The engagement gap

A 2008 Tower Perrin survey found that out of 90,000 employees worldwide, a tiny 21 percent were found to be fully engaged at work, with double that number (40 percent) disenchanted or disengaged. And in July of this year, Hewitt Associates, a global consulting and outsourcing company, reported that almost half of organizations around the world saw a significant drop in employee engagement levels at the end of June 2010 quarter.

“Engaged employees work harder, are more loyal and more willing to go the extra mile for the organization.”

Hewitt's analysis goes on to suggest a clear link between employee engagement levels and financial performance, while Tower Perrin found that companies with low levels of employee engagement had a 33 percent annual decline in operating income and an 11 percent annual decline in earnings growth. On the other hand, those with high engagement, reported a 19 percent increase in operating income and 28 percent growth in earnings per share.

The study also found that companies with the highest levels of employee engagement achieve better financial results and are more successful in retaining their most valued employees than companies with lower levels of engagement. Various other research shows that the connection between an employee's job and organizational strategy is the most important driver of employee engagement. Employees with the highest levels of commitment perform 20 percent better and are 87 percent less likely to leave the organization, which indicates that engagement is linked to organization performance.

There is no doubt that employee engagement is a key business driver for organizational success: high levels of engagement lead to retention of talent, fosters customer loyalty and improves organizational performance. The question is: how do you engage your workforce? 

Engagement is a complex subject and can be defined by many different factors, from workplace culture, organizational communication and managerial styles, to trust and respect, leadership and company reputation. And for today's generation access to training, career opportunities and work/life balance is important. Therefore, if the HR department designs, measures and evaluates workplace policies and practices to help attract and retain talent, there is more potential for engagement.

Looking at the current situation, attracting, engaging and retaining talent is becoming increasingly important and there is no doubt that leaders and managers need to master a new of abilities on order to engage their people. The Towers Perrin survey backs this up showing that senior leadership has a significant impact on engagement. The top engagement driver both globally and in the US is the employees' belief that senior management has their best interests at heart.

However, only four in 10 respondents believe this is the case in their organizations. More than half also felt that senior management "treats us as just another part of the organization to be managed" or "as if we don't matter". Both senior leaders and managers get low marks on key aspects of their role, in particular on empathy, communication and transparency.

The bottom line is that leaders to connect with and inspire the workforce in order to fully engage them. On the back of the research Towers Perrin suggested five potential insights that would allow an organization to close the engagement gap. First, the organization is the most powerful influencer of employee engagement, therefore the organization has to look at the way they are running the company and ensure they are doing everything possible to engage their employees. Second, there is no single "right model" for a high performance culture; the most effective approach depends on an organization's strategic priorities. Third, employees are eager to invest more of themselves to help the company succeed, but they want to understand what is in it for them.

Fourth, senior leaders need to make the leap to a more inspirational style of leadership to help drive higher engagement. Finally, companies need to understand their customers to design a work environment and experience that will drive higher engagement and performance. 

The bottom line in engagement is that engaged employees will work harder and are more likely to go the extra mile for their organization. By understanding that employee behaviors can either positively or negatively affect organizational success, it is vital that that employee engagement is regarded as a serious challenge. Indeed, companies that are successful at improving engagement in spite of these pressures are the ones that create an environment focused on key human capital elements. 

Case study: Sony Pictures Entertainment

The Energy Project, established a decade ago to help individuals and organizations transform the way they work, believes the reason we are so disenchanted with work stems from the assumption that we operate best in the same way as computers: at continuous high speed, for long periods of time, running multiple programs at the same time. The Energy Project believes that in fact this way of working will only lead to burnout. It instead focuses on individuals and organizations managing their energy as opposed to their time. Time, after all, is finite, and by contrast, you can expand your personal energy and regularly renew it.

Once people understand how their supply of available energy is influenced by the choices they make, they can learn new strategies that increase the fuel in their tanks and boost their productivity. By choosing to define precise time at which to do specific activities, these new behaviours become simple but powerful rituals. The Energy Project suggests practices such as shutting down your email for a couple of hours or taking a daily 3pm walk to get an emotional or physical breather.

Sony Pictures Entertainment, based in Culver City, California, has worked with  the Energy Project. The reaction to the program was overwhelmingly positive. Eighty-eight percent of participants say it has made them more focused and productive, while more than 90 percent say it has helped them bring more energy to work every day. Sony's management believes that the changes have also boosted the company's bottom line. 

FACTOID

• $350 billion is lost each year due to lower levels of productivity
• Engaged employees work harder, are more loyal and more willing to go the extra mile for the organization