Get 'engaged'

In today's lean business, employees who go the extra mile can make all the difference to corporate performance. Emma De Vita looks behind the current buzzword - 'engagement' - to discover how firms can unlock workers' precious reserves of discretionary effort.

by Emma De Vita
Last Updated: 09 Oct 2013

Everyone wants you to get engaged these days. And we don't mean settling down with the man or woman of your dreams; rather, making a meaningful commitment to the organisation you work for. But if the thought of getting married to the company fills you with dread, fear not, for the relationship your management wants to inculcate is an enlightened one, based on trust, openness and personal fulfilment ...

How we feel about our work is becoming the prime concern of a growing number of companies, which, after the cost-cutting and downsizing of the 1990s, want to make the most of what they've got left - namely, their diminished workforce. If nowadays you fight to recruit your talent, then you must struggle to keep hold of it. And if costs have been cut to the bone, the only way you can grow is through better productivity, innovation and service - which comes down to the willingness of your people to muck in, pull together and go that extra mile, for the success of the company.

This idea is now termed 'employee engagement', which HR consultancy Towers Perrin defines as 'the extent to which employees put discretionary effort into their work, beyond the required minimum to get the job done, in the form of extra time, brainpower or energy'.

The connection between the attitudes and behaviour of employees and an organisation's bottom line was first trumpeted 15 years ago by US retail company Sears. It dubbed it the 'employee-customer-profit chain' and the results of putting the idea into practice were spectacular. In a year, Sears' biggest lossmaking division - merchandising - went from a $3 billion deficit to a net income of $752 million.

Since then, various metrics have been devised by HR consultancies to help organisations quantify employee attitude and behaviour and the impact it has on customer satisfaction and ultimately the bottom line. 'The reason why engagement matters now,' says Jim Crawley, a principal at Towers Perrin, 'is that while previously anyone would intuitively have said there is a link between people being well disposed towards an organisation and the likelihood of that organisation being successful, now there is evidence to prove it.'

Because engagement is an area that essentially concerns itself with the emotions and even the spirituality of individuals, it's easy to dismiss it as another fluffy 'people' initiative. But the idea of employee engagement shouldn't be written off as just another HR fad with its concomitant metrics and bureaucracy. Neither should it be viewed as a quick fix. This idea is much bigger than that, because it relates to the core of a business - its values, culture and way of managing. Changing that is a tall order. But in the long term - and the path to engagement is a marathon, not a sprint - a truly engaged company is likely to be a 'great' one.

A sterling, if unusual, example of this is the John Lewis Partnership. It's unusual because, being owned by its employees, it doesn't follow a conventional corporate structure. But the secret of its engagement success is not attributable just to its ownership structure: it's as much about the company's collective management approach. In the words of Sir Stuart Hampson, chairman of the group until last month, '(it's) clear that co-ownership is the starting point, but its power only clicks in when combined with the full engagement of employees in "co-creation" of value'. In March, the group, which includes John Lewis and Waitrose, announced a record annual pre-tax profit of £319 million and a bonus pot of £155 million, shared among its 65,000 partners (each got the equivalent of nine weeks' pay).

But engagement cannot be restricted to co-owned companies. It would be difficult if it were, for the likelihood of shareholders voluntarily relinquishing their stake in a business is as achievable as renationalising BA. But it's enough of a promise to keep several hundred HR directors awake at night. Best Companies, the organisation behind the Sunday Times Best Companies Award, has for two years been running its Accreditation Standard, which specifically measures levels of employee engagement. This year, 434 organisations entered, including KPMG, Morgan Stanley, Arup, American Express, Deloitte & Touche, Ernst & Young, O2, Ogilvy and Vodafone. Of these, only 149 achieved three- or two-star status, Arup being one of them (see panel, right). So, any company can raise its game by improving its relationship with its employees. But true engagement can be a difficult path to follow. Is it worth it?

If the prize is an increase in levels of commitment right across the workforce, then the answer is yes. A deeply engaged employee is an enticing prospect for senior managers, because their positive behaviour will rub off on clients, customers and colleagues. So how does one of these creatures behave?

They're easy to spot for their motivation, loyalty, focus, enthusiasm, initiative and can-do attitude. They're happy in their work (most days) and advocates for their organisation. A highly engaged company is known to perform better; enjoy high staff retention; sustain long-term success; display energy, productivity and innovativeness; and win regard as an attractive place to work (see diagram below). According to Towers Perrin, for every 1% improvement in engagement, a company can enjoy a 0.1% improvement in sales growth. It's a nice ratio, but can levels of emotional engagement really be measured so precisely?

It's not so easy to create the environment that fosters this kind of behaviour. Like getting a pair of giant pandas or Bengal tigers to breed in captivity, it's about putting the right conditions in place to ensure that the love-in actually happens. There is no common toolkit because different things motivate each individual. As researchers Tamara Erickson and Lynda Grafton point out (Harvard Business Review, 'What It Means to Work Here', March 2007), not all workers want the same thing: 'Some care deeply about the social connections formed in the workplace. Others want to make as much money with as much flexibility and as little commitment as possible. Some have an appetite for risk. Others crave the steadiness of a well-structured, long-term climb up the career ladder.' So a money-hungry financier can be as engaged with their private equity house as a charity worker is with their NGO.

What they all have in common is an emotional connectedness to their organisation. Says Towers Perrin's Crawley: 'They know how their contribution is reflected in the organisation's performance. They have an understanding about where the organisation is going, its mission and how they contribute to that.' He terms this 'rational engagement', knowing how you fit into your organisation. Emotional engagement is more about how you feel about your work and your personal relationships - an alignment between your personal values and those of the business.

In trying to pin down employee engagement, HR experts have devised various criteria against which companies can check the levels of this elusive quality. For the organisation, these traits can be summed up as: a company that is confident of its values and effectively communicates them internally and externally; that knows who fits within the set-up and how to attract them; behaves as its employees expect; engenders autonomy and trust; demonstrates strong and authentic leadership and management; provides challenging work and personal development; values, respects and involves each employee; and invokes a sense of community. Not much to ask, is it?

Key to true engagement is the quality of personal relationships within an organisation; and the bigger the company, the more difficult it is to foster them. The onus is on senior management to create the right kind of managerial style. 'One of the words we're hearing is authenticity,' says Crawley. 'It's about being able to have conversations that are personal. It's about senior leaders personally taking time out to be visible, to get to know their staff.'

For a company with several thousand employees, learning how to connect personally with different generations can be challenging. A Generation Y graduate will need to be handled in a different way from a Baby-Boomer manager. It's a difficult balance to get right.

It's also critical to provide each employee with the opportunity to develop in their career and to be given satisfying work. This means understanding, at an individual level, what motivates and challenges them, then tailoring a career plan for them.

'The picture is very varied when it comes to career development,' says Doug Crawford, head of employee engagement at Chiumento, an HR consultancy. 'Some are very good, some only pay lip-service. But there must be different strokes for different folks. There are more organisations fishing in the same pond for talent, and so, to be successful, they must be very proactive: continually looking at their people, talking with them, ensuring that they - the company - deliver on expectations.'

Is it realistic to expect an organisation to engage 100% with its employees? The answer, MT thinks, is probably not. But even a modest improvement in the way people feel about their work can alter the atmosphere of a place. An engaged workplace is a happy, buzzy one, where the managers care about the people who work for them, and the employees care about the work they do. Simple really.

Additional words by Mark Vernon

THE ENGAGED EMPLOYEE

Owen Lloyd, European product planner, Honda

I graduated two years ago from Coventry University Engineering School and I got offered jobs at Bentley, Peugeot and Audi. I'd applied only to car companies whose attitude and product range I could subscribe to, and Honda for me was by far the best choice because of its people philosophy and its engineering approach. Honda empowers people to get things done and you're given a certain amount of freedom to do things in the way you want. Everyone is given the same opportunities.

You're allowed to make mistakes - you're not held to ransom if you do anything wrong, and you're given quite a lot of autonomy and responsibility quickly if you show you have the ability to take it. There's a lot of trust. It's an open culture and we have a lot of cross-division synergies.

This is the happiest place I've worked, and I've worked in quite a few places. It's a very energised feeling when you walk in the building. It's very open, you can go and speak to anyone. In fact, it's an expectation. If you need to ask a question, you go straight to that person. It's informal, which is really nice. There is a clear direction here and a proactive way of doing things.

Engagement means getting employees involved in the company. It doesn't need to be formalised - it's a culture rather than a process. It's a way of thinking, and it's got to be quite deeply ingrained. We have a very strong philosophy through our founder Soichiro Honda. He always said: yourself first, the company second. Honda very much employs a certain type of person first, and the skills second. A Honda person is interested, a plain speaker, passionate about the product, optimistic - negativity doesn't happen here.

THE VIRTUOUS CIRCLE OF EMPLOYEE ENGAGEMENT

THE ENGAGED COMPANY
- Better business performance
- High staff retention
- Sustained, long-term success
- Strong sense of purpose and identity
- Highly energised, productive and innovative
- Attractive reputation
ITS CONDITIONS OF ENGAGEMENT
- Knows its values and communicates them
- Knows who fits the company and how to attract them
- Behaves as its employees would expect
- Engenders autonomy and trust
- Strong and authentic leadership and management
- Provides challenging work and personal development
- Values, respects and involves each employee
- Invokes a sense of community
THE ENGAGED EMPLOYEE
- Feels trusted, valued and empowered
- Gives their best; goes the extra mile
- Is loyal, motivated and enthusiastic
- Is an advocate for the company
- Understands the company's mission and their place in it; shares common
values
- Is emotionally committed and personally involved

THE ENGAGED HR DIRECTOR

Stella Littlewood, group human resources director, Arup

As a company, we grow organically. In the past 10 years we've increased our staff by more than 150%, mostly through developing graduates. We take the ones who are turned on by what I think is a differentiator for Arup - what I call the spiritual employment contract, which is about our values, ethics and social consciousness. A lot of people join not because we've got a story to tell about our values but because we actually live them.

We tend to attract those with imagination and a bit of passion. What we're looking for is creativity - mavericks who stand out from the crowd. Our labour turnover at Arup is 12%; the industry average is 20%. I think it's a combination of the spiritual employment contract, the values that we have and the strong performance management that keeps people.

With a global business, you've got to allow people to network across the world online. People go onto our intranet and say: 'I've got a problem with x.' They chat about it virtually with Arup people all around the world.

One of our guys in Sydney was working on the Olympic equestrian centre. He wanted to speak to someone internally about horses, and one of our administrators in London came up - she'd posted a picture of herself on a horse. He contacted her. She became a special adviser to the Sydney Olympics and helped on the Beijing Olympics. It's about giving people a chance to get out and help in ways that interest them.

We're owned by three trusts. That helps make you predator-proof - trying to buy us would be a nightmare. It gives people a level of security; we can look longer-term. The money is our own, and it's a profit-share system for all the staff. There's an enormous amount of ownership, because everyone at Arup is a stakeholder. There are nearly 300 directors, and each has a clear idea that they own part of the company, as does my secretary.

THE ENGAGED CHIEF EXECUTIVE

Mark Devereux, co-founder and senior partner, Olswang solicitors

The philosophy of the business is very much about empowering people to achieve their maximum potential as quickly as they can. That has been a critical part of the firm since we started. And it has meant that we've always tried to remove barriers for people. I think it's a real differentiating factor for us and has created a tremendous amount of glue in the firm.

Why do people come to work here? It's a variety of things. They are not micromanaged, and they're encouraged to achieve progress. We're competitive in salary and everything else, but I think it would sad if that were the only reason people stayed. It's actually because it's a nice place to work. I feel passionately that if people do a good job in the firm, they're acknowledged and respected for what they do. It encourages a very good behaviour that projects itself externally.

You find people who share the same core values as you - and that fundamentally means decent people. We don't tolerate people with bad behaviour. It doesn't survive culturally in the firm because it's so countercultural to what people are like here. People can come with airs and graces but after six months they realise it doesn't sit well here.

Having engaged staff is so fundamental. The legal business is just about people - we're not selling products or widgets, we're selling people skills. So it is fundamental in a competitive world, where people are making higher and higher offerings in relation to turnaround and quality, to have people here not because it's just a job and they are bored out of their minds, but who are prepared to provide a first-class offering that is competitive and that is going to differentiate us from our competitors. It is utterly fundamental to our success.

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