Lack of Employee Engagement Hurts Business Performance

December 21, 2009: IT Business Edge

by Ann All

Companies are coming off a rough 18 months. So it's time to regroup, realign business objectives in light of the economic conditions and communicate them to employees. Yet that last step might be suffering, based on research conducted by the UK's Department for Business, Innovation and Skills (Bis).

According to a YouGov survey of more than 2,100 working people, just 24 percent said their employer had clearly articulated its 2010 objectives to the work force. Thirty-two percent doubted there was a plan for their business. Perhaps not surprisingly, only 27 per cent of respondents said they were fully prepared for challenges they would face at work in the coming year.

This lack of communication could be especially worrisome for IT, which as I wrote last week faces a double whammy of low staff levels and heightened corporate expectations. While there's a lot of talk about "employee engagement," it's tough for managers to rally the troops if they're feeling uncertain themselves. Nonetheless, it's important to do so. Poor employee engagement "can put the brakes on improved business performance," said David MacLeod, adviser to Bis and co-author of a report titled "Engaging for Success." He said:

If leaders don't explain where the business is going and what it's seeking to achieve, how can people be motivated or know what they're meant to contribute? Clear goals are a key ingredient for achieving performance and productivity -- but worryingly this research suggests many employers haven't yet grasped this for 2010.

MacLeod said engaging with staff goes beyond the warm and fuzzy and yields financial beneifts. If employee engagement levels rise by 10 percent, companies can increase profits by up to £1,500 (US $2,400) per employee per year.

Need more proof? Researchers who wrote a paper soon to be published in the Strategic Management Journal correlated sales growth with an organizational culture in which employees had higher opinions of their company than did society at large. They saw a 9 percent drop in sales over a year at 28 companies where employees thought far less of their company than customers did. Conversely, sales rose 7.46 percent for the companies whose employees liked it much more than consumers did.

Notice MacLeod's mention of "clear goals?" That meshes well with what Brad Hall, managing director of Human Capital Systems and author of "The New Human Capital Strategy," told me when I interviewed him in October. He suggested coming up with specific goals for each role in an organization -- all of which should be tied to larger corporate goals, of course. Then tie employee training, performance appraisals and incentives to those goals. In that same post, I offered advice from Globoforce CEO Eric Mosley, who said giving employees rewards keyed to corporate values can help improve overall company morale.

Engaged Employees can make a difference!

Fully engaged employees contribute more significantly to an organization's success. Research shows that engaged employees are more productive, motivated and committed. Using the employee survey will help you develop fully engaged employees and teams within your organization by addressing basic factors or motivators of the job, the work and the company.
You already know it’s smart to tap into employees' constructive input. However, do you tap into that powerful source of input effectively?

We know how... using our employee surveys and our delivery mechanisms to obtain valuable employee input. However, employees don't just want to provide input -- they also want to be part of an organization that can utilize employee survey results and move forward by demonstrating improvement.

Our method of gathering employee input, along with our action planning guide and form-fillable worksheet tools, can help transform your organization into a high performing team.

Employee Surveys Yield Cost-Saving Insights

Employee surveys (whether satisfaction, engagement or opinion) tell you a lot about the organization’s culture and overall employee satisfaction. With organizations asking employees to do more with less time and resources, keeping the workplace positive and productive should be a top goal. Job burnout and added stress at work increase the cost of doing business. In this economy, most organizations are trying to cut costs. What may surprise you is that using employee questionnaires to identify possible areas to cut costs, reallocate resources or boost productivity can pay off in ways you might not expect. Most employees are happy to share their cost cutting ideas and program ideas with employers. You may find that the best cost cutting ideas come from the trenches -- not from senior management or even HR.

Action Planning after Employee Surveys

You’ve probably heard that effective goal setting is a key to gaining successful results from your employee surveys. Whether or not you choose Insightlink for your employee surveys, you owe it to yourself and your organization to set goals and show employees that their time taking the survey was not wasted. Setting (and meeting) those goals gives employees a sense of the organization’s commitment to continuous improvement. Helpful tips for accomplishing this are included in our Action Planning Guide.


Effective Action Plans cannot be established without knowing the end result you want to achieve. In deciding what goals to set for your organization and/or your own department, site or functional unit, ask yourself:

Which issues are in your control to change?
What resources do you and/or your organization have available in order to resolve the issue?
How long will it take to correct the issue?
How will implementation of the proposed solution provide value to your employees?

All goals established for Action Plans should be divided into three categories:

Short-term “quick fixes” that can be implemented immediately.
Medium-term objectives that can be achieved in 2-3 months.
Longer-term goals that are more ambitious and likely require 6 months to a year to achieve.

Also, you should record the goals that cannot realistically be handled at the site level or cannot be tackled at this time. You need to let your employees know what these goals are and why they cannot be addressed at this time.

"Don't let your profits walk out the door."

No matter what function they hold in your organization, top-performing employees are vital to the success of your business. Top performers are the employees who generate more sales, who make better decisions, who solve the difficult technical problems and who generally make life easier (and more profitable) for business owners.You definitely don't want to lose these people, but the truth is, they are not only valuable to you. They are also the types of employees most likely to be stolen away by your competitors. And they are much more expensive to replace! So how do you prevent them from taking the bait when headhunters start calling? According to research, there are five primary reasons that make employees stay with employers long term:

1. Challenging and interesting work


2. Opportunities to learn new skills and grow in their jobs


3. Good relationships with co-workers


4. Fair pay


5. A great boss

Now that you know what your top performers are looking for, you need to learn how you can give it to them. Doing this may be easier than you think. Here are five guidelines to follow.

1. Talk to your employees.While you may be nervous about the answer, the best way to find out what it will take for an employee to stay is to ask them outright. Once you've asked them, encourage them to list every factor that they can think of. It's rare that someone will say 'money' and stop there. Your real high performers are looking for growth, development and responsibility.


2. Challenge your employees with goals.Although a great boss is last on the list of what employees are looking for, it is primarily this person who can influence all of the other factors. Hence the need for good, effective management. In your position as a leader, you have the opportunity to set goals for your employees that help both of you realize a shared vision for the company. Ongoing discussion about these expectations will help to ensure that employees are inspired and positively motivated to work toward these goals.


3. Don't micro-manage.Top performers will rebel if you try to micro-manage them. Most top-performing employees need the flexibility and independence to make their own decisions. When businesses create a bureaucracy of rules and procedures which takes autonomy away from people, in time they create working environment where even though they say they respect people, they don't demonstrate that they trust them. And a lack of trust is a sure way to drive people away.


4. Keep the lines of communication open.As your company grows bigger, you must find ways to continue to communicate. Employees will start to feel separated from your business if they're hearing about major company changes through the grapevine, or reading about them in the newspaper, rather than getting it first-hand from their internal leaders. That means setting up a very efficient information flow from the top down, making sure that communication is accurate through each level. They should hear it from you first.


5. Recognize the importance of your company culture.Developing a company culture that top performers want to be involved in also is critical to retaining them. Employees will remain in a work environment where they feel they are contributing and building something that is bigger than them. Together with the team, get everyone to buy into and evolve that culture. The culture dictated from above becomes a meaningless mission statement. A culture that has benefits for the people in it, motivates and rewards everybody is what then drives your success.

Insightlink offers a variety of professional services that can help organizations both improve employee satisfaction and evaluate their reasons for leaving. Our services include:

Insightlink's 4Cs Employee Survey - a comprehensive diagnostic tool to determine how your employees feel on all 4Cs of employee satisfaction: Communications, Culture, Commitment and Compensation.

Insightlink's Exit Survey System - a powerful online exit survey management tool that provides survey results in real time and the ability to create aggregate summaries as needed.

Closing the Employee Engagement Gap

On a recent trip, I picked up a book at LAX that was written to show how great companies unlock employee potential for superior results, sharing stories from the authors' experiences as consultants on workforce effectiveness and employee engagement.

What I read were inspiring examples of how leaders (or what we may think of as senior management) can tap into their employees' energy and passion and turn them into a competitive advantage. Although I agree with David Zinger's criticism of the "us vs. them" mentality, I still believe there is much value that can nonetheless be gleaned from the book.

For those of you who are unfamilar with it, the premise is that there are five keys that, when together, unlock employees' potential (the "Them" in the list below):

1. Know Them.
2. Grow Them.
3. Inspire Them.
4. Involve Them.
5. Reward Them.

Over the coming weeks, I will look at how these five keys dovetail with the employee engagement model in Insightlink's 4Cs Employee Surveys.

Employee engagement 2.0 has arrived courtesy of Google

By James Bennett, Managing Online Editor, Melcrum (May 20, 2009)

If you thought Google employees were the most engaged in today’s cutthroat and recession-riddled corporate world, think again. Despite receiving more than 700,000 applications a year to work for the planet’s most forward thinking Web 2.0 outfit, the company has seen hiring slow, been forced to cut back on some of its infamous perks such as afternoon tea and its annual ski trip and has even seen some of its most talented Googlers jump ship to competitors such as Twitter and Facebook.

So what has it gone and done? Well being the most advanced and innovative algorithmic genius in its class it’s gone and done what it’s best at doing - created an algorithm - but this time has taken employee engagement 2.0 to an entirely new and never-before-seen level. It has produced an algorithm so advanced and so ingrained in the employment and engagement process that it can supposedly crunch employee data such as appraisals, salaries and promotion history and decipher who among its staff is the most unhappy and who among the 20,000 engineers, developers and nerds it employs is the most willing to leave. Not only does it know every move we as web users make online, it can now pry into the work-life habits of its own and work out who should stay and who should go. It’s hard to fathom but Google’s boffins know the answers before their staff do.

Currently in a test phase, the system, if proved effective – and it would have to be faultless considering the information it gathers and the consequences it could have on people’s lives – could forever change the way businesses and their internal communications departments around the world vet and engage or even dismiss their employees.

The web giant has so far, however, discovered one key trend. Those of its employees that feel underused are more likely than others to leave. But the further it looks into the problem and examines employee reviews and pay histories the more I can imagine it will uncover more detail about how its workers think, behave, and react to certain emotions and situations. The key element will be to determine whether or not this research is effective in engaging more staff, unearthing those that are unhappiest and crucially, considering the economic times we are living in, what result this has on the bottom line. Could this be the ultimate tool, the Holy Grail, that we’ve all been looking for, to finally and accurately measure how we can effectively engage our employees and return a healthy profit in order to keep share and stakeholders happy? The possibilities, as with anything this company seems to do, are endless.

Google’s engagement algorithm – why now?

Crunches data from employee reviews, promotion and pay histories in a mathematical formula to identify which of its 20,000 employees are most likely to leave.

Google officials are reluctant to share details of the formula that is still being tested.

Google says the algorithm has already identified employees who felt underused, a key complaint among those who contemplate leaving.

Current and former Googlers said the company is losing talent because some employees feel they can’t make the same impact as the company matures.

Google's algorithm has been described by one HR commentator as “helping the company get inside people's heads even before they know they might leave”.

In recent weeks several top executives has left the company including advertising sales boss Tim Armstrong and display-advertising chief David Rosenblatt, Doug Bowman, engineering director Steve Horowitz and search-quality chief Santosh Jayaram, both of which have switched sides to Facebook and Twitter.

Why Culture is Important

By S. Max Brown


Tom Long recently had a client that asked why culture is so important. Specifically, they wanted examples of organizations that were suffering because of their culture. Immediately, I thought of Home Depot and their former CEO Bob Nardelli. During his tenure – or his reign of terror – the stock went sideways and they lost market share to LOWES. He cut out recognition, railed on his employees, and slashed expenses in every direction. At the same time, they lost huge talent (100% of 100+ leaders left), and they started having trouble recruiting new talent.

In the end, Bob’s efforts to cut costs really wiped out morale, engagement, and retention. Their reputation got out in the market and qualified people stayed away.When he was fired, Newsweek magazine reported that employees were cheering in the stores. Since his departure, the new CEO has reinstituted many recognition efforts (including hand written thank you cards to store employees).

In the aftermath of this whole snafu, Inc magazine (April 2007) asked a panel of experts the following question: “Bob Nardelli’s departure left customers, shareholders, and employees of the Atlanta-based retail chain wondering whether it will ever recapture the entrepreneurial zeal that the co-founders Bernie Marcus and Arthur Blank worked so hard to develop. How can the company go about refurbishing its good name?”

Tom Sternberg, the founder and former CEO of Staples and a partner at Highland Capital in Boston answered by saying:“First thing the company has to do is hang Bernie Marcus’s and Arthur Blank’s pictures in the lobby. They’re the two greatest entrepreneurs in American business history. They built the single best CULTURE of any business that I’m familiar with, and they built an extremely people-focused business in regard to both Home Depot’s customers and, even more important, its employees. Now you have Nardelli, this brash, abrasive egomaniac who destroyed the terrific culture in the name of efficiency, and that’s going to take decades to fix. I would try to hire back many of the phenomenal business leaders that Home Depot lost because of Nardelli. These are the folks who made Home Depot such a unique brand. I’d ask them to help put back in place the people-focused culture in order to get the company back to its prior standard of operating excellence.”

We all know that culture is important, and that is exactly why our business is so critical. Recognition drives cultures of excellence, and provides opportunities for people to appreciate one another. When you think of the havoc Bob created at Home Depot, it is easy to see how recognition is a crucial component in building a people-focused culture that really produces results. Are their costs associated with supporting a people-focused / recognition culture? Of course! Are their costs for destroying a culture? Ask Bob Nardelli or the hundreds of people he ran out of the company. Which strategy actually gets results? Is there any question?


http://smaxbrown.blogspot.com/2007/10/why-culture-is-important.html

Boosting Employee Engagement Survey Participation without Incentives

Embedded Questions - Even Cookie Preference - Can Boost Participation on Employee Engagement Surveys

Insightlink's 4Cs employee engagement survey is designed to be sufficiently engaging and motivating to achieve high participation and completion without the use of incentives. During our issues meetings with clients, we discuss the nature of the organization's work force to assess whether incentives are warranted. Incentives are something many survey providers grapple with, since there are pros and cons to using them. The issue of whether or not to use incentives to boost participation in employee surveys comes up regularly. Inevitably, somebody suggests encouraging managers to tell their employees that there will be a company-provided celebration (probably the most common is a pizza party or other type of lunch) for any department that can boast 100% participation in the survey. Other organizations set up "contests" where departments vie to see which can achieve the highest participation on the employee engagement survey - again, with some sort of company-sponsored prize going to the winner(s). A few have attempted to enter individual participants into drawings, often with multiple prizes. So what does Insightlink recommend?

As a general rule, we advise employee engagement survey clients not to make participation in the survey a competition. We generally recommend against individual winners or rewarding teams. If you do choose this route, however, be sure to communicate the incentive plan often and well. Be sure you have consistent and fair rules. Instead, consider a company-wide incentive. Make it meaningful to employees and feasible for the organization. For some, this may be donating to a charitable cause if they achieve their participation goal. Employees are less likely to view this type of incentive as a bribe, since it does not benefit employees directly.

Insightlink's employee engagement survey research team recently experimented with a new way to encourage survey completion that is employee-driven, not externally driven. Our client planned to have an "Employee Cookie Day" at the conclusion of the employee survey. So at the end of the survey, we added a question giving employees the opportunity to vote for their favorite cookie.The primary goal was to create a concrete way to show employees that HR was really listening to the survey results. A secondary benefit was that the symbolism of treating employees to a day with cookies, provided in quantities similar to the vote outcome, gave the organization time to do short, medium and long-term action planning. That such actions boosted participation was an added bonus.

Adding an employee engagement survey question about cookie preferences concluded the survey in a positive and unexpected way - and even provided a survey question that was okay to discuss around the water cooler. It created buzz about the survey and prompted more staff to want to offer their two cents - which they only could do by answering the entire survey, since the cookie question was strategically placed at the end.
P.S. Chocolate chip was the winner!

The Link Between Communication and Employee Engagement

Communication is always an area of difficulty for organizations, and a recent review of survey answers found showed low scores related to communication from senior management to employees. In fact, only one-third of current employees (33%) felt communication extremely or very effective. Workers in industries such as Machinery/Equipment (17%), Petroleum/Petrochemicals (18%), transportation (21%) and Trucking (26%) also scored poorly in this area, although the nature of the workforce in these industries contributes to the communications challenge. Even with communications options available, only 17% of workers in the Computer-/Electronic Equipment industry were positive about communication from senior management.

Luckily for some organizations’ senior management, employees – especially ones in jobs where communication via email and other methods is limited or non-existent -- can still perceive leadership to be effective, even without desired levels of communications. Over half the employees surveyed (53%) indicate they see evidence of effective leadership from senior management. Food/Beverage/Restaurants (61%), Trucking (75%) and transportation (53%) scored high relative to how they assess communications. However, less than half of employees in the Computer-/Electronic Equipment (47%) and Petroleum/Petrochemicals (36%) industries thought senior management showed effective leadership.

Source: Insightlink 4Cs Employee Feedback Database, August 2008

Culture and Engagement - Our Time To Act by Joe Gerstandt

Culture and Engagement

Still reflecting on the topic of organizational culture, and its importance, and it is probably worth taking a look at employee engagement. If you have been paying any attention to anything in the world of human resources, talent management, organizational behavior and organizational development during the past decade, you know that engagement matters. It matters a lot.
There are a number of definitions out there, a growing mountain of research (and pricey consulting services) all related to the issue of engagement. Choose the research, framework and definitions that work for you, but for me engagement is primarily about the deployment of discretionary effort. A person that makes the extra effort, that sacrifices and does more than what is technically required of them is engaged.

It is getting a bit dated, but I still like the information in Driving Performance and Retention Through Employee Engagement that was released by the Corporate Leadership Council in 2004. It can be found in this larger piece on engagement (pages 2-13). They define employee engagement as "the extent to which employees commit to something or someone in their organization, how hard they work, and how long they stay as a result of that commitment." So their definition sounds fancier than mine, but I like it, and I think it is probably important to include the idea of an employee's intent to stay.

So they did one of their big ass surveys of over 50,000 employees at 59 global organizations and came up with some insights regarding employee engagement.

It IS really important - engaged employees perform 20% better and are 87% more likely to stay. An analysis of both rational and emotional forms of engagement reveals that emotional engagement (emotional commitment to job, to organization, to team, to manager) is four times more valuable than rational engagement in driving employee effort. Most important among the 25 highest-impact drivers of engagement are a connection between employees' job and organizational strategy and employee understanding of how important their job is to organizational success. Also critical for increasing engagement levels are numerous manager characteristics and cultural traits, such as good internal communication, integrity, a culture of innovation.

The Top Five most effective levers for increasing engagement were:

Connection Between Work and Organizational Strategy
Importance of Job to Organizational Success
Understanding How to Complete Work Projects
Internal Communications
Demonstrated Strong Commitment to Diversity

What sticks out to me about the insights from this study is that are pointing towards things that have a lot to do with organizational culture. i would say that all five of these are in some way connected to an organizations culture, some more than others.

In my first post on organizational culture, I said that it could act as a force-multiplier for us and I think that employee engagement is an example of exactly that. If your culture is one that is highly engaging for employees, you are going to outperform groups that have similar resources with lower engagement....remember engaged employees perform 20% better and are 87% more likely to stay. Your organizational culture can help make this happen.

I don't want to beat a dead horse here, but organizational (and team, and community) culture is really important and potentially really powerful. It is a key factor in the longevity of your organization, as well as employee engagement and retention, your ability to innovate and more.

So. What is your culture strategic plan? What kind of resources are budgeted for architecting your culture? How many meetings, how many conversations are specifically about organizational culture? Do you have goals? Measurements? Maybe not. And so here we have this really powerful thing that we can use to make our organization really powerful and it is simply adrift at sea. We are in many ways absentee landlords when it comes to our organizational culture.
But it is simple to start. You can start by just making a few notes for your own consideration, to help develop your understanding of your current organizational culture.

Describe your organizational culture (either in narrative format or with a list of attributes), here are a few questions to help spur your thinking:

How do meetings work in your organization, are they very formal/ structured/rigid or are they a free-flowing exchange of ideas? Are they common or rare? Are they high-energy or low-energy? Productive or not?

How are questions viewed in your organization? Are they welcomed and embraced or do they result in defensiveness / debate posturing?

How are mistakes and risk-taking treated in your organization? When something does not work out as planned it is used for shared learning?

How are new ideas viewed in your organization? Are new ideas judged on their merit or are they judged based on who they come from?

Are conversations open/honest/candid? Are there undiscussables? Are there topics that are off limits?

Who determines the culture?

Now think about whether this organizational culture that you have started to describe matches with what the organization claims to be (mission statement, public perception, etc.)...and why or why not?

We are going to look at some more focused and research based tools later, but I think these are some good questions to reflect on to start wrapping your hands around what your organizations culture is and what that means for its success and for its future...and what it means for you.