By Allan Schweyer, Chairman, Enterprise Engagement Alliance
The growing organizational focus on achieving financial results by engaging employees reflects an emerging realization that traditional management practices are outdated.
Today, more than 80% of value in organizations is driven by talent – this includes such intangibles as the ability to innovate, create, delight customers and solve problems. Just 30 years ago, the great majority of organizations in the United States were valued more for their hard assets than their people. Today, Facebook is worth almost four times as much as General Motors, and Google is worth 10 times more than the country’s five most valuable airlines…combined. In an economy where relatively small companies (by employee count) dwarf the iconic firms of the 20th Century in value, there can be no doubt that we’ve experienced a profound shift.
Yet today’s management practices in most companies are strikingly similar to those invented during the industrial revolution. Too many organizations still rely on rigid hierarchies and multiple layers of executives, managers and supervisors to exert control. Despite employing a mostly white-collar, skilled and educated workforce, U.S. organizations are typically structured like 1940s factory operations. This approach, while useful for physical or repetitive types of work, greatly stifles the creativity and imaginations of knowledge workers. It also dispirits them and makes work a chore rather than the joy it could be.
It’s a great tragedy that less than one-quarter of the U.S. workforce describes itself as “fully engaged” at work. The tragedy is two-fold. First, it means that most of us spend much of our waking lives doing things we dislike and being somewhere we would rather not be. Secondly, it means that we’re less productive than we could be; this harms our organizations and the country as a whole. It also undermines our own human potential, limiting both the tangible and intangible rewards we might receive from work.
Engagement is a strategy being employed by some of the nation’s best known companies seeking to improve performance by building more powerful relationships with the people key to their business success. As many studies have shown, there is a direct link between financial results, share price performance and the ability of an organization to engage its employees. In the private sector, Gallup has found that engaged organizations have 3.9 times the earnings per share (EPS) growth rate compared to organizations with lower engagement in their same industry. The same is true in the public sector. A 2008 Merit Systems Protection Board (MSPB) study involving survey participants from across the federal government concluded: “We have found evidence that a heightened connection, or engagement, between Federal employees and their organization that surpasses job satisfaction is related to better organizational outcomes.”
If you read the quote carefully you might be thinking: “What’s the difference between employee satisfaction and employee engagement?” Night and day is the best answer. Satisfied employees are rationally satisfied with things like pay, benefits and work-life balance; they might stay with the organization but will rarely do much beyond what it takes to keep their job. Engaged employees are emotionally connected to the mission, goals and objectives of the organization, and as such are willing to exert discretionary effort to help it succeed.
Unfortunately, only about half of U.S. workers are engaged in their work (and, as above, less than a quarter are fully engaged). A recent Modern Survey report states that “Now only about half of respondents said they are willing to put in extra effort to help their company succeed, and only about half say they intend to stay with their company for a long time.”
The most important ingredient to sustained employee engagement is leadership, particularly the quality of front-line managers and supervisors. Yet only 44% of federal government employees believe their leaders generate high levels of motivation and commitment in the workforce, according to the MSPB study. This is unacceptable. If businesses and government are to overcome the challenges posed by globalization and the economy, they must learn to build an enterprise-wide environment of engagement that stresses motivation and commitment between all stakeholders. Otherwise, our nation’s problems are likely to overwhelm us.