Ken Scarlett, President
Employee engagement is the most important management function to succeed in business today, yet few organizations successfully define, measure or manage it. Correctly measured, engagement intensity predicts how well people and the business will perform, whereas incorrect measurement leads to employee disillusionment and business deterioration. Accurate engagement measurement predicts organizational performance – from revenue per employee to absenteeism to retention to service quality to eventually, profitability and stock price.
Our employee survey research at Scarlett Surveys reveals that the average percent of positively engaged employees - when we first measure an organization’s engagement - is around 35%. According to Gallup, “growth in engagement has remained flat … about 32%.” These low scores indicate that most organizations are not addressing the fundamental drivers of engagement or structurally improving employee engagement levels; thereby putting their long term business health at risk. What is causing leaders to work on the wrong things?
According to Dr. Jim Harter, employee surveys counted on to measure engagement are not. “What a lot of companies have done is to simply replace the terminology for their annual survey and call it an engagement instrument.” “A whole lot of things are now being called engagement that shouldn’t be.” Many employee surveys are simply not up to the complex measurement task. This causes leaders to work on the wrong things.
Test for yourself: If business execution is going down, if leaders are not creating conditions that motivate employees long-term, if resistance to change is high, the employee survey is probably not measuring engagement. Despite sincere efforts, employee engagement and the understanding of the science behind it is languishing. Engagement is still nebulous to many.
One More Time – What is Employee Engagement?
As a management initiative, employee engagement is the process of leading people by enabling them to want to do whatever is necessary to ensure the continuous high performance and success of the business. The output of engagement is willingness. From the employees’ perspective, engagement is their attitudinal and emotional state developed from experiences perceived to be controlled by management. These experiences or “drivers” heavily influence engagement level over time. By managing these drivers to be positive experiences, leaders can nourish employees’ intrinsic desire to consistently do their best work. The complexity lies in knowing, measuring and managing the most influential engagement drivers that affect employee willingness and getting those metrics and contributing factors into each team leader’s hands.
The engagement value chain works like this: engagement predicts willingness, willingness predicts effort, and intensity of effort drives business results. Thus, you can execute only as well as you can engage employees. You can only engage employees by managing the right things.
Our studies show that real engagement predicts the positive intensity and quality of effort the organization can expect from an individual within job confines. Engagement influences our motivational impetus that drives us to be productive. The higher the positive index the higher the propensity for sustained positive economic contribution. We have also found that great talent without engagement results in negative economic value. So engagement’s economic value to the business is, at a minimum, lower direct supervision costs, higher quality rates and higher revenue per employee. At the maximum, numerous innovation events, higher customer loyalty, higher return on human capital and steady increase in stock price. These “engageonomics” are connectable only if engagement is correctly defined, measured and managed.
The Economic Value of Engagement
Avoid Confusion - What Engagement is Not
Employee engagement is often confused with employee satisfaction. Satisfaction is a minimum attitude standard established during the age of mass production to guard against militancy by identifying and removing hygienic irritants. Satisfied employees are not emotionally endeared to their employer like positively engaged employees – they’re just not dissatisfied or angry. Pacification is not engagement.
“Great company” survey contests do not measure employee engagement. Nor is engagement a total score of opinion questions that look like they are related. Having a best friend at work, while fun, is not a credible component of engagement. It may have been a characteristic of some companies who were experiencing high engagement levels in the 1990’s but we have found it is not a bona fide engagement driver today. When you load up on best friends, it does not move up business results or endear employees to pledge their best work.
“Benchmarking” is another misnomer. The quality of an employee survey to measure engagement does not improve with repeated use or comparing scores to industry averages. If the questionnaire doesn’t scientifically measure it, years of comparative data is useless. Bad benchmarking may be the leading cause of engagement stagnation.
Simply put, there is no magic bullet or one thing you need to know which will sustainably improve engagement levels. The heart of employees is not something won by quick fixes, bells, whistles or trophies. Hearts are won by solid leadership using solid engagement analytics. Extravagant perks, while nice, do not structurally improve engagement or performance. Nothing makes up for a horrible boss or system left unaccountable. To be sustainable and profitable, engagement must be well defined, scientifically measured and diligently managed by each team leader as a leadership performance requirement from the top. Southwest Airlines sums it up nicely: “Leadership is effectively supporting your team of employees – everyday.” This is how real engagement looks and connects to profits.
Job 3 - Apply it: Engagement Measurement Management – Winning Hearts and Minds
Employee engagement does not automatically improve just by correctly defining and measuring it. The indexes, ratios and driver profiles have to be analyzed and applied by each team leader to steadily and structurally move it up. Team leaders need to fully understand the drivers of engagement and how their actions affect their scores. Both individual engagement and group engagement analytics should be considered when developing action plans. Doing so ensures a balance between addressing individual needs at each engagement level and synchronized unity of effort at the group level. Thus, leaders can fulfill their engagement survey’s business purpose; to increase associate economic contribution in sync with organizational goals while improving each individual’s desire of commitment and harmony. When leaders diligently implement their action plans based on proven engagement drivers, employees gradually become more intrinsically motivated to do their best work – everyday!
The Business Case for Managing Real Engagement
Business leaders should care about really understanding the technology and mechanics of employee engagement science because this is why most employee “engagement” efforts and businesses fail. More companies go out of business due to poor management of employee engagement than any other single factor. When measured correctly, engagement drivers provide management with a statistical method to maximize return on human capital (ROHC) that drives business results. We have several firsthand experiences where a clear lead-lag relationship between companywide engagement index increases and stock price increases existed over a period of years. Also, our survey research shows that employees we classify as “positively engaged” have higher than average individual productivity and innovation events plus they remain with the company longer than disengaged employees. In addition, the discretionary efforts of the fully engaged are of higher quality and of a more lasting endurance than less-engaged employees: their economic contributions to the business consistently exceed their employment costs. From a quality of work life perspective, positively engaged employees are often energetic and enthusiastic which makes them more productive in group efforts and makes them enjoyable to work with and for customers to do business with. They adapt to changes faster.
Our research also shows that fully engaged employees consistently solve problems and have lower incidences of absenteeism and defection. In a nutshell, the higher the percent of engaged employees, the higher the probability of sustained business success, the higher the return on your human capital. Real engagement is predictive of business performance.
The Most Important Measure – “Where There’s a Will, There’s a Way”
In today’s dynamic business world of fast-changing markets and hard-to-measure intellectual work, employee engagement drives business results, whether it is measured correctly or not. Organizations that define, measure and manage it well will succeed.
EMPLOYEE ENGAGEMENT SERIES
White Paper 1 of 3
As Markus Buckingham recently said “Most engagement surveys ask a long series of questions that show no correlation to retention or improved performance.” Dr. Harter at Gallup states “Reporting high numbers [from a list of survey questions] seem to make a lot of leaders feel good. But those won’t get them where they need to be.” What Scarlett has found is that employee responses to empirically validated and correctly weighted engagement drivers should be compared to big data critical ranges to make engagement survey Indexes meaningful, useful and trustworthy. Most importantly, there should be a statistical check in each survey which validates that the engagement drivers apply to that specific population and are impacting that particular business. Too often, organizations use the wrong questions or algorithms and wind up managing the wrong things so actual engagement levels deteriorate while their opinion survey responses rise.
Going a bit deeper, we find that reliable dashboard engagement indexes and ratios are best calculated from employee responses to question batteries encompassing 15 intrinsic and extrinsic engagement drivers which most influence employee on-the-job behavior/intensity of effort. This technology enables each driver to be independently measured and properly weighted to create reliable, psychometric profiles that read like a willingness profit and loss statement. Plus it provides the basis for anonymously classifying engagement level; each individual’s level of positive or negative emotional attachment to the organization and its goals by group - and the behaviors employers can expect at each engagement level. Accurate engagement profiles make it easy to address key opportunities for improvement and develop precision action plans that sustainably engage employees.
The ultimate validity test for employee engagement survey measurement is in the efficacy of improved human effort and business performance when survey data is managed by team leaders. When engagement scores go up, business results go up.
Scarlett Surveys has surveyed over 15 million employees over 53 years and has empirically validated the 15 drivers of engagement, developed by Dr. Frederick Herzberg, with their Associate Engagement Research (AER™) employee engagement survey instruments, worldwide.
"What is Employee Engagement?" is the most viewed and quoted White Paper on employee engagement. Ken can be reached at Ken.Scarlett@ScarlettSurveys.com.
© Scarlett Employee Surveys International “Lead. Inspire. Profit.”
Quotations without approbation subject to copyright infringement.
Job 1 – Define it: Best Practice Employee Engagement Definition
To manage engagement successfully the organization must define it correctly. Less than 21% of organizations we start work with have a written definition of employee engagement, while almost all stress the importance of employee engagement on their websites as a primary management objective. Without clear definition, leadership activities to improve engagement tend to be measured anecdotally through favorable stories. Working on the wrong things avoids detection.
The rule of success is that engagement must be defined well in order to measure it well. If measured well, it can be managed sustainably across the organization, like a “people leadership” performance profile.
Scarlett Surveys technically defines employee engagement as an individual’s degree of positive or negative emotional attachment to their organization, their job and their colleagues. This definition of employee engagement has increasingly become the globally accepted scientific standard for four reasons: 1) it is measurable through the deployment of an attitude survey questionnaire empirically validated to measure the 15 drivers of engagement developed by Dr. Frederick Herzberg; 2) this definition provides leadership with a cause and effect understanding they can successfully influence; 3) this definition can improve business results when assigned as a performance responsibility of leadership and Human Resources; and 4) this definition predicts effort.
Conceptually, engagement is the emotional energy that burns inside you at work – hot or cold and all temperatures between. Think of it as the intensity of your willingness to be “all in” or less before you start work.
Adopting a solid definition of employee engagement is the critical first step in real engagement measurement and management. Leaders need this common language to efficiently focus their HR strategies. And, so they can work on the right things.
Job 2 – Measure it: Quality Employee Engagement Measurement
There are three proven methods for measuring employee engagement, each with varying degrees of accuracy depending on measurement integrity and data-collection quality. Engagement can be measured by an empirically validated survey questionnaire, through person –to-person interviews and by observation.
Scarlett has found that the most reliable engagement measurement is derived from attitude classification psychometrics and collected via survey responses to a complete inventory of questions about employee feelings and experiences towards verified engagement “drivers”. An employee survey that accurately measures engagement is empirically validated to independently measure each bona fide engagement driver proven to significantly influence on-the-job behavior and effort. The tricky bit on calculating responses to these question sets is that these drivers are not linear – some are more influential than others. Mathematically, these drivers don’t have equal value when calculating a meaningful engagement index or ratio. So putting together a list of opinion questions and adding up responses to arrive at an “employee engagement score” fails. It takes years of empirical testing to develop a reliable engagement measurement survey instrument leaders can trust.
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