Whitepaper: Employee Engagement
A Strategic Differentiator in Today’s Competitive Business Landscape
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We work in a world in which automation and artificial intelligence are rapidly taking over manual and repetitive work.
The human jobs that remain require specialized skillsets, not just warm bodies. And as technical competencies are increasingly automated, what were previously considered soft skills are becoming the hard skills. These are mainly behavioral in context and are often referred to as transversal competencies. That’s according to the Future of Jobs Report 2022, published by the World Economic Forum, which identifies the skills that are increasingly in demand and those that are becoming less important (see facing graphic. World Economic Forum “The Future of Jobs Report 2018”).
The organizations that succeed now and into the future will be those that attract, retain and inspire the best talent with the skillset suited to this new landscape. To start, leaders must understand what these workers are seeking and satisfy that. But to get and keep talent in this competitive environment, they must go beyond mere employee satisfaction and strive to reach the next level – employee engagement (Kumar et al, 2015).
Organizations should prioritize employee engagement, embedding it as a key pillar in their strategic planning goals. This means ensuring that their unifying purpose, vision, culture and leadership are positioned to engage their ideal workforce. It also means identifying the specific factors that impact the engagement of that workforce (Forbes, 2018).
Generally speaking, the knowledge workers who will increasingly dominate the business landscape have certain expectations of their workplaces. They want to work for organizations that are agile and flexible, value innovation and maintain psychologically safe workspaces.
Extrinsic motivators – pay, benefits and so on – are less important to them than intrinsic motivators like work enjoyment, a sense of purpose, growth and innovation opportunities and positive work-life balance (Oades et al, 2017). Nevertheless, adequate extrinsic motivators are still important as “hygiene” motivators: They’re not differentiators but, if they’re inadequate, they become demotivators that negatively impact engagement.
All that being said, just as the optimal workforce profile varies from employer to employer, employee engagement looks different from organization to organization and even worker to worker. There is no one-size-fits-all solution to engaging the modern worker. Instead, organizations must develop their own engagement plan, customizable to individual employees.
To aid in that process, this paper will examine general steps and programs that may help boost engagement, present an overview of the many drivers that can impact engagement and discuss techniques to develop engagement strategies. It will even endeavor to address the question of whether agile organizations have more engaged employees. But first, let’s look at what exactly employee engagement is, and why it’s so important.
The Future of Jobs Report 2022, published by the World Economic Forum, identifies the skills that are increasingly in demand and those that are becoming less important
What is Employee Engagement?
The details of employee engagement may look different from one enterprise to another, and defining it for a specific organization is part of developing an engagement strategy.
Employees who enjoy the work they do, and feel in sync with the purpose of their organization, leaders and peers, will be more loyal, productive, innovative and positive. Employee engagement means this sense of working within a community that resonates for you (Macey et al, 2008).
Employee satisfaction or happiness is part of engagement, but true engagement goes farther than just satisfaction in a job. Truly engaged employees are proud of their association with their organization and feel connected to it; they would not leave it lightly. They enjoy participating at work, whether full-time, part-time or virtually. The gold standard would be that they welcome Monday; at any rate, work for them is certainly not just another four-letter word.
Beyond this, the details of employee engagement may look different from one enterprise to another, and defining it for a specific organization is part of developing an engagement strategy.
It’s important to note that talent retention does not equal engagement. Retention is important; when employees leave, they take with them important knowledge, experience, relationships and opportunities. Human Resources departments rightfully treat it as an important metric. But research shows that high retention rates don’t guarantee high staff engagement (Balakrishnan et al, 2013).
And as Elizabeth Lotardo discusses on LinkedIn, financial incentives and small perks (extrinsic motivators) can increase retention, but these don’t necessarily increase engagement and even negatively affect it in some cases (Lotardo, 2019).
Keeping workers may be good, but keeping workers wanting to be there – keeping them positive, productive and engaged – is better. Let’s examine the value in more detail.
Why is employee engagement important? Gallup research illustrates the dramtic outcomes of an engaged workforce. A 2017 Gallup report tells us that organizations with engaged staff enjoyed the following improvements (Reilly, 2014):
- 17 percent higher productivity
- 21 percent higher profitability
- 10 percent higher customer metrics
- 41 percent lower absenteeism
- 24 percent lower turnover for high-turnover organizations
- 59 percent lower turnover for low-turnover organizations
- 28 percent less shrinkage
- 70 percent fewer employee safety incidents
- 40 percent fewer quality incidents (defects)
All of these metrics heavily impact a company’s bottom line. For this reason, leaders should give engagement the same careful consideration they give to investment, product and market strategies.
Finally, as organizations foster an atmosphere in which employees flourish, they create ambassadors for their products or services – and for their workplace. This in turn will help drive successful recruitment, supporting a healthy cycle of employee engagement and business success.
How to Improve Employee Engagement
Having looked at what employee engagement is and why it’s important, let us now turn to how to achieve it.
To begin with, we’ll examine some general steps organizations can take to heighten engagement. Afterwards, we’ll look at how they can customize their value propositions to engage their particular workforce.
Well-known author Daniel Pink cites three factors that most engage and motivate employees: purpose, mastery and autonomy (Pink, 2011). Purpose refers to the desire to do something that has meaning and is important. (Businesses that only focus on profits without valuing purpose will end up with poor customer service and unhappy employees.) Mastery means the urge to acquire and improve one’s skills. And autonomy is our desire to be self-directed, which increases engagement over simple compliance.
By considering these motivators in combination with factors that demotivate employees, the paper’s authors have determined eight general steps to help any enterprise move towards improved engagement. Below is a discussion of these steps, followed by a list of specific programs that support engagement. Organizations can draw upon these generalities to create engagement plans tailored to their particular circumstances.
1. Transform management
Mutual trust and respect between leaders, managers and employees are of paramount importance. It is often stated that employees do not leave organizations – they leave managers. Indeed, it is managers who are primarily responsible for the engagement levels of their employees, according to Gallup research (Gallup, 2015).
It’s all too common to see managers bully employees, and if these bullied employees get the opportunity to leave, they will. As the war for talent ramps up, organizations that treat their existing talent poorly will lose them to others that successfully create a great workplace.
To build that great workplace, we in the business agility world argue that leaders must move away from a command-and-control mindset to become what’s commonly called a “servant leader.” The authors of this paper prefer the terms “enabling leader” or “leaderas-coach,” but, whatever we call them, this type of leader fills a special role. Rather than commanding, they provide employees the tools, environment, decision-making powers and whatever else is necessary to get the job done as quickly as possible with minimal quality issues.
This approach requires a 180-degree shift for most leaders, who must let go of everything they think they know and everything they’ve done in terms of management. Not all leaders can do this, and it is critical to (a) identify managers who probably won’t be able to pivot and find different opportunities for them, and (b) create significant development and support systems for those who can pivot, to coach them into the enabling leadership (or servant leadership) mindset (Zhang et l, 2010).
Based on its research, Gallup advises that companies “treat the manager role as unique” and requiring its own specialized talent set (Reilly, 2014). “Whether hiring from outside or promoting from within, businesses that scientifically select managers for the unique talents it takes to effectively manage people greatly increase the odds of engaging their employees,” declares Gallup in “Five Ways to Improve Employee Engagement.”
In addition to hiring and promoting managers with the right talent set, organizations should:
- Coach managers to collaborate with their employees in developing engagement plans and determining barriers to engagement, as well as to continuously maintain engagement.
- Hold managers accountable by making their workers’ engagement part of their performance expectations and by tracking the engagement of employees who report to them.
Simultaneously, it’s important to address the “forgotten middle” – middle managers whose role no longer exists (or is radically changed) in the evolving work landscape. A lean change management plan to help these workers fi nd their place in the new setting will keep them
from becoming blockers in transformation efforts (Welch, 2011).
Below is a list of unhealthy vs healthy leadership behaviors, adapted from Agile Transformation Inc (AgilityHealth, 2019).
- Telling the team HOW to work – managing daily tasks
- Top-down decision making
- Doesn’t seek or take input
- No clarity on vision, direction, goals
- Constantly shuffling people between priorities/teams
- Tactical focus, no strategic foresight
- Unrealistic deadlines and expectations
- Resistant to change/having no change management plan
- Not investing in learning
- Fostering a negative culture
- Not being transparent or authentic
- Empowering and growing others
- Collaborating on decision making
- Invites and genuinely considers input
- Providing clarity of purpose and clear goals
- Maintaining focus and letting people finish what they start
- Strategic focus and foresight
- Relentless about continuous improvement
- Removing obstacles quickly
- Embracing change
- Building healthy culture and norms
- Practicing what they preach
- Influencing others
- Being transparent, authentic, humble
2. Nurture healthy teams.
Modern workplaces focus more on teams than on individuals (although successful ones simultaneously take care not to devalue individual employee wants and needs). Given this reality, organizations should carefully consider how teams are formed, managed and assessed.
Ideally, teams should be self-regulating groups in which each individual contributes, feels acknowledged and is cherished. Some organizations are allowing teams to self-select, a practice which is proving highly successful. It’s useful to refer to the Tuckman team development model, which describes teams progressing through forming, storming, norming and performing stages (Bonebright, 2010).
Agile Transformation Inc. identifies goals and success indicators for high-performing teams (AgilityHealth, 2019):
- Clarity: They have a shared vision and view of what’s important now.
- Focus: They have a disciplined commitment to their priorities.
- Predictable execution: The deliver value predictably and produce measurable results.
3. Foster psychological safety.
Creating and maintaining a psychologically safe workplace is key to high engagement. This means an environment in which employees feel they can freely contribute and innovate without fear or undue inhibition.
When workers are liberated to innovate and perform, they are much more engaged and more likely to develop a high-performance atmosphere that celebrates focused problem solving and improved productivity.
What’s more, because work is a huge part of most people’s lives, employers have the opportunity to create a positive ripple effect: A workplace conducive to good mental health can positively impact employees’ wellness not just at work, but also at home and within society (Training, 2012).
4. Cultivate a growth mindset.
Organizations should seek to induce employees to bring their “whole selves” to their work, giving it their full ability and attention without holding back. To succeed at this, companies must instill a growth mindset, in which staff members are not motivated to “play it safe” to ensure accolades or avoid reprobation – but rather are focused on trying to achieve results (Ugwu et al, 2014).
This means encouraging workers at all levels to be proactive and to take ownership of the problems and solutions that they and their teams face. Rewarding effort as well as results, supporting trialand-error thinking, and encouraging blame-free brainstorming, are ways to support a growth mindset. Developing this mindset relies upon, and is closely linked to, a psychologically safe workplace.
5. Let employees develop their own sense of purpose at work.
Beyond the minimum of creating psychological safety, organizations wishing to truly engage workers should seek to create environments in which employees can express themselves and thrive.
To this end, they should enable workers to architect their personal sense of purpose through their work. This may sound like a stretch, but it can be and has been achieved. If companies do not enable employees to create their purpose at work, they will likely craft it elsewhere, sapping creativity and drive that could be funneled towards organizational success (Smith & Bititci, 2017).
Most employees in the modern workplace are looking for opportunities for personal growth, and such opportunities constitute an important driver of what we call intrinsic motivation.
The traditional organization set very rigid hierarchical structures supported by very defined role profiles and career paths. But the enterprises that are really engaging the hearts and minds of workers today are those that allow them to define and chart their own workplace, within a team context. They let them create their own learning paths, as well their own “career mosaics” – career paths that allow for moving upwards, sideways and even downwards, to meet the worker’s personal career aspirations. Naturally, however, this freedom must still fit within the framework of achieving the enterprise’s objectives.
6. Give employees a sense of purpose.
The closer the employee’s job purpose is to the value created for customers, the higher the employee’s engagement – and, in turn, the higher the customer satisfaction.
To bolster this, organizations should create a clear line of sight for all employees to the organization’s purpose, vision, mission and values. Each employee should be able to understand how the work they’re doing contributes to great customer satisfaction and achieving the organization’s strategy (Blattner et al, 2015).
7. Leave no one out.
It’s important to ensure that employees across all demographics feel included and valued. Inclusivity isn’t just a buzz word; besides being a value in its own right, it’s a track to higher engagement.
Let’s look at two examples. First, take a combination of collocated and remote staff that’s geographically dispersed. Imagine a USAbased company with virtual workers located across multiple time zones. Planners must take all relevant time zones into account when setting up meetings, deadlines, events, etc.
For the second example, let’s envision a company whose employees come from different cultures. It’s critical to consider this cultural variation. People from certain cultures, for instance, will agree to anything a leader asks of them even if it’s impossible, and will find it very difficult to challenge authority figures or admit they don’t understand what’s expected of them.
8. Empower employees.
This has been touched on above, but it is worth highlighting in more depth. A key component of employee engagement is empowering teams and individuals to make the decisions that directly affect their work. Many organizations employ the top talent available – and then proceed to tell them what to do. They hired these people for their expertise, so it only makes sense to liberate them to deliver on what they were hired for.
By devolving decision-making to the lowest possible level, enterprises free themselves of various layers of unnecessary supervision, while simultaneously allowing employees to be more innovative and productive. And the resulting autonomy fulfills one of Pink’s three key motivators, likely leading to improved engagement (Pink, 2011).
Programs that Foster Engagement
Organizations that provide wellness and social support for their employees generally increase their employee engagement significantly.
In addition to working to implement the priorities above, there are specific programs that organizations may consider introducing to increase employee engagement. These include:
1. Flexible work.
Employees have the option to determine where and when they work. Deciding their own schedules and work location can provide a greater work-life balance and potentially save hours wasted in commuting. The key concept here is that the employee must still deliver on their performance objectives and expected results, but they have the freedom to decide when and where they achieve this (CIO, 2018). In addition to increasing engagement, this approach can save the organization money on office space and associated costs, as well as saving employees many hours of unproductive time traveling to and from work.
2. Social Support.
Encouraging workers to take frequent breaks, and providing fun and relaxing places for them to do so, contributes to healthier employees (Bedarkar et al, 2014). Offering on-site daycare, medical facilities, spaces for social collaboration, etc. also supports this goal.
Employees spend a significant amount of their adult life at work, and their colleagues can become almost a second family. Providing space and opportunity for social gatherings contributes to increased teamwork and engagement. And inviting the employees’ actual families to some social gatherings can provide greater understanding and cohesion between their home and work lives, leading to better work-life balance, greater overall satisfaction and improved engagement.
3. Open feedback channels.
As discussed above, psychological safety is critically important to engagement. A key component of a psychologically safe workplace is having the freedom and opportunity to openly provide feedback to colleagues and managers. This feedback may be work-related or about the employee value proposition. Allowing open feedback is an important step towards better engagement and performance.
Furthermore, employees prefer receiving feedback on their own performance regularly and with a developmental angle – this is now being referred to as feed-forward. Virtually all participants in annual performance reviews (employees, leaders and HR workers) do not enjoy the process and generally do not see a direct impact on business performance (Macey et al, 2008). More timely and flexible interventions – such as daily stand-ups, coaching and retrospectives – focus on areas where improvement is needed and provide the support to act.
4. Professional development and training.
One of the greatest gifts organizations can provide employees is the opportunity to develop new skills and competencies. The modern worker values knowledge over most other assets. This knowledge allows them to expand their capabilities and remain relevant in an ever-changing talent universe.
5. Clear metrics and progress measures.
Many organizations believe that measuring performance is akin to keeping a scorecard, and that it will intimidate and turn off employees. But, in fact, clarity about expectations, progress and achievement is key in employee engagement (Saks, 2006). Individuals and teams want to understand how they are doing against their targets. Plus, natural competitiveness drives workers to keep ahead of the curve, so measures and metrics can motivate them – if implemented correctly.
The proviso here relates back to the ever-important concept of psychological safety. Leaders should strive to have their teams “fail fast, fail forward.” Innovation does not happen when employees fear metrics; it happens when they use metrics to drive performance.
Measures and reports about them should be easily accessible and visual. Objectives and key results (OKRs) should be cascaded and aligned throughout the organization (Shuck et al, 2017. Celebrating and rewarding the achievement of OKRs can improve engagement and drive productivity. Current wisdom says these celebrations and rewards should happen more frequently and should highlight team performance over individual performance.
And finally, engagement itself should be among the metrics tracked and celebrated. Defining engagement goals and including these in manager performance expectations, as well as frequently checking in with workers about progress towards these goals, will help support a highly engaged workforce.
6. Community service.
We are seeing more and more enterprises allowing their employees time off (paid or unpaid) to volunteer for programs with a social impact in their communities. The sense of accomplishment, belonging and fulfillment they gain from contributing to their communities can then carry over into their overall satisfaction and engagement at work.
Note that this is not an exhaustive list;
there are many paths to employee engagement (and as many ways to undermine it). Furthermore, rote implementation of these programs will not automatically lead to higher engagement. Co-developing a customizable employee value proposition with an organization’s workers is the only way to truly know what matters to them.
Developing Employee Value Propositions
Identifying the many possible drivers of employee engagement.
In developing value propositions and determining measures to improve engagement, it’s useful to identify the many possible drivers of employee engagement. Organizations, departments, teams or individuals can then determine which drivers are relevant to them, customizing and prioritizing their own lists (IES Report, 2004).
Drivers fall into four general types:
- Linear drivers contribute to higher and higher employee engagement the more they’re present, with engagement dropping proportionally the less the driver is evident.
- Hygiene drivers, or “must-haves,” support engagement up to a certain level, after which improving on them doesn’t significantly impact engagement (e.g., salary and benefits).
- Delighters are drivers that have no major negative impact if they’re missing, but which can have an important positive impact if fulfilled.
- Reverse drivers make employees less engaged the more they’re in evidence.
(Note that these relationships are quite similar to the KANO model (Verduyn, 2014), if we substitute employee engagement for customer satisfaction on the vertical axis.)
One caveat to be aware of: It may be possible under some circumstances for a positive driver to become a reverse driver (Plester et al, 2016). For example, having fun at work may drive engagement, but it can actually have a negative impact if pushed too much, according to “Fun times: the relationship between fun and workplace engagements”.
Furthermore, there are multiple layers of engagement – the employee’s engagement with their individual role, with their team, with their department, with their location, etc. – all of which may contribute to their overall engagement with the organization as a whole. Various drivers may impact one or many of these types of engagement, and to different degrees.
So, all that being said, we come to the question: What are the drivers of employee engagement? In reviewing 17 sources, the authors of this paper identified no fewer than 99 potential drivers. However, we have reduced these by combining related concepts, and we have classified them into some key general areas to make them more digestible.
Below is our overview of the most common drivers that may affect employee engagement:
- Communication and Interactions:
- Effective communication
- Clear expectations
- Variety and quality of work interactions
- Cooperation, collaboration
- Trust, respect
- Feedback cycles
- Alignment of values, goals, needs within teams/groups
- Sense of connection
- Values, norms
- Unifying Purpose, meaningfulness
- Corporate citizenship
- Motivational leaders, influencers
- Community contribution
- Learning opportunities, knowledge acquisition
- Growth and personal development opportunities
- Career mosaic
- Coaching, mentoring
- Work-life balance
- Interesting work, enjoyable work
- Role characteristics, role fit
- Spans of accountability
- Fun at work and with coworkers, teamwork
- Achievement, accomplishment
- Curiosity, discovery
- Logistics and Administration:
- Work location and flexibility
- Work hours
- Physical environment: comfort, health, safety, etc.
- Availability and quality of necessary material and technology, etc.
- Talent management
- Diversity of the workforce
- Psychological Safety:
- Safe to fail
- Work is valued
- Supportive environment
- Fairness (perceived and actual; procedural and individual)
- Security vs insecurity
- Sense of being valued
- How much one’s opinion counts
- Growth mindset
- Rewards and Remuneration:
- Appreciation expressed by colleagues, leaders or consumers
- Rewards (to the team or individual)
- Public or private recognition
- Benefits Perks, bonuses, incentives, etc
- Sense of being involved, included as an individual
- Sense of being involved, included based on one’s identification with a group, including by:
- Sexual orientation
- Physical ability
- Education level
- Employment status
- Length of service
- Department, team, unit
- Whether one works remotely or on-site
Techniques to Customize Employee Value Propositions
When developing a value proposition and a plan to foster engagement, there are some specific techniques we can draw on. Two of these are employee empathy maps and employee experience journey maps (Browne, 2012).
Both maps should be co-developed, with employees driving the content. This cannot be the human resources department sitting in a dark room with consultants but must be an open and collaborative process. And don’t forget that leaders are employees too: these techniques should be put to use for workers at all levels.
An empathy map is a chart that helps you understand someone else. You fill it out in order to get a sense of how things look from where they’re sitting – what they experience; how they feel; what they think, say and do – in short, to empathize with them. How do you find out what to put down in the chart? Ask them (facing is a sample template).
Once we have a basic understanding of a worker’s empathy map, we can begin drafting their journey maps – an expression of the process they go through to reach a goal. Note that any employee will experience many different journeys, including:
- Candidate journey
- Onboarding journey
- Location journey
- Role journey
- Performance journey
- Development journey
- Next job journey
- Work-life journey
- Personal situation journey
- Exit journey
- Alumni journey
As examples, for a current employee, we’d create separate journey maps for their compensation, benefits, personal data and inquiries. For a current manager, we’d create maps for planning for their team, hiring their team, setting their team’s outcomes, managing their team’s performance, resolving individual issues of team members and restructuring their team. Next, let’s examine the relationship between business agility and employee engagement.
Are Employees at Agile Organizations More Engaged?
This is a challenging question to answer.
Not only can employee engagement be defined in multiple ways and look different from place to place, but there are no standard indexes of employee engagement to allow us to objectively assess organizations on this metric.
However, there are several indirect, but correlated measures available – the best of which is Glassdoor, an open platform that allows current and former employees to provide anonymous ratings and reviews of companies. A study by employee engagement measurement platform CultureAmp shows a strong correlation between employee engagement scores and Glassdoor ratings (CultureAmp, 2019).
If we compare the Glassdoor ratings of mature agile organizations to overall Glassdoor ratings, we see statistically significant and measurably increased ratings; where “mature agile organizations” are defined as those scoring 7 or above in the Business Agility Report (Business Agility Institute, 2019). Specifically:
Average ratings for companies on Glassdoor is 3.3, according to the platform’s 2017 HR and Recruiting Statistics Report (Glassdoor, 2017). By contrast, mature agile organizations scored an average of 4.1 – an improvement of nearly 25%. Given the correlation between Glassdoor ratings and engagement scores, this implies that agile organizations may average close to one-quarter higher engagement than the average company.
It is important to emphasize that the Business Agility Report ratings are self-assessed, and Glassdoor is an indirect measure of employee engagement. As such, further research is required to understand the exact relationship and confidently define the quantitative difference. So far, however, the datasets show a clear trend towards agile organizations scoring higher on engagement.
Organizations that succeed in achieving high levels of engagement among their employees see tremendous benefits.
As we have shown above, organizations that succeed in achieving high levels of engagement among their employees see tremendous benefits. These range from greater talent attraction and retention to greater innovation, profitability and production. And conversely, enterprises that fail to engage their employees fall short of their potential on just as many fronts.
Therefore, it is tremendously important to track engagement, define engagement goals at all levels, develop plans to support high engagement and then maintain engagement efforts over the long term. The research gives us every reason to believe that enterprises that do this successfully will outperform their competitors, making employee engagement truly a differentiator in the current and upcoming business landscape.
With special thanks to the contributing authors for this research paper. We invite you to connect with them to publications authors on LinkedIn.
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