Should HR be accountable for increasing engagement across the organisation, but ultimately the CEO / board should lead?
In November last year, 40 prominent business leaders from organisations as diverse as Sainsbury’s, the NHS and BAE Systems signed an open letter to the Times.
If that weren’t unusual in itself, the subject matter was. The writers stressed the importance of employee engagement to the UK economy in terms of performance and productivity, while lamenting that only a third of people are fully engaged at work.
Employee engagement is higher up the business agenda than ever before. The very public involvement of CEOs of major blue chip companies across a broad spectrum of sectors sends a powerful message about boardroom buy-in. Clearly, engagement has evolved as a business issue and is now being taken seriously – beyond the confines of the HR department.
Once a little-known, ill-defined area of activity, employee engagement is increasingly the subject of serious discussion and analysis at a senior level. For switched-on CEOs, those who are happy to accept that part of their role is to be the so-called chief engagement officer, it is apparent an engaged workforce is a massive factor in achieving business goals. If engaged employees deliver for the business, then paying more attention to engagement is time well spent, even for the busiest CEO or managing director.
In truth, employee engagement is actually nothing new, even if the terminology has only recently entered common parlance. Enlightened companies have been surveying their staff for decades. Yet it is only in the past 10 to 15 years that those surveys have begun to look at what really motivates and engages people, while employers and research specialists such as Gallup and Ipsos MORI have developed more sophisticated tools.
And it is more recently still that credible research has emerged that demonstrates an irrefutable link between effective, positive employee engagement and business success. Evidence of this kind has persuaded the Government to throw its weight behind the cause, with prime minister David Cameron giving his backing in March 2011 to the Engage for Success taskforce. The same compelling evidence has been a catalyst for business leaders to support the taskforce and to look more closely at engagement within their own organisations.
All of this raises some crucial questions. Where in an organisation should the responsibility for employee engagement lie? Should bigger companies have someone in a dedicated, full-time role as head of engagement? And what can and should be done to lift engagement from the low levels it typically occupies?
Karen Boswell, managing director of rail operator East Coast and one of the signatories of the Times open letter, says she believes “with passion” that employee engagement is fundamental to how a business performs in both productivity and profitability. “In many ways, employee engagement has become the new buzzword over the past few years, but I would challenge any senior manager who said that engaging with their colleagues at all levels wasn’t a key part of their job,” she says. “This has been evidenced by the government taskforce, which has proved that having strong employee engagement is a prerequisite for success.
“It is important to remember, though, that employee engagement is not just a job for HR; it must be owned by everyone in the business at whatever level they operate. It should be the lifeblood of the organisation, so it is felt in everything you and your employees do. And of course it must start at the top and filter through the organisation. Authentic leadership brings inspiration to your managers and inspires them to boldly lead their teams. This in turn inspires employees to engage with and feel part of the business and strive to produce the best possible results.”
But the proof of the pudding, of course, is in the eating. And Boswell says that since she gave her personal commitment to engaging with managers across the business in 2010, the results have spoken for themselves. Employee engagement survey scores have risen from 62% in 2010 to 71% in 2012, and East Coast employees have said they are proud to be part of a business “which recognises them, and genuinely wants to be part of their development”.
At the same time there have been improved results in individual directorates across the company, including financial, safety, train and operational performance. Most notably, employees have helped the company achieve the best overall customer satisfaction scores since records began on the East Coast Main Line. This, Boswell maintains, proves an engaged and happy workforce converts to good customer satisfaction.
According to Tracy Clarke, group head of human resources and communications at Standard Chartered Bank, the top leadership team sets the vision for the organisation and the biggest driver of successful engagement is the quality of leadership. “Engagement must begin at the very top and cascade down to every layer of the organisation,” she asserts. “The role of HR is to help managers maximise engagement with their teams. We see engagement as a core driver of success because we have a culture where people are truly at the heart of what we do, and it is our people who are driving sustainable business performance.”
While some of the factors behind the rise of engagement up the business agenda are obvious, others are more subtle. Paul Drechsler, chairman and CEO of the construction group Wates, sees the erosion of trust in business as one impetus, citing Edelman’s influential global Trust Barometer as proof. The 2013 Barometer points to a crisis in leadership: fewer than one in five respondents believe that a government or business leader will tell the truth when confronted with a difficult issue.
Drechsler believes employee engagement has an important role to play in rebuilding trust and fostering loyalty. “We’re competing for people trans-sector, trans-nationally, and in my view employee engagement is a vital ingredient in employee retention,” he says.
However, when it comes to the practical steps companies should take, focusing specifically on getting people more engaged is actually the wrong approach, says Ivan Robertson, professor of organisational psychology at Leeds Business School. He likens it to a football club’s managing director asking how to get the crowd cheering more often, and deciding to focus on the crowd’s behaviour, instead of what is happening on the pitch. In his opinion, the positive beliefs and attitudes that define engagement are rooted in employees feeling their organisation cares for them.
“To really bring about a shift in employee engagement levels, CEOs and top teams need to focus on ensuring employees feel their organisation cares for them and that what they do at work is worthwhile,” says Robertson. “At least initially, they will need to put this ahead of profit and performance. This is a major risk and a huge shift in mindset.”
Yet it is exactly the prospect of improved profit and performance that is encouraging businesses to place a greater emphasis on engagement. Serco group HRD Geoff Lloyd says his company has analysed net promoter scores relating to 130 of its major contracts. There is, he says, a definite link between high engagement levels and high net promoter scores. “The correlation has changed the way we look at things at Serco,” he says. “Suddenly it’s a way we drive our performance.”
Much of the work in this area has been overseen by Serco employee engagement director Amber Kelly. Hers is a role that is becoming more common at large organisations as engagement gets taken more seriously. However, not everyone is a fan of such a position. Harry Dunlevy, director at HR consultancy Independent, has worked in numerous senior HR roles over the past 25 years, and thinks there shouldn’t be a head of engagement as this could allow line managers to abdicate responsibility. But he suggests having a dedicated budget to support engagement activities.
Roger Philby, CEO of management consultancy Chemistry, agrees, adding the controversial point: “Engagement is being made into an industry by people who want to sell you things.” For Philby, engagement is not an HR issue but a matter for the C-suite. “Time and again, when we see low engagement scores it’s about leadership and management,” he says. “The answer lies with leaders looking in the mirror.”
In Philby’s opinion, measuring employee engagement once a year is a waste of time, particularly if the exercise takes place just after bonuses have been paid. Far better, in his view, to take a regular measure of sentiment via sales force chatter and social media soundings – to “put a probe into the flowing stream of energy around the company”.
Although engagement has enjoyed a fairly rapid ascent to prominence, addressing the issue at its root will not bring overnight success. One of the engagement trailblazers in the UK, logistics and manufacturing company Unipart, first set about establishing its now famous Unipart Way approach in 1992, building on the Quality Circles initiatives of Japanese car manufacturers. The company has enjoyed such success with its philosophy that it now advises other businesses on engagement.
And as Unipart chairman and CEO John Neill explains, getting engagement right is very much about the long game. “It took 20 years to get here,” he says. “It’s like playing Beethoven’s ninth symphony. You have to practise for a very long time.”
Courtesy of HR Magazine, 12th April 2013.
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