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What is Employee Engagement?

What is Employee Engagement?

Employee engagement is a measure of the connection employees have with their organization. Strong employee engagement is characterized by passion, motivation, and commitment to the organization.

It is often confused with satisfaction, but while engaged employees do tend to enjoy their work more, high employee satisfaction doesn’t necessarily lead to high engagement because some employees are satisfied to do the minimum and take home a paycheck. Engagement also isn’t the same as performance, because while it does lead to greater performance, it is not the only factor.

According to the Society for Human Resource Management (SHRM), engaged employees are optimistic, team-oriented, solution-oriented, selfless, passionate for learning, willing to go above and beyond, and pass along credit while accepting blame. Unengaged employees are pessimistic, self-centered, egocentric, frequently absent, negative, focused on monetary worth, and accept credit while passing along blame.

What are the Benefits of Employee Engagement?

Low employee engagement costs the U.S. economy over $450 billion in lost productivity each year according to a Gallup estimate. With such a significant impact on the bottom line, it’s clear that employee involvement is vital to any company’s employee experience strategy. Gallup found that high engagement has a positive impact on a number of key metrics. Below, we dig into the impact it has on a number of those business outcomes:

Profitability

A study from the Engagement Institute supports Gallup’s estimate, pitting the cost of disengaged employees falling between $450 and $550 billion per year. Aon found that a 5-point increase in employee engagement is linked to a 3-point increase in revenue growth in the subsequent year. The mechanism for this connection between profitability and engagement lies in a variety of factors that include employee productivity, customer satisfaction, retention and the cost of hiring new employees, rates of absenteeism, and quality of work.

Productivity

Highly engaged employees are willing to go above and beyond because they care about their work and their organization. This allows them to accomplish more than their unengaged peers in regular responsibilities but are also more likely to be innovating. The Gallup data shows that business units in the top quartile of scores had 20% higher productivity than business units in the bottom quartile.

Customer Satisfaction and Retention

Happy employees lead to happy customers, and according to CultureIQ happy customers help lead to more employee involvement. This leads to a virtuous cycle whereby engagement boosts customer satisfaction, which boosts engagement, which boosts customer satisfaction, and so on. Hard-working employees go above and beyond, creating an improved customer experience with quality customer service and better-quality products. This also ties back to profitability because happy customers are more likely to stick around and keeping an old customer is much cheaper than finding new ones.

Employee Retention

Gallup found that the top 5 predictors of turnover are the immediate manager, poor fit to the job, coworkers who aren’t committed to quality, pay and benefits, and connection to the organization or to senior management. Coworker commitment and connection to the organization directly correlate with engagement of coworkers and the employees’ own engagement. Further, it can also play into how people perceive their fit in the job and their pay. Engaged workplaces see greater gains from employee recognition efforts and other strategies to improve retention.

Absenteeism

Just as customer satisfaction and engagement can form a virtuous cycle, high absenteeism and poor engagement can lead to a vicious cycle that sees each leading the other lower. A Kronos study in the retail space found that engagement has a significant impact on unplanned employee absence and that low engagement can drive higher absenteeism while high engagement drives lower rates of unplanned absences. This, in turn, has an impact on productivity, profits, and stress levels for managers.

How to Measure Employee Engagement

Now that we know how impactful engagement can be, how do I find out if my employees are engaged or not? There are several different ways of measuring, but by far the most popular are employee engagement surveys.

Employee Engagement Surveys

Employee surveys are the most important measurement tool and can be implemented in several ways. Short, frequent pulse surveys can help gather data quickly, allowing for more rapid response to issues and unearthing trends in commitment over time. Longer, annual surveys allow for more in-depth data discovery and can be effectively gathered from a large portion of the workforce. Other surveys that are completed around certain milestones, such as when onboarding, training, transitioning, or exiting allow for input on more specific processes.

Using a combination of these different types of surveys will give deep and regular insight into how engaged your employees are but knowing survey questions for employee satisfaction is a big piece of the puzzle as well. Fortunately, there are several companies that run engagement surveys that you can work with to craft your questions and gather insights. These include Gallup, Mercer, Glint, PeakOn, Culture Amp, Lattice, and many more. You can, of course, implement these surveys yourself and Analytics in HR and SHRM have some great guidance on how to do so.

Other Metrics

Of course, surveys have their own flaws because they require honest responses, which aren’t a guarantee. Fortunately, you can use a host of other metrics in tandem with survey data to round out your approach. According to Ryan Fuller of Microsoft’s MyAnalytics team, these include the amount of work done outside of business hours, participation levels in ad-hoc and optional meetings, trainings, and initiatives , and time levels of collaboration with customers and coworkers beyond normal job requirements. Any other objective measure of employees’ willingness to go beyond what’s necessary in your field will help assess their levels of engagement. The more you see people exhibiting these tendencies, the more engaged they are.

If you’re seeing low engagement, it’s important to get to the bottom of where the issue is coming from and Fuller’s article goes into further detail on data that can help uncover the issue areas

How to Improve Employee Engagement

Now that you know how engaged your employees are, what do you do about it? Unless every person is fully participating fully, there’s room for improvement, so what can we do? Quantum Workplace suggests that there are six forces driving engagement:

  1. The leaders of their organization are committed to making it a great place to work.
  2. Trust in the leaders of the organization to set the right course.
  3. Belief that the organization will be successful in the future.
  4. Understanding of how I fit into the organization's plans.
  5. The leaders of the organization value people as their most important resource.
  6. The organization makes investments to make employees more successful.

Other companies have come up with different ways of breaking it down and we’ve found that all these pieces of advice fall into the following categories. If you follow the guidance below and encourage your leadership to follow these goals, you’ll see engagement gains in no time.

Good Managers

The old maxim that people don’t quit jobs, they quit bosses has some merit. In fact, Gallup has found that managers account for at least 70% of the variance in employee engagement scores. Setting up the right managers from the lowest to the highest levels will go a long way towards engaging your employees. These managers need to be engaged themselves, believe in the company’s mission, and care about their employees.

Open Communications

Strong communications are important in every part of business, and engagement is no different. It’s important for leaders to clearly communicate their vision for the company, their plan to get there, and the part that each employee has in that plan. Of course, communication is a two-way street, and it’s equally important that leaders listen to their employees. This includes creating spaces for employees to make their voices heard and communicating the actions being taken to respond to their suggestions and/or complaints.

Recognition

Everyone likes to be appreciated for doing good work. ADP research found that a culture of recognition leads to more engaged, loyal, and productive employees. This can be anything from giving awards for big achievements, to thanking someone for their hard work, to creating incentive structures that lead to increased performance.

Professional Development

Helping employees with their career development shows them that you care and gives them a benefit to their work that isn’t purely monetary. Bob Nelson teaches that “linking learning and career development to employee interests and aspirations is a simple yet powerful way to build employee engagement in your organization.” By empowering employees to have greater ownership and by training them to be more capable, you increase their drive and their ability to go above and beyond in their work.

Employee Well-being

Research from CIPD and Gallup have found that thriving employees see increased benefits from employee engagement. To help increase well-being, managers can encourage participation in wellness activities during onboarding and follow up with employees about actively pursuing goals. Be sure to take advantage of your employees’ ideas by asking for input when launching wellness activities at work.

Measurement

As you make changes to improve employee engagement, continue to regularly measure to assess the impact of those adjustments. Continue what’s working, and change what isn’t. This constant feedback cycle will help you continually improve business outcomes.

It’s hard to overstate the impact engagement can have on your employees and organizational goals. There’s no part of a business that is immune to the negative influence that unengaged employees can have, so it’s vital to foster passion from the start and institute a rigorous measurement program to identify problem areas and opportunities for growth. While this may seem like a daunting task, the foundation of any engagement strategy is hiring the right people and caring deeply on a human level as well as a professional one. If you can manage that, you should see good outcomes and be able to overcome challenges along the way.

Preparing to change compensation at your company? Read this first.
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Published by Marshall Richards April 3, 2020
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