Perks improve employee engagement

Benefits buzzwords come and go, but employers are finding that perks can play their part in boosting employee engagement, leaving a lasting imprint on motivation, says Jenny Keefe

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The buzzword of the moment, “engagement” has become an HR obsession. In the 1960s we had commitment, in the 1990s there was involvement, and now it’s engagement. These all help to explain one thing that employers want: well-motivated staff who care about their work and are prepared to put in that extra bit of effort.

Jo Hennessy, director of open programmes at management institute Roffey Park, says employee engagement occurs when staff don’t merely turn up, but go that extra mile. “Engaged employees are committed to their work, putting in enthusiasm and discretionary effort for the organisation’s success.

“It’s when an individual brings their whole self to work, fully engages their brain and heart, and leaves at the end of the day energised by a job well done. At HSBC, they refer to this as having the skills to leave and the desire to stay,” she explains.

Sadly, Britain is suffering from an engagement deficit. International Survey Research’s (ISR) Employee engagement index 2005 found that a third of UK workers are indifferent to their employer’s success. In fact, when it comes to engagement, the UK is ranked only seventh out of the world’s 10 largest economies.

The case for engagement is strong. Who wouldn’t choose a team of keen beans over a bunch of clock-watchers? Yet there are also more tangible long-term business benefits. Jenny Davenport, director of employer brand consultants People in Business, says: “Engaged workers are more likely to stay, thus saving on recruitment and additional training costs and [giving] customers continuity.”

Indeed, Towers Perrin’s Worldwide Employee engagement survey 2005 found that engaged staff are far more likely to stick with their employer. Worldwide, six-out-of-ten (59%) of highly-engaged employees said they planned to stay with their employer, compared with 24% of disengaged staff.

Another advantage of engagement is that workers start to believe in the corporate brand. “At least as valuable, but hard to price, is having all your employees as advocates for your company. This is cheaper than corporate advertising and people are more likely to believe something they hear face-to-face than from an ad,” Davenport adds.

Financial benefits

The view that engagement impacts on the bottom line is also gaining ground. David Macleod, senior adviser on change and performance at Towers Perrin, says: “[In 2004], we did a study looking at the correlation between organisations’ levels of engagement and profit margins. We found a 15% improvement in levels of engagement correlates with a 2% improvement in operating margin. If you take all the evidence, there’s a compelling case that an organisation with engaged people [will] do financially better than one with disengaged people.”

If you want to take the case for engagement to senior management, Macleod advises gathering research showing its link with profits, then studying engagement levels in your organisation. Finally, work out the bottom line payout in return for the introduction of engagement-boosting activities.

And, so, the million dollar question: how to promote engagement? The bad news is that there is no quick fix — a top-notch benefits package won’t automatically solve engagement problems.

Mark Allison, managing director at employee and customer research firm Digital Opinion, says: “Benefits [affect] engagement when they fall short of perceived norms. Organisations that are genuinely interested in employee engagement tend to provide competitive benefits as a matter of course.”

Researchers at the Institute for Employment Studies (IES) surveyed eight organisations for its Drivers of employee engagement research and found that benefits only had an impact on engagement in one organisation. This was a firm of software consultants which had withdrawn a benefits scheme leaving staff dissatisfied.

Jon Cowell, head of learning and development at electricity supplier Npower, says benefits can help people to stay, but won’t make them pour their heart and soul in to the organisation. “The key to motivation and discretionary effort is largely founded on emotional engagement.

“This is intrinsic and has to do with the things that an employee values, such as interesting work, a sense of doing something worthwhile, and good relationships with colleagues. A good benefits package promotes rational engagement and generally helps [to] stop people leaving, but may not do much for their performance when in [the] post.”

Wellbeing perks are just one type of benefit that can help to foster engagement. The IES study identified four key drivers of engagement: being involved in decision making; believing ideas are listened to; opportunity for development; and health and wellbeing.

Sam Gee, head of reward at KPMG, says: “Health and wellbeing is important for engagement because it impacts on a positive workplace and work-life balance. It shows reward is much more complex than what we give to someone through pay and benefits. It is more about total reward, [relating] to their life outside and inside work.”

As far as measuring engagement is concerned, this is a tricky business. After all, how do you measure happiness? “Indirectly you can look at retention, but that isn’t a direct measure of engagement. Employee surveys are the best and easiest way of measuring engagement, since you’re talking about attitudes,” the Employer Brand Consultancy’s Davenport says.

Surveys shouldn’t be a one-off exercise, but should be incorporated into business cycles. The questions should normally cover three areas: whether staff are aligned with an organisation’s goals, whether they’re proud to work there, and if they are willing to go the extra distance for their employer when doing their job.

Creative fun

James Finn, engagement specialist at employee research company Getfeedback, advises adapting questions to suit the workforce by picking up on particular factors that help to identify the culture. In one particular case, he encountered a company which wanted to establish whether there was a ‘buzz in the organisation’. “That is hard to measure but it was important for this business, where it needed people to be on a constant high, to really drive [it] forward.

“I did work for another organisation where the people were highly creative and it asked: ‘is this a fun place [for us] to work?’ This was a key driver for members of staff who could work anywhere and working in a place that was fun was critical to recruitment and retention.”

Of course, collecting the data is just the beginning of the process. It’s what is done with it that counts. Nick Tatchell, senior project director at employee research company ISR, says the next step is to benchmark the findings. “Comparing engagement scores to a relevant benchmark enables you to evaluate whether levels are high or low within your particular country or sector.”

A good employee research firm should be able to show how an organisation measures up next to other employers in the same sector, country and even businesses with above-average financial results for that particular industry. What’s more, with a bit of clever number crunching, it’s possible to relate engagement scores directly to other aspects of business performance.

“Organisations are increasingly integrating employee engagement measures into scorecards alongside other key performance metrics. So senior managers can clear see the impact people have on everything from sales to customer satisfaction to financial performance,” Tatchell says.

Once the results have been analysed, it is crucial that employers work to get everyone on board. “Don’t treat the employee survey as an exercise that belongs only to the HR function. Encourage managers at all levels to take personal responsibility for improving employee engagement; perhaps by including specific goals in their performance reviews,” explains Tatchell.

The biggest pitfall, however, is carrying out surveys and not acting on the findings. “Good data should give the HR function the ability to say ‘we need to do this, because of this and this will help this element of our corporate plan’. Quite often, HR issues are not tangible [and] are difficult to show evidence for, but this will give the board confidence to act. Failure to act can be a demotivator. It is important to recognise this,” says Getfeedback’s Finn. So do the research, take the findings on board, and show employees that their employer is concerned about engagement too.


The dos and don’ts for an engaged workforce

Do make sure you get everyone onboard Engagement is the responsibility of the entire organisation, including senior management and line managers, not just human resources.

Do focus on healthy perks Studies show that wellbeing benefits can boost engagement levels.

Do have regular social events Activities where staff meet outside the office, such as picnics, charity and sporting events, can make people feel glad they work for an organisation.

Do take your workforce’s temperature Conduct regular employee engagement surveys and benchmark the results against other employers.

Do not skimp on staff perks A great benefits package might not actively engage employees but a stingy one can disengage workers.

Do not employ lousy managers Those that don’t listen, or who fail to treat staff with respect, are sure to switch employees off.

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Case study: InterContinental Hotels Group

Staff seen as vital link in hotel chain InterContinental Hotels Group puts its money where its mouth is and, this year, invested $10m (£5.4m) in a global employee engagement programme.

David Anderson, vice president of global brand innovation, headed the project, which involved 140 hotels in some 69 countries.

“A couple of years ago, the company started a brand repositioning project. It’s so easy to talk about brands in terms of beds, pillows and pillowcases, but our staff are a key selling point for the brand.

“We wanted to really get our people excited about InterContinental and internalise the new brand position,” he explains.

As part of the engagement programme, the firm held courses for staff, focusing on bringing the new brand to life through local knowledge, customer experience and the personal touch. Next year, the focus will move to employee benefits, beginning with the launch of a voluntary benefits scheme in January.

“Employee benefits is the big focus for early 2007. It’s no surprise that reward and recognition has an impact [on engagement levels] and I’m looking at how we can integrate engagement, so if you decide to work with the brand then you’re rewarded for that.”

Its benefits package currently includes a defined contribution pension scheme with contributions of 3%, 4% or 5%, private medical insurance and an employee assistance programme. Then there are the perks of the industry: free meals, dry cleaning and half-price room rates.

Hotels are judged on the service they provide, so it is in the firm’s interest to ensure staff are happy. “Obviously it’s proven that if you improve how you treat your colleagues that has a massive impact on service. There’s a real service-employee profit chain,” he says.

InterContinental runs two surveys: one to track employee engagement and another to measure guest satisfaction. Anderson believes there’s a strong correlation between the two polls, with engaged employees equalling satisfied guests. “Early signs are [that] the programme has been extremely successful,” he says.

Case Study: Npower

Electricity firm Npower regularly checks its workforce’s engagement pulse with surveys and focus groups. The utility firm surveys the entire company once every two years and polls sample groups every quarter. Jon Cowell, head of learning and development, says: “Questions are a mix of standard items to track engagement, mainly to do with advocacy, pride and intentions. Some of the questions we ask are: ‘Would you recommend Npower’s products?’, ‘Would you recommend Npower as an employer?’ and ‘Are you proud to work here?’.”

All 12,000 employees are eligible to join a defined benefit or defined contribution pension scheme, depending on their role. Other key benefits include private medical insurance, access to a sharesave scheme, on-site gyms, an employee assistance programme and childcare vouchers.

Cowell admits that conducting the research isn’t always plain sailing. “Some of the challenges are about encouraging people to invest the time and getting senior managers to act on the findings. Operationally, maintaining good quality data about [everyone within] the organisation has been a bit of a bug-bear.” It is also vital that the company takes action once the survey is complete. “In our 2005 survey responses, one site showed dissatisfaction with the working environment. We spent nearly £500,000 sorting these things out,” adds Cowell.