Friday, December 25, 2009

Employee Engagement: A Leadership Priority

December 7, 2009: Economic Times

by R Gopalakrishnan

A leadership priority is emerging — how to improve employee engagement within companies: There have been disquieting developments
in recent
times. All over the world, good employee policies exist in the manuals. However, the management capability to engage with the workforce and to implement the policies humanely is under pressure.

In his book The Idea of Justice, Prof Amartya Sen refers to the two Indian philosophical concepts of Niti and Nyaya. Niti relates to the policies, principles and institutions of justice while the Nyaya refers to the actual delivery of justice. The former is committed to better justice, while the latter is deeply concerned with the prevention of injustice.

Prevention of injustice is very different from pursuit of perfect justice. They are two sides of the same coin, but their value perception is different. So far as the Indian legislative framework is concerned, laws pertaining to worker relations have for long needed to be updated. Labour reforms have been widely discussed, but the subject remains on the pending agenda.

However, at the firm level, managers can act on remedying the nyaya perceived by the employees in the employee-employer relation; its practice can be modernised by forward-looking managements. This requires special effort by company leaders.

Evidence of pressure: Consider the evidence that employees do suffer from a feeling of unfair treatment, resulting in desperation and depression among employees of both developed and emerging markets.

Well-known French companies such as France Telecom, Renault, Peugeot and EDF have experienced increasing suicides among workers in the last two years. The cynic may observe that the French suicide rate is generally high compared to Britain, Germany and the US. That is true. However, even in the US, the rate of suicides has increased by 28% in the last two years.

Employees feel that they are expected to offer loyalty to their employer, but they do not receive an equal commitment from the employer to protect their jobs. Managers are so focused on corporate survival that they seem to have a limited bandwidth to attend to the employees’ feeling of injustice. Employees everywhere say that they are ‘in distress’ or that they are ‘stressed out’.

Surveys in the US over the last few years show that indices like ‘loyalty’ and ‘trust’ have collapsed from the 80% levels to 30% levels. More than half the respondents feel a sense of stagnation and disinterest in their work. The recession has increased uncertainty simultaneously with a perceived ‘onslaught’ by managers to increase workforce productivity.

All in all, in the developed countries, permanent workers are unhappy and are disenchanted with both their work and their employers’ attitude.
Temporary workers too have their own grievances. In South Korea, industrial action by temporaries has been experienced at Ssangyong and Donghee. In Japan, the president of Rengo has stated his disapproval of “temporaries being treated the same as robots”.

In India too, we have witnessed hyper cases of industrial action recently. After many decades of relative labour tranquillity, company executives have been killed at Grazino in the north and Pricol in the south. Strikes have occurred at Gurgaon-Manesar, Chennai and Coimbatore.

Employees in the emerging markets are deeply concerned about inflation, food and security. Prices of essential commodities have already increased sharply. Food experts predict that the rise in food prices is only the beginning of a serious, new threat. Richard Henry, chief economist at IFC’s agribusiness department, believes that “last year’s food crisis was a fairly small one — and was cut short by the global financial crisis — the next one is bound to be more prolonged”. In emerging countries, such forecasts cause very deep concerns.

Universally, employees are a worried lot. All of these are alarming trends and need to be taken seriously. Solutions must be found and implemented at the firm level. Within the firm, it must be focused upon at the departmental level and at the level of the individual relationship. Employees feel engaged or disengaged at the transactional level within departments.

A firm-level approach: Managers must consider a four-pronged approach:

l First, the subject of employee engagement needs to be driven down the company by the CEO. I think there is a general lack of awareness of the problem down the line. It is also mixed up with the general economic downturn. Poor employee engagement, it must be clearly understood, is a precursor to some other problem which is brewing. That is why there needs to be top-level engagement. If enough employees feel disengaged, the consequences will certainly be disruptive. Operating managers have to act. It cannot be left to the HR department.

l Second, there must be the action to measure and track employee engagement. Techniques are available and excellent companies already track their employee engagement scores. However, the extent to which such companies act on the results is unclear. Further, I suspect that very few companies measure employee engagement and prefer to get a qualitative feel; so their agenda to respond is also too general. The general approach may have worked in the past, but will not be good enough for the future.

l Third, operating managers need a refresher training on empathy and listening skills. Unions have been quiet for over two decades now with the passing of labour leaders like Datta Samant and Kuchelar. A whole new generation of managers has taken leadership roles without any direct experience of dealing with employee discontent. Listening skills are difficult to develop especially when a manager’s career thus far has not required him to do much of it. There need to be powerful conversations at the operating level, where employees feel they have been listened to even if all their suggestions have not been accepted.

l Fourth, and last, the top leadership of the company must institutionalise ways to connect directly with the lower levels of employees. Many Tata companies practice a monthly dialogue or a two-way webcast. Many formal and informal models of listening downwards have been practised. These need to be brushed up and implemented earnestly.

(The author is executive director at Tata Sons)

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