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Employee Engagement presentation delivered at the HR Directors Summit 2012
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Employee
Engagement
The truth,
the whole truth,
and, nothing
but
the truth.
Nicholas J Higgins
CEO, VaLUENTiS & Dean, ISHCM
DrHCMI MSc Fin (LBS) MBA (OBS) MCMI
HR Directors Summit 2012
ICC Birmingham
People
Science®
24th January
2012
Tour 2012
All rights reserved. No part of this presentation may be reproduced, translated, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming recording or otherwise without the express permission of the author.
Please e-mail [email protected] regarding any matters of reproduction.
© 2012
Due out
(finally)
2012
Audience
participation
time!
„Is there an elephant in the room?‟ (Every time you see this slide)
Employee Engagement Agenda • The Why and the What of engagement • The How of measuring engagement •Minding the gap (what’s going on here) • Engagement & organisation performance
LOGO
Organisations and employee engagement:
The 4-ball model:
Play down
‘We don’t...’
Play act
‘It’s all about PR…’
Play safe
‘At least we audit/ benchmark...’
Play make
‘We do it…’ The four progressive states of employee engagement embeddedness in organisations
Employee Engagement Agenda • The Why and the What of engagement
Source: Question posed in VaLUENTiS „skunkworks‟ output 2003
“Organisations were looking for a quick-win means of improving performance”
“Organisations were looking for a means to differentiate for hiring talent in PR terms”
1
2
3
Source: Question posed in VaLUENTiS „skunkworks‟ output 2003
Of course, this answer was based on the premise that most organisations were not optimising their people management….
• Embed an optimised people-productivity culture
• Attempt to mitigate against operational employment risk
• Means to collectively „evaluate‟ line management „competence‟ /organisational HCM
• Provide benchmark data on the „soft‟ area of operations (quasi-audit)
• Provide rationale and objective focus for management development programmes
• Means of providing intelligence and/or empirical evidence used in conjunction with other organisation performance data
Second order
(derivative)
rationale/spin-offs Source: Question posed in VaLUENTiS „skunkworks‟ output 2003
LOGO
1a Primary rationale ‘say/do/evidence’
exercise
LOGO
1b Secondary rationale ‘say/do/evidence’
exercise (limited to four)
Source: HR Employee Engagement survey 2010 HR magazine
Evidence that in fact the Primary reasons had swapped places (notwithstanding the
definitions and slightly confusing categories)
Source: Follow-on question posed in VaLUENTiS „skunkworks‟ 2003
This question proved the more difficult to answer as you see. It became more clear as more and more research was done that engagement was a concept (differing from the Macleod review definition) that had been in the making for some time, stretching back to Taylor‟s (much misunderstood work).
Employee engagement can be seen to have four levels: individual, immediate team, wider group and organisational (the micro-, macro- and meso- levels).
Most, if not all of these theories have been subject to empirical evidence and a number have received intense scrutiny. Some of the more well known ones have not always stood up to such scrutiny but remain popular because of the acceptability of the idea. A number of these theories overlap whilst some occasionally conflict as you would expect. Amongst all of the contributing authors we‟ve picked out a dozen of „the hard to ignore‟ variety.
In our view, the understanding of employee engagement became clearer to define through distilling various contributions – „standing on the shoulders of giants‟, so to speak. I‟d also point out that engagement as a concept is consistent with Kahn‟s conclusions back in 1990 – his article being acknowledged as a reference point.
As „employee engagement‟ has grown in business focus we‟ve been concerned that much published material/product on engagement has referenced so little with few exceptions. Effectively, and collectively, as a movement „we‟ve‟ been selling ourselves short, expending much energy on the reinvention of wheels, and, sewing much confusion in the process (where have we heard that before?).
Incidentally little has changed on this slide over the past ten years save more research in these subjects, notably wellbeing and burnout…….
Concept
EMPLOYEE
ENGAGEMENT
Concept
Concept
Concept
Concept
The concept of Employee Engagement: A synthesis of antecedent theories and empirical evidence with human capital
management practice related to organisation performance – 100 years in the making
Source: The antecedents of Employee Engagement, Nicholas J Higgins - VaLUENTiS technical paper 2003
Also in Employee Engagement: The Definitive Guide, forthcoming
Wider
Group
Immediate
Team Organisation Individual
•Motivation theory
•Goal setting and task theory
•Equity (justice) theory
•Group theory
•Trust theory
•Trait theory
•Fayol - Principles of management
•Taylor - Scientific management
•Expectancy theory
•Commitment theory
•Teams theory
•Conflict theory
•Needs theory
•Organisation performance & measurement*
•Social cognitive/
self efficacy theory
Human Capital Management practice/systems:
•Cognitive dissonance
•Wellbeing/Burnout
•Job satisfaction
•Organisation Citizenship Behaviour
•Learning theory
•McGregor Theory X/Y
•Behaviourism
•Training & Development
•Performance management
•Reward & recognition
•Resourcing & selection
•Organisation communication
•Talent management
•Leadership
•Organisation culture
•Employer brand
•Human capital retention
•Organisation design
•Decision-making theory
•Emotional Intelligence
•Workforce diversity
•Mayo/Hawthorne studies
•Tavistock – Socio-technical systems
•Lewin (MIT) - group dynamics/behaviour
•Psychological contract
•Leadership theory
•Organisational „fit‟ theory
•Other I/O psychology
contributions
•High performance work systems
•Munsterberg - Industrial psychology
•Follett - Management relations/integration
•Hertzberg – Two factor theory
•Drucker – Practice of management
•Kahn – Personal engagement
•Likert – Management system/measurement scale
“Employee engagement is an „outcome-based‟ concept.
It is the term used to describe the degree to which employees can be ascribed as „aligned‟ and „committed‟ to an organisation such that they are at their most productive.” VaLUENTiS International School of HCM
2005
‘Most productive’ meaning…individuals are:
More likely to
embrace set
values
More likely to
produce higher
grade/quality of
work (less errors)
More likely to be
flexible to
organisation needs
(if equitable)
Less likely to suffer
stress
(but more likely to
suffer burn-out)
More likely to achieve goals
set
More likely to ‘own’
their development
More inclined to
input into ideas/
innovation
More likely to give
discretionary effort
above contractual
obligations
Less likely to
move employer
Less likely to
commit
fraud/sabotage
Less inclined to
take days off
More inclined to
share knowledge
Our model incorporates five interlocking domains (constructs) which then provide an overall primary construct.
The five domains can each provide sub-constructs depending on focus where required.
When relating to surveys/questionnaires we remain consistent with Likert‟s original meaning of scale, i.e. not the item response format which most have come to mislabel but the use of the item response format against a defined construct….
Objectives awareness
Behaviour alignment
Role „fit‟
Performance management
Feedback
Capability
Line-of-Sight
Cultural elements
Team dynamics
Communication
Resources
Local management
Physical environment
Work Environment
VaLUENTiS 5D Employee Engagement Framework
Remuneration equity
Bonus/incentives
Benefits
Role equity
Recognition
Promotional aspects
Reward (equity) Development
Career progression
Competencies
Succession planning
Job/ Role architecture
Training/ Learning
Coaching/ Mentoring
Organisation design Performance/talent
management „Corporate‟ Leadership
Communication Decision rights
Work values Trust
© VaLUENTiS Ltd 2002-12
Organisation operating
culture
I‟ve mentioned some of the greats – one of those being Kurt Lewin. He is mostly remembered in the OD field with his forcefield analysis which has been much imitated and applied in other contexts.
Employee engagement of an individual can be though of as a daily flow of constant competing forces (vectors) affecting the individual‟s level as shown here with an illustration.
Pragmatically, organisations have tended to make use of annual employee surveys (in some cases quarterly etc) as a means of a proxy of gauging employee engagement levels; it can be thought of as similar to finance producing accounts, for example.
This type of approach provides for analysis, intervention and evaluation when looking at engagement and I expect more and more of this application as organisations finally get past „Go‟ in their approach to improving employee engagement...
Note I‟m not spending too much time on surveys and measurement in today‟s presentation.
Employee engagement as a sum of constant work
‘forces’ (illustrative vectors)
interpersonal
conflict
incentive
misalignment
perceived
reward
inequity
short-staffed
uncaring
new boss
poorly
communicated
reorganisation
enlarged
role
planned
training
cancelled
Well-received
performance
appraisal hit
personal
targets/
objectives
hit team
targets/
objectives
salary
increase enrolled on MD
programme
LOGO
2 Organisation approach to defining
employee engagement exercise
LOGO
The concept of Employee Engagement: A synthesis of antecedent theories and empirical evidence with human capital
management practice related to organisation performance – 100 years in the making
Source: The antecedents of Employee Engagement, Nicholas J Higgins - VaLUENTiS technical paper 2003
Wider
Group
Immediate
Team Organisation Individual
•Motivation theory
•Goal setting and task theory
•Equity (justice) theory
•Group theory
•Trust theory
•Trait theory
•Fayol - Principles of management
•Taylor - Scientific management
•Expectancy theory
•Commitment theory
•Teams theory
•Conflict theory
•Needs theory
•Organisation performance & measurement*
•Social cognitive/
self efficacy theory
Human Capital Management practice/systems:
•Cognitive dissonance
•Wellbeing/Burnout
•Job satisfaction
•Organisation Citizenship Behaviour
•Learning theory
•McGregor Theory X/Y
•Behaviourism
•Training & Development
•Performance management
•Reward & recognition
•Resourcing & selection
•Organisation communication
•Talent management
•Leadership
•Organisation culture
•Employer brand
•Human capital retention
•Organisation design
•Decision-making theory
•Emotional Intelligence
•Workforce diversity
•Mayo/Hawthorne studies
•Tavistock – Socio-technical systems
•Lewin (MIT) - group dynamics/behaviour
•Psychological contract
•Leadership theory
•Organisational „fit‟ theory
•Other I/O psychology
contributions
•High performance work systems
•Munsterberg - Industrial psychology
•Follett - Management relations/integration
•Hertzberg – Two factor theory
•Drucker – Practice of management
•Kahn – Personal engagement
•Likert – Management system/measurement scale
Just a quick note – some of you may have spotted that the HCM elements associated with the organisation (to the right of the diagram) bear a resemblance to our management pathfinder evaluation and you would be right. This is in fact how it came into being…..
DIVERSITY
EMPLOYEE
CENTRICITY
EMPLOYER
BRAND
HR
GOVERNANCE
HR
OPERATIONAL
EXCELLENCE
LEADERSHIP
ORGANISATION
CLIMATE ORGANISATION
COMMUNICATIONS
ORGANISATION
DESIGN
PERFORMANCE
ORIENTATION
RESOURCING
RETENTION
REWARD
TALENT
MANAGEMENT
TRAINING &
DEVELOPMENT
796
813
742
674
615
431
487
642
628 594 603
684
657 599 416
‘Out-performing’
(world class)
‘Out-performing’
(peer)
‘Comparable’
(peer)
‘Under-performing’
(peer)
VaLUENTiS VB-HR Rating Level 2:
Management Pathfinder
Employee Engagement Agenda
• The How of measuring engagement
Lord Kelvin
Improve
business
performance
through
people
Requiring
better
distributed
leadership/
management
Through
improving
productivity
Leveraging
„positive‟
associations
/events
Minimising
„negative
associations
/events‟
Requires some
form of
measurement/
evaluation
Requires
some
underlying
construct
Requires
a
definition
Source: VaLUENTiS „skunkworks‟ simplified collective output 2003
Reverse engineering the
employee engagement
question…..
I‟ve said I‟m only going to touch briefly on surveys and measurement today and I‟ll keep my promise.
I just want to illustrate a model we introduced a few years back to highlight the potential problems with employee engagement construct and survey design.
The Y-axis represents the breadth and balance of items (what we call question-statements) included.
The X-axis represents the design and balance of the statements themselves and the response format chosen.
The model shows four potential outcomes – only one of which is useful.
We would urge organisations to always check their design, whether provided internally or externally. Coming up short on either axis is undesirable.
The last thing you want is to base interventions on potential G-I-G-O „blind‟ scenarios…..
LOGO
Survey instrument design & measurement expertise
HC
M s
ub
ject
mat
ter
exp
erti
se
HIGH
LOW HIGH © ISHCM 2006
The employee survey expertise model
LOGO
Survey instrument design & measurement expertise
HC
M s
ub
ject
mat
ter
exp
erti
se
Myopic
Result: misleading or erroneous
interpretation
20/20 Foresight
Result: organisation has sufficient in-depth, robust
knowledge to act upon
Unfocused
Limited insight due to limitations of HCM knowledge
Blind
Result: end up with ‘garbage in-garbage out’ syndrome
HIGH
LOW HIGH © ISHCM 2006
The employee survey expertise model
LOGO
Survey instrument design & measurement expertise
HC
M s
ub
ject
mat
ter
exp
erti
se
Myopic
20/20 Foresight
Unfocused
Blind
HIGH
LOW HIGH
The employee survey expertise model
16%
25% 51%
8%
Sample: 147 employee surveys. All organisations with over 750 employees. ISHCM research team. Study carried out 2006-7
LOGO
Objectives awareness
Behaviour alignment
Role „fit‟
Performance management
Feedback
Capability
Line-of-Sight
Cultural elements
Team dynamics
Communication
Resources
Local management
Physical environment
Work Environment
VaLUENTiS 5D Employee Engagement Framework
Remuneration equity
Bonus/incentives
Benefits
Role equity
Recognition
Promotional aspects
Reward (equity) Development
Career progression
Competencies
Succession planning
Job/ Role architecture
Training/ Learning
Coaching/ Mentoring
Organisation design Performance/talent
management „Corporate‟ Leadership
Communication Decision rights
Work values Trust
© VaLUENTiS Ltd 2002-12
Organisation operating
culture
Y-axis: Breadth and balance of coverage required
I. Leading questions
II. Double barrelled/multiple questions
III. Knowledge or projection (proxy)
IV. Response extremity
V. Responses open to social desirability/prestige
VI. Responses implying causality
VII. Questions that impose unwarranted assumptions
VIII. Questions that include hidden contingencies
IX. Questions that include ambiguous time periods
X. Questions containing concepts that are open to differing interpretation
XI. Question that duplicates another or is a reverse of another
XII. Questions requiring a tendency to acquiesce and/or imply „psychological threat or hostility
XIII. Questions that are exclusively positively or exclusively negatively clustered
XIV. Questions which are culturally loaded and or overly long
Q-S (question-statement) design error
typology: avoiding the pitfalls
Source: VaLUENTiS QS methodology 2003
LOGO
3 Parameter ‘say/do/evidence’ exercise
LOGO
4 Employee Engagement construct
parameters exercise
LOGO
LOGO
Employee Engagement Agenda
•Minding the gap (what’s going on here)
LOGO
Knows what to
do/achieve
but unlikely to
achieve it
More likely to
have
performance/
capability
issues
Likely to have
performance,
attitudinal
and/or
behavioural
issues
Could do
more
Job gets
done
More likely to
have objective
and/or „potential‟
issues
Fully
productive
Less than
optimally
productive -
Could do more
„well‟
High probability
of wasted
effort/
frustration
Individual‟s
degree of
Alignment
Degree of
Commitment Affective Continuance
Incongruent
Fully
congruent
Staff engagement:
The challenge for organisations
“Only one box in
nine reflects the
constant „high
bar‟ challenge for
organisations in
optimising
engagement
across the
workforce on a
daily basis”
© VaLUENTiS Ltd 2002-12
Engagement responses:
‘The Good The OK and
The Ugly’ •Work and sense of personal accomplishment
•Pride in working for the organisation
•Opportunity to utilise skills
•Adequate training to perform the job
•Personal values/company values aligned
•Honesty and integrity in business activities
•Accurate evaluation of performance in last appraisal
•Company doing a good job in providing opportunities for advancement
•Well-being of employees when management make important decisions
•Senior management in touch with everyday issues
•Equity of being paid compared with others in other companies who hold similar jobs
•Clear communication of rationale behind promotion and career development
•Physical working environment
•Adequate resources to work effectively
•Company values visible in the day-to-day activities of my team
•Receiving recognition for doing a good job
•Understanding how to get promoted
•Equity of being paid compared with others in organisation
Scoring high
Scoring midrange
Scoring low
Source: VaLUENTiS Engagement database, collated since 2004
Please note: Actual Question-statements paraphrased for the purposes of this slide
• Managers are significantly under-qualified compared to other professional
occupations: 41% of managers hold below a Level 2 qualification…….
• …..Just 38.5% of managers and senior officials are qualified at level 4 and
above, compared to 80.9% of those in other professional occupations.”
• “It is estimated that the proportion of managers with management-related
qualifications will not get much above 20 per cent in the longer term at the
current rate of achievement……..
• ….. The literature review revealed that there is a growing body of evidence
showing the impact of not only management skills but management
qualifications on productivity.”
Source: The Value of Management Qualifications, Chartered Management Institute 2007
Management – just how many have a ‘license
to manage’....?
We along with others recognise the big factor in employee engagement – namely line management.
What perhaps is not so recognised is the issue of engagement with individual managers themselves.
It is extremely unlikely that highly engaged employees will be found working for managers who have low engagement themselves. And even if they did – it wouldn‟t be for long.
We recently took a random sample of manager engagement scores from our database to provide a picture. The next two slides show the same data in two different formats – the bell curve and percentile histogram.
I don‟t have time today to go into great detail but I would ask you note the 1 in 7 managers whose score is more than 1 (negative) standard deviation from the norm.
In this sample, 1 in 7 managers equates to about 3000 employees. That‟s a serious concern…………….
‘Line Management’ engagement scores ‘bell curve’
Management cadre sample 2010-11
Sample size: 1400 managers
(employee population: 20,000)
Score range 200-1000
Source: VaLUENTiS Engagement database
14.5% below 1sd 13.9% above 1sd
738 1000 200
‘Line Management’
engagement score by
percentile (same study)
910
860
813
790
760
Management cadre sample 2010-11
Sample size: 1400 managers representing 20,000 employees
Score range 200-1000 Source: VaLUENTiS Engagement database
The theory states that monitoring and maintaining urban
environments in a well-ordered condition may stop further
vandalism as well as an escalation into more serious crime.
The theory states that monitoring and maintaining work
environments in a well-ordered management condition may
stop further engagement erosion as well as an escalation into
more serious disengagement issues.
Applied to engagement…
The ‘Broken Windows’ hypothesis
One other interesting application re line management I‟d like to touch on today – the „Broken Windows‟ theory.
Some of you may be familiar with this – particularly if you‟ve read Malcolm Gladwell‟s „The Tipping Point‟. The actual research dates back to 1982 with Wilson and Kelling‟s work (and later Kelling and Coles) – the central tenet being that the monitoring and maintaining of urban environments in a well-ordered condition may stop further vandalism as well as an escalation into more serious crime; i.e. broken windows beget more broken windows etc.
Though the theory has come in for some criticism – notably Harcourt, it remains a powerful concept.
And thus for a moment I‟d like you to conceive the Broken Windows metaphor applied to line management, switching a few words for appropriateness.
Rather revealing? And maybe useful for organisation messages.
Thus the manager who keeps, for example, (i) postponing an individual‟s appraisal, (ii) late with signing off expenses, (iii) taking time off him/herself at short notice whilst not tolerating others in the same manner, (iv) not confronting a persistent lateness offender, (v) not instilling office tidiness and so on………well you get the similarities……I‟m sure you can identify with many more……….
And whilst we‟re on the subject of line management and „license to manage‟ - here‟s some common problems and some suggested fixes.
The question is do you recognise these and what fixes are taking place, or aren‟t they?
The ‘people competency’ of line
management......
...common problems • Lack of understanding across
managers as to what good people management is and its impact
• Varied mix of line managers with variation in people practice and resulting issues
• No set bar to becoming line „people manager‟, i.e. no „license to manage‟
• Too many „B‟-players in managerial positions who limit employee engagement potential
• Too often, HR as „personnel function‟ compensates for deficiencies
...‟fixes‟ • Clear communicated framework of
good people management practice together with learning exposure
• Utilise management competency platform with structured programme of learning and assessments
• Adopt „license to manage‟ standard with appropriate hurdles and gradings
• Instigate talent assessment where necessary, with career option route-paths including exit
• Assess if issue relates to culture, vague role definition or both, in conjunction with above actions
LOGO
5 Management fix-implementation exercise
LOGO
Employee Engagement Agenda
• Engagement & organisation performance
The traditional view of employee engagement
contributing to improved organisational
performance...
Higher
employee
engagement
Higher
productivity
Higher
organisation
performance
The emerging view of human capital management
practice and employee engagement contributing to
improved organisational performance (as a system)
Higher
employee
engagement
Higher
productivity
Higher
organisation
performance
More effective
human capital
management
However, remember the converse.....
Lower
employee
engagement
Lower
productivity
Lower
organisation
performance
More ineffective
human capital
management
So how do organisations go about improving employee engagement in a coordinated coherent manner?
A very good question. Most case studies, or more precisely mini-case study capsules provide little insight („the more and more providing less and less‟).
When we refer to case studies we refer to the Harvard-types used at the School (ISHCM) or sometimes in our management workshops where much more learning takes place.
Thus, increasingly, we‟re finding the „EE playbook‟, or „Definitive EE playbook‟ giving its correct name, of great value.
The book in itself doesn‟t necessarily have to exist per se but the contents do.
I‟ve shown an example EE playbook on the next slide and examples of operating EE system models, including the original Sears model which is now almost 20 years old and how these types of models have advanced. Again I don‟t have time to go into great detail today but you get the gist of what‟s its about.
I‟d like to think all HR departments have one though preferably it should be distributed around the organisation. It‟s the symbolism here that counts as much as the detail.
The ‘Definitive EE’ Playbook
Incentives
Performance
appraisal
Goal
alignment Team
development
Role design
Managing
conflict
Leadership
Work environment
P
E
R
F
O
R
M
A
N
C
E
What organisations (HR) keep getting
wrong (this is a short ‘shortlist’)…
Mo
dels
S
trate
gie
s
Imp
lem
en
tati
on
L
ea
rnin
g
Contents
1. Engagement strategies
2. Engagement operating „system‟ models and analytics templates
3. Question-statement selection and construct design
4. Measurement index construction, maintenance and reporting
5. Engagement Driver Factor (EDF) analysis
6. Engagement „forcefield‟ analysis
7. EE project management methodology and flowcharts
8. Engagement „issue work-through‟ tools
9. Management learning programme design and evaluative criteria
10. Engagement Transformation Programme (ETP) methodology
11. Core applied theory summary capsules
12. Human Capital Management framework
EE playbook 4
A look back at The original Sears
‘system’ model…
Internal
service
quality
Employee
Satisfaction
External
Service
Value
Customer
Satisfaction
Customer
Loyalty
Revenue
Growth
Profitability
Employee
Retention
Employee
Productivity
Putting the Service-Profit chain to work Heskett, Jones, Loveman, Sasser Jr & Schlesinger
Harvard Business Review Mar-Apr 1994
Human Capital
Practices
Human Capital
Practices External
Value
Proposition
External
Value
Proposition
Customer Satisfaction
Patient Satisfaction
Customer Loyalty
Patient
experience
Revenue Growth
Quality of
services
Profitability Use of Resources
Employee Retention
Staff
Retention
Individual/
team Productivity
Individual/
team Productivity
„ Local‟ Management
„ Local‟ Management
Cost control Cost control
Compliance Compliance
Portfolio mix Safety
X - selling Clinical
treatment
Service Patient focus
Work values Work values
Line - of - sight Line - of - sight
Development Development
Reward Reward
Work environment Work environment
Employee
Engagement
Staff
Engagement
Leadership &
governance
Leadership &
governance
Shareholder value
Trust
performance Employer brand
Employer brand
© VaLUENTiS VBM Analytics methodology 2008-12
Portfolio mix Prompt service
X - selling Environment
Service Community
Example „Macro‟ model NHS version 1.20
Moving on from the Sears model…
LOGO
6 Employee Engagement: Organisation
reality exercise
Source: HR Employee Engagement survey 2010 HR magazine
We could spend a whole day just on this slide (but we’re not!)……
Now you‟ve hopefully been completing the „quick and dirty‟ mini–exercises along the way.
By now you should have a (little) more informed view of where your organisation (or chosen organisation) is?
And so, to return to the beginning and the 4-ball model – the question is where is your organisation?
PLAY-DOWN
PLAY-ACT
PLAY-SAFE
PLAY-MAKE?
Your initiation has begun………
Thank you.
LOGO
Organisations and employee
engagement practice model:
Play down
‘We don’t...’
Play act
‘It’s all about PR…’
Play safe
‘At least we audit/ benchmark...’
Play make
‘We do it…’ The four progressive states of employee engagement embeddedness in organisations
Employee Engagement Agenda
• The truth • The whole truth •And nothing but the truth (well as we see it, anyway!)
Thanks for participating……