The Productivity and Payback of Employee Engagement

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Employee engagement is a top contributing factor to high-performance growth cultures and an undeniable producer of productivity and payback. But what exactly is employee engagement?

There is no consensus answer. However, I generally define employee engagement as the measure of an employee’s personal investment, sometimes called discretionary investment, in their job. Gallup defines it as “involved in, enthusiastic about and committed to their work and workplace.” And Gallup should know, as their most recent engagement survey collected data from over 195,000 U.S. employees.

The survey results were published in the State of the American Workplace report, and found that only 33% of employees are engaged in their work, a trend that has been disturbingly flat since 2000. According to Gallup CEO, Jim Clifton, “At the other end, 16% of employees are actively disengaged, they are miserable in the workplace and destroy what the most engaged employees build. The remaining 51% of employees are not engaged, they’re just there.”

Engagement Payback is Clear and Undeniable

When compared with business units in the bottom quartile of engagement, those in the top quartile realize improvements in the following areas:

Engagement Results
Source: Gallup State of the American Workplace report

Bain & Company is another organization that frequently measures employee engagement, and its most recent survey results found some similar benefits.

  • Engaged employees contribute 20% more revenue than less engaged employees
  • Satisfied employees are 40% more productive than non-satisfied
  • Engaged employees are 44% more productive than their satisfied peers
  • Inspired employees are 125% more productive than their satisfied peers

Engaged employees also contribute to customer engagement. An IBM research report, titled The Employee Experience Index, found that 95% of employees reporting a positive employee experience with their company said they engage in activities which are not part of their job but beneficial to customers and their company. That figure fell to 55% for staff reporting a poor experience with their employer.

How to Improve Employee Engagement

Once you recognize the financial and operational benefits, the next question is how to achieve employee engagement. And while there is no single answer to that question, I have found three items that deliver the highest impact in the shortest time.

  1. Make engagement part of a high-performance culture
  2. Improve communication and collaboration
  3. Measure and improve

First, make employee engagement part of your high-performance culture. However, recognize employee inclusion is a precursor to two-way engagement so to achieve both you are well advised to first satisfy three intrinsic staff values.

  • Know me. Employees want to be known and recognized as individuals.
  • Value me. They want to be valuable and be valued. They want to know the company cares about them.
  • Empower me. Empowerment varies. Some staff want increased responsibility, while others may want things like training and development.

Making staff engagement part of a growth culture will also entail creating engagement focused values and behaviors. When engagement is part of your culture DNA, and is communicated, modeled and reinforced by management, the results will appear.

Second, systemically improve your communication and collaboration.

Studies shows a clear pattern, whereby you can predict team performance by ignoring the informational content in the communication exchange and instead focus on the frequency of interactions, something called ‘signals’, and the context of how those interactions are given and received, something called ‘belonging cues’.

Companies can improve their employee communications by initiating a higher volume of smaller messages to more staff more often. You don’t need long or particularly important communications but frequent communications. Team collaboration is improved when everyone talks to everyone, in roughly equal measure, and those who don’t speak up are prompted and brought in to the conversation.

Belonging cues show empathy for the speaker and sincerity for what they say. They include non-verbal behaviors such as active listening, eye contact and frequent head nods. They occur in close proximity and benefit from physical touch. Research shows that belonging queues quite often matter more than what is said.

Written communications contribute to signals and should be part of a communication plan. However, in terms of effectiveness, they pale in comparison to face to face communication as they don’t deliver the belonging cues.

Team-based collaboration generally doesn’t occur naturally. Management will have to provide direction, coaching and rewards to shift the all too common individualism and lone wolf mentality to the sharing of ideas and knowledge among teams. When management promote team collaboration from top to bottom, align staff in the pursuit of common goals, remove actual or perceived individual competition barriers, and reward team-based outcomes, high performing teams will steadily evolve. Eventually they will advance under their own momentum.

Lastly, engagement must be measured to be improved. There are several methods available, but my experience is that engagement measures are most effective when part of the overall employee experience measurement. The three measures I have found most helpful are culture values, employee Net Promoter Score (eNPS) and the realization of the personal fulfillment factors Know Me, Value Me and Empower Me. Once you have captured your measures and analyzed progress, it’s critical to then quickly broadcast the results, celebrate successes, and double down on needed improvements. End

6 COMMENTS

  1. I love your definition of “Inspired” employees. I often relate ideas like that to employees who are passionate about what they do. Sometimes it’s a challenge to explain to leaders this concept. In the past, I talk about watching a performance of a play where the same play is done 3 ways:

    1) Satisfied = actors who memorize the lines and can satisfactorily recite their words
    2) Engaged = actors who memorize their lines and understand the meaning behind their performance
    3) Inspired or Passionate = actors who not only memorize their lines but they understand the meaning of the play and are deeply involved in bringing out the best performance possible.

    Then I ask, which performance do you want to watch?

    Good article!

  2. Hi Chuck: It’s sensible for employers to create a positive environment for employees. What’s positive for the emotional well being of employees is likely to transfer in favorable ways to their job performance. But a better motivation to treat people well is because it’s the right thing to do, rather than strictly considering the magnitude of the financial return it may provide. Many companies have started programs with the ostensible purpose of fostering employee satisfaction and commitment, only to cut back desirable components when Accounting got wind of the erosion to corporate profit margins. One step forward followed by two steps back, so to speak.

    In my view, Gallup’s definition, “involved in, enthusiastic about and committed to their work and workplace,” is achievable in a few companies, but is an impossibly high bar for many. Early in my career, my boss at the time told me, “Andy, I just want you to know that a lot of people here head home when the little hand hits the five and the big hand hits the twelve.” I worked for a manufacturing company with about 100 employees, most of them hourly wage earners. His statement, which has stuck with me for over 30 years, was delivered in a most matter-of-fact way, without judgement or disdain. His purpose for saying it was to prevent me from becoming disillusioned (I was in my young twenties at the time and compared to many at the company, my career was ahead of me). Most important, he wanted me to be empathetic and know that many people employed in the factory were hardworking and diligent, but he was realistic enough to know that their primary interest was drawing a paycheck, and he felt a deep responsibility to ensuring that he and his partners provided a stable company through which they could support their families. He had no delusion that if any of the employees won the lottery, they would quit the next day. Still, that never gave him license to treat people poorly or without respect. I think he had the right perspective. That made it a great place for employees to work.

  3. I don’t disagree that treating staff right is the right thing to do. However, without the economics driving this behavior, the behavior is likely to get squeezed or fall victim to competing interests when times get tight.
    I really like your story of your early boss, and understand why this still resonates with you today.
    Thanks for your comment.

  4. I love how you define employee engagement as the measure of an employee’s personal investment, because it truly is! An engaged employee contributes his time, energy and ideas that have its own ROI. But could you define a clear difference between an inspired and engaged employee? To my mind, inspiration is definitely a part of being engaged at the workplace.
    As per recommendations on how to improve employee engagement, those are pretty good points, however, I would definitely add pay transparency as it addresses engagement as well as other workplace issues like equality. As said in this article https://bit.ly/2NMXeMv ,”understanding what drives workplace satisfaction relies on the ability to understand what drives people”. People are naturally motivated by money and having a clear pay structure for each position is a good way for the employees to know what to strive for.

  5. Wow, thanks for your thoughtful comment Anastasiia. There are certain things you cannot manage, such as attitude. There are other things you can manage, such as behaviors. There are contradictory schools of thought when it comes to managing inspiration. My opinion is that while I strive to motivate my staff and colleagues, inspiration and motivation are at best short term management techniques.
    Pay transparency is interesting. I like the idea, however, I know the majority of my clients would not. I think the real issue is trust. If management is trusted, making compensation, or anything else, transparent is of lesser importance. If management is not trusted, making pay transparent is at best a short term benefit.

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