Is engagement working?

When the coalition government came to power 18 months ago and started dismantling Labour’s legacy, one of the few policy priorities to survive was a commitment to measures to raise employee engagement

Incoming ministers soon reappointed David MacLeod to lead a new employee engagement taskforce to pick up where his 2009 review had left off. That review helped to fuel a ground swell of interest in engagement, which has continued to grow despite an inhospitable economic climate. But has the UK workforce become any more engaged – and productive – as a result of all this interest? With dozens of competing definitions of “employee engagement”, it’s hard to tell, but the short answer, it seems, is “no”.

The CIPD’s summer 2011 Employee Outlook survey, which for the first time included an overall employee engagement score based on factors such as understanding of organisational purpose, trust in senior managers and willingness to go the extra mile, found a low level of engagement. While job satisfaction, calculated by subtracting the proportion of dissatisfied respondents from the proportion of satisfied respondents, produced a net score of +35, the score for individuals’ engagement with their organisation was, at +10, far lower. Public-sector employees with a score of -12 were by far the most disengaged; voluntary-sector employees the most engaged (+33); and private-sector employees somewhere in between (+13).

With increased levels of job insecurity, especially in the public sector, these findings come as no great surprise. As Ben Willmott, senior policy adviser at the CIPD, says: “In the current environment, there is evidence that people are under increasing pressure in the workplace, that there’s a growing trust deficit between people at the bottom and the top of organisations. You’ve also got the squeeze on incomes, with people either having their pay frozen or receiving pay rises that are less than the rate of inflation. Against that backdrop, it’s difficult to build engagement.” And it could become even more difficult as the government’s drive to cut red tape makes it easier for employers to hire and fire staff.

Employment relations minister Edward Davey, however, insists there is no tension between the government’s attempts to promote employee engagement and its deregulatory efforts.

“At a time when the government is actively encouraging growth in the private sector and when the public sector is aiming to deliver better for less, employee engagement has never been so important,” he says. Arguing that organisations benefit when their priorities and goals are understood by staff, he adds: “It’s about harnessing the energy, ideas, inspiration and commitment of their staff. This is not something that government can legislate on or determine by regulation.”

That may be true, but if deregulation leaves workers feeling even more insecure than they are already, it may encourage presenteeism and won’t do much for their engagement. Neither would a return to overly controlling management behaviour, identified by recent CIPD research as a barrier to engagement.

The good news is that the current economic gloom doesn’t seem to be pushing larger organisations, at least, in that direction. Nita Clarke, vice-chair of the government’s taskforce, believes business leaders are becoming increasingly aware of the concept of employee engagement and its potential benefits. Comments from some of the grandees sponsoring the taskforce support this view.

Sir Winfried Bischoff, chairman of Lloyds Banking Group, for instance, says he joined the sponsor group because engagement is an “employee’s choice” and has a direct impact on both customer service and personal satisfaction. “Having pride in one’s employer is a proven driver of business performance that we would like to see replicated across other UK employers,” he says.

Another member of the sponsors’ group, Sir Martin Sorrell, chief executive of advertising and communications group WPP, is critical of his own industry for its poor record on “finding, training and keeping” people and relying instead on poaching talent from rivals. He does not entirely exempt WPP from this criticism, although the group is investing heavily in a range of training and development programmes. “This whole area of engagement – of looking beyond the quantitative, beyond rations and incentives – this intangible stuff is really important and we are trying to find the best way to do it,” he says.

But growing awareness of the need to engage employees does not mean that employers always know how to go about it, says Clarke: “Some organisations still find it quite daunting and don’t really know where to start.”

A deluge of definitions

For organisations hoping to raise employee engagement the obvious starting point is to measure existing levels of engagement. But to do that, they need to know what they are measuring and, despite all the talk of engagement, there is little agreement about what the term actually means. The 2009 report Engaging for Success, which Clarke co-authored with David MacLeod, refers to more than 50 different definitions.

These descriptions range from “you know it when you see it” offered by a number of unnamed business leaders, to the review’s own description: “A workplace approach designed to ensure that employees are committed to their organisation’s goals and values, motivated to contribute to organisational success, and enhance their own sense of well-being.”

The problem, says Rob Briner, professor of organisational psychology at the University of Bath School of Management, is that unless something is clearly and consistently defined, it cannot be reliably measured, let alone improved: “From a practical point of view, if you can’t define precisely what it is that you are looking at or want to intervene in, how can you ever do anything about it?” Predicting that the “muddle-headed” thinking around employee engagement will see it go the way of other, now forgotten, management fads, Briner adds: “Give it five years and no one will be talking about it anymore.”

John Purcell, associate fellow in the industrial relations research unit at Warwick Business School, and a member of the “guru” group of academics and consultants advising the employee engagement taskforce, is less dismissive of the concept of engagement. “It’s about attitudes and behaviour and relationships at work and positiveness and how you get that, and it happens to be called employee engagement – at the moment,” he says.

He does, however, warn of the danger of going for easy answers and of blaming employees if they are not engaged. He is also critical of survey firms for raising expectations that engaged employees will give high scores across different dimensions. “If you are working in a hospital, for example, you can be highly engaged with the patients,” he says, “you can have phenomenal engagement with your fellow professionals and you can detest senior management and not have particularly warm feelings for the NHS trust that employs you. And why should you, given all the changes taking place that are making your life more difficult?”

The many surveys on offer haven’t done much to create a shared understanding of engagement, adds Katie Truss, who led the Kingston employee engagement consortium project before taking up her present post as head of Kent Business School at Medway. Survey firms, she says, have come up with different definitions of engagement, which makes conversations about the subject difficult and benchmarking between clients of different firms impossible.

For psychologists, she explains, engagement is something that individuals experience in relation to their work. So the Kingston project defines employee engagement as “being positively present during the performance of work by ­willingly contributing intellectual effort, experiencing positive­ emotions and meaningful connections to others”. This is quite different from the way employees may feel towards their employer, which in psychological terms would more accurately be described as “commitment”.

So instead of trying to get employees to support organisational goals and values, it could make more sense for employers to focus first on making sure employees are engaged with their work.

According to Truss, there is no quick and easy way to do this. It involves giving employees a chance to make a difference (however small), treating them with respect, listening to their views and giving them a sense of direction. It also means making sure people are in the right jobs in the first place. “If you are a square peg in a round hole then, whatever the organisation does, you are not going to be engaged,” says Truss.

Line management

If there is consensus about anything in the debate on engagement, it is about the pivotal part played by line managers. As a research report from Roffey Park, The human voice of employee engagement, puts it: “Whatever factors are at play elsewhere in the organisation, employees’ day-to-day experience of work is most heavily influenced by their line manager.”

The report highlights management behaviours likely to affect engagement, including making time for employees, treating them fairly and making them feel valued. Managers also need to set challenging but realistic targets, manage performance individually, rather than rebuking the whole team, and encourage job discretion.

A recent CIPD study, Management competencies for enhancing employee engagement, comes to similar conclusions, stressing the importance of giving employees guidance, feedback and an appropriate level of autonomy. Engaging managers who “facilitate and empower, rather than control or restrict their staff” are also among the four enablers of engagement (along with leadership, voice and integrity) identified by the original MacLeod review.

Equipping managers with these competencies clearly makes a difference – and if the new employee engagement taskforce is able to raise awareness of the need to help managers up their game, it will have achieved a great deal.

But this could be an uphill struggle. It may call for a level of investment that many organisations may be unable or unwilling to make in the current climate, particularly when you consider that relatively few of the organisational case studies highlighted in the MacLeod review reported that a renewed emphasis on developing managers was part of their engagement strategy. Suggestion schemes, recognition awards and efforts to get employees to buy into the corporate values were far more common approaches.

The role of HR

While studies often focus on the role of managers in driving engagement, much less is said about where HR comes into all this. However, the Kingston research identified an important role for HR professionals in helping line managers to design jobs and develop effective selection processes that match individuals’ skills to jobs.

Linda Holbeche, director of the Holbeche Partnership and visiting professor of HRM/OD at Cass Business School, also believes that job design is critical, with roles that provide “stretch” and a degree of autonomy the most likely to engage individuals, especially those in white-collar roles.

Currently co-writing a book on engagement with Geoff Matthews, vice-president, HR strategy and organisational development for Merck Serono, Holbeche argues that ­people will inevitably feel disengaged at some point, “not least because the employment relationship is very one-sided these days”. She adds that no effort to engage employees will succeed unless they feel they are treated fairly and that their voice is heard and taken into account.

These two principles become especially important when organisations face financial challenges. That’s been the experience of Birmingham City Council, which launched its renowned employee engagement programme, Best, when times were good for the public sector, and is now finding it is helping to make the bad times slightly less bad. The workshop-based programme has generated tens of thousands of ideas for improving services, and with the council set to lose around 4,000 jobs this year, Best is now providing a framework for communicating with staff and consulting them on new ways of working.

Sandy Wilkie, head of organisational development at NHS Dumfries and Galloway and one of the founders of an online community of practice devoted to employee engagement, also sees employee involvement as a key element of the engagement equation. His organisation recently launched a scheme that offers employees seed funding to implement ideas for improving efficiency or the quality of patients’ experience. “In a challenging financial situation, that’s a positive way of diverting energy away from anxiety to something more positive,” says Wilkie.

As these two examples, and those of the organisations featured earlier in this feature show, while the concept may be hard to pin down, there’s some very good people management going on under the employee engagement banner. And without all the interest it has generated, life in many workplaces would be a whole lot harder than it is.

Case Studies

Tasked to engage

The 2009 MacLeod review set out to consider whether wider take up of “engagement approaches” would improve the UK’s competitiveness and performance. The answer given in the subsequent report, which consisted largely of company case studies, was an unequivocal “yes”.

But the coalition government clearly feels that more needs to be done to increase understanding of employee engagement and its potential benefits. Earlier this year the prime minister launched an employee engagement taskforce headed by David MacLeod to share good practice, generate debate and offer employers support via a new website. Its members include the HR directors of BAE Systems, BT, Marks and Spencer and Unilever.

In addition to the taskforce itself, there is a “guru” group of academics and consultants with specialist knowledge of employee engagement and a sponsor group of top business leaders. Finally, there is a larger practitioner group, which plans to develop practical tools and contribute to the areas of study the taskforce has already identified. These include nailing the evidence, engaging through economic adversity, barriers to engagement, and engagement, wellbeing and CSR.

The taskforce hopes to present its findings and conclusions in 2012.

Perspective: Lloyds Banking Group

Despite being in the eye of the financial storm, Lloyds Banking Group has seen its engagement levels holding up "remarkably well", according to David Atter, director of colleague engagement and corporate brand. "One reason for that is that we have a very clear purpose and direction," he says. "Basically, we want to be the best bank for customers, colleagues and our communities."

With more than 30 million customers, the group, formed after Lloyds TSB's purchase of Halifax Bank of Scotland, is systemically important to the UK economy and takes its responsibilities for the communities in which it operates seriously, says Atter. He believes this may be another reason why employee engagement levels are above both the financial services norm and the UK national norm, as determined by the professional services firm Towers Watson.

Yet when Atter, who joined the group a few months ago, visited some of its call centres and branches, he found that what employees were most interested in was doing a good job. "The overriding message I got was that if systems and processes are geared towards allowing me to better serve my customers, then I will feel more loyal to the business."

Perspective: Marks and Spencer

Proof that employee engagement boosts business performance is hard to unearth but Marks and Spencer has probably come closer than most to finding it.

The retailer’s annual survey of its 80,000 employees includes several questions relating specifically to engagement. When analysing the responses, it looks at the stores with the highest and lowest levels of engagement, correlating their engagement scores to their sales figures, mystery shoppers’ scores and absence rates.

“We find that there’s a very high correlation between them,” says HR director Tanith Dodge.

The latest employee survey gave the company an overall engagement score of 75 per cent – two points up on the previous year. The response rate, itself a measure of engagement, had also gone up, to 95 per cent.

Dodge attributes these results to the company’s proactive approach to employee engagement. Other factors she highlights include employees’ “passion” for the M&S brand, their pride in working for an organisation that is committed to sustainability and their sense that the company cares about their well-being – even when trading conditions are as tough as they are right now.

Perspective: Nationwide

The Nationwide’s annual employee survey includes five questions designed to measure employees’ engagement with both the organisation and their own work. Responses tend to follow the same pattern across these two dimensions, according to Graeme Hughes, the building society’s HR and corporate affairs director. “So if you feel good about the job you are doing and see value in that job, you have confidence in the business,” he says.

Pointing out that the Nationwide came through the financial crash and subsequent recession without a government bailout, Hughes says this has boosted confidence in the business. That in turn has helped its overall employee engagement score bounce back to 68 per cent this year, after dipping to 56 per cent in the depth of the recession.