Engagement is such a buzz term in human resources circles.
Engagement is such a buzz term in human resources circles and the 2012 RedBalloon and AltusQ (formerly Shirlaws) employee engagement capability report has shown that company culture is king when it comes to having a pool of highly engaged employees.
With this study we wanted to take a step back from the theory and delve into what employee engagement meant and offer organisations a sound approach for improving their own employee engagement reality.
The average Australian business has an engagement score of about 55 per cent.
At RedBalloon we have achieved an AON Hewitt engagement score of more than 90 per cent for the past three years – and we know all about the impact this can have to the bottom line.
In fact, according to the report, organisations achieving 80 per cent or more engagement are at least six times more likely to see increases in sales and profit than those with a score below 60 per cent.
But what does this mean for those organisations which are struggling to engage and motivate their employees? What can they do to improve their engagement reality?
If we think of employee engagement like baking a cake, there are certain things that we must include to achieve basic success.
The core ingredients for engagement success, according to the report, are flexible working arrangements, recognition programs, non-cash rewards/incentives and training and development programs.
If organisations do not include these activities as part of their activity mix, they stand little chance of breaking past average levels of engagement.
Data indicate the cream in the middle – once you have the basics in place – are coaching, time off for volunteering, buddy programs and company lunches/nights out.
And, according to data, a combination of coaching and buddying in an organisation results in an 82 per cent chance of achieving an engagement score of 80 per cent plus.
The icing on the cake are those activities that offer limited return on investment when considering engagement. They include paid parental leave, time off for study and social clubs.
These activities have actually become an expectation that deliver no significant engagement returns, but which employees expect as standard.
Once the foundation capabilities are running deep in an organization, there is an opportunity to break from the pack and achieve outstanding levels of engagement.
We found that the biggest gaps between the skills of the most-engaged organisations and those scoring below 40 per cent engagement – and in turn the biggest opportunities for improvement – are in the areas of brand, expectation management, coaching, rewards and recognition and effective meetings.
Understanding the engagement levers that will most likely deliver an engagement and productivity return, as opposed to satisfying a perpetual demand for more benefits from the talent pool is what is starting to separate the good from the great. According to the report, highly engaged organisations (those with a score of 80 per cent plus) were on average up to 20 times more likely to see increases or improvements in the areas of customer satisfaction, attraction of key talent, productivity, customer loyalty, turnover and profit than those with an engagement score of less than 60 per cent.
So, in order to create the best engagement outcome, you have to question what capabilities in your team will deliver the greatest uplift in engagement from the budget available.
It’s not about having huge amounts of money, but learning how to use wisely what you have.
Let’s assume that as the HR leader in your organisation you have a $2500 budget per person, and the strategies in place to deliver activities in the areas of training and development, flexible working arrangements, recognition and non-cash rewards and incentives.
The reality is that unless you have the capability to engage, you are likely to be wasting your money and only achieve average levels of engagement.
What this means in practice is that, even if you have a magnificent strategy for your activities, the difference between having that strategy deliver a return for engagement rests with how capable managers are at implementation and driving that strategy.
In those organisations surveyed that spent more than $3000 a year on engagement activities and also reported an engagement score of less than 60 per cent, they had an average capability score of just 53.
In contrast, if we look at the organisations that scored either a four or five (the highest) for culture, the most important of all the capabilities, we find that 74 per cent in this category have an engagement score of at least 60 per cent.
This group also has an average capability score of 70. Yet only 23 per cent of this group spent more than $3000 a year on engagement activities.
It’s not about how much you spend but how you spend what you have. Make sure you get the basics right.
Any business, by assessing capability thoroughly, asking every leader and manager and developing the fullest picture of capability possible would be able to use this report to benchmark and identify the ripest areas for improvement and quickest route to enhancing its engagement reality.
RedBalloon and AltusQ are hosting an engagement capability workshop in Perth on April 23. Call 02 8755 0020.
James Wright is corporate engagement specialist with RedBalloon.