Edelman Rethinking Employee Engagement Report 2011

RETHINKING

EMPLOYEE ENGAGEMENT

WHERE DO YOU START?

Edelman Change and Employee Engagement

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................................. 2

EMPLOYEE ENGAGEMENT: COMPETING DEFINITIONS ............................................................ 3

EMPLOYEE ENGAGEMENT: LINKING EMOTIONS AND ACTIONS ............................................. 4

REALITY CHECK ............................................................................................................................ 8

A BEGINNING ROADMAP: RETHINKING EMPLOYEE ENGAGEMENT ....................................... 9


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EXECUTIVE SUMMARY

Only one in five workers is giving full discretionary effort on the job. At the same time, companies with highly engaged employees outperformed the total stock market and enjoyed total shareholder returns 19 percent higher than the average in 2009, while those with low engagement levels saw total shareholder returns 44 percent lower than the average. The case is clear for better employee engagement, yet according to a recent global research study by Edelman, many organizations struggle to understand what engagement truly looks and feels like and how best to invest in sustainable efforts to improve it, particularly during times of change. Companies can score well on employee engagement surveys and still be challenged with creating or reinventing an environment that fosters effective collaboration, innovation and decision-making, involving leaders and employees in taking the company in new directions or cultivating them as willing ambassadors for the company and its brands.

Traditional views assume employee engagement is owned by the organization and HR rather than by leaders specifically. These same views focus on employee satisfaction and commitment at a point in time, based on relatively static elements like pay, benefits, recognition, career opportunity, work environment, job tools and tactical communications – analysis of which stops short of providing relevant insights for leaders on how to manage the total business differently or better in an ever-changing environment. This report is a compilation of discussions and interviews with approximately 30 global organizations representing a variety of industries. It presents an alternative framework for employee engagement, which focuses on addressing the actions and mindset of employees and leaders during change. It answers questions like:

What should employee engagement look like for a company introducing a new corporate strategy, entering new markets or shifting to a more customer- or solutions-centric mindset?

What are the behaviors that should define employee engagement in these situations?

What specific role should leadership play in increasing employee engagement?

This contrasting view can help your organization rethink pathways to reshape employee mindsets, leadership behaviors and workplace practices and

communication to deal with change and the realities of your specific business, today’s economy and the communications landscape.

“I’ve never had control and I never wanted it. If you create an environment where people truly participate, you don’t need control. They know what needs to be done and they do it…We’re not looking for blind obedience. We’re looking for people who on their own initiative want to be doing what they’re doing because they consider it to be a worthy objective.”

– Herb Kelleher,

former Chairman and CEO of Southwest Airlines


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EMPLOYEE ENGAGEMENT: COMPETING DEFINITIONS

Traditional models of employee engagement define it by measuring employee perceptions of key drivers from an HR and a cultural perspective – things like pay, benefits, recognition, career opportunity, work environment, job tools and tactical communications. However, in everyday discussion, employee engagement is increasingly re-interpreted, misunderstood or misdiagnosed and many times interchangeably referenced with internal or employee communications, employer branding or even employees promoting the company or its products.

Two recent studies by leading HR consulting groups highlight the challenge of defining employee engagement. One group reported that employee engagement had fallen to a 15-year low during the recession period. Just days later, a second group released a study that found employees performed their jobs with a higher level of engagement during the recession. These vastly different conclusions illustrate the countless – oftentimes competing – ways companies define, measure and achieve engagement.

Our own research confirms this. In a recent global employee research study, Edelman interviewed 30 multinational companies with various offices represented in the US, UK, France, Germany, Spain, Brazil, Malaysia, Singapore, Thailand, and Indonesia on their views and approaches to employee engagement during times of change.

Here’s what the study found:

We confirmed that companies are indeed struggling to define engagement and how to achieve it during times of change, despite the traditional approaches, tools and measurement mechanisms available to do so. Some companies interviewed defined employee engagement in emotional terms – satisfaction, pride and motivation. Others we spoke to acknowledged employee engagement is necessary but elusive especially in tough times. In several cases, companies believed they are effectively impacting engagement through their management and communication practices. In the last two years, an increasing number of organizations are listing “rebuilding employee engagement” as a top priority on their Strategic Plans or Balanced Scorecards. However, it’s clear that no one-size-fits-all definition of employee engagement is sufficient, and the approach to and ownership of it differs widely around the world.

Finally, our research found that it is commonly assumed HR and the organization broadly own employee engagement, rather than leadership specifically. While leadership is directly in a position to influence employee engagement the most, few organizations hold their leaders directly accountable for improving it with specific behaviors and actions.


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At the same time, current approaches to employee engagement research stop short of providing relevant insights for leaders on how to respond and manage the total business differently or better in an ever-changing environment.

What’s needed? Companies large and small, in the US and globally, acknowledge the importance of employee engagement. But given the confusion around what engagement truly looks and feels like, and exactly how to achieve it, it’s clear that an alternative approach is needed, rather than a one-size-fits-all approach. To increase employee engagement in today’s dynamic economy, a company’s efforts should:

Inform and emphasize leadership’s role

Drive new thinking as well as behaviors needed for the business

Be unique to each company’s desired business outcomes

Help organizations respond to change

Use communications to lead and shape internal dialogue

Account for the employee role in influencing the external publics important to the business

EMPLOYEE ENGAGEMENT: LINKING EMOTIONS AND ACTIONS

In reviewing the global research and our experiences with a broader set of clients, it’s clear that companies with highly engaged employees have found a sustainable way of linking the emotions of employees with the collective actions needed to advance the business. We call this the Emotion-Action dynamic. In this view, employee engagement is both (1) a willingness to link one’s personal interests with those of the organization, as well as, (2) from a company standpoint, the evolving ability of leaders and employees to understand, act upon and champion the priorities of the business.

Exploring and measuring these two elements as well as defining specific leadership actions to drive improvement in these areas can help define a specific and actionable path for improving employee engagement at your company during times of change.

Example: Deepening the Emotional Connection with Employees

Facing a tough year with lagging employee engagement, one retail company CEO challenged his C-Suite to reinvent the employee experience in order to regain the lost connection between senior leadership and the global employee base, now increasingly a Millennial population that valued working at the company for different reasons than employees in previous years. The company initiated a pulse study to investigate the emotional connection between employees and its brand. They found that the brand and the employees shared a common passion – making a positive impact in their local communities. More than three-quarters of employees said they strongly welcomed the opportunity to volunteer in their communities, including on behalf of the company. Many

EMOTION-ACTION DYNAMIC

1. A willingness to link one’s personal interests with those of the organization

2. The evolving ability of leaders and employees to understand, act upon and champion the priorities of the business.


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also listed understanding customer preferences and needs as their top concern, even over pay and benefits. However, when the company looked at the priority it had placed on employee engagement programs at the retail level, most of it was operational, focused on health and welfare benefits or pushing internal news. Employee passion about making a difference in their local communities and with customers was, in this case, the biggest untapped opportunity to drive greater employee engagement and connection with the brand and the business. The company has since reoriented the ownership of employee engagement among HR, Internal Communications and Store Operations, and started creating a program and a set of tools to help employees become change agents in their local communities and deepen their knowledge of the company’s sustainable supply chain and its value to customers in the stores.

Example: Organizing for Action

Fresh off a restructuring and cost-effectiveness initiative, a global consumer goods company needed to re-orient leaders and employees to a unified strategy emphasizing market prioritization and increased customer-centricity and innovation. The new strategy would require leaders and managers to understand and incorporate the impact of the competitive environment and consumer preferences on everyday decisions on investments, priorities, resources and staffing. However, the company had no infrastructure in place to drive the new conversation and thinking required to change decision-making and actions by leaders in concert with a new, five-year strategy. To begin the dialogue, the company segmented their leadership into top 100, top 1,000 and top 5,000 people managers, and created a targeted strategy for communications, involvement and two-way feedback for each group. Ultimately, they implemented a monthly and quarterly cadence for communications that has served as an essential building block for strategy execution, and have shown measurable improvement on employee engagement and awareness according to their annual survey.


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LEADERSHIP EFFECTIVENESS AND EMPLOYEE ENGAGEMENT

Time and again, research has shown that the relationship with one’s direct manager is a top driver of employee retention and engagement. An individual employee’s motivation to grow beyond a minimal set of performance expectations is directly due to the style, behaviors, recognition, consistency, and authenticity of his/her leader. Employees look to their leaders for context, direction and inspiration. However, more often than not, companies’ employee engagement efforts are driven by HR and focused on tangible components of the employee experience – things like pay, benefits, recognition and tactical communications. To truly make a difference, companies should spend their resources and energy developing programs and opportunities to strengthen and engage leaders. Simply put, engaged leaders create engaged employees, who in turn generate above average performance.

Example: Engaging Leaders to Drive Revenue Growth by Decreasing Employee Turnover

Following a management change at a major U.S. car retailer, the company’s leadership team embarked on a face-to-face tour to meet with every general manager from its 150+ dealerships nationwide. At each stop, the CEO, COO and the head of the local region – laid out a plan to grow the business despite an incredibly challenging economy. The senior team’s deep involvement at this level met a key ground rule for increasing employee engagement: Make It Important!


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Leaders had identified a somewhat unlikely driver of the targeted growth: reducing employee turnover. The company closely tracks engagement, retention, customer satisfaction and financial performance for each dealership; in reviewing this data, leaders observed that the higher the churn rate, the less successful a dealership was in training employees to run operations smoothly and provide the excellent customer service that differentiated the company from competitors. In fact, they were able to determine that sales improved to the tune of $400 per month in gross profit per associate when retention and engagement improved at a certain location. Leaders shared this data with managers and tasked them each with reducing their location’s turnover by nearly half. They offered specific, actionable ways to do that, including sharing information, taking genuine interest in employees’ development, implementing staff’s suggestions for improving operations and empowering employees to resolve customer issues on the spot.

Example: Changing the Dialogue, Redefining Leadership

Despite its well-respected brand name and long-standing presence in the market, a leading lawn and garden products company realized it could no longer survive and grow by doing things the way they’d always been done. Led by a CEO determined to secure the company’s future success, the company built a leadership development program designed to drive real culture change. After all, building a culture that embraced change, innovation and creative thinking would require a new way of thinking and a different type of leader.

Focusing its resources on the top 100 leaders in the organization, the company introduced a yearlong speaker series. The series featured prominent speakers from a variety of business industries, academics and even the military. In their discussions, these outside leaders would speak about their own successes and failures in areas all companies can relate to, like leadership, customer service, cultural change, innovation and sustainability. Their experiences inspired a new way of thinking and the courage to try new approaches to drive real and lasting culture change.

Following each presentation, leaders would come together to re-examine their own business plans and priorities – rethinking them through the lens of what was just discussed. As a result, they were inspired to think differently about their day-to-day work, long-term priorities and overall leadership style. The organization has become increasingly energized and excited about the future, and leaders’ new way of thinking and innovating has shaped the employee experience at all levels of the organization. As leaders explore topics and issues they’ve never discussed before, the entire culture is shifting in a new direction.


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REALITY CHECK

Rethinking employee engagement to drive new results isn’t easy, especially when there are many competing definitions and approaches. Yet, given our tough business environment, the bar is now exponentially raised for employee engagement and leadership communications and effectiveness. Is your organization ready to address this reality? Consider the following:

1. Is your leadership rolling out a new strategy or initiative that will require more engagement than ever from your employees?

2. Do you need to activate or re-engage your employees as advocates or ambassadors?

3. How well is the urgency for change understood and acted on within your organization?

4. Should leadership communication be a critical component of delivering on your company’s strategy or organizational performance goals in the next 1 to 3 years?

5. Are you searching for novel ways to renew or reinvent the employee experience? Are leaders looking for better ways of engaging their teams?

6. Does your employee engagement research provide sufficient insights for leaders to build trust, cultivate two-way dialogue and engage employees on critical priorities?

7. Do your current drivers of employee engagement support the business you need to become?

8. If employee engagement remains at its current level or decreases within your company, is there a downside risk?

HAVE YOU EVER SEEN A BRAND AMBASSADOR?

Contrary to popular belief within corporate circles, according to the organizations we spoke with and studied, the concept of brand ambassadors among employees is largely a myth. People decide when, what, where, how and why they promote or discuss their employer. The best organizations can do is to provide timely, relevant information and stories that characterize the value and efficacy of brands, products, and services. More importantly, leaders must foster an open and respectful work environment where employees are heard, recognized, rewarded and engaged in the business. Doing so increases one’s chances of having people talk positively and frequently to others about the organization.

Remember, labeling or branding someone as an “ambassador” is the first step to derailing the effort. Rather, allow the process to happen naturally, organically and focus on content, context, accessibility and feedback. The , have the confidence to be subjective about results.


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A BEGINNING ROADMAP: RETHINKING EMPLOYEE ENGAGEMENT

Unlocking human potential is truly the most sustainable competitive advantage for companies in today’s global marketplace. Developing the right formula – one that involves leadership, HR and communications – can help ensure that you are recruiting and retaining the talent necessary to succeed, if not survive.

A one-size-fits-all approach will not work, so you should begin by building a better understanding of your current situation. This includes evaluating your current employee research, identifying the drivers of engagement for your organization and defining your employees’ world view – how they view your business and their role in it, how they consume media inside and outside work, what their top-of-mind concerns are, who they view as credible sources and how well they are positioned to be ambassadors for the company. With a solid understanding of these areas, you can begin to establish a strategy to strengthen employee engagement within your organization.

Engagement is about Experience….Experience is about Relationships….Relationships are about Communications….Communications is about Relevance….Relevance is about Respect….Respect is about Trust

EDELMAN CHANGE AND EMPLOYEE ENGAGEMENT is the global organizational (internal) change communications consulting group of Edelman, the largest independent public relations firm in the world and the third largest overall. The group provides distinctive expertise in organizational effectiveness, culture transformation, strategy implementation and accessibility, CEO transition and positioning, internal branding, post-merger integration, labor-management relations, internal communications programming and research/measurement.

For more information, please visit our team web site and blog at: http://change.edelman.com.

Edelman Rethinking Employee Engagement Report 2011

Business

Transcript of Edelman Rethinking Employee Engagement Report 2011