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Employee Engagement

Engagement at work was conceptualized by William A. Kahn (1990) as the ‘harnessing of organizational members’ selves to their work roles. In engagement, people employ and express themselves physically, cognitively, and emotionally during role performances. The second related construct to engagement in organizational behavior is the notion of flow advanced by Csikszentmihalyi (1975, 1990). Csikzentmihalyi (1975) defines flow as the ‘holistic sensation’ that people feel when they act with total involvement. Flow is the state in which there is little distinction between the self and environment. When individuals are in Flow State little conscious control is necessary for their actions Employee Engagement as the extent to which workforce commitment, both emotional and intellectual, exists relative to accomplishing the work, mission, and vision of the organization. I see engagement as a heightened level of ownership where each employee wants to do whatever they can for the benefit of their internal and external customers, and for the success of the organization as a whole.

Employee engagement was described in the academic literature by Schmidt et al (1993) using data from Gallup’s Q12 engagement survey. A modernized version of job satisfaction, Schmidt et al’s influential definition of engagement was “an employee’s involvement with, commitment to, and satisfaction with work.” This integrates the classic constructs of job satisfaction (Smith et al, 1969), and organizational commitment (Meyer & Allen, 1991). Harter and Schmidt’s (2003) most recent meta-analysis can be useful for understanding the impact of engagement.

Linkage research (e.g., Treacy) received significant attention in the business community because of correlations between employee engagement and desirable business outcomes such as retention of talent, customer service, individual performance, team performance, business unit productivity, and even enterprise-level financial performance (e.g., Rucci at al, 1998 using data from Sears). Some of this work has been published in a diversity context (e.g., McKay, Avery, Morris et al, 2007). Directions of causality were discussed by Schneider and colleagues in 2003.

Engaged employees care about the future of the company and are willing to invest the discretionary effort[1]. Engaged employees feel a strong emotional bond to the organization that employs them. (Robinson)

[edit] Emotional attachment

Only 29% of employees are actively engaged in their jobs.[2] These employees work with passion and feel a profound connection to their company. People that are actively engaged help move the organization forward. 84% of highly engaged employees believe they can positively impact quality of their organization’s products, compared with only 31% of the disengaged.[citation needed] 72% of highly engaged employees believe they can positively affect customer service, versus 27% of the disengaged.[citation needed] 68% of highly engaged employees believe they can positively impact costs in their job or unit, compared with just 19% of the disengaged[1]. Engaged employees feel a strong emotional bond to the organization that employs them.[3] This is associated with people demonstrating a willingness to recommend the organization to others and commit time and effort to help the organization succeed.[4] It suggests that people are motivated by intrinsic factors (e.g. personal growth, working to a common purpose, being part of a larger process) rather than simply focusing on extrinsic factors (e.g., pay/reward).[5]

[edit] Involvement

Eileen Appelbaum and her colleagues (2000) studied 15 steel mills, 17 apparel manufacturers, and 10 electronic instrument and imaging equipment producers. Their purpose was to compare traditional production systems with flexible high-performance production systems involving teams, training, and incentive pay systems. In all three industries, the plants utilizing high-involvement practices showed superior performance. In addition, workers in the high-involvement plants showed more positive attitudes, including trust, organizational commitment and intrinsic enjoyment of the work[3]. The concept has gained popularity as various studies have demonstrated links with productivity. It is often linked to the notion of employee voice and empowerment.[6]

[edit] Commitment

It has been routinely found that employee engagement scores account for as much as half of the variance in customer satisfaction scores. This translates into millions of dollars for companies if they can improve their scores. Studies have statistically demonstrated that engaged employees are more productive, more profitable, more customer-focused, safer, and less likely to leave their employer.

Employees with the highest level of commitment perform 20% better and are 87% less likely to leave the organization, which indicates that engagement is linked to organizational performance.[7] For example, at the beverage company of MolsonCoors, it was found that engaged employees were five times less likely than non-engaged employees to have a safety incident and seven times less likely to have a lost-time safety incident. In fact, the average cost of a safety incident for an engaged employee was $63, compared with an average of $392 for a non-engaged employee. Consequently, through strengthening employee engagement, the company saved $1,721,760 in safety costs in 2002. In addition, savings were found in sales performance teams through engagement. In 2005, for example, low-engagement teams were seen falling behind engaged teams, with a difference in performance-related costs of low- versus high-engagement teams totaling $2,104,823.3 (Lockwood).

[edit] Life insurance industry

Two studies of employees in the life insurance industry examined the impact of employee perceptions that they had the power to make decisions, sufficient knowledge and information to do the job effectively, and rewards for high performance. Both studies included large samples of employees (3,570 employees in 49 organizations and 4,828 employees in 92 organizations). In both studies, high-involvement management practices were positively associated with employee morale, employee retention, and firm financial performance[3]. Watson Wyatt found that high-commitment organizations (one with loyal and dedicated employees) out-performed those with low commitment by 47% in the 2000 study and by 200% in the 2002 study.[8]

[edit] Productivity

In a study of professional service firms, the Hay Group found that offices with engaged employees were up to 43% more productive.[9]

The most striking finding[citation needed] is the almost 52% gaps in operating incomes between companies with highly engaged employees and companies whose employees have low-engagement scores. High-engagement companies improved 19.2% while low-engagement companies declined 32.7% in operating income during the study period . For example, New Century Financial Corporation, a U.S. specialty mortgage banking company, found that account executives in the wholesale division who were actively disengaged produced 28% less revenue than their colleagues who were engaged. Furthermore, those not engaged generated 23% less revenue than their engaged counterparts. Engaged employees also outperformed the not engaged and actively disengaged employees in other divisions. It comes as no surprise, then, that engaged employees have been statistically linked with innovation events and better problem solving.

Generating engagement

Recent research has focused on developing a better understanding of how variables such as quality of work relationships and values of the organization interact and their link to important work outcomes. 84% of highly engaged employees believe they can positively impact the quality of their organization’s products, compared with only 31 percent of the disengaged[1]. From the perspective of the employee, “outcomes” range from strong commitment to the isolation of oneself from the organization. The study done by the Gallup Management Journal has shown that only 29% of employees are actively engaged in their jobs. Those “engaged” employees work with passion and feel a strong connection to their company. About ⅔ of the business units scoring above the median on employee engagement also scored above the median on performance. Moreover, 54% of employees are not engaged meaning that they go through each workday putting time but no passion into their work. Only about ⅓ of companies below the median on employee engagement scored above the median on performance.

Access to a reliable model enables organizations to conduct validation studies to establish the relationship of employee engagement to productivity/performance and other measures linked to effectiveness.

It is an important principle of industrial and organizational psychology (i.e. the application of psychological theories, research methods, and intervention strategies involving workplace issues) that validation studies should be anchored in reliable scales (i.e. organized and related groups of items) and not simply focus on individual elements in isolation. To understand how high levels of employee engagement affect organizational performance/productivity it is important to have an a priori model that demonstrates how the scales interact. Unfortunately, the major consulting firms have ignored this basic and critical aspect. To date, the only a priori model of which I am aware is that by Dr. Paul Marciano — The RESPECT Model.

There is also overlap between this concept and those relating to well-being at work and the psychological contract.

As employee productivity is clearly connected with employee engagement, creating an environment that encourages employee engagement is considered to be essential in the effective management of human capital.[12]

[edit] Influences

* Employer engagement – A company’s “commitment to improving the partnership between employees and…employer.”[14] Employers can stay engaged with their employees by actively seeking to understand and act on behalf of the expectations and preferences of their employees.

* Employee perceptions of job importance – According to a 2006 study by Gerard Seijts and Dan Crim, “…an employees attitude toward the job[‘s importance] and the company had the greatest impact on loyalty and customer service then all other employee factors combined.”[12]

* Employee clarity of job expectations – “If expectations are not clear and basic materials and equipment not provided, negative emotions such as boredom or resentment may result, and the employee may then become focused on surviving more than thinking about how he can help the organization succeed.”[4]

* Career advancement/improvement opportunities – “Plant supervisors and managers indicated that many plant improvements were being made outside the suggestion system, where employees initiated changes in order to reap the bonuses generated by the subsequent cost savings.”[13]

* Regular feedback and dialogue with superiors – “Feedback is the key to giving employees a sense of where they’re going, but many organizations are remarkably bad at giving it.”[4] “‘What I really wanted to hear was ‘Thanks. You did a good job.’ But all my boss did was hand me a check.'”[9]

* Quality of working relationships with peers, superiors, and subordinates – “…if employees’ relationship with their managers is fractured, then no amount of perks will persuade the employees to perform at top levels. Employee engagement is a direct reflection of how employees feel about their relationship with the boss.”[12]

* Perceptions of the ethos and values of the organization – “‘Inspiration and values’ is the most important of the six drivers in our Engaged Performance model. Inspirational leadership is the ultimate perk. In its absence, [it] is unlikely to engage employees.”[9]

* Effective Internal Employee Communications – which convey a clear description of “what’s going on”. “‘If you accept that employees want to be involved in what they are doing then this trend is clear (from small businesses to large global organisations). The effect of poor internal communications is seen as its most destructive in global organisations which suffer from employee annexation – where the head office in one country is buoyant (since they are closest to the action, know what is going on, and are heavily engaged) but its annexes (who are furthest away from the action and know little about what is happening) are dis-engaged. In the worst case, employee annexation can be very destructive when the head office attributes the annex’s low engagement to its poor performance… when its poor performance is really due to its poor communications.

* Reward to engage – Look at employee benefits and acknowledge the role of incentives. “An incentive to reward good work is a tried and test way of boosting staff morale and enhancing engagement.” There are a range of tactics you can employ to ensure your incentive scheme hits the mark with your workforce such as: Setting realistic targets, selecting the right rewards for your incentive programme, communicating the scheme effectively and frequently, have lots of winners and reward all achievers, encouraging sustained effort, present awards publicly and evaluate the incentive scheme regularly.

 

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