There is no doubt that most organizations faced falling employee engagement measures last year.
We all knew that 2009 had been a challenging economic year and that we may have cut a little too deep or managed our communications poorly as we rolled out pay freezes, forced furloughs, staff reductions, and slashed benefits programs. But last year, the impact of those decisions started to come home to roost – engagement surveys were sent out and numbers were down.
Solution providers in the space were quick to share that numbers were down and highlight the possible storm clouds on the horizon, leading to reduced performance and turn-over in high-potentials and critical talent roles. Some examples:
- “Broadly, organizations face something we’ve labeled an “engagement gap.”… only 21% of our sample are engaged,… Worse yet, fully 38% are either wholly or partly disengaged” — Towers Perrin.
- “One-Third of Companies Are Troubled by Low Employee Engagement… Employee engagement—the willingness of workers to go the extra mile at work—took a big hit during the recession and has not bounced back…” — BCG and WFPMA.
- “Low employee engagement is pervasive — nearly half of the world’s employees are not engaged. This means that for every employee who is contributing to the success of your organization, there’s another employee not putting forth maximum effort.” — Aon Hewitt.
Last year was the calm before the storm; voluntary turnover rates were way below average as employees hunkered down and waited for the economy to chug back to life.
A paradox: engagement data wasn’t low enough
This year, searches are up – candidates are on the market, and if your employee engagement scores were down last year and you didn’t take advantage of the time to address concerns – you’d better believe your best talent is on the market today.
Most HR leaders were already aware of the hazard. With or without their employee surveys, they were aware that morale was low and business performance was at risk. They shared their concerns with leadership when decisions were made, and they expected the employee survey data to support their warnings. But some HR leaders faced an unexpected challenge when employee engagement scores came in for 2010: Engagement data wasn’t low enough!
You might be scratching your head at this point, but keep in mind that HR professionals have many ways to assess employee engagement: Glassdoor.com, exit interviews, manager complaints, employee relations issues, customer complaints, and so forth. So when employee surveys come back with only slightly lower scores, or even worse, flat engagement scores, and they know from these other sources that engagement has plummeted, many feel it might be time to re-think their approach to assessing and reporting on employee engagement.
Even when employee engagement scores matched HR expectations, HR is being challenged to develop a more strategic approach to assessing and managing employee engagement.
In our 2010 survey on Talent and Learning measurement, 71 percent of HR leaders with an executive level scorecard, ranked Employee Engagement as a key metric in their HR scorecards. It was the number one metric selected by all participants, coming ahead of more traditional HR metrics such as retention rates and performance ratings.
In taking a fresh look at this important topic, many HR leaders are looking at both their current solution providers as well as their own internal approach to engagement. Many are questioning their current practices; including benchmarking, engagement drivers, analysis models and even the role of employee engagement in assessing leadership roles and company culture. They are also looking for solution providers who can partner strategically on these questions and help them develop a complete engagement strategy.
Looking for insights
In the last three weeks, I’ve had four different member calls on employee engagement – they were looking for insights on where we saw this market heading. Many were thinking about replacing their current solution providers, some were just trying to figure out how to partner more closely, while others were looking to increase the strategic connection between their employee engagement efforts and meaningful outcomes for their business and talent strategies. For example:
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- A small financial organization, with retail environments all over the U.S. was looking to replace an existing climate survey they were using sporadically across the company with no programs for follow up. Although current climate measures weren’t horrible, they knew they had some deep rooted issues that needed to be addressed due to the 50 percent turnover rate in field locations. They were hoping we could provide some insights on solution providers who could balance their practical need to assess engagement and help them build a strategy that their small HR function could support.
- A large technology organization recently split from its parent company – and they wanted to look at connecting their employee engagement strategy to their organizational culture strategy. They needed to help their employee’s become comfortable with the innovative but less structured company culture that would be needed to survive. They knew that this change would make many employees uncomfortable, and possibly concerned about their roles. So they were looking for their employee engagement efforts to assess the capacity for culture shift and the gap between their current culture and desired culture. They wanted to know if that was possible – and if so what were the practical aspects of that type of effort
- A division within one of the world’s largest business service companies was very concerned because their annual engagement scores were taking a dip. More frustrating was the fact that the decisions concerning how the engagement survey was conducted, which internal samples were selected, and how it was rolled out were handled at a much higher corporate level. They wanted to understand their options in connecting their enterprise approach to a more practical divisional strategy. A committee had been formed to develop recommendations on not only how to improve the engagement scores, but how to make them more meaningful throughout the division.
They hadn’t considered asking their current enterprise employee engagement partner for help with this challenge; something our research showed was a valuable first step. Most of the employee engagement vendors in the market have a ton of best practices on how to connect engagement data to actions at the divisional level. Often corporate HR functions select only minimal services from their solution providers or worse neglect to include them on critical discussions concerning the enterprise engagement strategy.
- A large financial organization located in the northern U.S. felt their survey data was just too flat – especially after the last few turbulent years for their industry. They were actually choosing to take a break on their annual survey, as they felt it was providing very little value in relation to both business impact and insights into how to motivate an employee-base they were concerned had become complacent and comfortable. They were taking the year to re-think their entire approach to employee engagement: Should they care about benchmarked indexes, how often should they survey, what actions should be tied to survey data, what type of analysis and consulting should they expect from their partnership with a solution provider in this space? Do we have the right partner for our company?
Engagement challenges today
These conversations highlighted a few challenges companies are facing today:
- Many companies are still unsure of their goals for assessing employee engagement – but they know it is important and are willing to invest resources and time to improve their employee engagement approach.
- Many organizations are struggling to shift their companies focus from the employee engagement survey to the need to create a full employee engagement strategy.
- Most companies know something needs to change, but they are unsure of what elements in their approach need to change?
- The solution providers in the market are also trying to make changes and highlight the risks; but are often left out of critical conversations their clients are holding on employee engagement strategies.
What you get with an Employment Engagement Strategy
For me most of the questions come back to the need for an Employee Engagement Strategy? Knowing what you expect to accomplish with your engagement efforts and the role you expect your partner to play in these efforts is critical. Our research found that organizations who had documented a full employee engagement strategy were able to answer:
- What the definition of employee engagement was for their company? Where that definition had come from and why it was still relevant today?
- What the goal of improving employee engagement was for their organization?
- What the best way to assess engagement was in their specific culture? If their approach had been regionalized and customized to their audience needs.
- What followed the assessment efforts: analysis, communication, actions, follow-up, expectations set
- How employee engagement measures and data were used to make talent and business decisions in their organizations?
- What type of relationship they would have with their service provders and how they would manage that relationship?
- And most of all, they had proven through either solution provider research or their own analysis efforts that improved engagement (as defined by their current process) was leading to the business outcomes their company needed?
The market is changing and decisions concerning the use of employee engagement data to influence business and talent decisions are weighing heavily on HR leaders today. As engagement scores continue to show up on executive score cards, board-level documents, or even in analyst reviews concerning the health and wellness of an organizations talent, companies are looking for confirmation that HR can prove the validity of their engagement efforts.
No two companies are alike, and as such no single employee engagement strategy or solution provider meets the needs of every company. Our research found organizations that had very strategic relationships with their solution providers, many lasting more than a decade, with solid data supporting the impact of their efforts. While other organizations were taking painful steps to change not only their approach to engagement, but their solution providers as well. None of these decisions were made lightly.
Our research on this topic, Employee Engagement: A Changing Market Place, provides insights on what is driving these market changes, the growing importance of this measure in the talent management space, as well as details on employee engagement strategies, key solution provider questions, and selection best practices.