Employee Engagement – What is the Relationship to Reward?

There is increasing evidence which shows that high levels of employee engagement results in improved business performance. This may not be surprising since engaged employees act as advocates for the organisation and this drives customer satisfaction and business success.

What do we mean by employee engagement? We’re talking about the discretionary effort that employees choose to make, combined with their commitment to the organisation’s culture and values. It is the ‘going above and beyond’ that makes the difference as shown by Gallup’s recent study (see the News section) where shareholder value grew 2.6 times more in public companies with the highest levels of engagement compared to those with below average engagement levels.

Trends from global engagement surveys show that employees want to understand how their contribution makes a difference to the organisation’s success. While this relies on effective people strategies that are aligned to business goals, where does reward fit into this equation? It is central to practices such as performance management, career development and the role of line managers, all of which influence the levels of employee engagement. Take a look at the Tips section below to see which reward factors you need to consider in order to make a difference.

Tips: What Reward Factors Make the Difference to Employee Engagement?

• Establish a baseline. Consider conducting an employee survey which is a common starting point to establish an employee engagement baseline. This will identify key issues that employees care about which impact business performance. Gather ‘hard’ data on recruitment and attrition to establish a credible baseline to start from.

• Set priorities. Use survey results which include outputs from follow-up focus groups to agree the priorities. While issues may span the range of people management practices, it is intangible rewards such as organisation values, leadership and opportunities for personal and professional development that may be high on the agenda. Agree priorities that are achievable within a given timeframe.

• Involve line managers. Front-line managers are critical to success so make sure they are involved in the decision making from the start. Aim to involve employees where it is clear that their contribution will be recognised.

• Implement the action plan. Building an engaged workforce takes time, commitment and setting of clear goals. The action plan is an important step towards achieving this. Implement a SMART action plan based on agreed priorities and clear lines of accountability. Ensure that your communications plan is ‘up to the job’.

• Take stock. Build in a review process to assess what is going well and areas for improvements. As well as reviewing specific areas, assess the extent that your reward and people management practices are aligned to your organisational goals. While this directly impacts employee behaviour which is the cornerstone of engagement, remember that not everyone wants to be engaged.

Consider all these factors when you are assessing the difference that reward has on employee engagement and you will be able to use the most effective methods to achieve the result you want.

Website of the Month

Each month, we’ll give a quick round up of a website and this month we take a look at the Gallup Management Journal (GMJ). The GMJ is part of the Gallup Organisation and operates as an online publication. Journal content focuses on people management issues such as employee and customer engagement and it places great store on challenging the ‘status quo’ amongst business leaders.

What works well? There is free access to a wide range of well researched articles on employee engagement and other relevant topics. The GMJ emphasis is strong on practical ‘bottom line’ outcomes and the communication style is clear and unambiguous.

What could be improved? As GMJ papers are typically based on Gallup products and services including the widely used Gallup Q12 engagement survey this can be tiresome after a while.

Just News

High employee engagement levels boost shareholder value by 2.6 times compared to below-average engagement in public companies. Recent research carried out by Gallup into 90 public companies show that those with the highest levels of engagement (top-quartile based on Gallup Q12 engagement survey results) are 12% more profitable than those with below-average levels of engagement. These ‘low-engagement’ companies experience up to 51% more employee turnover and 62% more accidents than those companies with the highest engagement levels. The research was conducted on public companies whose financial data was available from 2001 to 2005 and who had also conducted the Q12 engagement survey for accuracy of comparison.

Study shows Belgian staff motivated by financial rewards more likely to be dissatisfied. Research carried out by the University of Leuven into 885 Belgian workers show that employees who value the financial rewards and personal status over and above helping colleagues are more likely to be dissatisfied at work. Results published this month identify this group as more likely to leave their job compared to employees interested in self development. This dissatisfaction extended into greater conflict in their life outside of work. The findings indicate that the strong focus that some organisations place on material benefits may be counter productive working against their success in the long term.

Please note that our advice is provided as guidance only. If you need specific advice relating to your requirements, please call Reward First on + 44 (0) 1367 710 618.