Employee engagement has been around as a concept for many years. Research in the public domain articulates the business and economic advantage; the ability for organisations to achieve 'more with less' through greater engagement with their workforce. Employee engagement is even touted as possibly the single most important business success metric. But what is it exactly?
An employee that turns up to work with a smile on their face, with a great work ethic and who is satisfied in their role isn't necessarily engaged.
Employee engagement is often confused with satisfaction or happiness, but it runs much deeper. It is the level of an employee's psychological investment in their organisation. Independent research proves that an engaged workforce will lead to better business outcomes, productivity and bottom line financial improvement. How so? A satisfied employee might be one that happily works their contractual hours, sometimes more if asked to do so, and enjoys the social benefits or 'perks' their employer provides. An engaged employee is one that is truly vested in the strategic success of their employer, understands its objectives and how their own efforts can contribute to that success and executes those efforts in whatever capacity to help achieve the goals of their organisation. Engaged employee provide a higher level of service, customer satisfaction, sales outcomes and make fewer mistakes compared to those that are not engaged. This leads to increased levels of profitability for the organisation.
How can we enable, promote and ultimately achieve employee engagement? More importantly how do we know if we have achieved it, and how much more can we do as an employer to reap the benefits of engagement and be able to measure them?
The key drivers
Research tells us some key drivers of employee engagement:
- Regular dialogue and feedback from managers. According to AON Hewitt's 2016 Trends in Global Employee Engagement, if organisations are to succeed in achieving improvements to their employee engagement, they will need to optimise the employee experience like never before. One way of achieving this could be through the concept of 'continuous listening' where collaborative and frequent conversations are used to collect feedback and actions throughout the employee lifecycle.
- Clarity of an employee's job expectations and importance - self-worth if you like. If an employee does not have clear expectations of their job and how it aligns to their organisation's strategy, then how can they feel connected and valuable to the organisation?
- Career path and development opportunities consistently rank as top drivers of employee engagement. The approach will differ when you compare large to small business, but even in small business on the job training, mentoring and individual training programs will all demonstrate to an employee that their employer is invested in them.
- The quality of working relationship with peers, superiors and subordinates. The employee's relationship with their boss heavily contributes to how engaged an employee feels to their organisation. Managers that demonstrate inspirational leadership, accountability, ethics and values will naturally drive employee engagement and loyalty.
- Internal employee communications that keep everyone informed about what's going on in your business.
The risk of disengagement
There are many advantages of an engaged workforce which are well worth pursuing. But it is important to also understand the risk associated with allowing the workforce to become disengaged. For example:
- Productivity can be damaged where employees become bored and resentful. They may be in a mindset of survival rather than success. If an employees' relationship with their manager is damaged, then no amount of incentive will persuade the employee to perform at their best.
- Mistakes can be costly in many industries. Statistics tell us that engaged workers make less mistakes than those who are not engaged. Not only can this place risk to an organisation's finances but also to personal safety and/or business outcomes of workers, customers and any other person that relies on the activities of disengaged employee.
- Retaining good employees is not only key to productivity, but also avoid the financial loss an organisation incurs when having to replace an employee. In industries like healthcare for example, the cost to replace 1 nurse can range between $40,000 and $60,000 when you consider the direct and indirect costs associated such as hiring, temporary replacement, advertising, training, decreased new employee productivity etc.
A starting point
Through the drivers listed above, a couple of key factors become clear - open communication and good leadership. These factors affect people, their satisfaction, their trust, their commitment and the culture of an organisation. Leadership needs to distribute through the whole of an organisation and delivered by those that have the desire and vision to improve business outcomes. Organisation that have a culture of transparency and accountability and leaders that provide clear direction and 'walk the talk' will achieve better outcomes than those that do not. It's important to not leave these to chance - or left to be driven by individual leaders, as this will mostly result in pockets of success across the entire organisation. Solutions such as SAP SuccessFactors are modular and scalable to suit all types and sizes of organisations.
For more insight on employee engagement, visit our Human Capital Management page. If you're ready to explore in more details, our Human Resource Professional Services Team, leveraging SAP SuccessFactors to power the strategy for your organisation. Contact us to start today.