Employee engagement is the biggest evolution in human resource and performance management strategy in the last 20 years. It deviates from the old carrot and stick extrinsic motivators and gets to the heart of what drives employees. Engagement centers around aligning employees’ career goals to that of the business and has been generating staggering economic benefits.
A study by Gallup found that workplaces with high employee engagement outperform low-scoring businesses by 202% in terms of revenue. Revenue isn’t the only metric impacted significantly. Benefits extend from sales to safety to productivity and beyond.
Today employee performance matters to all businesses and in this guide we’ll take you through:
- The Definition of Employee Engagement
- How does this guide provide value?
- The Benefits of High Engagement and Costs of Low Engagement
- How to Introduce Employee Engagement
- Final Thoughts
The Definition of Employee Engagement
Employee engagement is the emotional commitment of each employee to their job and company. It occurs when a staff member feels they can achieve their career aspirations in their current role whilst simultaneously serving the greater business needs. For this to occur, the employee must feel supported and see themselves as a valued contributor to the overall business success.
Engaged employees are those who identify themselves in the company’s success. They are the employees who willingly stay late to help achieve the collective business goals. Your company gives them a sense of belonging, purpose, and identity. They are proud of the work they are doing and envision continuing with your company for long into the future.
To ensure clarity, it helps to point out what engagement is not – Having workplace friends, job satisfaction, doing overtime under duress, and perks are not signs of engagement. They may help to satisfy an extrinsic need but they do not determine who is and is not engaged.
Engaged Employee Example
John is a marketing associate who dreams of creating eye-catching advertisements for a purpose-driven company. He is currently on the marketing storytelling team and has been taking evening classes in strategy that were paid for by his employer who makes electric vehicles. He gets frequent positive feedback from a manager who knows that if John achieves his goals, the business benefits. To his manager, making John’s goal possible is in both their interests.
Provided John is not subjected to any fundamentally negative workplace experiences, he is likely to be personally motivated by the opportunity to achieve his dreams through his current role. Therefore, John is a fully engaged employee willing to go that extra mile.
How does this guide provide value?
Modern businesses are at a crossroads between old and new methods of performance management. Previously, extrinsic motivators (money, bonuses etc) and vanity metrics were believed to be all that was necessary to get the most out of your team. However, that only gets you so far. By not addressing the evolution in the mindset of employees, your company suffers over time.
Our guide helps you understand the foundations of why employee engagement allows businesses to achieve more, what undermines your current systems, and how you can improve. As millennials become the largest demographic in the workforce, you need to know how best to mobilize and optimize them using intrinsic motivation.
Our guide gives you an easy framework to plug the holes in your ship and create a team unwilling to accept anything but success.
The Benefits of High Engagement and Costs of Low Engagement
As you can imagine, a devoted workforce is a hugely powerful asset. Treating employees as contributors to success and giving them the foundations to achieve their goals yields incredible business benefits including:
- Productivity Booms – Engaged teams are more willing to use discretionary effort and time to achieve success. Productivity in engaged teams is approximately 21% higher.
- Sales increase – Engaged employees care and provide better customer service. In an environment where customers don’t give businesses a second shot, nailing customer service is crucial.
- Improving quality – Employees who care how their output reflects them and that performance contributes to personal success ensure quality every time.
- Better workplace safety – 70% fewer incidents happen in engaged workforces.
- Enhanced Innovation – Teams that feel valued, respected, and psychologically safe are more willing to find solutions to problems by themselves and contribute new ideas.
- Leadership development – As employees solve more of their problems and drive success, more leaders emerge organically.
- Lower absenteeism – Employees with high engagement suffer less physical and mental health problems and take 41% fewer voluntary sick days.
- Lower turnover – Fully committed employees are not driven to look for other roles because they can achieve fulfillment with you. Employees cost approximately 20-30% of their salaries to replace.
- Recruit better talent – Companies that are known to provide an engaging environment see bigger and better applicant pools.
- Improved Profitability – High engagement companies enjoy 21% higher profitability because they don’t incur the costs outlined above but do enjoy the benefits.
How to Introduce Employee Engagement
Eliminate Sources of Demotivation
Fredrick Herzberg developed the Two-Factor Theory of Motivation back in 1959. Amazingly, it still provides the basis for most theories today. He found that to improve engagement, there had to be a foundation and that couldn’t be achieved without removing things that generally annoyed employees. That means that companies must meet basic satisfaction needs such as:
- Equitable salaries
- Fair processes and procedures
- Supportive management
- High workplace morale
- Safe and amicable working conditions,
- Job security
- Appropriate job titles
Provided these factors were satisfied, employees feel respected and can concentrate on work rather than extrinsic demotivators or stressors.
Enhance Psychological Safety
In a 5-year study, Google found that the biggest contributor to team performance was psychological safety. That is the ability of teams to feel socially safe to admit mistakes, raise concerns, contribute ideas, and challenge leadership.
Ask opinions and encourage the team to openly share their thoughts. Reprimand behaviors that create embarrassment or discourage sharing. Foster a transparent environment that values each voice.
When everyone contributes freely, innovation blooms and solutions emerge quickly. Perhaps, more importantly, mistakes are not compounded and large-scale failure is avoided.
Managers are the key to engagement. If your manager is not engaged or a champion of engagement, your efforts will fail. Managers are responsible for 70% of employee engagement. 56% of employees would forego a 10% raise to stay with a great manager so it is important.
Choose managers based on their ability to lead and motivate people and not on their tenure. Take into account their ability in the job but success as a salesperson does not guarantee that you can inspire a sales team.
Furthermore, empower managers to trust the opinion of the team rather than making every important decision by themselves. Reduce their span of control to a team size they can actively build a rapport with. If a manager has 20-30 subordinates, they cannot offer accessible support, curate a relationship and get the most out of the people they are responsible for.
Create a Feedback and Recognition Culture
The days of annual performance reviews are over because they just don’t work. Employees don’t get the answers they need to improve in a timely way and the recognition is insufficient.
In an ideal world, employees should get feedback on a weekly basis. When Adobe instituted bi-weekly feedback they saw their staff turnover rate drop by 30% in one year. Given that they have an average salary of $100,000, they likely saved a minimum of $20,000 per employee that didn’t leave.
Employees need to be acknowledged regularly. Letting people know they did a good job and giving constructive feedback relieves performance anxiety and affirms that they are on the right track to personal success.
Reflect on employee performance in the context of the overall business. Tying individual performance to company success allows them to understand their contribution and improve their sense of belonging.
Improve Communication Channels
This might be a bit of a sweeping platitude but bear with us.
Communication blockages between staff members and between staff and management cause engagement problems. It fosters a sense of isolation and breaks the connection between the employee and the overall company purpose.
Conduct an audit to see if friction exists in the communication lines. Involve the team in resolving issues. Idea activation, staff morale, collaboration, and problem-solving depends on it.
Build More Teams
It might seem like a strange solution but employees who are on two or more teams are 5 times more likely to feel engaged. It adds significantly to feeling valued while also enriching their role. Never forget that 33% of employees leave their jobs because they are bored.
Teams bolster the sense of belonging and increase collaborations with others. It allows your employees to work in new and challenging environments. Relationships are built quickly. Tacit knowledge sharing improves their competency. And, employees are given more autonomy over their projects and success.
Gamify Team Goals
In 2017, I held a role in a company that didn’t align with my career aspirations but they still managed to keep me fully committed to the overall business success. They did so by making me a part of their monthly rewards scheme. Each month we would aim for 12.5% more growth than the same month last year. When we got there, we were awarded 1% of our salaries. This kept everyone interested and hungry for success.
Gamifying business goals in a way that encourages full team participation creates a different motivator. Financial wins only go so far but as you succeed, you can personalize the reward. The collective responsibility and accountability help to drive the team together and forward.
Record and Strategize for Employee Goals
87% of millennials look for roles that provide a clear path to career development. They want the job with your company to be a vehicle toward personal fulfillment. While it might sound selfish, they view your business as their route to achieving goals they are highly motivated to attain.
Understanding what your employees are striving for and helping it happen is a win-win because the result benefits your business.
Take the time to learn what each employee wants out of their role and career. How can you help them get closer? When your business goals and the employee’s personal goals can be achieved in the same role, unrelenting motivation and hard work transpire.
Measure Engagement and Benchmark Over Time
How are you going to know if your engagement strategies are working? Measure it.
Conducting short pulse surveys regularly lets you know what works. A pulse survey is a quick check-in on employee morale, motivation, and engagement. When they are done frequently, they provide feedback and inform your decision-making on where to go and what to do.
Don’t just survey quietly though. Discuss the results with the team and create a collaborative action plan. Employees who don’t see any outcome from a survey become disenfranchised and stop filling them out. Plus, it is a waste of your time and money.
In addition, conduct exit interviews for departing staff. Find out exactly why they are leaving because your other employees are probably be feeling the same. Don’t miss an opportunity to learn what you could do better or why competing employers are more attractive.
Knowing whether your strategies are working or not makes the investment worthwhile. Where psychologically safe employees can raise concerns to stop you from wasting time and money with failed practices, surveys stop you from wasting your time with failed performance management.
Set SMART Goals
Specific. Measurable. Achievable. Realistic. Time-Bound.
Goals are hugely motivating when done correctly. Setting goals with individual employees gives them specific aims to strive for. Get their input in the process so they can have control over their futures and success metrics. This gives employees defined expectations that are often lacking. When employees can see how they are progressing, they are more willing to use discretionary effort to succeed.
Be careful to avoid setting vanity-driven goals. Things like sales targets can’t be achieved individually can be disenfranchising. If the employee is, in part, powerless to affect the outcome, they tend to not care as deeply.
We are seeing a huge evolution in the understanding of what impacts employee performance. While many industries thought that offering more money to employees would encourage better results, others thought deeper about intrinsic motivation. As society grows to appreciate soft skills and mental health more, we are beginning to see the benefits in the workplace.
A more sophisticated understanding of personal psychology has shown that respect, alignment, and empowerment on an individual basis create collective growth. Companies investing in employee engagement see startling success in sales, profitability, absenteeism, and employee turnover. The success stories are everywhere from Google and Adobe. Even General Electric saw a 5-fold increase in productivity when they put engagement at the center of performance management.
By using our guide as a roadmap, you will enhance employee engagement. Over time and with the right focus, high performance will become more predictable and automated.