The 'What' and 'Why' of Employee Engagement

Employers are increasingly asking their employees to “do more with less.” Yet countless studies warn that disengaged employees won’t deliver peak performance. Understanding what engagement is all about—and why it matters—is a good place to start.

Engagement is defined by benefits consultancy Watson Wyatt as a combination of commitment—the motivation employees have to help the organization succeed—and line of sight—the focus and direction employees need—to know what to do to make the organization successful.

Translating an Idea into Action

Watson Wyatt reports that the level of employee engagement (or disengagement) depends on how effectively the organization:

• Ensures that senior leaders set the direction.
• Focuses employees at all levels on the customer.
• Compensates people based on performance and customer focus.
• Communicates corporate strategy and goals, the importance of the customer and the value of the total rewards package clearly.

Other organizations’ definitions differ slightly.

“Employee engagement is measured by the ability and willingness of individuals to exert extra effort for the benefit of the company, their tendency to speak highly of the organization and their intent to stay,” according to Greg Harris, president, Quantum Workplace, a market research company that surveys employee engagement.

In a February 2009 statement, Quantum Workplace, best known as the research firm behind Best Places to Work programs in more than 40 metro areas, released a list of five key factors that set companies with higher engagement scores apart from others. Such companies:

• Set a clear, compelling direction that empowers each employee.
• Engage in open and honest communication.
• Maintain a focus on career growth and development.
• Recognize and reward high performance.
• Provide employee benefits that demonstrate a strong commitment to employee well-being.

Meanwhile, HR consulting firm Juice Inc., says engaged employees might describe their experience using five statements:

• “I Fit.”
• “I’m Clear.”
• “I’m Supported.”
• “I’m valued.”
• “I’m Inspired.”

“When employees have a sense of purpose, significance and security, when they feel that they belong to a group yet have the freedom to work and advance individually—that equals true engagement,” said Brady Wilson, a founding partner of Juice Inc., in a statement. “Workers in this case get fulfillment from their work, so not only will they stay at their job but they’ll offer their discretionary effort as well.”

Why Engagement Matters

Watson Wyatt's 2008/2009 WorkUSA Report, Driving Business Results Through Continuous Engagement, released Feb. 10, 2009, reports that highly-engaged employees are twice as likely as their less-engaged peers to be top performers.

Moreover, when employees are highly engaged, their companies enjoy 26 percent higher employee productivity, have lower turnover risk and are more likely to attract top talent. The companies of highly-engaged employees earned 13 percent greater total returns to shareholders over the past five years.

Such workers miss 20 percent fewer days of work, and three-quarters of them exceeded or far exceeded expectations in their most recent performance review.

Additionally, highly-engaged workers tend to be more supportive of organizational change initiatives and resilient in the face of change.

“During periods of turmoil—when the organization is undertaking cost-reduction measures, consolidations or other dramatic change events that will profoundly impact employees—maintaining or enhancing employee engagement can be critical to the organization’s return to profitability,” the report notes.

Watson Wyatt surveyed more than 13,000 full-time U.S. workers in May and June 2008, before the full advent of the financial crisis.

Engageable Moments

"Keeping workers engaged and productive is always a daunting challenge. However, it's even more crucial in this type of economic environment when organizations are striving to do more with less and employees are paying closer attention," said Ilene Gochman, global-practice leader for organization effectiveness at Watson Wyatt, in a statement.

The report suggests employers capitalize on "engageable moments,” virtually any opportunity an employer has to motivate employees and provide direction.

Formal and Informal ‘Engageable Moment’ Opportunities

Formal Opportunities	Other Opportunities
Recruitment and onboarding	Coaching and mentoring
Training	Career development discussions
Performance reviews & goal setting	Ongoing performance feedback
Managing change during downsizing, mergers, new leadership, etc.	Personalized communication such as total-rewards statements and anniversary date acknowledgement
Communication by senior leaders	Informal networking
Employee surveys	Recognition programs
Benefits enrollment	Company social events
Advertising and public relations	Personal crises

Source: Adapted from Watson Wyatt's 2008/2009 WorkUSA Report.

WorkUSA data shows that engagement starts off high among new employees but tapers off through careers—average employee engagement drops by 9 percent in the first year alone. Almost three-quarters (71 percent) of employees on the job for less than six months say that they are motivated to do their best work every day. This number drops to 57 percent after six months. "While some decline is inevitable, companies that identify and take action around engageable moments can minimize or potentially even reverse the decline," noted Gochman.

"Improving employee engagement will help drive business results in the long run by improving employee commitment to corporate goals and generating exceptional individual performance and productivity," added Gochman.

But it’s not the top performers who will deliver the big results, according to Watson Wyatt. The real key to driving big productivity gains is by increasing engagement among the vast middle group of employees—the core contributors who represent about 60 percent of the workforce.

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.