Organizational Culture & Employee Engagement: What’s the Relationship?


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As a leader, which is more important to you?
That your organization is performing the way it
needs to in order to meet your business objectives?
Or that your employees are well engaged in their
jobs? Chances are both are important. Both impact each other, and both are important parts of the organizational system. Organizational culture is an organizational-level construct that measures organizational behaviors and practices as a whole.

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Organizational Culture & Employee Engagement: What’s the Relationship?

  1. 1. Volume 4, Issue 3, 2010 researchnotesOrganizational Culture & Employee Engagement: What’s the Relationship?As a leader, which is more important to you? organization is functioning and can be used toThat your organization is performing the way it predict performance on important metrics such asneeds to in order to meet your business objectives? profitability, growth, innovation, quality and customerOr that your employees are well engaged in their satisfaction. A survey of organizational culturejobs? Chances are both are important. Both impact often contains items from this overall perspectiveeach other, and both are important parts of the such as, “Our strategy leads other organizationsorganizational system. Organizational culture is to change the way they compete in the industry”an organizational-level construct that measures and “Innovation and risk taking are encouragedorganizational behaviors and practices as a whole. and rewarded” (The Denison Organizational CultureCulture gives you the big picture of how your Survey, 1998). Employee engagement, on the other Top 10 Bottom 10 Engagment Figure 1: The Denison Organizational Culture Model and Employee Engagement Factor Bottom 10 DOCS Overall Top 10 DOCS Overall Bottom 10 Cultures Overall Top 10 Cultures Overall External Focus External Focus 98 98 97 98 10 12 15 11 98 98 10 Beliefs and 14 Beliefs and Flexible Stable Flexible Stable Assumptions Assumptions 8 12 9 7 98 98 8 8 98 98 98 98 Internal Focus Internal Focus Engagement Factor = 11th Percentile Engagement Factor = 83rd Percentile In a sample of 90 organizations using the Denison Organizational Culture Survey and the Engagement Module, we found firms with low scores on culture also had lower engagement scores. Conversely, organizations with strong culture scores had significantly higher engagement scores. This suggests a strong relationship between the health of an organization’s culture and their employee’s individual level of engagement. All content © copyright 2005-2010 Denison Consulting, LLC. All rights reserved. l l Page 1
  2. 2. hand, measures your individual employees’ level of employees to reach that heightened positiveengagement with their jobs and their organization. state toward their job and organization we knowMost employee engagement surveys are designed as engagement. At the core of our approachto look at an individual’s behaviors and satisfaction is the Denison Organizational Culture Surveywith their particular job. These types of surveys (DOCS) which measures the overall health of anbest predict individual-level performance and often organization. With proven links to organizationalinclude items such as: “I am passionate about my performance such as profitability, growth,work;” and “My manager gives me the tools and innovation, customer satisfaction, employeeresources I need to do my job.” As a leader or satisfaction and quality, the DOCS provides anmanager, it’s important to know the extent to which objective, reliable measure of the organization’syour employees are engaged. However, if employee strategic strengths and weaknesses. The Denisonengagement is all you look at, you only see part of Employee Engagement Module is an additionalthe picture. brief and reliable measure of employee engagement that helps leaders and managers understand howUnderstanding employee engagement is most their individual employees feel about their work andvaluable when understood within the context of the the impact that the culture has on their attitudesstrengths and weaknesses of the organization. If toward their job. By pairing these two surveys,we look at employee engagement alone, without organizations can align their efforts and gain greaterconsidering the culture that employees work in, clarity about their employees’ individual performancewe potentially leave ourselves blind to the strategic and the organization’s performance.strengths and weaknesses in the organizationthat impact employee performance and ultimately Engagement is an Outcome of a Healthyorganizational performance. For instance, Cultureconsider an organization that measures employeeengagement and finds that both the Research & We believe employee engagement is an outcome ofDevelopment department and the Sales Department a healthy culture, but as a research-based company,are highly engaged in their work. They may feel we needed to do the work to prove it: Whatconfident that all is well within those departments aspects of culture most strongly relate to employeeand that value is being created for their customers. engagement? To answer this question, we lookedWhat the survey may not be telling them, however, at a sample of 9,464 individuals in 90 organizationsis that while both departments are working well who completed both the Denison Organizationalindividually, neither department is communicating Culture Survey and the Denison Engagementwith the other. This, in turn, is creating serious Content Module between January and July of 2010challenges for their new product development to try to uncover key relationships.process and impacting future business opportunitiesand growth. In fact, it is easy for an organization First, we explored the overall relationshipto have very high engagement scores but also be between culture and engagement to assess: “Dofacing serious issues such as silos, misalignment or organizations with stronger cultures also havedistrust in the larger organization. Typical employee more engaged employees?” We divided the 90engagement measures often say little about how the organizations that used both the DOCS and theorganization works as a whole - making it difficult to Engagement Module into the top 10 and bottomdefine a path forward without knowing the broader 10 scoring organizations based on their overallcontext of the organization. DOCS scores. We then compared the Engagement Factor scores of these two groups. Scores on the Denison Employee Engagement Module areOur Approach to Employee Engagement calculated by giving each organization an overallWe provide leaders and managers the tools Engagement Factor. This Factor is a percentilenecessary to ensure that the characteristics of score that tells the organization how “engaged” thetheir organization (their culture) serve to inspire individuals of the organization are compared to the All content © copyright 2005-2010 Denison Consulting, LLC. All rights reserved. l l Page 2
  3. 3. other organizations in our Engagement Normative • There is a clear mission that gives meaningBenchmark. The results showed compelling and direction to our work. (Mission: Strategicevidence of the connection between culture and Direction & Intent)engagement. The bottom 10 organizations on • Everyone believes that he or she can have aDOCS overall had an Engagement Factor in the positive impact. (Involvement: Empowerment)11th percentile while those in the top 10 were in • The leaders and managers ‘practice what theythe 83rd percentile compared to the Engagement preach.’ (Consistency: Core Values)Benchmark Database (see Figure 1). This clearlydemonstrates that organizations with stronger While a strong correlation does not provecultures also have a highly engaged workforce. causation, we feel comfortable in saying that an organization with a compelling vision, with a clear mission that guides an individual’s work, whereEngagement at the Item Level people feel they can make a difference, and whereComparing the overall scores of the DOCS and the leaders practice what they preach, will more likelyEmployee Engagement Module gave us a good have a highly engaged workforce.idea of the “big picture” relationship of culture andengagement, but we also wanted to dig deeper to Implications for Action Planningsee what specific aspects of culture most stronglyrelated to engagement. We correlated each line Interestingly, the item “The leaders and managersitem of the DOCS with the Engagement Factor ‘practice what they preach’” was the highestand found four key survey items that most strongly correlated item. According to our research, whencorrelate to employee engagement: managers act in congruence with their words, employees are willing to give more and are more• Our vision creates excitement and motivation for passionate about what they do. This has important our employees. (Mission: Vision) implications for organizations trying to improve their engagement scores. Typical engagement surveys include items such as “I enjoy coming to work Figure 4: Engagement Predictors by Index every day.” While this is important information to know, how does a busy leader, team or department External Focus create an action plan for making an employee happy to come to work? The DOCS provides a road map for actions and behaviors that managers can use to improve their practices. Understanding the context of the organization – the culture – along with employee engagement is critical to obtaining a clear picture of your organization’s human capital. Beliefs and Flexible Assumptions Stable Engagement at the Index Level Finally, we looked at the relationship between the Indexes of the Denison Model and the Employee Engagement Module. Using regression analyses, we were able to determine which of the twelve indexes of the model were important Internal Focus to engagement: Vision, Core Values, CapabilityUsing multiple regression analysis we found that Development and Empowerment.the Vision, Core Values, Capability Developmentand Empowerment indexes were the strongest Not surprisingly, the Empowerment and Capabilitypredictors of engagement. Development indexes of the model were significant predictors of employee engagement. These All content © copyright 2005-2010 Denison Consulting, LLC. All rights reserved. l l Page 3
  4. 4. indexes measure concepts that are often captured The significant relationships found here suggest thatin employee engagement surveys: employees’ perceptions of how the organization as a whole functions in the areas of Mission,• How empowered do employees feel to make Adaptability, Involvement and Consistency are decisions? important predictors of individual-level engagement.• How much input into the organization do they As we would expect, the indexes in the Involvement feel they have and can they make a difference? trait are important to an employee’s level of• Does the organization invest in employee skills engagement. However, the significant relationships and development? that exist between employee engagement and other indexes such as Core Values and Vision pointWe again saw the strong impact of the item, to the importance of looking beyond the more“Leaders and managers practice what they preach.” traditional understanding of engagement, to a moreThe Core Values index, which contains that item, comprehensive understanding of organizationalwas the strongest predictor of engagement. This practices.suggests that of all the factors that can influenceemployee engagement, the behaviors embodied in Healthy Culture -> Engaged EmployeesCore Values, can have the most significant impact. At the end of the day, organizations value what brings about the results they most desire: improvedThis includes: having “a clear and consistent set performance and overall effectiveness. Theof values that governs the way we do business,” best way to accomplish this is not by looking at“having a characteristic management style and employee engagement alone, but also by gaininga distinct set of management practices,” and of an understanding of the organizational contextcourse having “leaders and managers ‘practicing and culture the employees work within. It is thewhat they preach.’” Each of these are important combination of a healthy culture and engagedto the pride, enthusiasm and commitment of your employees that is most critical to improving youremployees and are important areas to focus on if organization’s effectiveness and the experiences ofyou find your employee engagement scores are the people in it.low.Related ResourcesCorporate Executive Board. (2004). Driving Schaufeli, W. B., & Bakker, A. B. (2004). Jobperformance and retention through employee demands, job resources, and their relationship withengagement. burnout and engagement: a multi-sample study. Journal of Organizational Behavior, 25, 293-315.Rich, B. L., LePine, J. A., & Crawford, E. R. (2010).Job engagement: Antecedents and effects on jobperformance. Academy of Management Journal,53(3), 617-635.Contact Information Copyright InformationDenison Consulting, LLC Copyright 2005-2010 Denison Consulting, LLC121 West Washington, Suite 201 All Rights Reserved.Ann Arbor, Michigan 48104 Unauthorized reproduction, in any manner, is prohibited.Phone: (734) 302-4002 The Denison model, circumplex and survey are trade-Fax: (734) 302-4023 marks of Denison Consulting, LLC.Email: Version 1.0, December 2010 All content © copyright 2005-2010 Denison Consulting, LLC. All rights reserved. l l Page 4