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.

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.

The Art of the Thank-You Note

During the holidays, Geoffrey Parker, branding consultant for Parker Pen Co. and great-grandson of its founder, George S. Parker, is careful not to overlook what he calls a "critical" aspect of the gift-giving season: thank-you notes.
"It's common courtesy," he says. "If someone does something for me, I need to acknowledge that." Mr. Parker sometimes thanks a gift-giver or party host with a phone call, email or text message. But he believes that these modes are "insufficient" and always follows up with a handwritten message. "As these modern electronic devices become more common and overused, they become cheap," he says.
Mr. Parker usually sends his thank-you notes on four-by-six-inch cards with his name and address printed across the top. He favors heavier paper and cards with printed words that are raised, noting that people often subconsciously run their fingers over the printed portion of stationery when they receive a note. "People are establishing impressions based on a lot of subtle things," he says.
When writing a card, Mr. Parker eschews everyday ballpoint pens. "I feel fountain pens allow me to be more expressive," he says. He likes using a pen with a broad nib, saying that the fatter script and signature "doesn't look as if it's something that's been mass-produced." He uses ink in a different color from the printed message on the card, usually favoring a striking bright royal blue for his black-printed stationery.
Before he writes his note, he sometimes practices writing a line several times to see how it looks on paper. "People are writing less and less these days ... a lot of people have forgotten how to write," he says. "You don't want something to be difficult to read, misunderstood or simply not understood."
He typically begins the note with a line "harking back to the last time I saw or communicated with them" and then goes on to ask about an associate or family member. "By doing this, you establish a sort of conversation, more than a blunt 'Thanks for the necktie,'" he says. While he tries to keep his message brief, he makes sure it is always more than one or two lines.
Finally, he signs off informally with his first name. "Do not use your business signature for a personal note," he says. "It can seem too formal, and a personal note should not be done in any sort of mechanical or perfunctory way." His rule of thumb: "The thought behind the thank-you should be equal to or greater than the thought that went into the gift."
From the Wall Street journal, Dec 24, 2009

A review of THE CARROT PRINCIPLE in Financial Executive Magazine

The Carrot Principle: How the Best Managers Use Recognition to Engage Their People, Retain Talent and Accelerate Performance; revised edition. By Adrian Gostick and Chester Elton.

In this, their second look at the use of corporate carrots--the first edition was a big 2007 seller--authors Gostick and Elton offer further evidence that praise and recognition belong in every manager's toolkit. In fact, they write, in the long-standing recession, "the Carrot philosophy has never been more relevant."

Indeed, finding ways to recognize people and honor their work doesn't require new resources, just new ways of thinking. Recognition isn't simply the softer side of leadership, they write, but a "secret ingredient that great leaders add to their companies for [a] direct impact on profits."

Organizations that more effectively recognize and reOward excellence, according to a 10-year study of more than 200,000 employees cited in the book, had triple the return on equity as companies that did the worst at recognition. And of employees reporting the highest morale, more than 94 said their managers were good at recognition.

These numbers stand in sharp contrast to others evincing the general sorry state of recognition efforts. Almost two-thirds of North American workers cited in the study said they had no recognition at all in the past year, and 79 percent of top performers who left their companies said "lack of appreciation" was a key reason.

The authors do a superb job of sketching out how and why recognition programs work, citing companies like Quest Diagnostics, KPMG, WaltDisney Co., Avis Budget Group and DHL. As they write, "Smart companies have realized that workers are being asked to do more than ever, and find work less fulfilling. Recognition that builds motivation is essential to keeping them and to getting the most from them."

More Than Half of Employees Intend to Leave Current Job in 2010

Employee turnover is expected to rise next year as a new survey shows that many workers are unhappy with their present jobs. 60% of employees intend to leave their current positions and an additional one-quarter are networking and updating their resumes, according to research from Right Management. The Right Management survey of workers in North America asked: Do you plan to pursue new job opportunities as the economy improves in 2010?
• 60% — Yes, I intend to leave
• 21% — Maybe, so I’m networking
• 6% — Not likely, but I’ve updated my resume
• 13% — No, I intend to stay.
“The study provides a barometer of employee engagement in the workplace, with results that might alarm and surprise many employers,” said Douglas J. Matthews, president and COO at Right Management. “Employees are clearly expressing their pent up frustration with how they have been treated through the downturn. While employers may have taken the necessary steps to streamline operations to remain viable, it appears many employees may have felt neglected in the process. The result is a disengaged and disgruntled workforce.” Matthews said that the best workers are mobile in any economy. “We know that people are attracted by career development opportunities, attaining work-life balance and working for an innovative company culture. If management doesn’t provide employees with these opportunities, then workers are going to take their knowledge and skills elsewhere. Talented staff can change jobs because they can and want to, not because they have to.”

Gift Cards - The New Fruitcake?

By Liz Pulliam Weston
MSN Money

It's the time of year when we like to focus on the good news, and mine is this: Gift cards are on the wane.

A new TowerGroup report predicts gift card purchases will drop to $87 billion this year, from $91 billion in 2008. Spending on store-branded gift cards is expected to fall 7%, while spending on general-purpose cards likely will rise a mere 3%. TowerGroup's predictions, plus a Consumer Reports poll showing only 15% of adults want gift cards and 25% hadn't used a card from last year, led MediaPost's Marketing Daily to label gift cards as the new fruitcake.

We can blame the economy, rather than a sudden mass realization that gift cards aren't real gifts, for plasticized cash's diminished popularity. But people also might be getting wise to gift cards' many drawbacks, including:

* The possibility of total loss. Any store-branded card can become worthless if the retailer goes out of business. An estimated $100 million in card value vanished with the 2008 bankruptcies of Sharper Image, Linens 'n Things and other retailers, TowerGroup said.

* The probability of waste. The amount lost to bankruptcies pales next to the amount that will never be redeemed. A whopping $5 billion of the money spent on gift cards this year won't get used, TowerGroup estimated. This is a big reason retailers and banks push gift cards with such enthusiasm -- that and the fact that most people who do redeem their cards (65%, according to the Consumer Reports poll) wind up spending more than the cards' value.

* Fees, fees and more fees. General-purpose cards -- gift cards issued by credit card companies -- typically cost $2 to $4 to purchase and then involve additional charges (typically $2.50 a month) after 12 months of inactivity. You might face fees for shipping, checking a balance or replacing a defective or lost card.

* Expiration dates. This is more of a problem for cards issued by smaller retailers, since major retailers tend not to impose expiration dates and the "valid through" dates on general-purpose cards refer only to the expected life of the magnetic strip, not the expiration of any balances on the card, according to a Bankrate.com survey. Several states ban or limit expiration dates, but in other states cards can expire in as little as six months. In most states, cards can still lose all value because of inactivity and maintenance fees.

* Limits on use. CVS gift cards, for example, can't be used online. American Airlines gift cards can be used only online or when you're making phone reservations. They're not valid at airport ticket counters or when you're booking through travel agents.

* The last few dollars might get trapped on the card. Some retailers won't let you use a card unless the remaining balance is enough to cover your entire purchase. They won't let you split a purchase between the card and some other form of payment

Some new consumer protections will go into effect next summer, thanks to the credit card reform law and the Federal Reserve. Those protections -- still undergoing some tinkering -- include rules prohibiting gift cards from expiring for at least five years after purchase and prohibiting card sellers from charging service or inactivity fees in the first year. All fees must be disclosed, and no more than one fee can be charged per month.

Incentive Magazine’s 2009 Platinum Partner Awards

More than 40,000 buyers of recognition and incentive programs voted O.C. Tanner as the standard of excellence in the incentive industry and made us the winner of Incentive Magazine’s 2009 Platinum Partner Awards’ Corporate Gift Services category--for the fifth year in a row. Your business and support have helped us succeed.

Your ideas and desire to appreciate great work in the best ways possible push us to elevate recognition practices and drive improved results for you. As our partner, this prestigious award reflects your success and hard work as well. Many thanks to all of you!

Engage Employee Heart-Power - Not Just Brain-Power

We've heard that some companies believe there are more important ways to drive engagement than appreciation. Did you know that the number one driver of engagement is "opportunity and well-being"? But how do you add that? The right question might be.. what creates a sense of "opportunity and well-being"? The answer is appreciation..

Here's an interesting article from Harvard Business dated November 11, 2009 that speaks to engaging hearts through leadership.

On any given Sunday in the NFL, the heart power of the players is at least as important as the brain power of the game plan. On any given workday, the same can be said for businesses. But companies lack confidence when it comes to creating heart power in employees. They're not sure how to do it well. So they concentrate brain power on the game plan of translating top-line dollars into bottom-line profit.

Creating heart power starts with management's style of running the company — how much of the time executives spend leading and how much time managing. Managing has to do with matters of the brain; leading has to do with matters of the heart.

Leading is about making sure, first of all, that the company is engaged in changing people's lives for the better. When that's the case, employees' awareness that they have a lot to do with the company's work lights their fire from within. That inner flame causes them to bring their imagination and creativity to the enterprise. They feel it's "their" company, and they take ownership of the customers.

Most companies do change people's lives for the better, if only in the sense that they pay a good wage, provide opportunities for creativity and betterment, and help workers save for retirement and put their kids through school — in addition to benefiting the community in myriad ways. Other companies, such as the one I work for, go much further. For example, to provide people with a good education, the founders bought a bankrupt college years ago, got it into shape, and donated it to the state — it's now known as Ball State University. A business that is engaged in improving lives is the kind of company people want to sell for.

Another word about heart and leadership: A lot of big companies tell new employees to bring their brains and their effort to work but leave their emotional baggage at home. In essence, they tell them to cut their hearts out and leave them on the doorstep to be reclaimed when they get home. "We have enough problems of our own; we don't need your personal problems here" is an example of a style where the "managing" function dominates.

Other companies, generally small businesses that excel in the "leading" functions, hire the whole person, heart and soul, mind and brain. When problems occur in the home, a company support group forms to help get the employee through the trauma. That generates dedication and loyalty, which rub off on customers. And because the employee's life is changing for the better, he or she makes sure the company's corporate life changes for the better as well. Companies neglect employee heart power at their peril.

Clif Reichard is a sales consultant for Ball Corporation, which he has served for 36 years in capacities including vice president of sales. He is in his 55th year selling rigid packaging substrates. This post is one in an occasional series.

Employees Report Low Morale & Motivation

Nearly one-quarter of employers rate their employee morale as low, 40% of workers say they have had difficulty staying motivated at work in the last year and 24% say they do not feel loyal to their employer, according to a CareerBuilder survey of employers and workers. “Low morale levels are an unfortunate side effect of this recession,” said Jason Ferrara, vice president of corporate marketing for CareerBuilder. “As a result, employers are taking measures to help address negative workplace sentiment and motivate their employees. Whether it’s through stepping up communication, offering more employee recognition programs or providing flexible work opportunities, organizations are doing what they can to proactively manage low morale.”

Employee Engagement Rooted in Managers' Leadership Skills

To drive higher levels of employee engagement, companies should work on improving the leadership skills of frontline managers, says a new report from Aberdeen Group. "Employee engagement is something world-class organizations need to be effective at in today's competitive environment," says Mollie Lombardi, an Analyst at Aberdeen. "Learning programs provide individuals and managers with the skills and tools to align goals and priorities, and give a strong foundation which organizations can build on in order to achieve success."

According to Beyond Satisfaction: Engaging Employees to Retain Customers, more than half of best-in-class organizations provide training and tools to managers to help them better engage employees, and nearly all of the rest (45%) are planning to extend this type of training in the future. The report also found that two programs – onboarding and development plans agreed to by manager and employee – are critical to building high levels of engagement. Onboarding ensures that employees are aligned with the organizational mission and priorities from their earliest days, and development plans ensure that employees and managers remain in alignment when it comes to their role in achieving organizational success.

"This study is important because it highlights the need to develop strong leadership skills at all levels in the organization, not just in the corner office," notes John Ambrose, Senior Vice President of Strategy, Corporate Development and Emerging Business at SkillSoft, which conducted the research along with Aberdeen Group. "The challenge comes in finding ways to deliver leadership training that are cost-effective and scalable."

Companies Plan to Increase Focus on Employee Engagement in Reward Programs

57% of companies plan to increase their focus on employee engagement in measuring their reward programs during the next two to three years, according to a recent study by WorldatWork and the Hay Group. In addition, 64% will also increase their future focus on the motivational value of reward programs.
The "Reward Next Practices Survey" queried approximately 763 organizations in 66 countries from a cross section of industries to determine the reward practices of global organizations during the next two to three years. According to the study, current reward program performance metrics are more heavily weighted toward financial performance than employee engagement, with companies reporting a current focus of 71% on using financial performance measurements and 40% on employee engagement. Other performance standards, such as customer satisfaction, innovation, talent management and employee engagement are all at less than 40% of current focus by organizations. Of all of these metrics, organizations report a more intense future focus (57%) on employee engagement performance.