Employee engagement is an important concept in the world of business, so how can managers make sure their employees are engaged and how does this influence other business results? Here we speak to PeopleStreme’s CEO, Lyle Potgieter to find out.
It stands to reason that when an employee is excited about their daily tasks, their future and the broad business goals of the organisation where they work, that they will be happier and perhaps, more creatively and professionally fulfilled. But how can this be quantified and proven?
PeopleStreme Human Capital is one of the original pioneers in software that promotes healthy human capital management. They have been leading the industry by providing a fully integrated suite of products that allow managers to activate their team members effectively to get the best business results.
Their recent white paper discusses these links and suggests some practical ways to build these linkages between the HR department and management teams and ways of putting these links into action. If you’re a manager of people, or are looking to pursue a career where managing a team is on the cards, then the link between employee engagement and business outcomes should be firmly on your radar.
What is employee engagement, and why is it so important?
According to Forbes, “employee engagement is the emotional commitment the employee has to the organisation and its goals.”
It’s important to note that this is not the same as employee happiness or employee satisfaction – it goes deeper.
A satisfied employee may only do the bare minimum asked of them, but an engaged employee will go that extra metaphorical mile. Traditionally, this could mean working longer hours during an urgent project without being asked to. However, nowadays, it can mean so much more.
Are your team members brand advocates? Would they share the company’s posts on their private accounts? Would they actively seek out new relationships and always put in the extra effort to get best results for the team, even if they only had a part-stake in the outcome?
Lyle Potgieter, CEO of PeopleStreme, explains this concept further. “Engaged employees might engage in extracurricular activities or extra learning development. It actually connects the employee, not just to the organisation, but to further their job role or their career destination,” he says.
He mentions that in human resources, human capital or people management, the concept is relatively new. “It became popular in the early ‘90s,” explains Lyle, “when people started publishing articles about it. It’s been refined over the last 20 years to the extent that there are now a number of definitions about employee engagement.”
Potgieter says that there are a number of surveys and management practitioners talking about this. “It’s become reasonably well-accepted that engagement is the ideal outcome that may happen to employees in a successful organisation.”
“We define employee engagement as the propensity for the employee to exhibit discretionary effort. So if the employee is more engaged, they will display more discretionary effort. If they’re less engaged, then they’ll display less.” It’s a concept that seems simple in premise, and yet many managers may not commit enough of their time to honing their policies on staff activation.
One thing is becoming clearer – employee engagement is important and we need to understand it better, especially when only 24% of the Australian workforce considers itself engaged.
The impact of employee engagement on businesses<
A recent white paper published by PeopleStreme looked into the link between employee engagement and business outcomes.
It found that most line managers still struggle with this concept, often not understanding the connection between engagement and other business outcomes that influence the everyday running of their business.
This is a problem for many reasons. Potgieter says “one of the symptoms of low engagement is high employee turnover” which is, in turn, linked to other issues, such as lower customer satisfaction. Finding the right tools to explore these intricate connections is a major challenge.”
“If you feel like your work is not meaningful, then you’re probably not going to be engaged. You’re therefore more susceptible to distraction with everything other than work.”
The correlation between engagement and job performance
Potgieter mentions that PeopleStreme has seen a clear correlation between engagement and job performance. “If someone is really engaged, they might explore more about how to achieve their job in a better way, so they might engage in extracurricular activities or extra learning development.”
“It actually connects the employee, not just to the organisation, and furthers their job role or their career destination.”
Managers might receive the results of an annual satisfaction survey but without proper interpretation of the data, the survey might be ignored or even forgotten until next year.
Using more advanced survey techniques allows managers to draw connections between factors such as employee absenteeism, customer satisfaction, employee turnover and profitability, all of which are directly relevant to their departments.
There are many different surveys available and Potgieter explains PeopleStreme’s approach: “In our employee engagement survey, we have around about 28 questions that focus on various different elements. For example, the relationship between a manager and their employee, satisfaction with the job, the connection with the job, and a range of questions that are typically asked.” Examining these factors could lead to sound results and/or an improvement in performance.
CASE STUDY: Employee engagement in the hospitality sector
PeopleStreme’s white paper uses a national hotel chain as an example but the outcomes could be applied to any field or sector. This hotel chain traditionally carried out employee engagement surveys, but had not seen any change in engagement over the years.
However, when other business outcomes were taken into consideration for the first time, the survey found a 90% correlation between employee engagement and:
a) Average hotel profitability
b) Customer satisfaction scores
c) Employee turnover
d) Employee absenteeism
In the states that had higher employee engagement for the hotel chain, average hotel profitability and customer satisfaction was also higher, while employee turnover and absenteeism was lower than in other states. This is information a hotel manager can easily understand and see value in. In states with high turnover, the survey found employees were unhappy with their career development.
Conversely, in states with higher employee engagement, they had a career rotation scheme in place, meaning that employees were able to try different roles in different departments. When this scheme was in place, career development satisfaction and retention were higher.
Repeat visitor rates and profit margins were also higher. This makes sense when considering that repeat visitors who are happy with the service and know individual staff members would be less likely to haggle over their room rates.
Armed with this data, hotel managers could implement systems that kept employees engaged. Therefore, the white paper indicated that businesses must ensure that employee engagement should be treated with the same urgency and priority as profit and loss. Does your business have this as a priority? Should it?
How to engage employees
Employee engagement is relevant to virtually any field, so we need to find ways businesses can put it to the top of their agenda. The best way to do this is by learning from great managers who understand how to engage employees.
It’s easy to jump to the conclusion that money and perks drive engagement, but that’s not the complete picture. Lyle Potgieter admits that money is definitely a contributing factor. “It’s got to be sufficient to enable employees do their job. If the money is insufficient, then they’ll be focused on exiting and finding a job that does pay sufficient money. It something that has to be in place before you can start having proper conversations about employee engagement.”
Consider all these factors if you are a manager of people, or part of a human capital performance solutions team.
1. Providing the opportunity for meaningful work
When asked about the driving forces of engagement, Lyle Potgieter mentions that, “one of the large determining factors is that employees feel their work is actually meaningful,” which makes perfect sense from a social and structural point of view.
Just as businesses have to think about why customers would buy a product from them, they have to ask WHY their employees should care beyond the basic functions and responsibilities of their role.
In his famous Ted Talk, leadership and management expert Simon Sinek shows how great leaders inspire everyone to take action.
He explains that great managers work from the inside out: they start with the “why” then move on to the “what” and the “how”.
The “why” is never to make a profit; employees don’t get out of bed in the morning to generate a profit for their companies. It’s about a purpose, a cause and a belief.
This also applies to employee engagement, especially for millennials (who will make up around 75% of the work force in the next decade) who want to work for companies that stand for something.
2. Is your business driving your employees and industry forward?
Knowing and believing that your company is driving your industry forward is one way to feel engaged. Working for a cause you support, as many NGOs do, is another. A business doesn’t have to be 100% altruistic to be meaningful. Making a quality product that assists your customers or helps others, or having solid environmental and social credentials is another indication of meaning.
According to Potgieter, “Employee engagement should be about helping the employees understand that they contribute to the department, and ultimately, to the organisation.”
Potgieter illustrates the practical example of a nurse at work in a typical role in a hospital setting. “The higher purpose of this team member would be helping the patients - and the secondary higher purpose is patient score.”
The manager of this nurse should communicate that by doing this job reasonably well, the nurse is going to get a higher patient score, which in turn means the hospital/workplace gets more funding. This extra funding could mean that it is able to service more people effectively and get more equipment and resources.” A win for the employee (nurse) “customer” (patient) and organisation (hospital).
All these factors work alongside each other to enable businesses to get the most out of their employees, while giving meaningful KPIs back.
3. Get your team members involved
It should go without saying, but one of the best ways to engage employees is to involve them in the development and progress of the company. They want to know what impact their own work has on the business and the direction it will take in the future.
“How are they going to feel about doing more work?” asks Potgieter. “What’s in it for them?” This is another question that needs to be factored in.
“Engagement has become something that people realise is not just about the organisation or getting a task fulfilled. It’s about connecting that employee and engaging them and helping them feel that the work they do is meaningful.”
It is also necessary to keep employees in the loop on their own progress and that of their team. Offer regular (annual does not cut it anymore) feedback sessions and celebrate small wins along the way.
4. As a manager: walk the walk
It’s interesting that many ways to boost morale and engagement are absolutely free. One of the cheapest and most effective engagement strategies to deploy is making sure that the leadership team “walks the walk” and leads by example.
Great managers lead by example, they behave and work in the same way that everybody else is expected to. This has proven to make employees up to 55% more engaged and 53% more focused.
5. Perks can work
Company perks have gotten more creative in recent times. Google is definitely a forerunner when it comes to perks. They offer employees everything from free food and bowling alleys, to giant hammocks and allowing 20% of working hours to be dedicated to passion projects.
While perks alone will not make an employee engaged (some fear it can even backfire), they can definitely help improve overall happiness and engagement.
However, not all perks are created equal. Health and wellness programs have proven to be especially effective. These can reduce stress and help prevent injuries both in physically demanding and desk-based jobs.
Another perk that is gathering popularity is offering healthy free food. Employees of Australian comparison website finder.com.au have been enjoying free healthy breakfasts and lunches every day for three years. This not only has health benefits, but has also led to a spike in productivity.
While previously employees would work through lunch at their desks, now they take the time to have lunch together and catch up. This forced break is good for focus and concentration, and the healthy food helps them stay in good health.
6. Bring people together and encourage friendships
Research by Gallup has shown that company allegiance can be built from strong friendships at the workplace. Indeed, the importance of engendering a positive company culture has never been so important due to the increasingly mobile nature of the workforce. There are many ways to encourage stronger relationships to form.
Simple things such as regular team outings, lunches and bonding events are on most companies’ agendas, but could your organisation go a bit further?
Charity events are suitable occasions for people to bond over meaningful work while having fun, as are low key training events and inspirational, on-brand talks from industry stakeholders. Managers should seek to be creative and switch things up often to cater for everyone’s preferences. Managers should also aim to get involved in these events in a hands-on capacity and to see these activates as an opportunity to get to know their team better.
7. Work-life balance
With the rise of the millennial generation, work-life balance has never been more important than now. You don’t necessarily need to introduce a 30-hour working week, but you should think about ways to be more flexible.
Advances in technology allow us to work in a completely different way than we did even 10 years ago. Telecommuting and remote work are not reserved for call centre staff anymore.
A study by Virgin Media predicts that by 2022 more than 60% of office workers will be able to work from home. Allowing employees to work flexible shifts or stay at home not only improves their quality of life, but can also mean huge savings in office space.
Positive outcomes are tied to people – that’s the bottom line
Potgieter mentions that “employee engagement is something that PeopleStreme pushes very strongly because organisations see outcomes tied specifically to people - and we find that the people who are engaged also feel much better about the work that they do. It’s a two-way street. It’s important in both the employees engaged and the employees feeling engaged.”
Employee engagement is not a simple buzzword - it’s a concept that is imperative to business outcomes. While it can be daunting for some businesses to tackle on the management level, there are many benefits to be reaped, both for the company and individual employees.
Wise managers will start by understanding the connection between engagement and business outcomes in their field. Intelligent surveys are the first step. And, as we just showed, there are many ways that you can improve engagement for your business.
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