What can employee engagement do for business

productivity?

Mark BeatsonChief Economist

CIPD

Content

• Understanding the link between employee engagement and productivity

• The difference engagement can make to employees• The impact on business performance• Understanding why engagement initiatives can fail to

deliver

Understanding the link between employee engagement and productivity

What are the channels?

• Release of discretionary effort (hours, effort, attention, imagination) – “going the extra mile”

• Alignment of interests allows delegation and decentralisation• Employee insights and knowledge of their customers support

innovation• Social exchange• External reputation – how an organisation treats its employees is one

of the key influences on how (potential) customers think about it

The importance of employees to corporate reputation

Blogger

Board of Directors

Entrepreneur

CEO

Government official

Regular employee

A person like you

NGO representative

Financial or industry analyst

Technical expert in industry

Academic or outside expert

20%

36%

37%

39%

41%

52%

55%

57%

60%

64%

67%

Credibility as a source of in-formation on a company

Consistent financial returnsPartners with third parties

Top global companyAdmired top leadership

InnovatorAddresses society's needs

Community benefitsProtects environmentCommunicates often

EthicalHigh quality products

Acts responsibly in crisisTransparent and open

Looks after employeesCustomers before profits

Listens to customers

27%29%29%30%

33%40%40%

43%50%52%54%55%56%58%59%61%

Importance of actions in building trust in a company

Source: Edelman Trust Barometer 2014.

The difference engagement can make to employees

Employees who feel inspired and involved are better placed to handle demanding workloads

Very true TRUE Somewhat true

Not at all true

Strongly agree

Agree Disagree Strongly disagree

0

10

20

30

40

50

60

70

80

90

% of employees who strongly agree that ‘my job requires that I work very hard’

Always/often come home from work exhausted Work under great deal of tension

‘My job allows me to take part in decisions that affect my work’

‘This organisation really inspires the very best of me in the way of job performance’

Source: Skills and Employment Survey 2012.

Does organisational commitment reduce stress?

19% 17% 14% 12% 10% 10%

33% 35%27% 28% 26% 25%

Excessive pressure every day Excessive pressure 1-2 times per week

Source: CIPD Employee Outlook survey, spring 2014, employees only.

The impact on business performance

Engagement is high on employers’ near term priorities

Other

Improving digital literacy

Reviewing reward/recognition systems

Changing the skills mix of the workforce

Predicting future talent requirements

Employee retention

Recruiting to key vacanices

Business restructuring

Containing labour costs

High levels of employee engagement

Improving leadership skills/capabilities

3

9

18

19

22

23

28

28

33

44

50

Top three workforce priorities in the coming year (% of employers)

Source: ‘Growth for everyone’, CBI/Accenture employment trends survey 2014.

What do employers expect to gain?

Improved health and safety

Increase innovation

Income growth

Increase retention

Reduced absence/higher well-being

Increased client/customer satisfaction

Increased productivity/performance

8

15

22

42

45

65

80

Major benefits of higher levels of employee engagement (% of employers)

Source: ‘Growth for everyone’, CBI/Accenture employment trends survey 2014.

What’s the evidence on the impact of employee engagement?

• ‘Nailing the evidence’ working group found lots of studies … some more plausible than others

• Causality is an issue – does engagement lead to success or success mean businesses can afford engagement?

• Meta-analyses suggest causation more likely from job attitudes to performance – but this is something difficult to nail down (if it matters)

• Impact often happens through impact on customers and customer satisfaction

• Engagement improves quality and innovative behaviour

• Engagement reduces turnover and absenteeism

Some big claims are made …

Absen

teeism

Shrink

age

Safety

incide

nts

Quality

(defe

cts)

Custom

er sa

tisfac

tion

Produc

tivity

Profita

bility

-37%-28%

-48%-41%

10%

21% 22%

% difference in performance between top and bottom quartiles of employee engagement

Source: Gallup 2012, based on data from about 1.4 million employees in 192 organisations across 49 industries and 34 countries using Q12 measure of employee engagement.

Is employee engagement spreading?

Managers treat employees fairlyManagers deal with employees honestly

Managers can be relied upon to keep their promisesINTEGRITY

Satisfied with involvement in decisionsManagers allow employees to influence decisions

Managers good at responding to employee suggestionsManagers good at seeking views of employees

EMPLOYEE VOICESatisfied with sense of achievement from work

Good management-employee relationshipENGAGING MANAGERS

I am proud to tell people who I work forI feel loyal to my organisation

I share many of the values of my organisationSTRATEGIC NARRATIVE

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

2011 2004

Source: Workplace Employment Relations Studies 2004 and 2011, surveys of employees, GB, workplaces with 5+ employees.%s are those strongly agreeing/agreeing with the statement.

Understanding why engagement initiatives can fail to deliver

What are the common barriers?

• If it’s all one-way• Work-life balance• Development and progression

• Lack of job control• Leadership behaviour• Line managers

• Lack people skills• Ineffective implementation of organisational HR policies

• HR practices• Lack of trust• Lack of effective voice

• Mechanisms• Confidence to use them

What undermines organisational commitment?(% of employees highly motivated by core purpose of organisation)

Never

Very ra

re

Rarely

Someti

mes

Very of

ten

Alway

s

70% 68%

59%52%

36%

27%

Secretiveness

“Important information is only shared with a select few”

Source: CIPD Employee Outlook survey, spring 2014, employees only.

Strongly agree

Agree Neither agree nor disgree

Disagree Strongly disagree

72%

57%

38%32%

24%

Poor managers

“My working relationship with my su-pervisor would be described as very ef-

fective”

Do appraisals help or hinder engagement?

• NHS Staff Survey 2010: overall engagement score = 3.9 for ‘good-quality’* appraisals, 3.5 for ‘poorer quality’ appraisals and no appraisals (West and Dawson, 2012)

• *‘good-quality’ = employee felt it useful in understanding how to do job, clear objectives set, employee left appraisal feeling valued by employer.

Very fa

ir

Somew

hat fa

ir

Neutra

l

Somew

hat u

nfair

Very un

fair

Don’t k

now

Not ap

plica

ble

93%

58%

25%

11%4%

29% 29%

Engagement by perceived fair-ness of performance management

Fairness of performance management process

Source: CIPD Employee Outlook survey, spring 2014, employees only.

19

And can you have “too much” engagement?• Burnout?• Misallocation of

time – forgetting the day job?

• Insufficient challenge?

• Disappointment – what happens if leaders have feet of clay?

• Implications for future jobs – “once bitten, twice shy”?

Thank you