Engagement defined

Employee engagement can have numerous meanings so employers must determine how it applies to them, says Victoria Furness

Whoever coined the phrase ’employee engagement’ is probably kicking themselves for not registering it as a trademark, as they would most likely be a multi-billionaire by now such is the frequency with which the phrase is used in HR circles.

Employee engagement is rapidly becoming one of those phrases that defines a decade of thinking about how employees relate to their workplace. In the 1980s, there was ‘job satisfaction’, in the 1990s ’employee motivation’ and now, in the Noughties, ’employee engagement’ has become the de rigueur phrase. But that’s not to downplay its relevance in today’s working environment. Organisations that foster high levels of engagement are more likely to retain high-performing employees, according to the Chartered Institute of Personnel and Development’s (CIPD) most recent survey into employee engagement, How engaged are British employees?, published in November 2006.

Furthermore, Towers Perrin’s Global workforce study, published in October last year, meanwhile, found that not only are highly-engaged employees far more likely to stay with their employer than disengaged staff, but they believe they can and do make a meaningful contribution to results. This is backed up by the Towers Perrin-ISR engagement report, published in June 2007, which found that employers with the highest percentage of engaged employees, on average, increased operating margins by 3.74% and net profit margins by 2.06%, whereas organisations with the lowest percentage of engaged staff showed declines of 2% in operating margins and 1.38% in net profit margins.

With such a strong case in support of employee engagement, there is little wonder organisations are jumping on the bandwagon. Yet defining exactly what is meant by the term is not always a straightforward task.

David MacLeod, a senior adviser at Towers Perrin and co-author of a book on employee engagement, The extra mile, believes the defining characteristic of employee engagement is whether staff are prepared to offer discretionary effort. “When we’re asked to do something or see an opportunity to do it, do we go the extra mile or do we just do the reasonable minimum to get by? The problem with the phrase ‘job satisfaction’ is that I can be satisfied in a job, but that’s not the same as me really wanting to go the extra mile.”

Nic Marks, founder for the Centre for Wellbeing at the New Economics Foundation (NEF), breaks down the concept of employee engagement even further into extrinsic and intrinsic engagement. He explains that extrinsic engagement looks at how much an employee goes the extra mile beyond their duty, while intrinsic engagement is about how engaged or absorbed people are in their actual jobs. “Quite a lot of employee engagement strategies take a top-down approach and tend to focus on getting more out of employees. But if you take a bottom-up approach and give people the opportunity to express themselves through jobs that interest them, they will take less time off sick and be more productive as they are working with their own intrinsic motivation,” he says.

Make use of data

The Hay Group, however, prefers to talk about ’employee effectiveness’, which according to managing consultant Sam Dawson, takes engagement a stage further using a concept called Support For Success. “This looks at the enabling environment, the conditions in someone’s job that allow them to do their best, and starts to think about the things managers can put into place that best align people to roles,” he says.

Such discrepancies over the meaning of employee engagement may seem more suited to the realms of academia, but if an employer hasn’t decided what the phrase means in relation to its workforce, it can be difficult to begin to measure levels within the organisation.

Only by measuring employee engagement, can employers start to see what has an influence on engagement levels and, crucially, adapt or improve the way it manages staff. James Finn, a consultant at Getfeedback.net, explains: “Measuring engagement gives employers insight into all the systems and processes they have to attract and retain employees, and motivate them.”

Where difficulties often arise is in measuring something as intangible as engagement – after all, everyone is prone to the occasional bad day at work. Nick Tatchell, senior project director at Towers Perrin-ISR, says: “Surveys are the best way to go, but the other important [thing] is helping employers understand how they compare to sector norms or high-performing organisations.”

Many employers don’t just rely on an annual staff survey to assess engagement levels, but also use focus groups and other employee data sources for richer insight. The Royal Bank of Scotland (RBS), for example, has run an annual global employee opinion survey of its 170,000 staff since 2000 and, over that time, has developed an advanced array of data analysis techniques. Greig Aitken, head of human capital strategy, says: “It allows us to understand what aspects of our employee proposition are driving engagement scores.”

But, he acknowledges that surveys aren’t a solution in themselves. “Only 60% of success comes from doing the survey. The most important part is doing something with the results,” he adds.

This is why the wealth of employee engagement data RBS collects – not just from its global employee opinion survey but also leavers’ questionnaires, benchmark data and employee research – is used to identify the impact of employee engagement on tangible business metrics such as customer service and the company’s financial performance.

Nic Pearce, managing director of internal communications agency Instinctif, insists employers also have to translate what the results means for employees on a day-to-day basis. “If management says it wants to grow company market share by 4% over the next 12 months, then employees need to know ‘what you want me to do differently [from] what I’m doing now’,” he explains.

This is why the concept of employee engagement is seen as so important by organisations today. Unlike past concepts of job satisfaction or staff motivation, employee engagement is not simply about creating a happier workforce, but, more importantly, about making an organisation more productive and successful by engaging people. High-performing organisations have already made the connection, so it surely won’t be long before other employers catch on too.

Case study: Network Rail staff signal change

Network Rail, which manages the UK’s rail infrastructure, has measured engagement since it took over Railtrack five years ago.

Bob Hughes, talent and employee engagement manager, says: “We [effectively] needed to build a new company and change the culture so that we created a safe, reliable and affordable railway. The measure of employee engagement gave us a measure of the improvement in our company culture.”†

The organisation uses the Gallup Q12 poll across its 33,000 UK staff, a process designed specifically to measure engagement. In 2007, its employee engagement score increased by 5% and the number of managers considered to be in the top quartile, who generate the highest scores, increased to 22%.

“In terms of encouraging people to be engaged, we reward our best people. Some people say they’re already good, so why bother? But if you invest in the best, the payback will be greater,” says Hughes.

Last year, for instance, its top 300 managers were invited to a two-day coaching programme.

Learning and development is an important part of Network Rail’s approach to improving the entire organisation’s culture and performance.

Hughes reports that the engagement scores of people who have attended company training programmes, such as those provided by the Centre for High Performance Development, are much higher. “We are making it visible to people that we care about improving engagement,” he says.

Case study: QVC channels survey data

Home shopping broadcaster, QVC, began measuring the engagement levels of its 2,300 UK employees last year when it ran a survey to identify the impact of employee engagement on its business performance.

Frank Robinson, HR director, explains: “Providing an environment where people want to give their best, have clarity of direction and trust in them to succeed will be a big factor [that influences] how they contribute to our organisation.

“In terms of rating QVC as a good place to work, there were very [encouraging] results and our leadership [data was] also very positive. One area we can improve on though, is recognition, particularly appreciating people on a daily basis for a job well done.”†

Not content with simply basing its engagement score on the quantitative survey results, QVC also ran a series of focus groups to understand what issues were important to employees. “The interesting thing was we found where leaders were highly regarded by staff, generally their engagement levels were higher, so we have since focused on leadership programmes looking at coaching, and workshops to share good practice,” adds Robinson.

Team leaders are also incentivised to focus on engagement levels. One of the targets for receiving their bonus is achieving an improvement in their engagement survey results.