that when employees leave an organization, they are in fact leaving their manager.
Provide efficient and ongoing training for new and experienced employees as well as offering rewards and recognition for employees who excel and/or demonstrate a strong passion for their work and organization. According to the Institute of Employment Studies (IES), the main driver of engagement is a sense of feeling valued and involved.
Listen to employees and act on their suggestions. Just listening and not acknowledging, responding or acting on what is being heard can damage credibility and engagement. (Ray Baumruk).
Remain supportive of the engagement initiative while monitoring the work-life balance of employees. Highly engaged people run the risk of burnout by becoming too eager and too passionate about their work.
Finally, conduct frequent engagement surveys to gain perspective on employee expectations, desires, and goals within the organization.

About Insala – Our Commitment to Employee Engagement

Insala is a leading global provider of integrated human capital solutions supporting the entire employee life cycle. The Insala Solution Suite spans succession planning, career development, performance management, leadership development, employee surveys, and coaching and transition, available in 13 languages in 29 countries.

According to Insala CEO, Phillip Roark, ‘employee engagement is [about] creating an environment where employees are excited and passionate about their life and their work as a part of that’.

Insala’s products assist corporations in engaging employees through career development. Insala’s iCareerManager, an internationally recognized software module, empowers employees with easily accessed resources designed to motivate, develop and support them throughout their career journey. The tools offer them insight into who they are and how their ever-changing lives fit into the workplace. Furthermore, the iCareerManager ‘enhances the relationships that the employee has between their peers and their managers’ by improving the ‘visibility of the career philosophy of the organization’ (Phillip Roark). iCareerManager provides the opportunity for companies to take the first step and put tools in place for employees to better understand the organization. This benefits employees by allowing them to take control of their professional lives and at the same time gives organizations the competitive edge.

Webcast:

Building Workforce Affiliation to Keep Your Best and Brightest Talent
Ron Elsdon, Ph.D. author, adjunct professor and president of Elsdon Organizational Renewal and New Beginnings Career and College Guidance presents this free one hour webcast in which he addresses the issue of weak workforce relationships and disengaged employees. He offers insight into the effectiveness of developing strong workplace affiliation in order to engage employees.

Bibliography:

BAUMRUK, R. and GORMAN, B. (2006) 'Why managers are crucial to increasing engagement' Strategic HR Review Vol 5, No 2, January/February. pp24-27

Dernovsek, Darla (2008) ‘Engaged Employees’ Credit Union Magazine 74(5) p. 42

Endres, Grace M and Mancheno-Smoak, Lolita (2008) ‘The Human Resource Craze: Human Performance Improvement and Employee Engagement’ Organization Development Journal 26(1), p. 69

Ketter, Paula (2008) ‘What’s the big deal about employee engagement?'T and D Magazine 62(1), p. 45

Lawler III, Edward E (2008) ‘Why are we losing all our good people?’Harvard Business Review June 2008, p. 41

Nohria, Nitin; Groysberg, Boris; Lee, Linda-Eling (2008) ‘Employee Motivation: A Powerful New Model’Harvard Business Review July/August, p. 78