Employee Engagement Update April2013

7/30/2019 Employee Engagement Update April2013

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Engagement is powerul but complicated

Stop worrying about benchmarking and determine key employee engagement compo-nents or your organization based on your unique business strategy and employee roles

Identiy other key drivers o perormance

Build capability to do these analyses internally or fnd strong partnerships

Create generalists who are good consumers o analytics understand results/ask good

questions

In 1993, Albrecht Schmidt defned engagement as "an employee's involvement with,commitment to, and satisaction with work. Employee engagement is a part o employeeretention." oday, engagement is one o the most commonly discussed concepts among HRproessionals and HR unctions spend a great deal o money and time assessing and tryingto eectively manage employee engagement. Despite the great interest in engagement, thereare a ew issues that HR researchers, consultants, and practitioners must address to manageengagement more eectively. Most importantly, we need to develop better defnitions andmeasurements o engagement.

Key Findings

WHEN IT COMES TO EMPLOYEE

ENGAGEMENT, ONE SIZE DOES NOT FIT

ALL

CAHRSCAHRSCAHRSResearchLinkResearchLinkResearchLink

No. 2

April 2013

Topic: Targeting Specific Forms of Engagement by Industry,

Company Strategy and Employee Role can Enhance Impact onPerformance


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Page 2 When it Comes to Employee Engagement, One Size Does Not Fit All

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Since the initial defnition was introduced, the number o defnitions o employeeengagement used by HR Consultants have prolierated, ranging rom passion or the

company to psychological presence to intentions to stay with the company tosatisaction. Importantly, as the range o defnitions o engagement expanded, it hasbecome more dicult to pinpoint what engagement is and i it impacts all employeesand all companies the same way. While consulting companies have been trying to sim-pliy the measurement o engagement, the wide-array o defnitions would suggest thatengagement is more complex and greater clarity is needed i companies are going tomanage engagement more eectively.

Along the same lines, engagement has typically been challenging to measure. For exam-ple, many o the existing measures o engagement have blurred together engagementdrivers (advancement opportunities, good leadership) with engagement with outcomes o

engagement (lower turnover, extra eort). Te lack o valid and consistent measures,much like the lack o clear defnitions, makes it dicult or research to demonstrate thepower o engagement and or companies to eectively manage the engagement o theirworkorce.

Te research fndings behind this CAHRS ResearchLink was drawn rom three studies:Engagement Across Industries, Engagement Within an Industry, and Engagement With-in a Company. In an attempt to better understand the complexity o employee engage-ment, researchers asked what is engagement? and does it matter in the same way orevery company or, or that matter, or every employee within a company?

Based on extensive background research and surveys to clariy the concept o engage-ment, the researchers consistently identifed our distinct aspects o employee engage-ment. Tat is, they ound that employees engage with their employer in our distinctways:

1.Company employees eel personal attachment, aliation, passion toward the com-pany as a whole

2.Job - employees value and eel personal involvement with their work and the tasksassociated with their specifc jobs

3.Supervisor/Leader employees eel personal attachment, commitment, and alia-tion with their direct supervisors and higher level leaders

Definition of Engagement


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4. Colleagues/coworkers employees value relationships and eel emotional attach-ment to the other members o their team or to colleagues that they work with directly.

Initial survey research and results suggest that employees can clearly distinguish betweenthe our components o employee engagement. Further, individual employees dier intheir levels o engagement across the our components and rarely are high or low on allour. Tese initial fndings suggest that engagement is complex and there may be dier-ent components o engagement that are more important or driving perormance acrossemployees and led to the next set o research studies to examine how the dierent com-ponents impact employee engagement across industries, business strategies, andemployee roles.

In the frst study, the researchers surveyed 287 medium sized businesses/units acrossindustries, with an impressive 70% response rate o employees across the organizations.Industries included manuacturing, proessional services, retail, and sotware/engineering. Te analyses o the data when looking at all o the companies regardless oindustry produced a relatively homogenous picture o the impact o company-, job-,supervisor- and colleague engagement on employee and fnancial outcomes such as extraeort put into the job, customer service orientation, helping teammates, and meetingcompany goals. Tat is, each o the components seemed to be important or drivingboth employee and fnancial outcomes.

Te real power o looking at the separate components o employee engagement camewhen the researchers looked at dierences across industries. When they looked at theinuence o engagement on a units success in achieving fnancial goals, the resultsshowed that dierent components o engagement mattered more across dierent indus-tries. For example, engagement with the company and supervisor were the most im-portant drivers o fnancial goal achievement in manuacturing frms, whereas engage-ment with the job and colleagues were the most important drivers o fnancial goalachievement or engineering frms.

Study 1: Employee Engagement Across Industries


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Likewise, when predicting employee outcomes such as exerting extra eort at work,

customer service orientation, helping teammates, and employee turnover, the re-

searchers again ound wide variations in the impact o the our components o em-

ployee engagement on employee outcomes across industries.

When looking across industries, the data suggest that the our components o em-

ployee engagement are not equivalent. Tat is, depending on industry, companies

might gain better returns or ocusing on building some components o engagement

over others. Depending on the industry, there appear to be dierent drivers or

achieving fnancial goals and impacting employee extra eort, turnover, helping be-

haviors, and customer-service attitudes.

When it Comes to Employee Engagement, One Size Does Not Fit All

Predicting Achievement of Financial Goals


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In their second study, the researchers pushed these initial fndings even urther bytesting or engagement dierences in companies within the same industry. Te re-search team surveyed engineers and programmers at 223 sotware frms. Based oninterviews with senior business leaders at each frm, the companies were split intothose primarily pursuing a strategy o innovation and new product introductionversus those primarily ocusing on a strategy o incremental improvement o cur-rent products.

When they examined the impact o employee engagement across the two strategies,the researchers ound that the our components did not have a universal impact on

sales growth across sotware frms. Instead, the perormance o sotware frms pur-suing an innovation strategy was disproportionately impacted by job- and colleague-engagement, whereas the perormance o companies pursuing an incremental im-provement strategy was impacted by company- and supervisor-engagement.


Predicting Sales Growth

Study 2: Engagement Within an Industry


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Importantly, in understanding why the components o engagement have diering

eects across strategies, the researchers ound dierent employees outcomes wererequired to support specifc strategies. Further, dierent employee engagement com-ponents support these employee outcomes. For example, frms pursuing innova-tion, job- and colleague-engagement help to drive the motivation required to createthe levels o risk-taking, productive conict, social networks, and education requiredto support the development o new-to-the-world products. In contrast, company-and supervisor-engagement support the development o company tenure, lowerturnover, and procedure and process ocus required to support eective and sustain-able incremental improvement o existing products.

Tus, it is important or HR practitioners to keep in mind that, even in the sameindustry, the impact o the our employee engagement components vary by strategyand required talent ocus. Te best practice or practitioners is to start with companystrategy and work backwards to identiy the key employee outcomes.


Employee Requirements by Strategy


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Month 2012Te dierences within an industry prompted urther investigation on the research-ers part to examine i the impact o the our engagement actors hold across em-ployee roles within the same company. A CAHRS Partner company in the manuac-turing industry worked with the researchers to survey its engineers, sales, logistics/supply chain, managers, and rontline. Te study was meant to determine whattypes o engagement aected perormance, specifcally which aspects o engagementwere related to the work unit achieving its budget numbers. In addition, the re-searchers also examined the impact o human capital drivers on achieving budgetgoals. As with the industry and strategy studies, the data showed very distinct en-gagement actors aecting Perormance Against Budget across employee roles. Asan example, the researchers ound that unit perormance was higher when engineers

had higher job and colleague engagement and when sales personnel had higher lead-er and company engagement. In addition, the researchers also ound variability othe impact o human capital on unit perormance. For example, units had higherperormance when engineers had higher levels o education and had worked acrossmore internal units and when sales personnel had more years o work experiencewith the company, total years o work experience, and years o experience in theircurrent role.


Predicting Performance Against Budget

Study 3: Engagement Within a Company


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Te study fndings suggest that, even within the same company/division, the impact

o engagement diers across employees. Moreover, ocusing on the combination ospecifc human capital and engagement components or a specifc role or set o jobscan greatly enhance perormance. Finally, dont set just one goal or engagementand human capital: localize HR strategy to each individual business unit.

Past defnitions and measures o Employee Engagement have varied widely, poten-tially negatively impacting the ability o HR practitioners to eectively manage theworkorce to drive higher organizational perormance. Te fndings rom this set ostudies suggest that:

Employee engagement seems to have at least our major components and em-

ployees may engage at dierent levels with their company, job, supervisor/leader, and colleagues.

Te impact o the our components o employee engagement on employee out-comes (e.g., turnover, extra eort, customer service orientation, helping behav-iors) and fnancial perormance seem to dier by industry, business strategy, andjob roles.

HR practitioners should be thinking about the broader picture o the organiza-tion that they support. Tat is, they should start with the strategy and underly-ing employee requirements and then work backwards to understand which

components o employee engagement and what types o human capital to ocuson to enhance perormance.

Te research design and fndings o this set o studies, in eect, capture the essenceo HR Analytics using HR, employee, and organizational data to understandwhere HR interventions can have the greatest impact on the organization. Specif-cally, in the context o employee engagement, HR practitioners need to better un-derstand what and how to measure employee engagement and how engagement andhuman capital attributes support the employee outcomes that drive business strategyexecution and higher perormance. Practitioners should keep in mind the variety osources available, including educational organizations, that can help them measureand statistically examine these relationships. eaming up with HR researchers can

prove to be a win-win scenario at no cost to the practitioner, with great rewardsor both sides. O greater importance than where the research is conducted, howev-er, is HR generalists understanding o their own business contexts and their abilityto interpret the results and fndings o the data that they have collected.


Takeaways


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When it Comes to Employee Engagement, One Size Does Not Fill All

The Center for AdvancedHuman Resource Studies(CAHRS) is an internationalcenter serving corporatehuman resources leaders andtheir companies by providingcritical tools for building andleading high performing HRorganizations. CAHRS mis-

sion is to bring together part-ners and the ILR Schoolsworld-renowned HR Studiesfaculty to investigate, trans-late and apply the latest HRresearch into practice excel-

lence.

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Research Conducted by:

Chris Collins, Proessor Human Re-source Studies, ILR School, and Direc-

tor o the Center or Advanced Human

Resource Studies (CAHRS)

Cornell University


No. 2

April 2013

Employee Engagement Update April2013

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