Employee Engagement

ENTERPRISE THEME: Employee Engagement

Employee engagement identifies the employee’s attitude towards their employment and employer, which in turn directs their behaviour and dictates the eventual outcome of their actions [1]. It can be achieved either at the transactional or emotional level [14].

Transactional Engagement is short term and shaped by employees’ concern to earn a living, to meet minimal expectations of the employer and their co-workers. Emotional Engagement is a psychological contract between the employee and the firm, is long term, and, voluntarily extracts increased discretionary effort through changed employee attitude & behaviour to deliver greater productivity and financial returns [2].

While competitive compensation and benefits packages are crucial to attract and retain talent, emotionally engaged employees improve business performance by up to 30% (compared to 9% for transactional engagement) [15], and, that highly emotionally engaged employees are 2.5 times more likely to exceed performance expectations. In terms of organisational income, the differential between high and low engagement companies is a staggering 52% [3]:

  • Income of highly engaged companies improved by 19.2%
  • Low engagement companies saw their income decline by 32.7%

Changing employee engagement has a marked impact on the company’s financial health. The principal issue is how to make that impact positive and quantifiable so that all stakeholders can clearly understand and appreciate the benefits to your organization.

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Reduction in Direct Employee Operational Costs when improving Employee Engagement

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Emotional engagement is defined by the employees’ attitude to their role, organisation and to a large extent, their level of self engagement (i.e. having a clear objective of their own requirements). This then drives their behaviour and how they conduct themselves to their employer, peers and external customers/public. The outcome of which is reflected in their individual performance and their positive/negative contribution to the overall organisational profitability.

  • Attitudinally, the degree to which an employee feels:
    • committed to the organisation’s goals and values (feel pride, loyalty, sense of trust and fairness)
    • motivated to contribute to organisational success (a positive advocate of their company to clients)
    • able to enhance their well-being (satisfaction and fulfilment lowering presenteeism  absenteeism  and attrition
  • Behaviourally, as a consequence, an engaged employee will:
    • go the extra mile to deliver services or products to required quality and schedule (increased productivity)
    • continuously seek creative/innovative avenues to complete tasks, deliver/define products and services
    • actively promote the company brand, product/services (indirect marketing)
  • Outcomes:
    • The outcome of Employee Engagement is enhanced and accelerated by the use of catalysts: Training and Diversity.
    • Reduced Absenteeism [7] and Presenteeism means that the productivity of engaged employees rises by 40% and use of temporary/shared job opportunity costs are minimised [3];
    • Rate of attrition is reduced by 14% ensuring that recruitment costs are kept to a minimal [8] to replace staff lost and retain IP [6] that would be lost to competitors [5]. Potential employees would directly approach the organisation [17] bringing with them additional IP [7] and competitive knowledge without having to be poached at great expense [4];
    • Increased engagement not only breeds greater productivity [12], it also embeds an environment where employees are empowered to become both proactive and creative [9] in their tasks and outperform their expectations by 50% [3], benefitting in areas of operational efficiency [13], reframing/new product or service development [11], increase in customer satisfaction [10] and brand loyalty by 18%, identification of new markets/opportunities [12]. All of which boosting revenues by 4.5 times [1]
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[1]        CIPD, 2012
[2]        Institute of Fiscal Studies, 2005
[3]        The Hay Group, 2010
[4]        Personnel Today
[5]        Director of Finance, 2010
[6]        American Association of Corporate Counsel, 2013
[7]        Aon Hewitt, 2012
[8]        Corporate Leadership Council, 2008
[9]        Gallup, 2007
[10]      Harvard Business Review
[11]      Price Waterhouse Coopers
[12]      Towers Watson, 2007
[13]      Forrester, 2011
[14]      Kingston Engagement Consortium, 2012

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