Unlocking Workforce Engagement: The Critical Business Issue of the Decade

Unlocking Workforce Engagement: The Critical Business Issue of the Decade

Jim SilleryPrincipalBuck Consultants

Today we will talk about…

• The current situation

• What is creating the disconnect

• What you can do about it

Unlocking Workforce Engagement

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What is employee engagement?

An "engaged employee" is one who is fully involved in, and enthusiastic about their work, and thus will act in a way that furthers their organization's interests.

Employee engagement is a measurable degree of an employee's positive or negative emotional attachment to their job, colleagues and organization which profoundly influences their willingness to learn and perform at work.

As a result, engagement is distinctively different from employee satisfaction, motivation and organizational culture.


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Creating engagement sounds simple…

… You just balance organization and individual needs


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Why is engagement important?

Highly engaged employees outperform their disengaged colleagues by 20 to 28 percent. The Conference Board


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“May you live in interesting times”

During the first 10 years of the 21st Century, there was a major terrorist attack, an economic recession, and a major downturn in the U.S. stock market.

Unemployment exceeded the 10 percent mark for the first time since 1983.

After a series of declines, household wealth increased somewhat with the stock market gains, but remained well below pre-recession levels.


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As we woke up to collapsing financial markets…

And then things got really bad…


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Followed by collapsing job markets…

By 2009, HR had taken a number of steps to address the impact of the recession

Source: Buck Consultants Salary Planning Survey

By the height of the recession…

Only 28% of employees were engaged in their jobs

54% were not engaged and 18% were actively disengaged

Source: Gallup Q12 Survey

And everyone was looking for the light at the end of the tunnel…

Since that time, we have seen…

An improving economy…

And an improving job market…

New opportunities… new challenges

Today, companies are looking at opportunities opening across global markets

For many companies, the decisions made today will determine their success for years to come

To be successful, companies need to fully engage their workforce

Today’s global knowledge-based economy is dependent on people and their knowledge, skills, and commitment

The challenge:

- Talent shortages exist side by side with high unemployment- Battered by the recession, workforce discontent spreads- Retention is jeopardized by “latent turnover”


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All signs pointing to an economic upturn and global recovery…

But employee engagement is as bad, if not worse…… with only 30% engaged in their jobs

Despite sincere efforts by companies, workforce engagement remains a persistent problem, with an annual cost estimated at over $550 billion a year.

"But there is a gap between knowing about engagement and doing something about it in most American workplaces.“ Gallup

Recent college graduates are persistently under employedMore than 50% of Gen Y are prepared to accept a lower wage or lesser role if their work contributes to something more important of meaningfulMore than 60% of Gen X is looking for a new job within a year46% of Baby Boomers say career goals are not being advanced in their current job.

And so, as companies emerge from the tunnel, they find that something has changed…

Understanding the Disconnect: It’s a matter of perspective

Companies use their Left Brain:

• Programs

• Procedures

• Policies Employees use their Right Brain:

• Perceptions

• Behaviors

• Culture


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Understanding and managing change

In addressing change, companies often confuse process -- visioning, chartering, change teams, planning, employee presentations -- with dialogue…

And, they often confuse behavior change with engagement

The Left-Brain is Driving Company Actions

We communicate a pay for performance environment, but…

In 2011, high performers will average a 4.0% merit increase

While “middle” performers will average a 2.7% merit increase

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1974198319851987198919911993199519971999200120032005200720092011

30 Year Salary Budget History

NE EX Exec

Companies try to promote “consumerism”, but too often, efforts at engagement are aimed at compliance rather than commitment

In employee benefits, companies have had to communicate many changes…

But to employees, change means reduction…

Communication is always one way…

And choice is a balance between reward and punishment…

But the Right-Brain is driving employee response…

“I understand why my company has to cut costs, but why do they have to cut what is important to us?”Employee response to interview question


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How does engagement fit in to company priorities?

6%

12%

21%

29%

39%

59%

20%

26%

38%

46%

49%

36%

32%

26%

36%

22%

10%

5%

27%

18%

5%

2%

2% 18%

15%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Reduce disciplinary issues

Create a new culture

Increase employee morale

Increase productivity

Hire top talent

Retain top talent

Extremely Important Very Important Moderately Important Slightly Important Not Important

Source: Buck Consultants Salary Planning SurveyUnlocking Workforce Engagement

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“Today, the greatest challenge that a company can face is a lack of engagement… and not to be aware of the situation.Executive response to interview question

Employee value is tied to perceptions

Behavior economics proposes theories based on psychology to explain anomalies in the market.

Behavioral economics assumes that the information structure and the characteristics of market participants systematically influence individuals' investment decisions as well as market outcomes.

Behavioral economics can help to better understand how employees make decisions and how those decisions affect their perception of the value being delivered.

To an employee, perception is reality


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How are perceptions formed?

Three main themes in behavioral economics:

• People often make decisions based on “rules of thumb”, not rational analysis

• The way a problem is presented will affect the decision a person makes on how to act

• There are behavioral explanations for observed actions that are contrary to rational expectations


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Pay Is Not Enough

• As companies seek to re-engage a workforce battered by the recession, many find that pay alone is not the answer

• Best practices show the top drivers of workforce response are related to perceptions of careers

• Employees define career as current and future opportunity for pay, growth, satisfaction and employability

• Capturing the full potential of careers is critical to engagement and long-term commitment

• Capturing this potential requires two-way communication and mutual understanding


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Fuel for Career Management…

If companies help manage career and growth

Employee

Perceived value in career motivates behavior change

Career motivation

Employer


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… Becomes Fuel for Engagement

Employee

Employer

Engagement

If companies manage value, not cost

The response to value drives desired behaviors and results


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Building an engagement strategy

• One size will never fit all

• Look for root causes… “The 5 Whys”

• There are no short-term decisions

• Follow the eight step process


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1. When you listen, know who you are listening to…

While employee feedback can give you data…

… Amplified voices can give you information and insight


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2. Focus on value delivered

Will the perceived value of pay create a premium or deficit? Should it?

0

50

100

150

200

250

300

350

400

450

1 2 3 4 5 6 7 8 9 10

Actual vs Perceived Value

Premium Actual Discount


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3. Take a total rewards perspective

A total rewards strategy becomes a filter for responding to internal and external pressures in a consistent way…


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4. Understand – and use - your work culture

• How it is organized

• How roles are defined

• Types of people that succeed

• How performance is managed

• How people are rewarded

A company’s work culture defines

5. Understand who your employees are

A demographics analysis can provide insights into why specific events are occurring, like challenges with attraction, retention, engagement and performance.


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5. Understand what your employees want/need

A cost/value analysis will show you where you should invest money … and where you can cut without pain

6. Base “Career” on what employees are capable of doing, not what they are doing now

Most companies use position-based career development, using “job ladders” to identify career paths

This puts current skills and experience as primary drivers of advancement

Differentiating competencies, which are the true predictor of future success, can also be nurtured

Career paths are defined by developing differentiating competencies models

The result is a dynamic process where someone will be pre-disposed to success

But, studies show the correlation between experience and high performance is almost zero

7. Build a platform for delivery – “4i’s”


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8. Profile desired response to “Careers”


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Questions

Jim SilleryPrincipal+1 (1) 952 806 [email protected]


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