It’s a term that has saturated HR literature for almost two decades and spawned a multi-billion dollar industry. Organisations spend huge amounts of resources trying to measure it and are constantly working to improve it. But does anyone really know what “employee engagement” is and why it’s so important?
I’ll be the first to admit it’s a topic we promoted heavily during the early days of Ethos. It seemed logical that improvements in employee wellbeing would impact positively on engagement and, in turn, business results. Unfortunately it’s not that simple.
After researching the topic extensively and meeting >120 HR and business leaders, a few things have become clear. We would like to share these insights with you and give you some ideas about how you can move the pendulum from rhetoric to action.
1. Employee Engagement is a notion, not a science
It’s more than just semantics. The meaning of employee engagement is ambiguous among both academics and practitioners. Most HR consultancies avoid defining the term, instead referring only to its presumed positive consequences.
Much of the appeal to organisations is driven by claims that employee engagement drives bottom-line results. The problem with this “bottom up” approach is that it’s just too simplistic. The potential components, antecedents and consequences of engagement have not been rigorously conceptualised, let alone studied. What hope do you have of demonstrating causality in employee engagement initiatives if the concept can’t be accurately defined or measured?
2. Employee Engagement Surveys are (often) a waste of time and money
Heavily promoted by global HR consultancies since the early 2000s, the Employee Engagement Survey (or more subtly named Pulse Survey) promises deep insights into employee engagement and the “soft” elements of an organisation that contribute to business growth and success.
In reality however, many companies fail to achieve any tangible outcomes from their employee engagement survey. We hear this regularly from HR practitioners who perform the exercise primarily to benchmark their score against prior years and / or competition. Used as a static and lagging indicator, employee engagement surveys derive minimal value.
Business leaders need to be aware of the limitations of such a vaguely defined construct and instead focus on more identifiable workplace characteristics that directly impact employee wellbeing (such as job demands, job resources, communication, sense of community, recognition, etc).
Rather than periodically surveying employees about how they are contributing to business performance, there needs to be a genuine attempt to understand and act on employee sentiments. The mere use of the word “engagement” has a demeaning connotation for employees.
I’m not condemning the tool, more the way it’s promoted and used. Surveys (and all metrics for that matter) are tools that should be used to make informed decisions. They should be heavily action-oriented and conducted with a high level of transparency for participants. Most companies running engagement surveys fail to apply these basic principles.
We know of a large company that spends over $80,000 each year on their engagement survey with take-up rates of less than 35%. Most of their employees simply don’t see any value in participating as there are never any visible outcomes. Their “engagement score” is over 88% which provides a sense of accomplishment for HR, but doesn’t yield useful business insights. Their main justification for running the survey is to benchmark themselves against competition rather than use it as a strategic change agent.
3. Organisations (generally) don’t understand their employees
Organisations spend a huge amount of time and money building and nurturing client relationships but when it comes to employees, many companies still operate like they did in the industrial revolution.
Employees are still seen as serving a purpose for the company rather than the other way around.
Despite typically making up over 50% of a company’s operating costs, employees are generally not treated to the same nurturing relationship as the clients they serve. Initiatives to gather employee feedback (like engagement surveys, focus groups or performance reviews) are often thinly veiled attempts to drive the “revenue side” of the business rather than a genuine desire to understand and meet the needs of the workforce.
I’m also constantly surprised at how little attention HR metrics get in many organisations. Employee turnover rates of 15-20% are accepted as “industry average” and increasing sickness absence and EAP rates are simply highlighted (but not addressed) in monthly HR metrics circulated to key stakeholders.
We recently estimated the cost of employee turnover for a new customer at $10.1M, something they were not aware of and had no strategies to address. The management were almost exclusively focussed on serving customers and hadn’t given any real consideration of the profile, interests and needs of their employees. While this was clearly evident in their turnover figures, employee discontent was having a negative impact across many of their business KPIs.
A CHANGE IN FOCUS
Progressive companies are now defining themselves by “who we are” (rather than “what we do” or “who we serve”) to better adapt and thrive in a constantly changing environment. This requires a paradigm shift in leadership circles and a strategic focus on the company’s greatest asset (and expense), its workforce.
Business leaders need to think about employee wellbeing as a foundational element of company values / purpose and not just an “add on” to employee benefits. The term “employee engagement” needs to be dropped from the HR vernacular in favour of simpler, more action-oriented concepts like “employee sentiments”.
Organisations that cultivate strong and genuine cultures around employee wellbeing will be best positioned in the burgeoning knowledge economy for long-term growth and success.
HOW TO EFFECT THIS CHANGE
The goal of this article is not to disparage efforts to “engage” employees. It is more to share insights about what we see as a major inhibitor of real progress in the employee wellbeing space.
HR and business leaders can have a significant impact on employees and their bottom line if they focus on building genuine employee-first cultures. With that goal in mind, here are a few strategies that you can adopt to move from rhetoric to action in improving your employee wellbeing environment:
1. Establish strong leadership buy-in
It seems obvious, but without leadership commitment, any efforts to improve the workplace environment will have minimal impact. Employee wellbeing needs to be fully integrated into an organisation’s short and long term strategy with clear goals, timeframes and KPIs to be monitored.
You may also consider developing a comprehensive Employee Wellbeing Charter that sets out the organisations commitments to employees and their families. Rather than being centrally driven, it’s important to have employee representation in the process to gain buy-in and ownership from employees.
2. Gather regular feedback from employees through multiple channels
Surveys are an efficient mechanism for gauging employee sentiments, but there are a number of effective ways you can gather feedback (e.g. online forms / apps, feedback boxes, employee feedback representatives, focus groups, exit interviews, etc). The goal of the feedback is to be insightful and actionable, so questions need to be carefully formulated to elicit meaningful results. If a survey is utilised, questions should be worded in a way that is employee (not employer) focussed. It’s a subtle but important distinction.
Another driver of constructive, honest feedback is whether employees feel 100% assured of confidentiality. Employees often suspect their responses will be reviewed by management, particularly if the process is managed internally. Creating transparency in the submission / review / action process helps reassure them that there won’t be repercussions from communicating “negative” sentiments.
Aggregate reporting by division, function, location, etc can also be insightful to identify feedback themes, but participants should be advised of the reporting parameters to avoid privacy concerns (e.g. aggregate reporting only where “XX” respondents).
3. Have a strong and consistent communications strategy
Despite best intentions, employee feedback initiatives can fail simply due to a lack of effective supporting communications. Employees need to understand why their feedback is important and what will be done with it.
Too often, employees are sent an annual survey with a generic introduction and limited context. This approach is hardly inspiring and discourages many from giving even 5 minutes of their time. HR needs to adopt a clear and consistent communication strategy that demonstrates the importance of gathering feedback to drive organisational change.
The flip side is that you need to be willing to share results and action plans. While this can be confronting, this approach demonstrates a high degree of transparency and humility on the part of leaders (two things that are highly valued by younger generations). This iterative process ensures employees can see that their feedback is valued and instigates real change.
Ethos is a consulting and health-tech company that helps organisations harness the latest employee practices and technology to create positive and productive employee wellbeing environments. We’ve developed a suite of flexible, culture-first solutions that help organisations understand and meet the evolving needs of their workforce.
Our Employee Perspectives Survey is a highly customisable survey that provides organisations with an evidence-based approach to understanding what factors contribute positively or negatively to their working environment. It can be delivered in isolation or built into one of our holistic, integrated employee wellbeing programs.
A growing number of organisations choose Ethos to assist with their employee wellbeing programs including Credit Union Australia, Sunsuper and Suncare. In September 2015, Ethos was awarded a large federal government grant for innovation in HR practices.