Employee engagement to enhance organisational performance by David Macleod

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Presentation by David Macleod at the Acas national conference 2009 London, UK. (Acas.org.uk/summit09)

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Employee engagement to enhance organisational performance by David Macleod

  1. 1. <ul><li>Employee engagement </li></ul>to enhance organisational performance ACAS and CIPD 11 th June 2009
  2. 2. Summary: <ul><li>A report to Government </li></ul><ul><li>Due to publish this summer </li></ul><ul><li>About performance </li></ul><ul><li>Targeting leaders who want to know more </li></ul>1
  3. 3. Our five questions: <ul><li>1. What is it? </li></ul><ul><li>2. Does it matter? </li></ul><ul><li>3. What are the characteristics of engaged organisations and what enables this? </li></ul><ul><li>4. What are the barriers? </li></ul><ul><li>5. What could government and its delivery partners do to help? </li></ul>2
  4. 4. 1. What is it? <ul><li>Not a great term but has currency </li></ul><ul><li>Lots of definitions but common themes </li></ul><ul><li>It is a belief, an approach. </li></ul><ul><ul><li>It places people’s commitment, potential, creativity and capability at the heart of the effectiveness, quality and performance of the organisation. </li></ul></ul><ul><ul><li>It is about unlocking the potential of people, enabling people to give more of their best at work. </li></ul></ul>3
  5. 5. 1. What is it? (cont’d.) <ul><li>A 2-way commitment </li></ul><ul><li>‘ With’ not ‘to’ </li></ul><ul><li>‘ In the knowledge economy, we are all volunteers.’ </li></ul><ul><li>LEAN – A way of engaging those doing the work. </li></ul><ul><li>SYSTEMS THINKING – If work is badly organised, engagement difficult to attain. </li></ul><ul><li>WELLBEING – Addressing employee wellbeing helps ensure employee engagement endures. </li></ul><ul><li>SMEs – Employee engagement important when organisations grow </li></ul>4
  6. 6. Employee Engagement YES! SME’s Guru’s Practitioners Regional Events Academics Analysis Economists “ Society” DOES IT MATTER? TODAY: TOMORROW <ul><li>COSTS </li></ul><ul><ul><li>£9bn Presenteeism </li></ul></ul><ul><ul><li>£50bn; Low Levels </li></ul></ul><ul><ul><li>BENEFITS </li></ul></ul><ul><ul><li>2/3 x Performance </li></ul></ul><ul><ul><li>Make most of opportunities in recession </li></ul></ul><ul><li>To compete with BRICS </li></ul><ul><li>Public Services we want </li></ul>To innovate To bespoke <ul><li>Cannot waste untapped potential </li></ul><ul><li>Must enable the best of people </li></ul>THE QUESTION TO ANSWER: NB: <ul><li>“ Economist, rational man” </li></ul><ul><li>“ Taking charge” (RSA) </li></ul>On Organisations’ Radar? 5 Employee engagement
  7. 7. Evidence <ul><li>ISR : 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%. </li></ul><ul><li>Corporate Leadership Council : Profits grow up to three times faster in organisations with engaged employees compared with organisational competitors. </li></ul><ul><li>Gallup : Top quartile EE organisations exceeded industry peers on EPS by 18%. Bottom quartile were 3.1% below peers. </li></ul><ul><li>Best Companies to Work For : Share price growth 50% faster for best companies. </li></ul><ul><li>Gallup : 59% of EE say “work brings out their most creative ideas” – only 3% of disengaged agree </li></ul>6 Evidence
  8. 8. Further Evidence <ul><li>Valtera : 65 firms, diverse industries. Top 25% EE have 7% ROA and 11% profitability. Bottom 25% have 2% ROA and 2% profitability. </li></ul><ul><li>Barber et al. IES : 65,000 employees over 2 years, 1 point increase in EE (5 point scale) leads to 9% increase in sales. </li></ul><ul><li>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. </li></ul><ul><li>Corporate Leadership Council : 50,000 employees, 59 organisations, ‘Engagement accounts for 40% of observed performance improvements’. </li></ul><ul><li>Gallup, Harter et al: Meta-analysis. Top 50% EE Business Units have 27% higher profitability than bottom 50%. </li></ul><ul><li>AXA: Organisations with greater attention to employees produced greater shareholder returns. </li></ul>7 Further Evidence
  9. 9. Other benefits of employee engagement <ul><li>Engaged employees: 2.7 sick days per year Disengaged employees: 6.2 (Gallup) </li></ul><ul><li>Engaged employees are 87% less likely to leave (Corporate Leadership Council) </li></ul><ul><li>67% of engaged advocate their organisations; only 3% of the disengaged do (Gallup) </li></ul><ul><li>9 out of 10 of key barriers to successful change, people related (PWC) </li></ul>8 Other benefits of engagement
  10. 10. LEVEL 1 & LEVEL 2 Engagement LEVEL 1 – TRANSACTIONAL; We act on employee feedback through survey LEVEL 2 – TRANSFORMATIONAL Compartmentalised Thinking It is a way of running and doing business NB: <ul><li>Reactive engagement. About discretionary effort </li></ul>Territory, Market Sector Strategy STRATEGY FOR: IT; ESTATES; CAPITAL ETC <ul><li>EMPLOYEE / HR STRATEGY </li></ul><ul><li>Survey & act on it </li></ul><ul><li>eg Performance management, communications, listened to etc </li></ul>“ ONE PAGE”: Market Sectors, CA, Country, Positioning Strategy AND Values/Behaviours to deliver it WE TRACK PROGRESS OF STRATEGY NB: <ul><li>About proactive engagement </li></ul>WE MEASURE: Concerns, commitment, feedback People give continual VOICE People help shape strategy People at heart of delivery and at heart of strategy TWO-WAY 9
  11. 11. Enablers <ul><li>1. Leadership </li></ul><ul><li>A coherent and compelling narrative of where the organisation is going and why. </li></ul><ul><li>2. Line management </li></ul><ul><li>Employees know what is expected of them, feel appreciated, are given as much autonomy to operate as possible and receive appropriate training. </li></ul><ul><li>3. Voice </li></ul><ul><li>The 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. </li></ul><ul><li>4. Values and behaviour </li></ul><ul><li>Most organisations espouse some values, all have behavioural norms. Any gap results in distrust. Trust is at the heart of effective engagement. </li></ul><ul><li>N.B. Must be context specific </li></ul>10
  12. 12. <ul><li>Employee engagement </li></ul>to enhance organisational performance

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