Employee Engagement: What It Is and Why You Need It
BusinessWeek.com reader Derek Irvine on the importance of engaging employees strategically and authentically
As someone whose job it is to advise companies on employee engagement, I was fascinated to read “Making Employee Engagement Fashionable” by the CEO of Gucci recently on BusinessWeek.com. As I was moved to comment on the column, strategic recognition is the key to fostering a truly engaged workforce. As the recession drags on, company leaders are looking for any solution to boost morale, increase productivity, and help gain competitive advantage. Employee engagement is rapidly becoming the answer for many organizations, though many remain confused about the benefits of employee engagement, what it is, and how to foster it in their organizations. Why should you care if your employees are engaged? The research on the bottom-line benefits of employee engagement is clear: Towers Perrin has found that companies with engaged employees boosted operating income by 19% compared with companies with the lowest percentage of engaged employees, which saw operating income fall 33%. What does that mean in real dollars? For S&P 500 companies, Watson Wyatt (WW) reports that a significant improvement in employee engagement increases revenue by $95 million.
The effects of engagement on employee productivity, retention, and recruitment are no less astonishing. Watson Wyatt further found that companies with highly engaged employees experienced 26% higher employee productivity, lower turnover risk, greater ability to attract top talent, and 13% higher total returns to shareholders over the last five years. Additionally, highly engaged employees are twice as likely to be top performers—and miss 20% fewer days of work. They also exceed expectations in performance reviews and are more supportive of organizational change initiatives. So you’re convinced you need to get your employees more engaged. But what does that mean? The definitions of employee engagement seem endless and include increased line of sight, greater commitment, and willingness to give additional discretionary effort. Instead of trying to define employee engagement, I want to know what an engaged employee looks like, how they behave while at work, and how to replicate that in the organization. One definition of an engaged employee is one who gives additional discretionary effort. That doesn’t go far enough. That additional effort, willingly and happily given, must be put toward something that matters to the company. The most worthwhile engagement is seen in employees who happily want to give additional effort and know where to apply it. This combination of action and line of sight results in an engaged employee who willingly works harder to deliver against your company’s strategic objectives in their own daily tasks.
Say “Thank You”
Now that we’ve explained why you should care about employee engagement and defined it, there’s still one catch. Do your employees know your strategic objectives? More important, do they have any idea how their daily work impacts the achievement of those objectives? In my experience very few line employees can even cite the company’s objectives, much less articulate how their work helps achieve them. But it has never been more urgent for every employee to understand precisely this connection. You need to clearly communicate the needs of your company (e.g., your strategic objectives) and show employees how their individual, specific efforts help the company achieve those objectives. How? It’s simple: Say “thank you.” During a down economy, when companies need employees to give more discretionary effort to achieve critical objectives, strategic employee recognition specifically acknowledges actions and behaviors that align with company values and help achieve those objectives, encouraging employees to repeat precisely those behaviors needed for the organization to succeed. Recognition is based on fostering an environment in which employees want to perform, then letting managers and even peers acknowledge exceptional effort and praise deserving employees. All employees need recognition for their efforts and validation that their work is appreciated—now more than ever. If the recognition is for demonstrating a company value or achieving a strategic objective, employees begin to see how their individual efforts contribute to company success. Strategic recognition is by far the most positive and effective way to ensure that employee effort is maximized, aligned with company objectives, and reflective of company values.