By Carol Morrison
In our highly competitive business world, companies struggle to find the elusive element, or combination of elements, that differentiates them from their counterparts. Unique selling points, marketers call them. HR professionals know them by another name: people.
“It is a matter of sheer commercial logic that an organization’s people represent the most crucial weapon in its bid for competitive supremacy,” writes Charles Woodruffe, managing director of the UK consulting firm Human Assets, adding that employees will stay with companies that meet their needs only for “job satisfaction, purpose and sense of self-worth.”
Meeting those needs isn’t always easy. In fact, more than four out of 10 U.S. business leaders identified employee engagement as a top-five talent management challenge in late 2005. Thirty-eight percent said they intended to pursue strategies to engage specific groups of their organizations’ workers (Towers Perrin 2005). That’s probably a good idea, given the fact a 2006 study conducted by the Gallup Organization, which provides market research and consulting services, found that only 27% of the nation’s workforce currently is engaged.
Who or what is an engaged employee? The Gallup Organization characterizes engaged workers as those who feel a close bond with their employers and who are passionate about their work. In contrast, workers who are not engaged show up for work but don’t have the same deep level of connection and involvement. A third type of employee, the actively disengaged worker, is so unhappy and tuned out that he or she may willfully undermine co-workers and employer alike.
There is a solid business case for investing in activities designed to improve employees’ engagement levels. The UK research and consulting firm ISR (2006) tracked the financial performance of 41 global organizations over three years’ time, concluding that firms with high levels of worker engagement “realized a 5.75% [positive] difference in operating margin and a 3.44% [positive] difference in net profit margin versus the low engagement companies.” Other ISR research on organizations worldwide found a 19% increase in operating income over a year for companies with high levels of employee engagement, compared with a nearly 33% decline for those with low engagement. Similarly, net income increased 13%, and earnings per share improved nearly 28% in high-engagement firms over the one-year period, while low-engagement firms saw their corresponding measures decrease by nearly 4% and 11%.
Making the connection between employee engagement, productivity and bottom-line results will demonstrate for organizational shareholders that employee well-being is a valid consideration that can lead to improved financial outcomes, notes Financial Times employment columnist Richard Donkin (2006). “In a well-managed workforce,” he states, “there need be no conflict between concerns for employee welfare and those of the bottom line. Engagement makes the connection.”
Since engaged employees can contribute to improvements in productivity and profitability—not to mention turnover rates—savvy employers are implementing strategies aimed at boosting engagement levels in their organizations. Not surprisingly, managers play a key role in those strategies. By coaching employees to build their work skills, providing career advancement opportunities, clarifying expectations, and encouraging workers to anticipate future prospects with the organization, managers can demonstrate a firm’s commitment to its employees.
What about pay and benefits? Certainly both can motivate workers—to an extent. But by themselves, raising compensation and offering more benefits aren’t effective drivers of employee engagement. Corporate cultures characterized by teamwork, pleasant working conditions, considerate treatment of employees, and abundant training opportunities can contribute to staff engagement.
Aligning individual and organizational values also can be important. In 2005, Keith Jones, then cultural practice leader for the career Web site BrassRing, predicted companies’ efforts to engage workers would increasingly depend on their ability to cater to employees’ individual preferences—effectively creating a choose-your-own menu of motivation/retention programs. The drivers of engagement also seem to vary from one workplace to the next, necessitating a customized approach to achieve optimal results in boosting engagement levels.
As employers look to the future amid dire predictions of looming talent shortages, they may find that reengaging employees is a valuable tool to improve retention. Indeed, focusing on the future can help boost feelings of engagement. As HR consultant Rod Fralicx has pointed out, workers’ belief that they have a future with their employer is a leading driver of employee commitment, a recognized precursor to engagement.
For much more information visit Human Resource Institute.
Documents used in the preparation of this article include:
Donkin, Richard. “Compelling Rules of Engagement.” Human Resources. ProQuest. April 2006, p. 14.
“Employee Engagement Gives Big Boost to the Bottom-Line.” Management-Issues [www.management-issues.com]. June 27, 2006.
Gallup Organization. “ Gallup Study: Feeling Good Matters in the Workplace.” Press release [http://gmj.gallup.com]. January 12, 2006.
Gandossy, Robert. “Responding to Talent Challenges.” Workforce Performance Solutions, January 2006, pp. 28ff.
Gorman, Bob Jr. and Robert E. Gorman. “Why Managers Are Crucial to Increasing Engagement.” Strategic HR Review. ProQuest. January/February 2006, pp. 24ff.
ISR. “Effective Execution—How Leadership Impacts the Bottom Line” [www.isrinsight.com]. Obtained June 1, 2006.
“It Takes More than Good Benefits to Inspire Commitment.” HR.CCh.com, August 24, 2005, p. 127.
Jones, Keith. “The Culture Quandary: Creating an Organizational Fit.” Workspan, October 2005, pp. 12–13.
Schweyer, Allan. “Talent Management: Moving from Employee Satisfaction to Commitment.” Executive Briefing, October 10, 2005.
Towers Perrin. Talent Management: The State of the Art. 2005.
Woodruffe, Charles. “Employee Engagement.” British Journal of Administrative Management, December 2005/January 2006, pp. 28–29.
About the Author(s)
Carol Morrison is with the Institute for Corporate Productivity. For more information, visit www.i4cp.com