Employee Engagement

Employee engagementto enhance organisational performanceACAS and CIPD 11th June 2009

Summary:A report to Government

Due to publish this summer

About performance

Targeting leaders who want to know more1

Our five questions:1. What is it?

2. Does it matter?

3. What are the characteristics of engaged organisations and what enables this?

4. What are the barriers?

5. What could government and its delivery partners do to help?

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1. What is it?

Not a great term but has currency

Lots of definitions but common themes

It is a belief, an approach.

It places peoples commitment, potential, creativity and capability at the heart of the effectiveness, quality and performance of the organisation.It is about unlocking the potential of people, enabling people to give more of their best at work.

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1. What is it? (contd.)A 2-way commitmentWith not toIn the knowledge economy, we are all volunteers.

LEAN A way of engaging those doing the work.SYSTEMS THINKING If work is badly organised, engagement difficult to attain.WELLBEING Addressing employee wellbeing helps ensure employee engagement endures. SMEs Employee engagement important when organisations grow

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Employee EngagementYES!SMEsGurusPractitionersRegional EventsAcademicsAnalysisEconomistsSocietyDOES IT MATTER?TODAY:TOMORROWCOSTS9bn Presenteeism50bn; Low LevelsBENEFITS2/3 x PerformanceMake most of opportunities in recessionTo compete with BRICS Public Services we wantTo innovateTo bespokeCannot waste untapped potentialMust enable the best of peopleTHE QUESTION TO ANSWER:NB: Economist, rational manTaking charge (RSA)On Organisations Radar?5Employee engagement

EvidenceISR: 664,000 employees in 50 organisations with more employee engagement increased operating income by 19.2% over 12 months. In those with less employee engagement, it shrank by 33%.

Corporate Leadership Council: Profits grow up to three times faster in organisations with engaged employees compared with organisational competitors.

Gallup: Top quartile EE organisations exceeded industry peers on EPS by 18%. Bottom quartile were 3.1% below peers.

Best Companies to Work For: Share price growth 50% faster for best companies.

Gallup: 59% of EE say work brings out their most creative ideas only 3% of disengaged agree

6Evidence

Further EvidenceValtera: 65 firms, diverse industries. Top 25% EE have 7% ROA and 11% profitability. Bottom 25% have 2% ROA and 2% profitability.

Barber et al. IES: 65,000 employees over 2 years, 1 point increase in EE (5 point scale) leads to 9% increase in sales.

ISR: 363,000 employees in organisations with high employee engagement increased margins by 3.74% over 3 years. OM reduced by 2% with disengaged employees.

Corporate Leadership Council: 50,000 employees, 59 organisations, Engagement accounts for 40% of observed performance improvements.

Gallup, Harter et al: Meta-analysis. Top 50% EE Business Units have 27% higher profitability than bottom 50%.

AXA: Organisations with greater attention to employees produced greater shareholder returns.

7Further Evidence

Other benefits of employee engagement

Engaged employees: 2.7 sick days per year Disengaged employees: 6.2 (Gallup)

Engaged employees are 87% less likely to leave (Corporate Leadership Council)

67% of engaged advocate their organisations; only 3% of the disengaged do (Gallup)

9 out of 10 of key barriers to successful change, people related (PWC)

8Other benefits of engagement

LEVEL 1 TRANSACTIONAL; We act on employee feedback through surveyLEVEL 1 & LEVEL 2 Engagement LEVEL 2 TRANSFORMATIONALCompartmentalised ThinkingIt is a way of running and doing businessNB: Reactive engagement. About discretionary effort Territory, Market Sector StrategySTRATEGY FOR:IT; ESTATES; CAPITAL ETCEMPLOYEE / HR STRATEGYSurvey & act on iteg Performance management, communications, listened to etcONE PAGE: Market Sectors, CA, Country, Positioning Strategy AND Values/Behaviours to deliver itWE TRACK PROGRESS OF STRATEGYNB: About proactive engagementWE MEASURE: Concerns, commitment, feedbackPeople give continual VOICEPeople help shape strategyPeople at heart of delivery and at heart of strategyTWO-WAY9

Enablers1. LeadershipA coherent and compelling narrative of where the organisation is going and why.

2. Line managementEmployees know what is expected of them, feel appreciated, are given as much autonomy to operate as possible and receive appropriate training.

3. VoiceThe employee voice is offered and heard up and down the hierarchies (without fear), across the silos and with external stakeholders. People feel their voice counts.

4. Values and behaviourMost organisations espouse some values, all have behavioural norms. Any gap results in distrust. Trust is at the heart of effective engagement.

N.B. Must be context specific

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Employee engagementto enhance organisational performance

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