Why does engagement matter?

Despite the downturn, employees remain engaged but there are important signals managers shouldn’t miss. Here are some suggestions to help managers keep employees energized amid ongoing uncertainty.

Despite the turbulence in the U.S. economy over the past two years, Gallup has found that employee engagement has remained relatively stable. But there are subtle changes going on that managers need to keep an eye on to help their workgroups -- and their companies -- remain competitive.

Worker engagement is an emotional response, so one might expect employees to become less engaged as the recession deepened. Surprisingly, they haven't.

The current U.S. recession began in December 2007, according to the National Bureau of Economic Research. During the heart of the recession -- throughout 2008 and 2009 -- Gallup surveyed American workers on a wide range of measures, including its Q12 survey -- 12 items that measure employee engagement. Employee engagement is the psychological and emotional attachment people feel for their workplaces. It's based on the fulfillment of basic human needs in the workplace, and the more people feel those needs are met, the more engaged they are.

Why does engagement matter? Because there's also a clear link between engagement and profitability, which makes engagement a more urgent issue now than it has been in prosperous times. Worker engagement is an emotional response, so one might expect employees to become less engaged as the recession deepened. Surprisingly, they haven't: Gallup has found that there have been only slight changes in overall engagement, but there have been significant changes on specific elements of engagement.

Ups and downs less traumatic for the engaged
In general, Gallup's tracking of the U.S. general public's daily mood throughout 2008 and 2009 shows that there have been "significant changes in average mood by month as we've tracked it throughout the year," says James K. Harter, Gallup's chief scientist of workplace management and wellbeing. (See "Gallup Daily: U.S. Mood" in the "See Also" area on this page.)
This same tracking indicates that several key wellbeing variables have been affected: There have been increases in worry and stress. The amount of time people spend socializing has decreased. And obesity is on the rise. But "the ups and downs have been less traumatic for people who are engaged in their work," says Harter.

Gallup has tracked the engagement levels of the U.S. working population for the past decade. Its most recent employee engagement research shows that 28% of American workers are engaged, 54% are not engaged, and 18% are actively disengaged. Throughout the decade, the percentage of engaged employees ranged from 26% to 30%, while the percentage of actively disengaged employees ranged from 15% to 20%.

In addition, from July 2008 to March 2009 -- during the heart of the recession -- Gallup tracked a large sample of employees and found only slight (1%) changes in overall engagement. In July 2008, 31% of employees were engaged, 51% were not engaged, and 17% were actively disengaged. In March 2009, these percentages had changed very minimally: 30% were engaged, 52% were not engaged, and 18% were actively disengaged.

Why did these engagement levels remain so stable despite the dire economic conditions? "This likely has to do with the fact that engagement is based on very local, everyday, worker experiences," Harter says. "Therefore, engagement can serve as an anchor during troubled times."

What managers can do?
Although overall engagement levels seem to be stable, there were significant changes at the individual Q12 item level that managers would be wise to monitor in their own workgroups. Managers who focus on just a few items -- such as making expectations clear, providing frequent feedback and recognition, encouraging development, and helping workers connect their efforts with the mission and purpose of their company -- can enjoy a big payoff not just for their team but for the organization as a whole.

Knowing what's expected
"The element that dropped the most during the recession was 'I know what is expected of me at work,'" Harter says. "I think that speaks to the reality that as the economy has changed, workers have role clarity issues. Layoffs are happening, organizations are restructuring, and workers' roles are changing. People are uncertain about the future." To counter this, managers need to work particularly hard at clarifying expectations with their employees.
The majority of people just want their managers to realize that they're here, that they're making a difference, and that they're working really hard.

Opportunity to do what I do best
Over time, many employees can do more of what they do best because they continue to refine and optimize their role. In a down economy, when companies are struggling to do more with less, employees may have to pick up the slack for colleagues who have been laid off or who have had job changes. As a result, they might be taking on new tasks and responsibilities they are uncomfortable with or aren't as good at.

To help workers find opportunities to do what they do best, managers can focus on their employees' strengths and work to understand the barriers that get between employees and performance -- and try to remove those barriers. "During a down economy, it isn't difficult to notice what is going wrong," Harter says. "It is more challenging, and useful, to think about and leverage individual strengths to get done what needs to get done."

A connection to the mission of the company
During turbulent economic times, people might feel less connected to the mission of their company, especially if they think their job is threatened. "When changes are happening, it's either a threat or an opportunity," Harter says. "When people around you are losing their jobs, employees are more likely to see it as a threat, and they revert to basic survival needs." And when employees are in survival mode, it's more difficult for them to connect to the broader purpose of the company.

For managers, the key to helping employees overcome this is to get them to understand how they are part of the organization's future. Managers should conscientiously and assertively help employees see how what they're doing is part of something bigger -- and how it connects to the future of the organization. That produces substantial benefits for the organization's performance "because it helps workers focus on thinking about how the organization can get better in the future, rather than getting into a 'hunkering-down' mode," Harter says. "Even though the economy is down, there are opportunities for the company to grow."

Talking about progress
During a challenging time, some managers can also feel threatened or that their job may be at risk, and they might not communicate with employees as well as they should. "But people want to be part of the future, and progress discussions help them see how they can contribute to that future," Harter says. "Managers can help employees by continually communicating how they are progressing and showing them how their work benefits the organization."

Opportunities to learn and grow
Many companies have reduced their budgets for training and education, so managers have less discretionary income to allocate to employee training programs. But learning and growing isn't just about buying training -- it's about helping employees continue to grow in their jobs, and there are many ways to do that outside the training budget. "Providing employees with meaningful opportunities to learn and grow starts with getting to know each person one on one, thinking about their strengths, and thinking about the ways they learn best," Harter says.

Recognition and praise
One item did go up significantly from July 2008 to March 2009: More employees agreed with the statement "In the last seven days, I have received recognition or praise for doing good work." Why was there significant positive change on this item? It could be that managers are leveraging the non-monetary means they have to motivate their workforces during a down economy. If a company's financial situation precludes things like development training or job role changes, managers can still perform a crucial function: recognizing and praising employees for hard work and quality productivity.

"Many companies can't recognize people for their work with financial rewards right now," says Denise McLain, a Gallup principal. "And truthfully, financial rewards are important to some people, but the majority of people just want their managers to realize that they're here, that they're making a difference, and that they're working really hard."

In a healthy economy, engagement makes good companies better. During challenging times, engagement might be what helps keep companies solvent. As the economy begins to improve -- and it will -- organizations with strong engagement will be poised to grow, and engagement may well play a role in that recovery.

Source: Jennifer Robison is a Senior Editor for the Gallup Management Journal.

12 Questions to Measure Employee Engagement

Do your opinions seem to count? Does the mission/purpose of your company make you feel your job is important? Have you had opportunities at work to learn and grow?

Five years ago, The Gallup Organization began creating a feedback system for employers that would identify and measure elements of worker engagement most tied to the bottom line--things such as sales growth, productivity and customer loyalty.

After hundreds of focus groups and thousands of interviews with employees in a variety of industries, Gallup came up with the Q12, a 12-question survey that identifies strong feelings of employee engagement. Results from the survey show a strong correlation between high scores and superior job performance. Here are those 12 questions...

1. Do you know what is expected of you at work?
2. Do you have the materials and equipment you need to do your work right?
3. At work, do you have the opportunity to do what you do best every day?
4. In the last seven days, have you received recognition or praise for doing good work?
5. Does your supervisor, or someone at work, seem to care about you as a person?
6. Is there someone at work who encourages your development?
7. At work, do your opinions seem to count?
8. Does the mission/purpose of your company make you feel your job is important?
9. Are your associates (fellow employees) committed to doing quality work?
10. Do you have a best friend at work?
11. In the last six months, has someone at work talked to you about your progress?
12. In the last year, have you had opportunities at work to learn and grow?

Article from Workforce Management Online. Copyright 1992-1999 The Gallup Organization, Princeton, NJ. All rights reserved. Gallup and Q12 are registered trademarks of The Gallup Organization.

Five Tips for Effective Employee Recognition

How to Reward, Recognize, Award, and Thank People Successfully
By Susan M. Heathfield, About.com Guide

Employee recognition is not just a nice thing to do for people. Employee recognition is a communication tool that reinforces and rewards the most important outcomes people create for your business. When you recognize people effectively, you reinforce, with your chosen means of recognition, the actions and behaviors you most want to see people repeat. An effective employee recognition system is simple, immediate, and powerfully reinforcing.

When you consider employee recognition processes, you need to develop recognition that is equally powerful for both the organization and the employee. You must address five important issues if you want the recognition you offer to be viewed as motivating and rewarding by your employees and important for the success of your organization.

The Five Most Important Tips for Effective Recognition
You need to establish criteria for what performance or contribution constitutes rewardable behavior or actions.
· All employees must be eligible for the recognition.
· The recognition must supply the employer and employee with specific information about what behaviors or actions are being rewarded and recognized.
· Anyone who then performs at the level or standard stated in the criteria receives the reward.
· The recognition should occur as close to the performance of the actions as possible, so the recognition reinforces behavior the employer wants to encourage.
· You don't want to design a process in which managers "select" the people to receive recognition. This type of process will be viewed forever as "favoritism" or talked about as "it's your turn to get recognized this month." This is why processes that single out an individual, such as "Employee of the Month," are rarely effective.

A Working Example of Successful Recognition
A client company established criteria for rewarding employees. Criteria included such activities as contributing to company success serving a customer without being asked to help by a supervisor. Each employee, who meets the stated criteria, receives a thank you note, hand-written by the supervisor. The note spells out exactly why the employee is receiving the recognition.

The note includes the opportunity for the employee to "draw" a gift from a box. Gifts range from fast food restaurant gift certificates and candy to a gold dollar and substantial cash rewards. The employee draws the reward, so no supervisory interference is perceived. A duplicate of the thank you note goes into a periodic drawing for even more substantial reward and recognition opportunities.

More Tips About Recognition and Performance Management
· If you attach recognition to "real" accomplishments and goal achievement as negotiated in a performance development planning meeting, you need to make sure the recognition meets the above stated requirements. Supervisors must also apply the criteria consistently, so some organizational oversight may be necessary.The challenge of individually negotiated goals is to make certain their accomplishment is viewed as similarly difficult by the organization for the process to be a success.

· People also like recognition that is random and that provides an element of surprise. If you thank a manufacturing group every time they make customer deliveries on time with a lunch, gradually the lunch becomes a "given" or an entitlement and is no longer rewarding.In another organization, the CEO traditionally bought lunch for all employees every Friday. Soon, he had employees coming to him asking to be reimbursed for lunch if they ate lunch outside of the company on a Friday. His goal of team building turned into a "given" or an entitlement and he was disappointed with the results.

· There is always room for employee reward and recognition activities that generally build positive morale in the work environment. The Pall Corporation, in Ann Arbor, MI, has had a "smile team" that meets to schedule random, fun employee recognition events. They have decorated shop windows, with a prize to the best, for a holiday.They sponsor ice cream socials, picnics, the "boss" cooks day, and so on, to create a rewarding environment at work. Another company holds an annual costume wearing and judging along with a lunch potluck every Halloween.

Rewards and recognition that help both the employer and the employee get what they need from work are a win-win situation. Make this the year you plan a recognition process that will "wow" your staff and "wow" you with its positive outcomes. Avoid the employee recognition traps that:
· single out a few employees who are mysteriously selected for the recognition,
· sap the morale of the many who failed to understand the criteria enough to compete and win, and
· sought votes or other personalized, subjective criteria to determine winners.

Employee Engagement: Define It, Measure It and Put It to Work in Your Organizations

Research by APQC, one of the leading proponents of process and performance improvement, has yielded key insights into what engagement is, how it can be measured and how it can be integrated into organizational culture.
By Rachele Williams.
Employee engagement is to HR what customer loyalty is to marketing and sales. It is that often elusive frame of mind that goes beyond satisfaction and ensures the long-term and productive tenure of the faithful employee with the employer.

This article describes how leading organizations define employee engagement, how they collect and measure and put into play relevant information and how they ensure senior leadership is held accountable for making employee engagement a part of the organizational culture.

Defining employee engagement
In order to make the most of such key talent processes as recruiting, training and development and retention, organizations should be tuned in to the “voice of the employee” and ensure that valued employees are engaged with the organization.

A manager of organizational effectiveness and employee engagement at a Fortune 100 company put it this way: “The typical organization today views talent management as three building blocks: attract, develop and retain. These are solid building blocks. The challenge is that these blocks won’t stick together unless there is mortar. And that mortar is employee engagement. A robust, world-class talent management process has to put the mortar between those three key building blocks.”

To avoid platitudes, every organization should define employee engagement to ensure that the information it is gathering from the workforce on can be put into practice. For example, one organization researched by APQC for its newest collaborative research project, “Rewarding, Engaging, and Retaining Key Talent,” defines employee engagement as commitment, work ethic and loyalty.

Another organization defines employee engagement as a combination of perceptions—including satisfaction, commitment, pride, loyalty, sense of personal responsibility and willingness to be an advocate for the organization—that have an impact on behavior.

And a third defines engagement centrally as “an individual sense of purpose and focused energy, evident to others in their display of personal initiative, effort and persistence, that is directed toward organizational goals.”

Each organization in the study is clear about what it means to be an engaged employee. That definition is reinforced through standard processes and practices for collecting employee engagement information.

Why employee engagement is important?
Both qualitative anecdotes and quantitative research indicate that organizations realize positive outcomes from employee engagement.

For example, a best-practice organization candidate for APQC’s “Rewarding, Engaging, and Retaining Key Talent” study found that high levels of employee engagement have been correlated with high levels of quality, productivity and attendance. Another has correlated higher levels of employee engagement with higher levels of new product innovation. And a third has observed some very positive business outcomes, in large part because of its focus on employee engagement over the past four years, including a reduction in team member turnover of 19 percent, a reduction in workers’ compensation claims of 27 percent, an increase in net revenue of 22 percent, and an increase in earnings before interest, taxes, depreciation and amortization of 43 percent.

Quantitative research reinforces the relationship among customers, employees and the bottom line. For example, the classic 1994 Harvard Business Review article “Putting the Service Profit Chain to Work” establishes relationships among profitability, customer loyalty, employee satisfaction and productivity. A 2003 article from Journal of Applied Psychology—“Which Comes First: Employee Attitudes or Organizational Financial and Market Performance?”—found consistent and significant positive relationships over time between overall job satisfaction and financial and market performance (as well as reciprocal relationships).

Measuring employee engagement
Employee attitude or climate surveys are two tools for gathering feedback and enhancing workplace communication. APQC’s Open Standards Research shows that workforce climate surveys primarily take the form of an annual census, which means that all employees are surveyed once a year. (About half of survey participants conduct employee satisfaction/engagement surveys at least once per year.) The results are then communicated to senior leaders and the top managers responsible for such key employee areas as talent management, compensation and benefits for action and process improvement.

APQC’s qualitative research also sheds light on how best-practice organizations monitor the voice of the employee and take action. For example, one organization calculates an employee engagement index, based on a subset of employee survey items measuring the engagement of respondents:

• Satisfaction: Employees are asked, “Considering everything, how would you rate your overall satisfaction with the company at the present time?”
• Advocacy: Employees are asked whether they “would recommend the company as a great place to work.”
• Retention: Employees are asked to respond yes or no to the statement “I rarely think about looking for a job with a new company.”
• Pride: Employees are asked to respond yes or no to the statement “I am proud to work for the company.”

At another organization in APQC’s collaborative research, employee engagement is measured two times per year through a formal survey. First, the organization administers a formal employee engagement survey to all employees worldwide. This information is analyzed, and action plans are developed and implemented based on results. Participation is voluntary; in 2008, roughly 92 percent participated in the survey. Then about halfway through the year the organization conducts a random poll to assess how well it is doing with the action plans generated from the annual survey results.

Sustaining a commitment to employee engagement
The final steps in the engagement process are ensuring that the information can be acted upon, that senior leadership is held accountable for the results, and that a focus on employee engagement is instilled in organizational culture.

Employee satisfaction and engagement research should be important elements in HR and organizational strategic planning processes. Of the organizations participating in APQC’s Open Standards Research, 77 percent indicate that employee feedback and surveys are key aspects of the organizational HR planning process (Figure 1, N=75). Because employees are important customers—indeed, the ultimate customers—of HR plans, policies and strategies, their opinions can help organizations gauge the success of particular initiatives, determine strategic priorities and pinpoint needed improvements.

Which of the following are inputs into your HR planning process?
Organizational long-term objectives 83%
Organization mission statement 80
Senior management directive 79
Employee feedback/surveys 77
Internal and external analysis 75
Corporate and unit strategies 72
HR customer satisfaction surveys 52
Other 5

Organizations must also reinforce how seriously they take employee engagement. According to APQC’s Open Standards Research, employee satisfaction and the growth of key staff members are the most common employee- or HR-related metrics factored into leadership compensation (Figure 2, N=156). Employee satisfaction is typically gauged via employee satisfaction, engagement, climate or culture surveys. Staff development is typically measured by the number of promotions and developmental opportunities completed.

Which of the following people/HR metrics are built into the compensation plan for the leadership team at your business entity?

Employee satisfaction (climate/culture survey) 40%
Growth of key staff (promotions, developmental opportunities provided) 40
No people metrics built into compensation plans for leadership 32
Attrition/retention of key staff 28
Staff training completed in comparison to learning goals 21
Number of available positions filled internally 19
Diversity 15
Other 9

Here are some examples from APQC’s collaborative research of how leading organizations act on this information:
• The organization feeds results of the employee engagement survey into action plans and process-improvement initiatives. Through data analysis, it compares each group’s employee engagement index against the organization overall and against the benchmarks.
• In another example, each business unit develops action plans based on results of the previous year’s engagement survey and the follow-up pulse survey. The organization also requires that all managers with direct reports have performance objectives related to engagement.
• A third organization directs information from the customer and employee surveys to the appropriate process owners for action and improvement. This information is used as one factor in computing bonuses for senior leadership and is communicated to managers for process-improvement purposes. Results are also used for group training purposes when necessary. The organization also convenes a cultural council for every operating location to review information from the employee and customer surveys and discuss other employee issues and concerns, such as turnover and career paths. The cultural council comprises employees who meet on a monthly basis as part of the council and discuss improvement opportunities. Actions and feedback suggested by the councils then are communicated at the district and the division level.

The final consideration is making employee engagement part of an organization’s culture. One way to do this is by integrating employee engagement into other key talent initiatives and activities. For example, one organization integrates employee engagement into such activities as learning and development, Six Sigma, succession management and nonfinancial recognition:

• In learning and development: One e-learning module focuses specifically on the “fundamentals of employee engagement.”
• In Six Sigma: The company has been able to calculate estimated improvements in business outcomes based on improvements in the employee engagement scores using Six Sigma processes.
• In succession management: Successors are ultimately selected based not only on their performance and potential, but also on their engagement, leadership and values, as measured by the employee opinion survey.
• In nonfinancial recognition: The company grants an annual “Chairman’s Recognition for Engagement” award to deserving employees each year.

In this manner, employee engagement is integrated throughout different aspects of talent management and is instilled as a key part of organizational culture.

Take Action Against Low Morale

If you’re feeling that morale is running a little low around the office this New Year, you’re not alone.
Almost 25 percent of U.S. employers say morale among workers at their companies is low, according to a survey released by CareerBuilder. "Low morale levels are an unfortunate side effect of this recession," says Jason Ferrara, vice president for the company. Employees reported:

• Having trouble staying motivated at work in the last year

• Not feeling loyal to their employer

• High stress levels and increased work levels in the last 6 months

To give employees a much needed boost Ferrara suggests taking measures to help address negative workplace sentiment and motivate employees. Whether you step-up communication, offer more employee recognition programs, or provide flexible work opportunities—the time to act and engage your employees is now.