Testing Engagement’s Strength

There is perhaps nothing more elusive to the human resources professional than employee engagement.

Employee engagement has never been very high, though the economy as a whole has had its share of booms and busts in the past 14 years, according to Gallup Inc. The research and consulting firm has tracked U.S. employees’ discretionary effort since 2000.

The highest engagement number Gallup has seen since was 30 percent in 2012. This means 70 percent of the country’s workers — in a year the business environment had steadily improved four years after the financial crisis — were “emotionally disconnected” from their workplaces and, therefore, less productive.

In 2005, a period of economic growth — government data show gross domestic product in the third quarter alone grew at a 4.3 percent annual rate — employee engagement in the U.S. was even worse at 26 percent, according to Gallup. The research firm estimates that “actively disengaged” employees cost the U.S. economy between $450 billion and $550 billion annually in lost productivity.

But as momentum behind the value of employee engagement continues to increase, and practitioners remain steadfast in measuring and developing strategies behind it, small pockets of scrutiny among talent management experts have surfaced.

Some say the common practice of measuring engagement on a massive scale is misguided, while others question the use and design of the surveys ordinarily used to gather the data.

Then there are those who say engagement’s tendency to vary tremendously by individual means trying to standardize a once- or twice-a-year measurement is, in a sense, an inaccurate practice.

“When I define employee engagement,” said Julie Lynch, a motivation and engagement catalyst at research firm International Data Corp., or IDC, “it is difficult to define it for the entire employee population as in what it takes to be engaged or not.”

These concerns raise an important question: Is employee engagement a worthwhile strategic target on its own, or is it simply a byproduct that comes from HR efforts that more intimately touch the employee experience?  

Survey Says

The concept of employee engagement has developed slowly over the past two decades. Its exact origin is cloudy, but many peg its arrival into the management lexicon from a 1999 Institute for Employment Studiesarticle, which examined the link between frontline worker happiness and customer satisfaction in the service industry.

When researchers determined that happier frontline workers produced an increase in customer satisfaction, with sales and profits likely to climb as a result, the idea snowballed into the corporate office. The more emotionally invested a knowledge worker is, the thinking went, the more likely that person is going to exert discretionary effort — going “above and beyond” — to help the organization succeed.   

To measure engagement, large companies have typically used surveys seeking answers to questions about how employees feel about things like the nature of their work, benefits, relationships with managers and work environment.

McDonald’s Corp., for example, surveys its restaurant workers every six months.Rich Floersch, executive vice president and chief human resources officer for the Oak Brook, Illinois-based fast-food chain, said the company is able to discern the relationship between restaurants that score favorably on engagement and those that have high levels of customer satisfaction, leading to increased sales.

“You do see varying levels of employee engagement and how they translate in terms of better-run restaurants or better-run departments,” Floersch said. “The questions, in the way that the survey is constructed, enables us to actually pinpoint areas that need to be addressed. You don’t have unlimited resources, so it’s always great to be able to put your resources against areas where you get the greatest improvement.”

Other companies have adopted similar practices, and Gallupresearch suggests a relationship between highly engaged employees andfinancial results.

“In the U.S., we do a poll every single day of the year, outside of the holidays,” tracking employee engagement, said Jim Harter, Gallup’s chief scientist of workplace management and well-being. “We are collecting data continuously — about 1,000 people a night every year — and we are able to aggregate those results for a large sample size.”

A Gallup meta analysis of its data conducted in 2012 showed that work units in the top quartile in employee engagement outperformed bottom-quartile units by 10 percent on customer ratings, 22 percent on profitability and 21 percent on productivity.

Furthermore, work units in the top quartile on engagement also saw significantly lower turnover as well as absenteeism, safetyincidents and product-quality defects, the analysis showed.

Wayne Cascio, a business management professor at theUniversity of Colorado Denver said Gallup’s data show what he calls “reciprocal causality.”Engagement’s influence on areas like productivity “moves in both directions, but it’s stronger in the direction of highly engaged employees being a lot more productive,” he said. “There’s some causality from highly successful organizations making people feel engaged.”

Yet some say engagement survey questions — Gallup’s included — fail to capture the whole story. As a result, the data gleaned from them isn’t necessarily representative of employees’ real levels of engagement.

IDC’s Lynch points to the individualized nature of engagement as a reason most surveys miss the mark. She said her research has shown factors like “Are we in a good industry?” and “Do we have ethical leaders?” likely influence about 55 percent of an employee’s motivation and engagement, while the other 45 percent likely comes from an employee’s self-efficacy — the personal connection an employee has with his or her individual work, relationship with the boss and other personal experiences that define the connection the employee establishes with the company.

“Nobody’s really asking about, ‘To what extent are you aware of what engages you and doesn’t engage you?’ and what to do about it when you are feeling that way — that self-efficacy piece,” Lynch said. “That’s really where our work has come from. So no matter how you define engagement, you should be measuring how people feel about what the organization offers, how people feel about what the management offers, and how capable you are as an individual to managing your own motivation and understanding of what you need and how to get it.”

Lynch said in overlooking  individual connections to the organization, most engagement surveys are missing an important element: context. She used an example of a common engagement survey question: “To what extent are you happy with the benefits in the organization?”

This question, Lynch said, might elicit a positive response from the majority of respondents even though many of those employees might not participate in certain benefits programs. Therefore, the majority of positive sentiment is less accurate because not all of those respondents have participated in all of the company’s benefits offerings. The question lacks the context of each employee’s individual experience.

Josh Bersin, principal and founder of Bersin by Deloitte, a research and HR advisory firm, said he takes issue with a common question on Gallup’s survey: “Do you have a best friend at work?”

“It’s absolutely wonderful — people have friends at work,” Bersin said. “But does that give you any information on how to create the right environment? What if people say, ‘No’? And what about performance? Does that mean that people who have friends at work are high performers? Or maybe they’re just hanging around?”

When asked to explain the reasoning behind the best friend question further, Gallup’s Harter said: “The best teams have a different kind of social dynamic. Most people will say they have friends, but fewer people will say they have a best friend, and that’s what differentiates between successful and less-successful teams. Now, that said, it’s an item that needs to be taken in context. It’s not one of the basic issues; it’s a higher-level issue.”

Engage the Future

Despite such scrutiny, experts say there is a way forward to improve how engagement is viewed— one that better fits with the individualized nature of the employee experience and environments that organizations operate in.

First, talent managers have to recognize engagement is just one factor influencing employee performance, but it’s not the only factor.

“You can still get a productive workforce out of that gray group,” said Tom Capizzi, executive vice president of global human resources for orthopedic device-maker DJO Global, referring to employees who might not be highly engaged. “But what’s going to get you to be a stronger company, a company that ultimately attracts better people, is creating an environment that drives innovation, drives creativity.”

Capizzi also said engagement needs to be viewed not as a transactional event or program, but as an everyday practice.

Engagement should additionally be framed in the context of individual teams and business units, not necessarily the organization at large.

For Capizzi, this means putting an emphasis on developing solid managers. Supervisors, he said, have perhaps the greatest influence on an employee’s engagement,because the boss-employee relationship is critical to the everyday employee experience.

The engagement survey could also use a rethink, Bersin said. Business conditions are prone to change, so the idea of a yearly survey is slowlybecoming out-of-date.

Bersin suggests that talent practitioners could better measure engagement through social networks and internal blogs. He said organizations should not only monitor internal engagement through these tools but also via platforms where employees feel more comfortable, like Facebook, Glassdoor, LinkedIn and Twitter.

“Organizations need to not only monitor their internal engagement through tools internally, but they really need to monitor what’s being said about them in the outside world,” Bersin said.

For IDC’s Lynch, even using social media for real-time engagement measurement merits some caution. “I don’t know if it would give you a good measure, because the folks who are going to use social media are self-selected.They’re a certain type and group of employees,” she said.

Though engagement surveys likely need to adjust to better reflect the current environment, Bersin points out why many survey vendors might be reluctant. “The older engagement vendors are looking around and saying, ‘Well, if we change all of our surveys, we can’t use any of our own data,’ ” Bersin said.” They’re caught in the middle between what they’ve been selling for the last 15, 20 years … and what’s happening today.”

In any event, Bersin and others seem to agree: How HR views engagement is due for a refresh. Talent professionals have to look beyond such an indefinable measure like engagement and focus efforts on strategies that are more likely to improve how even the plainly satisfied employee functions at work.

“I don’t think the word is going away,” Bersin said. “But I think we have to redefine it. We have to open it up to consider these other factors.”