employee engagement: the benefits extend beyond the organization s walls

Transcription

1 employee engagement: the benefits extend beyond the organization s walls

2 2 A Note About the Author and This Series Don MacPherson is the co-founder and president of Modern Survey, whose human capital measurement software combines feedback, benchmarks, and data from enterprise systems to elucidate the correlation between employee performance and company success. Don leads Modern Survey s sales, marketing, and consulting departments. This is an excerpt from Don s forthcoming book, Switched On: Engaging People at Work and in Life. Let s face it. American business no longer seriously questions the assumption that engaged employees are of greater value to an organization than employees who are committed to neither their jobs nor their employers. What business leader wouldn t prefer to have employees who are willing to stay late to get the job done, who appreciate the organization s values, and who believe they have some kind of future with the organization? That, after all, is what we re talking about when we talk about employee engagement. It s not about being happy on the job. Having a pleasant work environment, a decent paycheck, and the certainty of leaving the office at the same time every day can make someone happy with their job. Nor is engagement about being satisfied on the job. Satisfaction is simply the opposite of being dissatisfied. Many satisfied workers are only treading water. They re not doing anything to challenge the current of the river or put forward any effort to change their course or the course of the organization. At Modern Survey, we believe employee engagement is the psychological investment people have in their organization and its goals. It s the same as when someone is engaged in a good conversation or a personal relationship. They focus on the other person when that person speaks. They pay attention to how that person feels and what their needs are. They re empathetic toward the other person s goals and make themselves available when that person needs them. Similarly, engaged employees care about their work and their employer s goals and mission. Of course, just like anyone, the engaged employee needs a paycheck and prefers a job with good benefits. But engaged employees also work for the good of the organization and its goals. Studies show, for example, that engaged employees will use more discretionary effort. The idea that employees who care about an organization s goals could greatly affect the organization s bottom line is what started research into what has become known as employee engagement. But the positive effects of employee engagement go far beyond the topics of performance and productivity. When employees are engaged at work, the benefits extend to their customers, to the employees personal lives, and to the communities in which they live and their employer does business. It s all connected. And we know now that it extends far beyond what we ve traditionally measured in terms of increased revenue or customer satisfaction. It s more than that, wider than that.

3 3 Engagement Is Good for the Organization Maybe you didn t realize it, but I m sure you ve seen examples of how an engaged employee affects your organization in a positive way: They re the ones who will stay late without being asked, pick up trash on the floor when they see it, work to please the customer who s given everyone else headaches, even when their shift is over. Why? Often it s because the engaged employee has a sense that the work they re doing is important to the organization, which makes the work important to them. The statistical proof of these anecdotes is irrefutable. Engaged employees drive better business outcomes. Period. Aon Hewitt has reported that in 2010 during challenging economic times organizations with high levels of engagement (65 percent or greater) outperformed the total stock market index and posted total shareholder returns that were 22 percent higher than average. On the other hand, organizations with low engagement (45 percent or less) had a total shareholder return that was 28 percent below average. 1 To put a finer point on it, Best Buy (despite its more recent struggles as a big-box consumer-electronics retailer), is a prime example of an organization that directly linked higher employee engagement scores to better store performance. The company said in 2007 that for every tenth of a point a store increased its employee engagement scores, that store saw a $100,000 increase in annual operating income. 2 A Caterpillar construction equipment company in Missouri spent $500,000 on employee engagement consulting and related training and development programs. The investment could later be linked directly to $3 million in increased sales. 3 But here s the sobering part: Despite all of the research that supports the argument for a workplace that creates and nourishes employee engagement, it s amazing how few managers and front-line employees understand the concept and how few employees are what our research defines as fully engaged. In fact, we know from our research that a lot of organizations don t understand that employees usually have a choice about whether they will be engaged. This means engagement is something the organization can influence. Yet almost four in 10 managers in the United States don t even understand the concept of employee engagement. Modern Survey s research defines and measures the continuum of employee engagement based on specific opinions, attitudes, and beliefs of employees toward their jobs and the organizations they work for. It enables organizations to more specifically define what drives employee engagement at different levels and in different areas of the organization. Modern Survey s mthrive solution uses proprietary science-tested questions to help organizations learn how engaged their employees are and to identify the unique drivers of engagement within their organization. It also allows them to compare their organization against the American workforce or their industry. What we see is that the majority of the workforce is up for grabs. Ten percent is already fully engaged. With a few exceptions, the 32 percent that is disengaged will be nearly impossible to reach. That still leaves us with 58 percent of our workforce that is reachable engageable. That s good news for organizations and leaders who are dedicated to building a culture of engagement. According to March 2013 Modern Survey research: 4 Less than half of the U.S. workforce is familiar with the concept of employee engagement. More discouraging, only 63 percent of managers are familiar with the concept. Only 10 percent of the U.S. workforce is fully engaged, 22 percent is moderately engaged, 36 percent is under engaged and a full 32 percent is disengaged. 1 Aon Hewitt. Trends in Global Employee Engagement CFO Magazine. Measuring Up. June 26, Harvard Business Review. September Robison, Jennifer. A Caterpillar Dealer Unearths Employee Engagement. Gallup Business Journal. Oct. 12, Modern Survey. Spring 2013 United States Employee Engagement Study. March 2013.

4 4 Engagement Is Good for the Customer Here s another statistically proven truth: Engaged employees create satisfied customers, and satisfied customers eventually become loyal customers. But before a customer becomes loyal, they are engaged with your organization. Yes, just as the world of performance management and talent development has defined the engaged employee, business now has the engaged customer. And similar to understanding employee engagement, it s important to realize that customer engagement is more than customer satisfaction. By one definition, an engaged customer: Is emotionally connected to the organization Enjoys a consistent customer experience among products, processes, and connections with employees Is enabled and encouraged to be an extension of the organization 5 Getting engaged customers starts with developing engaged employees. The connection is irrefutable. Here are four clear examples: A 2011 survey of 2,435 U.S. employees found that in organizations with high levels of customer service, employees are 2.5 times more engaged than in companies with poor customer-service ratings. 6 At the retail chain Petco, a five-year program to heighten engagement among more than 1,500 leaders resulted in a 5-point increase in the company s customer loyalty index (the company s employee engagement indexes, meanwhile, rose an average of 7 points). 7 The Caterpillar equipment company mentioned earlier in this paper examined connections specifically between employee engagement and customer engagement. It divided each of the company s sales groups in half based on employee engagement levels. Employees in the top halves had overall customer engagement scores that were 8 percent higher than those in the bottom halves. 8 Teams that Aon Hewitt classified as being high-performance engagement zones had a net promoter score (NPS an accepted customer-loyalty metric) of 37 percent, compared with 10 percent for teams outside of the high-performance engagement zones. 9 This all matters because an organization with truly loyal customers will see a boost in financial performance for several reasons. Where the rubber meets the road, loyal customers are less price-sensitive than other customers. This means an organization with a high share of loyal customers can raise prices and, within reason, not fear customers will revolt or shop elsewhere. Loyal customers also are more likely to refer new business and be cheerleaders for the organization. The organization s brand is burnished, thanks to the extra attention, and level of care that an employee has brought to the job. Customer engagement has another benefit as well. It loops back to employee engagement. Among five specific HR practices that Modern Survey has identified as substantially enabling employee engagement scores, one is to regularly measure customer satisfaction and share customer satisfaction information with employees. 10 The takeaway here: When organizations are focused on delighting their customers, the possibility of fully engaging employees becomes greater. It s a virtuous circle. 5 Training Magazine. Want Engaged Customers? Then Engage Your Employees! Aug. 2, Papachristos, Anna. Promote Employee Engagement to Enhance Customer Loyalty and Satisfaction. 1to1 Media. Jan. 19, Training Magazine. Training Today: Engagement Fur Real. July 17, Robison. 9 Aon Hewitt. Managers: Your Strongest (or Weakest) Link in Driving Employee Engagement? talent_mgmt/survey-2011-european-engagement.jsp 10 Modern Survey. Economic Concerns Changing the Predictors of Employee Engagement. March 30, 2011.

5 5 Engagement Is Good for the Employee For years, employees felt that their professional development was the responsibility of the employer, that it was the organization s job to challenge them and set expectations for them. That s changed. Now it s more along the lines of asking, How do I want to be developed? This is what employee engagement leads to. It s an extension of the attitudes that engaged employees have toward the values and goals of the organization. Creating an environment that encourages this kind of personal involvement and individual goal-setting is crucial to optimal career development, which in turn fuels increased employee engagement. Among the five specific HR practices that Modern Survey has identified as substantially enabling employee engagement scores, three relate directly to how employees are involved in improving their performance and development: The quality of their work is continuously measured (rather than evaluated sporadically or only for reviews) and the metrics used are regularly communicated to them They receive performance appraisals at least every 12 months They have attended at least one organization-sponsored training session or event every 12 months 11 Modern Survey s mperform solution is one way organizations can better involve their employees in their own career development. For example, mperform provides intuitive interfaces for every employee, all integrated into the organization s human resources portal, and ensures that performance goals are clearly and accurately cascaded down from senior leadership to line management. Employee-centric development that drives engagement comes not only through formal training programs. It also comes from offering employees challenging experiences in their jobs. It is in the transcendent nature of engagement that people want to be challenged. People intrinsically want to continue to learn and grow. It s how we stay vibrant, young, and relevant. Organizations need to tap into that. Research has shown, for example, that the most fulfilled residents in retirement communities are those who have an interest in learning new things regardless of their age. Unfortunately, in our society and in our organizations, not everyone is motivated this way. Sadly, an estimated 10 percent of the population has no interest in improving themselves in any way, shape, or form, or in challenging themselves or changing their situation. On the other hand, about 5 percent, no matter the circumstances, are positive and will make the best of any situation. Having a better understanding of new hires, and getting them engaged as early as possible, is crucial to building a high-engagement culture, research shows. Tools such as Modern Survey s mspark can help an organization evaluate and modify its onboarding process to accelerate the journey from a new hire s first day to their point of peak engagement and performance. In addition to what they offer the organization, we know that engaged employees are physically healthier than their under engaged co-workers and have healthier relationships. We concede that research doesn t show the cause and effect of engagement on the job leading directly to better lives outside the workplace. But if you work where you re not challenged, and you re not trained to work anywhere else, and you spend eight hours a day of your life miserable, it simply stands to reason that you re not going to be the happiest person in the world at home. Workforces with higher rates of employee engagement have lower rates of absenteeism. One study of companies in the United Kingdom found that among companies with high employee engagement (over 80 percent), 36 percent had been financially affected by long-term absences. For companies with lower employee engagement (below 60 percent), the share affected by long-term absences shot to 78 percent Modern Survey. Economic Concerns Changing the Predictors of Employee Engagement. March 30, Thomas, Owain. Cover Magazine. Employee Engagement Improves Benefit Usage and Absenteeism. Sept. 28,

6 6 Engagement Is Good for the Community It s not a big leap to go from seeing how employee engagement benefits the organization to seeing how it can benefit the community in which it does business, and even make a greater difference in the world beyond those boundaries. Everything we ve talked about up to this point makes the argument for employee engagement being a community benefit. If the employee is engaged, that leads to higher performance, greater retention, and loyal customers. The organization is more stable, can hire and grow, and the community is sustained. You can make those connections. And just as employees want a greater role in determining their own futures with their employers, they want more options for where their charity dollars and those of the company are distributed. Employees seek choice and appreciate democratic participation when it comes to their corporate donations. 14 One specific area in which employee engagement can influence the community is through its impact on corporate social responsibility. Employee engagement has, in fact, become the natural next frontier of corporate social responsibility, reports Causecast, an online system that helps businesses manage community volunteering and other campaigns. 13 Engaged employees are more likely to align with and further a company s efforts to become a more responsible member of the global community, Causecast has found. The message here is that the way an organization manages its programs for community giving and other charitable efforts will have an impact on employee engagement. 13 Causecast. Employee Engagement and Corporate Social Responsibility for Generation Twitter. culture-causes/employee-engagement-and-corporate-social-responsibility-generation-twitter 14 Greenstein, Howard and Watson, Tom. Wired Workforce, Networked CSR: Employee Engagement in the Age of Social Media. The JK Group Inc

7 7 Conclusion Nearly 7 in 10 U.S. workers are either disengaged or under engaged on the job. It s a staggering statistic and one that has implications far beyond the corporate bottom line. Not only are disengaged and under engaged employees less productive than their engaged co-workers. They are also less likely to drive customer loyalty, more likely to use more sick days and leave their jobs sooner, less prone to be involved in corporate giving programs, and find it more challenging to positively engage in parts of their lives outside of work. An organization that makes a conscious choice to heighten employee engagement does more than boost job performance. It makes a holistic difference in the fabric of the world in which it exists, on every level. Solutions like those offered by Modern Survey help organizations do just that. They apply science-tested questions to help organizations measure employee attitudes and beliefs about a wide range of workplace issues. From there, talent management and development processes that range from the way new hires are onboarded to the way their performance reviews are handled can be evaluated and refined to ensure a more highly engaged workforce.

8 about us Modern Survey measures workforce intensity that fire in your company s belly that makes all things possible. Our human capital measurement software combines feedback, benchmarks and data from enterprise systems to elucidate the correlation between employee performance and company success. We analyze the stuff your talent management system can t so that you know what to do next. We are Modern Survey. And we are relentless. Find us at Tyler St. NE, Suite 170 Minneapolis, MN (866) modernsurvey.com 2013 Modern Survey