Edelman Rethinking Employee Engagement Report 2011


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Edelman Rethinking Employee Engagement Report 2011

  2. 2. Edelman Change and Employee EngagementTABLE OF CONTENTSEXECUTIVE SUMMARY ................................................................................................................. 2EMPLOYEE ENGAGEMENT: COMPETING DEFINITIONS ............................................................ 3EMPLOYEE ENGAGEMENT: LINKING EMOTIONS AND ACTIONS ............................................. 4REALITY CHECK ............................................................................................................................ 8A BEGINNING ROADMAP: RETHINKING EMPLOYEE ENGAGEMENT ....................................... 9 1
  3. 3. Edelman Change and Employee Engagement EXECUTIVE SUMMARY Only one in five workers is giving full discretionary effort on the job. At the same time, companies with highly engaged employees outperformed the total stock market and enjoyed total shareholder returns 19 percent higher than the average in 2009, while those with low engagement levels saw total shareholder returns 44 percent lower than the average. The case is clear for better employee engagement, yet according to a recent global research study by Edelman, many organizations struggle to understand what engagement truly looks and feels like and how best to invest in sustainable efforts to improve it, particularly during times of change. Companies can score well on employee engagement surveys and still “I’ve never had control and be challenged with creating or reinventing an environment that fosters effective I never wanted it. If you collaboration, innovation and decision-making, involving leaders and employees in create an environment taking the company in new directions or cultivating them as willing ambassadors where people truly for the company and its brands. participate, you don’t need control. They know what Traditional views assume employee engagement is owned by the organization needs to be done and they and HR rather than by leaders specifically. These same views focus on employee do it…We’re not looking for satisfaction and commitment at a point in time, based on relatively static elements blind obedience. We’re looking for people who on like pay, benefits, recognition, career opportunity, work environment, job tools and their own initiative want to tactical communications – analysis of which stops short of providing relevant be doing what they’re doing insights for leaders on how to manage the total business differently or better in an because they consider it to ever-changing environment. This report is a compilation of discussions and be a worthy objective.” interviews with approximately 30 global organizations representing a variety of industries. It presents an alternative framework for employee engagement, which – Herb Kelleher, focuses on addressing the actions and mindset of employees and leaders during former Chairman and CEO change. It answers questions like: of Southwest Airlines What should employee engagement look like for a company introducing a new corporate strategy, entering new markets or shifting to a more customer- or solutions-centric mindset? What are the behaviors that should define employee engagement in these situations? What specific role should leadership play in increasing employee engagement? This contrasting view can help your organization rethink pathways to reshape employee mindsets, leadership behaviors and workplace practices and communication to deal with change and the realities of your specific business, today’s economy and the communications landscape. 2
  4. 4. Edelman Change and Employee EngagementEMPLOYEE ENGAGEMENT: COMPETING DEFINITIONSTraditional models of employee engagement define it by measuring employee perceptionsof key drivers from an HR and a cultural perspective – things like pay, benefits, recognition,career opportunity, work environment, job tools and tactical communications. However, ineveryday discussion, employee engagement is increasingly re-interpreted,misunderstood or misdiagnosed and many timesinterchangeably referenced with internal or employeecommunications, employer branding or evenemployees promoting the company or its products.Two recent studies by leading HR consulting groupshighlight the challenge of defining employeeengagement. One group reported that employeeengagement had fallen to a 15-year low during therecession period. Just days later, a second groupreleased a study that found employees performedtheir jobs with a higher level of engagement during therecession. These vastly different conclusions illustratethe countless – oftentimes competing – wayscompanies define, measure and achieve engagement.Our own research confirms this. In a recent global employee research study, Edelmaninterviewed 30 multinational companies with various offices represented in the US, UK,France, Germany, Spain, Brazil, Malaysia, Singapore, Thailand, and Indonesia on theirviews and approaches to employee engagement during times of change.Here’s what the study found:We confirmed that companies are indeed struggling to define engagement and how toachieve it during times of change, despite the traditional approaches, tools andmeasurement mechanisms available to do so. Some companies interviewed definedemployee engagement in emotional terms – satisfaction, pride and motivation. Others wespoke to acknowledged employee engagement is necessary but elusive especially in toughtimes. In several cases, companies believed they are effectively impacting engagementthrough their management and communication practices. In the last two years, anincreasing number of organizations are listing “rebuilding employee engagement” as a toppriority on their Strategic Plans or Balanced Scorecards. However, it’s clear that no one-size-fits-all definition of employee engagement is sufficient, and the approach to andownership of it differs widely around the world.Finally, our research found that it is commonly assumed HR and the organization broadlyown employee engagement, rather than leadership specifically. While leadership isdirectly in a position to influence employee engagement the most, few organizationshold their leaders directly accountable for improving it with specific behaviors and actions. 3
  5. 5. Edelman Change and Employee EngagementAt the same time, current approaches to employee engagement research stop short ofproviding relevant insights for leaders on how to respond and manage the total businessdifferently or better in an ever-changing environment.What’s needed? Companies large and small, in the US and globally, acknowledge theimportance of employee engagement. But given the confusion around what engagementtruly looks and feels like, and exactly how to achieve it, it’s clear that an alternativeapproach is needed, rather than a one-size-fits-all approach. To increase employeeengagement in today’s dynamic economy, a company’s efforts should: Inform and emphasize leadership’s role Drive new thinking as well as behaviors needed for the business Be unique to each company’s desired business outcomes Help organizations respond to change Use communications to lead and shape internal dialogue Account for the employee role in influencing the external publics important to the businessEMPLOYEE ENGAGEMENT: LINKING EMOTIONS AND ACTIONSIn reviewing the global research and our experiences with a broader set of clients, it’s clearthat companies with highly engaged employees have found a sustainable way of linking the EMOTION-ACTIONemotions of employees with the collective actions needed to advance the business. DYNAMICWe call this the Emotion-Action dynamic. In this view, employee engagement is both 1. A willingness to(1) a willingness to link one’s personal interests with those of the organization, as well as, link one’s personal(2) from a company standpoint, the evolving ability of leaders and employees to interests with thoseunderstand, act upon and champion the priorities of the business. of the organization 2. The evolvingExploring and measuring these two elements as well as defining specific leadership ability of leadersactions to drive improvement in these areas can help define a specific and actionable and employees topath for improving employee engagement at your company during times of change. understand, act upon and champion the priorities of theExample: Deepening the Emotional Connection with Employees business.Facing a tough year with lagging employee engagement, one retail company CEOchallenged his C-Suite to reinvent the employee experience in order to regain the lostconnection between senior leadership and the global employee base, now increasinglya Millennial population that valued working at the company for different reasons thanemployees in previous years. The company initiated a pulse study to investigate theemotional connection between employees and its brand. They found that the brandand the employees shared a common passion – making a positive impact in their localcommunities. More than three-quarters of employees said they strongly welcomed theopportunity to volunteer in their communities, including on behalf of the company. Many 4
  6. 6. Edelman Change and Employee Engagementalso listed understanding customer preferences and needs as their top concern, even overpay and benefits. However, when the company looked at the priority it had placed onemployee engagement programs at the retail level, most of it was operational, focusedon health and welfare benefits or pushing internal news. Employee passion about makinga difference in their local communities and with customers was, in this case, the biggestuntapped opportunity to drive greater employee engagement and connection with thebrand and the business. The company has since reoriented the ownership of employeeengagement among HR, Internal Communications and Store Operations, and startedcreating a program and a set of tools to help employees become change agents in theirlocal communities and deepen their knowledge of the company’s sustainable supply chainand its value to customers in the stores.Example: Organizing for ActionFresh off a restructuring and cost-effectiveness initiative, a global consumer goodscompany needed to re-orient leaders and employees to a unified strategy emphasizingmarket prioritization and increased customer-centricity and innovation. The new strategywould require leaders and managers tounderstand and incorporate the impact of the competitive environment and consumerpreferences on everyday decisions oninvestments, priorities, resources and staffing.However, the company had no infrastructurein place to drive the new conversation andthinking required to change decision-makingand actions by leaders in concert with a new,five-year strategy. To begin the dialogue,the company segmented their leadershipinto top 100, top 1,000 and top 5,000 peoplemanagers, and created a targeted strategy forcommunications, involvement and two-wayfeedback for each group. Ultimately, theyimplemented a monthly and quarterly cadencefor communications that has served as anessential building block for strategy execution,and have shown measurable improvementon employee engagement and awarenessaccording to their annual survey. 5
  7. 7. Edelman Change and Employee EngagementLEADERSHIP EFFECTIVENESS AND EMPLOYEE ENGAGEMENTTime and again, research has shown that the relationship with one’s direct manager is a topdriver of employee retention and engagement. An individual employee’s motivation to growbeyond a minimal set of performance expectations is directly due to the style, behaviors,recognition, consistency, and authenticity of his/her leader. Employees look to theirleaders for context, direction and inspiration. However, more often than not, companies’employee engagement efforts are driven by HR and focused on tangible components of theemployee experience – things like pay, benefits, recognition and tactical communications.To truly make a difference, companies should spend their resources and energy developingprograms and opportunities to strengthen and engage leaders. Simply put, engagedleaders create engaged employees, who in turn generate above average performance.Example: Engaging Leaders to Drive Revenue Growth by Decreasing Employee TurnoverFollowing a management change at a major U.S. car retailer, the company’s leadershipteam embarked on a face-to-face tour to meet with every general manager from its 150+dealerships nationwide. At each stop, the CEO, COO and the head of the local region –laid out a plan to grow the business despite an incredibly challenging economy. The seniorteam’s deep involvement at this level met a key ground rule for increasing employeeengagement: Make It Important! 6
  8. 8. Edelman Change and Employee EngagementLeaders had identified a somewhat unlikely driver of the targeted growth: reducingemployee turnover. The company closely tracks engagement, retention, customersatisfaction and financial performance for each dealership; in reviewing this data, leadersobserved that the higher the churn rate, the less successful a dealership was in trainingemployees to run operations smoothly and provide the excellent customer service thatdifferentiated the company from competitors. In fact, they were able to determine that salesimproved to the tune of $400 per month in gross profit per associate when retention andengagement improved at a certain location. Leaders shared this data with managersand tasked them each with reducing their location’s turnover by nearly half. They offeredspecific, actionable ways to do that, including sharing information, taking genuine interestin employees’ development, implementing staff’s suggestions for improving operations andempowering employees to resolve customer issues on the spot.Example: Changing the Dialogue, Redefining LeadershipDespite its well-respected brand name and long-standing presence in the market, a leadinglawn and garden products company realized it could no longer survive and grow by doingthings the way they’d always been done. Led by a CEO determined to secure thecompany’s future success, the company built a leadership development program designedto drive real culture change. After all, building a culture that embraced change, innovationand creative thinking would require a new way of thinking and a different type of leader.Focusing its resources on the top 100 leaders in the organization, the company introduceda yearlong speaker series. The series featured prominent speakers from a variety ofbusiness industries, academics and even the military. In their discussions, these outsideleaders would speak about their own successes and failures in areas all companies canrelate to, like leadership, customer service, cultural change, innovation and sustainability.Their experiences inspired a new way of thinking and the courage to try new approachesto drive real and lasting culture change.Following each presentation, leaders would come together to re-examine their ownbusiness plans and priorities – rethinking them through the lens of what was just discussed.As a result, they were inspired to think differently about their day-to-day work, long-termpriorities and overall leadership style. The organization has become increasingly energizedand excited about the future, and leaders’ new way of thinking and innovating has shapedthe employee experience at all levels of the organization. As leaders explore topics andissues they’ve never discussed before, the entire culture is shifting in a new direction. 7
  9. 9. Edelman Change and Employee EngagementREALITY CHECKRethinking employee engagement to drive new results isn’t easy, especially whenthere are many competing definitions and approaches. Yet, given our tough businessenvironment, the bar is now exponentially raised for employee engagement and leadershipcommunications and effectiveness. Is your organization ready to address this reality?Consider the following:1. Is your leadership rolling out a new strategy or initiative that will require more engagement than ever from your employees?2. Do you need to activate or re-engage your employees as advocates or ambassadors?3. How well is the urgency for change understood and acted on within your organization?4. Should leadership communication be a critical component of delivering on your company’s strategy or organizational performance goals in the next 1 to 3 years?5. Are you searching for novel ways to renew or reinvent the employee experience? Are leaders looking for better ways of engaging their teams?6. Does your employee engagement research provide sufficient insights for leaders to build trust, cultivate two-way dialogue and engage employees on critical priorities?7. Do your current drivers of employee engagement support the business you need to become?8. If employee engagement remains at its current level or decreases within your company, is there a downside risk? HAVE YOU EVER SEEN A BRAND AMBASSADOR? Contrary to popular belief within corporate circles, according to the organizations we spoke with and studied, the concept of brand ambassadors among employees is largely a myth. People decide when, what, where, how and why they promote or discuss their employer. The best organizations can do is to provide timely, relevant information and stories that characterize the value and efficacy of brands, products, and services. More importantly, leaders must foster an open and respectful work environment where employees are heard, recognized, rewarded and engaged in the business. Doing so increases one’s chances of having people talk positively and frequently to others about the organization. Remember, labeling or branding someone as an “ambassador” is the first step to derailing the effort. Rather, allow the process to happen naturally, organically and focus on content, context, accessibility and feedback. The , have the confidence to be subjective about results. 8
  10. 10. Edelman Change and Employee EngagementA BEGINNING ROADMAP: RETHINKING EMPLOYEE ENGAGEMENTUnlocking human potential is truly the most sustainable competitive advantage forcompanies in today’s global marketplace. Developing the right formula – one that involvesleadership, HR and communications – can help ensure that you are recruiting andretaining the talent necessary to succeed, if not survive.A one-size-fits-all approach will not work, so you should begin by building a betterunderstanding of your current situation. This includes evaluating your current employeeresearch, identifying the drivers of engagement for your organization and definingyour employees’ world view – how they view your business and their role in it, howthey consume media inside and outside work, what their top-of-mind concerns are, whothey view as credible sources and how well they are positioned to be ambassadors forthe company. With a solid understanding of these areas, you can begin to establish astrategy to strengthen employee engagement within your organization. EDELMAN CHANGE AND EMPLOYEE ENGAGEMENT is the global organizational (internal) change communications consulting group of Edelman, the largest independent public relations firm in the world and the third largest overall. The group provides distinctive expertise in organizational effectiveness, culture transformation, strategy implementation and accessibility, CEO transition and positioning, internal branding, post-merger integration, labor- management relations, internal communications programming and research/measurement. For more information, please visit our team web site and blog at:Engagement is about Experience….Experience is about Relationships….Relationships are http://change.edelman.com.about Communications….Communications is about Relevance….Relevance is aboutRespect….Respect is about Trust 9