Chapter 2
What Engages People at Work?
Three employees from a major communications conglomerate sit down to complete a survey about their engagement with work. First we have Mike, a member of the baby-boomer generation. He has worked for the company for nearly twenty years after an earlier career as an insurance agent. Mike works as a middle manager at a call center that fields technical support requests.
Then we have Janet, a member of generation X, whose employment with the company began seven years ago. Janet works as an associate attorney in the legal department.
Finally, there is Justin, a graphic designer for the marketing department. Justin is a member of generation Y, and has been with the company for just under two years.
We asked all three employees to provide responses to the same four statements/questions:
- Describe the one thing that most influences you to stay with the organization.
- Describe one thing that could cause you to leave the organization.
- What would increase your willingness to recommend, to a friend or colleague, your organization as a good place to work?
- What would increase your willingness to recommend the products and services your organization offers?
We will delve more deeply into Mike, Janet, and Justin’s specific answers later in the chapter, but for now, let’s keep in mind three important trends that have emerged from the millions of answers we have compiled through surveys like this one: (1) There are four key drivers of employee engagement (organizational factors, job/career satisfaction, coworker relationships, and credible leadership); (2) different generations tend to favor those four drivers in slightly different ways; and most importantly, (3) no matter what generation, organization, or industry we’re talking about, quality of leadership is the absolute most controllable driver of employee engagement. There is nothing that an organization can change quicker, easier, and to greater results than how their leaders approach employee engagement. Put simply, if you want to engage and retain the most employees possible, the absolute best place to start is with your leadership.
The Tipping Point
Before we address the four drivers, let’s take a quick look at a few statistics that highlight how important engagement is as a business imperative that should be prioritized, managed, measured, and reported like many other key performance indicators, like most companies do for customer satisfaction. A growing number of major studies reinforce what the most successful executives have long understood: Engaged workers perform better, stay longer, and deliver greater results—and the numbers bear it out.
It all starts with a study of recent history. Over the past ten years, we have seen a tipping point emerge. US companies once enjoyed the heady boom times of growth fueled by the real estate bubble. Then they got knocked down and dragged through the deepest recession since the 1930s. Lately, most of these companies have regained their footing and now have a new outlook on what it takes to succeed in the twenty-first century. At the time of this writing, unemployment has dipped below 4%, and job growth is stronger than it has been in many years. The best organizations realize that now is the time to capture this momentum and ensure that their workforce carries the organization forward.
Meanwhile, a decade ago, millennials barely registered on the employment radar. Now, at roughly ninety-five million strong, they are a welcome wave of smart, energetic labor. On the other hand, they may be a disruptive force made up of workers impatient with the workplace status quo and driven by unrealistic expectations.
Increased competition in many industries—from banking and retail to transportation and entertainment—demands a renewed focus on the customer experience. Engaged, experienced employees are proving to be a key weapon in raising customer satisfaction, average transaction value, and brand loyalty. As a result, budgeting for these efforts has slowly gained traction, with 61% of US organizations reporting that they budget funds for these initiatives. Figure 2.1 shows the percentage of organizations budgeting resources for employee engagement for the past two years. The latest analysis shows that these organizations have seen a dramatic impact on operations and sales metrics and a measurable return on investment.
Figure 2.1 The percentage of organizations budgeting resources for employee engagement in 2015 and 2016.
It should come as no surprise that employee engagement is now a strategic priority for 82% of US companies. For our best-in-class group of employers (the top 10% of all participating firms in engaging and retaining employees), 100% of them make engagement a priority and budget funds to support key initiatives. More on this important point in Chapter 3.
Best-in-class organizations continue to innovate, trying new strategies and tactics to weave engagement more deeply into the fabric of their businesses. Most often, it is the leaders of these organizations who direct and implement these initiatives. They employ deliberate strategies facilitated by clear goals and accountability throughout all levels of leadership, with links to key performance indicators in sales, customer satisfaction, and operations, and reinforced through incentives.
Award Your Best Asset
Budget Director Bertha Johnson shared with us a unique perspective of her staff with the government of the city of Durham, North Carolina. She explained that, absent a product or service to sell, the local government’s employees are their most important asset. They are, after all, the ones who interact with the client and project the most direct picture of the organization’s quality. “We recognized early on the importance of employee satisfaction,” she told us. “Employees that are motivated and engaged are more likely to be innovative and proactive in their jobs. They don’t wait for someone else to fix a problem; they solve it independently. They also tend to be more efficient and productive, which allows a tax-funded organization like ours to do more with less.”
To get to the desired level of engagement, Johnson’s group began by working with employees to identify the organization’s core values, including them in the new employee orientation process, and listing them in many highly visible places throughout the offices (including on every employee badge). Next, they implemented employee recognition and empowerment programs like DurhamFirst, a committee of volunteer employees tasked with leading and coordinating organization-wide development efforts. On a monthly basis, they recognize what they call their “STAR” employees (Show and Tell Award Recipient), or those people who best exemplify the organization’s core values. Award recipients are chosen by their peers via email or handwritten nominations. “The program allows us to tell the untold stories of our employees,” she said. “It lets others know that their work is appreciated, and thanks them for what they do. There’s tremendous power in that.”
The results speak for themselves. At Durham, greater employee engagement has led to higher service, quality, and productivity, which, in turn, has led to rapidly increasing resident satisfaction with employees, and with the community as a whole.
I Don’t Need No Satisfaction
Job satisfaction is a wonderful thing. An employee who is satisfied with his job is happy with environmental factors like workspace, pay, employment location, benefits, and on and on. People who are satisfied with their jobs tend to have little to complain about when it comes to the day-to-day operations of how they get to work, how they are compensated for that work, and what they must do in order to receive that compensation. A satisfied employee’s observations about these elements of his job tend to fit closely with his expectations and standards about those same elements.
For all these reasons, an organization must strive for the highest possible job satisfaction for every employee. Engagement, however, is something that runs much deeper than satisfaction and, as a bonus, is often far more controllable. This is because people factors are what control and drive engagement. Engaged employees feel supported, inspired, motivated, and coached by their leaders. Engaged employees are internally motivated, inspired to contribute discretionary effort, and make a difference at work (for customers, coworkers, and the organization). They are committed to making a difference, and if they have a leader who reinforces and fuels their engagement, they excel over time.
Stillwater Mining Company, an organization that used to face high levels of attrition related to job satisfaction, looked at whether they were hiring the right people for their particularly unique environment. They called the program “Hiring for Attitude.” It involved presenting a more realistic job preview, where they took prospective employees on a tour of the mine, made it clearer that shifts would span a full 11.5 hours and rotate on a four days on, four days off basis. Rotating hours aren’t for everybody, obviously, but sometimes simply delivering that message was all they needed to overcome a preventable loss.
At six, twelve, and eighteen months, Stillwater now interviews their hires for feedback, asking direct questions about what is working for them and what could be improved. “We found that improving engagement was just as simple as improving our signage underground,” Debbie Weaver told us. “We have a hundred miles of roadway down there. Sometimes morale with new hires would suffer just because they didn’t have a clear idea of how to get around.”
After performing these surveys, they determined that the organization needed a leadership development program to help extend a sense of ownership and advancement to more levels than just frontline leadership. The program focuses on specific qualities the organization values in a leader, and each leader-driven class trains on one of these qualities. “So far, feedback has been really positive,” Weaver said. “We’ve put a hundred people through the program with a couple hundred more to go.” And even though the process is not yet complete, Stillwater has gone from 36% turnover in the first eighteen months of the employee life cycle down to less than 10%.
So in a nutshell, satisfaction is great. It is about an employee’s self-perception of status compared to her “happiness” with her surroundings. But engagement is where the true power lies, because it is what drives employee behavior.
The Four Drivers of Employee Engagement
As we mentioned in the introduction to this chapter, the four drivers of employee engagement are (1) organizational factors, (2) job/ career satisfaction, (3) coworker relationships, and (4) credible leadership. Figure 2.2 illustrates these four engagement drivers and the performance outcomes they produce. Let’s take a look at each driver before determining the most logical course of action for most organizations seeking to increase engagement and retention of their employees.
Figure 2.2 The four engagement drivers and the performance outcomes they produce.
Organizational Factors
Organizational factors include perception of senior management, the organization’s vision and mission, reputation, policies and procedures, culture, and environment.
An engaged employee tends to make these kinds of statements about the organizational factors that contribute to her job:
- The organization’s vision, mission, and goals inspire me and help me to be more productive.
- Senior management in my organization is open, honest, and transparent in communication.
- Senior management is accessible and approachable when necessary.
- I feel that I can question a policy or practice without fear of being penalized.
- My organization’s policies and procedures help create an effective work environment.
- My organization consistently demonstrates that delivering customer value is a high priority.
- My organization’s process and procedures to evaluate and promote employees is fair.
- My organization shows respect for employees.
- My organization supports a balance between work and personal life.
- I am satisfied with the location where I come to work on a daily basis, and am also satisfied with my commute to work.
As you can see, many of the preceding points reference how an employee feels she “fits” into the organization in question. Because there are so many different (and often unchangeable) factors related to that “fit,” the organizational driver can be more time consuming and costly to address. It is one thing to reshape an organization’s vision, mission, and goals—or more appropriately, to improve the message that helps your employees connect to the vision, mission, and goals—and entirely another to consider moving the location of your offices to better suit employee engagement.
This is not to downplay the importance of the organizational driver, which, along with the job/career satisfaction driver, show up often in employee surveys as primary factors that motivate their engagement.
Job/Career Satisfaction
The components of job/career satisfaction include clarity of job roles, job responsibilities, accountability for goals, opportunities to utilize skills, and chances for career growth. Although the overarching trends in US employment have been positive of late, unfortunately not all news is good these days. For the third consecutive year, job and career issues have sparked more turnover and lower engagement than any of the other four drivers, including having a lousy boss (which has long been the top reason people reported they quit).
It all boils down to whether the employee likes what he does, feels as if he is using his skills and can learn new skills, sees an impact beyond the task at hand, and, most important, finds meaning in his work. An engaged employee tends to make these kinds of statements about the job/career satisfaction measures that contribute to his job:
- My decision-making authority is sufficient for me to perform my job effectively.
- I receive the training needed to perform my job effectively.
- I have the information and resources needed to effectively get my work done.
- At work, I have the opportunity to utilize my skills and do what I do best.
- This is a career that I love and believe in.
- I am satisfied with the tasks and responsibilities associated with my job.
- At work, I have sufficient opportunities for personal and professional growth.
- My job is challenging and interesting.
- I am satisfied with the benefits my current job provides.
- I am satisfied with my current work schedule.
- I fully understand my compensation plan.
- My compensation is proportional to the contributions I make.
We mentioned how, over the past three years, these factors have had a greater impact on turnover than the other three drivers. TalentKeepers has been tracking and reporting on this trend for over a decade, and at this point, it’s clear that we must look at this as something other than just a short-term phenomenon. It appears that, as we transition to a greater number of millennials in the workforce, job/career satisfaction has become more and more important. And factors associated with the job itself need greater focus. Leaders still play a huge role in stay-or-leave decisions, and can greatly influence how people feel about their jobs, but organizations must pay more attention to job and career growth issues. The opportunity to learn new skills, do things they do well, and see a path forward—all are important to retaining people and keeping them engaged.
Fortunately, much of this connects to how leaders approach their relationships with their employees, so the initiative ties in well with our focus on leadership. More on this in a moment.
Coworker Relationships
Our third driver relates to the people with whom we work. Team-based relationships, including peer support and everyday work interactions, can make or break how satisfied an employee feels, while playing a key role in overall engagement.
In the traditional corporation of the past, commitment was a matter of the bond between an employee and the company. People felt a loyalty to their employers. As long as a company took care of its employees, they could expect implicit commitment from those same employees. Unfortunately, gone are the days when companies were able to offer the same level of job security they could in the past. As a result, the new organization can expect its employees to form an attachment not to the organization itself, but rather, to the employee’s own job or team. Today’s employees (and in particular, millennials), take their sense of worth from their projects, opportunities, and affiliation with others rather than a bond with a particular company.
What is driving this change? Research shows that people pull together when they are faced with some kind of common threat. The economic conditions in the last decade have caused employees to have to face the perils of downsizing, takeovers, mergers, and negative reactions among team members affected by feelings of apprehension, uncertainty, and resentment. Employees who previously may have been a loose working group with little in common now recognize the kinds of pressures that they can’t quite understand or manage directly. In these situations, new bonds form as team members unite to attack the things they can manage, and take comfort in what they do have in common. As a result, stronger bonds form among coworkers.
The stronger these bonds, the more engaged an employee becomes. Here are a few examples of statements an engaged employee might make:
- Most of my coworkers communicate effectively with me.
- From most of my coworkers, I receive the support I need to be able to succeed.
- Most of my coworkers demonstrate interest and concern for my personal well-being.
- While working on assigned tasks, most of my coworkers do not just participate, but rather, seem engaged with the work.
- Most of my coworkers deliver quality work and put forth extra effort to help our organization succeed.
- Most of my coworkers value and support my work and career goals.
It is no secret that coworker relationships have become important to modern employees, but the trouble is that ensuring that positive coworker relationships form is difficult. The only truly effective strategy is to foster these relationships from the leadership structure down. In other words, like the other drivers, how your leadership performs and interacts with their employees is crucially important. Only leadership can create a sense of belonging for each employee, build mutual trust and commitment among the staff, and make the workplace more enjoyable and satisfying. This is a huge part of why we save the most important driver for last.
Credible Leadership
Here is where we can make the greatest difference as leaders of an organization. Credible leadership involves engagement of team members by immediate managers, including communication, trust, coaching, and recognition. Leaders are the lens through which employees see nearly everything. Their behavior has a significant impact on the workplace experience of their team members. They shape expectations, set the mood, deflate or energize, coach and develop (or smother), empower, and incent.
Here is what a leader who effectively engages her employees looks like:
- Tells the truth, meets commitments, and does what she says she will do.
- Is someone an employee can trust.
- Listens when an employee has suggestions on how to do things better.
- Clearly communicates expectations and the reasons behind changing priorities.
- Provides feedback that helps employees improve their performance.
- Serves as an effective coach and motivator who enables employees to achieve their career and professional objectives.
- Empowers employees and creates an environment that encourages decision-making.
- Recognizes individual efforts and achievements and wants each employee to be successful.
- Makes work challenging and satisfying by encouraging fun, and provides as much choice as possible regarding work activities.
- Increases each employee’s desire to come to work and do her best.
- Is interested in having only the best-qualified people added to the team.
- Demonstrates concern for a new team member’s fit with the organization’s values, goals, and practices, as well as how likely they are to stay with the organization.
- Recognizes and takes into account everyone’s work/life balance needs.
- Provides flexibility and choice in how each employee does his work.
- Holds team members appropriately accountable for performance.
- Supports high goals, keeps employees informed of progress, and emphasizes how their work contributes to organizational success.
- Believes an engaged and stable workforce is important for organizational success.
- Is aware of team members who may be thinking of leaving, taking appropriate action to encourage them to stay.
- Identifies top performers and creates ways to engage and retain them.
- Adapts his or her communication and coaching style to effectively relate to younger workers.
- Remains sensitive to generational differences in the workplace and responds appropriately.
There are many business reasons to make leaders the best strategic and tactical resource to drive engagement and retention. Based on our years of research, best-in-class employers clearly view their leaders and their role in engagement highly. They understand that they must involve leaders in engagement strategies. A leader is entrusted with developing a team, after all. Since these organizations already provide leadership training, they simply review the curriculum and determine if the mix of topics addresses engagement and retention skills like building trust and having growth conversations with each employee.
Leaders are already held accountable for a variety of metrics; a retention goal and team engagement metric helps reinforce the importance of engaging employees. These metrics should tie into an incentive or bonus in the leader’s compensation plan. Further, if you already evaluate your leaders each year for the succession plan, you can make engagement and retention effectiveness an essential criteria for consideration. However you approach the subject, leveraging your leaders to engage your employees is a highly effective business strategy for any organization. So let’s move on to discuss how to make that happen.
The Four Drivers and the Leadership Engagement Index
We return to the model with which we opened the book: the Leadership Engagement Index (LEI). The concept starts with the notion that you understand that some leaders are better than others at engaging their team members. The LEI helps you determine which leaders are strong with engagement and which could use some work, which then helps you establish strategies for raising the numbers across the board.
Why is this important? Because leaders are the deliverers of information from the top down in any organization. The four drivers are all important, but leaders stand to make the most positive change. We know that the leader has an impact on employee perceptions at work. Compensation is the perfect example. People either think it’s fair and competitive or they think they’re underpaid. Of course, part of that has to do with the actual monetary value, but at TalentKeepers, we have also seen two organizations with the exact same compensation plan, one whose employees were satisfied with their pay and one whose employees were not. What was the difference? The way leadership talked about, positioned, and supported the compensation plan.
Across the board, leaders with a high LEI talking about compensation and all the other drivers made a huge difference. If a leader with a high LEI talks positively about the compensation plan, his team reports being happy with that plan. If a leader with a low LEI talks down on the compensation plan (saying things like, “I don’t know what HR is thinking; I agree with you; we need more money”), then it shouldn’t be a surprise when the team reports dissatisfaction with the plan.
Obviously the job/career satisfaction driver still applies here. We can’t ignore the amount of pay entirely in this equation, after all. If pay is unreasonably low, a leader with a high LEI has to work that much harder to keep her team engaged. But if pay is at least reasonably competitive and fair, how a leader talks about it can make all the difference.
In a large customer service organization, we compared employee perceptions of pay to individual leaders’ LEI. Fifty supervisors managed teams that averaged about twenty customer service representatives each. We compared each leader’s LEI to their team’s perception of their pay, which was identical across all fifty teams. Those leaders with a high LEI had team members consistently rating their compensation as more competitive and fair than those leaders with a low LEI. How the leader treats employees, and specifically how they talk about pay, can shape employee perceptions.
And pay is only one component. LEI correlates positively to all the other factors listed in the four drivers model outlined earlier. A leader with a high LEI score can influence and shape an employee’s perception of team building, career opportunity, self-esteem, sense of self-worth, safety, and on and on. On this note, the business case for holding leaders accountable for building engagement on their teams is clear: High LEI leaders generate engaged employees who perform better in any role, which drives stronger performance and results in sales, customer experience, productivity, and so on.
For Mike, Janet, and Justin, the answers to the questions on the four drivers were varied. Asked what one thing would increase their willingness to recommend their organization as a good place to work to a friend or colleague, their answers trended toward matters related to scheduling and compensation. More flexible hours and higher pay and better benefits ruled the day with these respondents, as well as with the millions of employees who have taken our surveys over the years. The answers to “What would increase your willingness to recommend the products and services your organization offers?” trended toward matters related to better communication and more thorough understanding. But with the first two questions on the four drivers, the picture on leadership began to emerge.
Baby boomer Mike’s “one thing that influences you most to stay within the organization” was, “My chief values very highly my contribution to the practice, and provides me with the time and material to conduct my practice correctly.” For gen-Xer Janet, the answer was, “Upper management listens and takes care of problems right then and there. I am very satisfied with corporate support.” And for Justin the millennial, the answer revolved around “excellent leadership of the department.”
These kinds of answers are consistent across the board in every survey we have ever conducted. When it comes to a desire to stay with an organization, leadership is the most important factor. Great leaders with high LEI scores generate more engaged employees, which leads to better employee retention. Conversely, Mike, Janet, Justin, and the millions of others who submitted responses also pointed to a lack of leadership as the “one thing that could cause you to leave the organization.”
Leaders can make or break a workforce. The time to invest in their ability to make a greater impact is now.