HRA Employee Engagement and Disengagement 11.10.2009
Scott LeuchterHRA of Greater Oak BrookNovember 10, 2009
“Only 1 OUT OF EVERY 5 workers today is giving full discretionary effort on the job, and this “engagement gap” poses serious risks for employers because of the strong connection between employee engagement and company financial performance.”SOURCE: Towers Perrin 2008 Global Workforce Study
Understanding Engagement • The Business Case • Journey to Engagement • Definitions Engaging Your Organization • How to Measuring YOUR Employees’ Engagement • Where is YOUR Organization? • What’s Next?
Disengagement’s Financial Impact *Annual cost to U.S. = $292 – 355 billion ** Operating Income 32.7% ** Income Growth Rate 3.8% ** Earnings per Share 11.2% ** Operating Margin 2.01% ** Net Profit Margin 1.38%•Gallop** 2007-2008 Global Workforce Study
% Respondents who say they can positively impact: 56% 39% Costs 25% Engaged 20% 59% 42% Enrolled Revenue Growth 23% 17% 60% Disenchanted 41% Innovation 22% 13% 63% Disengaged 46% Profitability 27% 20% 85% 72% Customer Satisfaction 48% 42% 88% 74% Quality 49% 38%SOURCE: Towers Perrin 2008 Global Workforce Study
No Plans to leave 7% 15% Not looking, but would 15% consider another offer Actively looking for another job Made plans to leave current job 35% 28% Plan to retire in the next few yearsSOURCE: Towers Perrin 2008 Global Workforce Study
Engagement is a critical leading indicator of potential productivity and retention issues.10% increase in engagement leads to 8% more discretionary effort which leads to 2% improvement in performance.
$10,000 $3,400 loss Actively disengaged employees cost organizations $3,400 for every $10,000 in salary. - Gallup, 2002 Smaller organization = Higher engagement levels. In difficult economic times, engagement is more important than ever.
In which area(s) is your organization struggling?Cost? Customer Satisfaction?Growth? Quality?Innovation? Retention?Profitability? Employee Performance?How would an organization’s level of engagement impact these areas?
Onlythose companies that win the hearts and minds of their top talent will be able to deliver value over both the short and long-term. – Deloitte, 2008 We are witnessing an era for business around the world in which engaging employees makes the difference between success and failure. -Towers Perrin, 2006
Linkage to Business Outcomes • Employee behavior – customer behavior – financial performance Global Talent Age • Innovation • Agility • Responsiveness to change • Encourage creativity
1980’s 1990’s 2000’sSatisfaction Commitment Engagement• Satisfaction alone • Positive rel. with • Direct relationship is not an adequate turnover/ retention with customer predictor of satisfaction, financial performance • Commitment does performance, not correlate with individual customer satisfaction performance, retention • Positive rel. with company/ • More job-related organization
The extent to which employees enjoy and believe in what they do, feel valued for it and are willing to spend their intellectual effort to make the organization successful. - Human Capital Institute Willingness and ability to contribute to company success; is the extent to which employees go the extra mile and put discretionary effort into their work – contributing more of their energy, creativity and passion on the job. – Towers Perrin
“Occurs when employees are motivated to help the company succeed (commitment) and know what to do to make it successful (line of sight).” – Watson Wyatt “Theextent to which people enjoy and believe in what they do, and feel valued for doing it.” – Development Dimensions International
PersonalEngagement defined as “the harnessing of organization members’ selves to work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performances – Kahn, 1990 Vigor, dedication, and absorption – Schaufeli, Salanova, Gonzalez-Roma, & Bakker, 2002
Passion and commitment – the willingness to invest oneself and expend one’s discretionary effort to help the employer’s success – Erikson, 2005 Psychological trait, situational state, and a behavior – Macey & Schneider, 2008
Meaningfulness • Receiving a return on investment of one’s self • Job enrichment and work role fit is positively linked Safety • Ability to show and employ one’s self without fear of negative consequences • Rewarding co-worker and supportive supervisor is positively linked
Availability • Individual’s belief that they have the resources to engage one’s self at work • Resource availability is positively linked
Shocks to the system that impact meaningfulness, safety or availability Breakin the psychological contract Unfolds over time • First thoughts of quitting and actual decision to leave • Decision to leave and actual departure
Behavioral Observation Absenteeism Rapid task saturation Tardiness Slow tempo of activity Withdrawal Poor decision-making Negativity Lack of interest in work Lengthy episodes of Marginally productive distraction
Six Sigma methodology • Effective framework for developing and executing an efficient and effective engagement program • Define • Measure • Analyze • Improve • Control
Define • Problem Statement • Business Case • Purpose and Scope • Intended Improvement • Communication Strategy
Measure • Collect qualitative and quantitative base-line data Observations Interviews Focus Groups Survey
Analyze • Identify root-causes based on data • Organize and segment by level, locations and appropriate demographics
Improve • Engage stakeholders • Communicate results • Prepare the organization for taking action • Develop, try out and implement action plans and solutions to address gaps • Use data to evaluate both the solution and the action plans to carry them out
Control • Maintain and institutionalize the gains developed via the action plan • Anticipate future improvements and preserve the lessons learned • Conduct periodic “pulse” checks • Form and leverage engagement action teams as change agents
On Your Mark Getting Started • Interview senior leadership • Link to the business strategy • Present the business case • Secure champions•Adapted from Blessing White, 2008
Get Set Consideration • Inform and educate Just Beginning • Engage managers • Be transparent•Adapted from Blessing White, 2008
Go! Stuck • Focus on specific actions & areas for change Along the way • Engage leadership across the organization • Leverage prior successes • Revisit your data•Adapted from Blessing White, 2008
Enjoy the journey • Continue to educate and inform • Link results to tangible business performance • Refine and improve•Adapted from Blessing White, 2008
Where is your organization in this journey? Getting Started Stuck Consideration Along the Way Just BeginningWhat 3 things will you do to help move it forward?
Engagement leads to organizational success HR is in the best position to impact engagement Time to act is NOW