It is always interesting to me that when I see or read about what performance metrics executives should have on their dashboard there is often about a discussion about whether they should be tracking employee engagement or KPI’s (key performance indicators. As both a former human resources and operational executive my reaction is that employee engagement IS a key performance indicator.
There is certainly enough qualitative and quantitative date available to definitively determine that there is both a direct and indirect correlation between employee engagement and organizational performance.
The top performing and most admired companies recognize that which is why over 90% of them have developed and maintain an explicit employment branding strategy.
The Gallup organization has come out and stated that employee engagement is one of if not the most accurate predictors of long term organizational sustainability. In the UK it has been acknowledged to the point where there is actually a national initiative to address it.
So what keeps most organizations from developing and implementing an engagement strategy?
I think it is a number of things. Although we don’t like to admit it I think a lot of organizations still embrace the tenets of scientific management where people are a resource or asset. Can anybody say human capital?
I would submit another stumbling block is found in the issue of who owns responsibility for engagement. When I make this statement I don’t mean just departmentally, I mean personally.
In my opinion engagement properly done represents a social contract between employer and employed and provider and customer. It is shared.
Back when I was a business executive I used to say to employees who wanted to talk about empowerment that the flip side of empowerment is personal accountability and responsibility.
I am a huge fan of empowerment. In fact I will admit that I lack the patience to be an effective leader to people who are not capable of operating with a high degree of personal responsibility and accountability.
I feel I owe them several things:
- A meaningful value proposition that is consistent with their values.
- Clear expectations of their role and what metrics we use to monitor our progress and performance and their direct relationship to those metrics.
- Constructive feedback and coaching in order to be sure they stay on track and are given the opportunity to grow and succeed personally and professionally.
- Fair and equitable compensation in exchange for the privilege of renting their talents and behaviors.
- Respect for them as a person up to and including not being willing to accept performance that is below my expectations and their capabilities
In return for my commitments I feel I have the right to expect some things in return:
- I expect them to bring their best efforts to the work everyday
- I expect them to invest in themselves in increasing their capabilities by learning new skills and abilities and being willing to share those skills and abilities with others.
- I need and expect their constructive feedback when my colleagues and I are not providing them with the direction that need or don’t seem to be acting or leading in a direction consistent with our values.
- Being respectful of others including their coworkers, customers, and other stakeholders.
Perhaps my social contract is unrealistic, but I don’t think so. I have had the opportunity to help create and work in these kinds of environments and I can assure you it is way better than the alternative.
There are things I don’t expect:
- I don’t expect personal loyalty. I appreciate it when I earn it and it is reciprocated, but I accept my responsibility to earn it.
- I don’t expect blind trust. I understand that my position provides me with trust based on my authority and hopefully my competency, but I endeavor to earn trust based on identity because of credibility and character. That occurs with time.
- I don’t expect them to make a lifelong commitment to me or the organization. I expect that while they are in my organization they will be committed.
Many may look at this and say what impact does it have on the goals of the organization and my response would be quite a bit.
- Individuals who identify themselves as highly engaged demonstrate personal productivity on average 20% higher per capita than neutral or un-engaged employees. Organizations with engagement in the 90th percentile increase that to over 30% more per capita productivity.
- We lose $5.2 trillion annually to turnover and presenteeism, but 60% of highly engaged employees indicate a high degree of likelihood in staying with their current employer.
- Organizations with high levels of engagement outperform their peers financially by margins as high as 100%.
Here are some other key performance indicators-
- In a 2012 study 77% of non- managerial employees identified themselves as neutrally or un-engaged.
- Of that group 65% indicated they would make an employment change for as little as a 5% increase in compensation
- The “shelf life” of traditional training is 18 months. After that studies show the retention rate of new skills to be less than 10%
Compensation and training are hygiene factors. You have to get them right to break even, but they in and of themselves will not create engagement or optimize performance.
Neither will process improvement systems like six sigma, lean, or others. Those systems will increase performance on the short term, but not over the longer horizon.
My suggestion to you is that you recognize that employee engagement is indeed a key performance indicator and needs to be addressed systemically not systematically.
When you are constructing you performance enhancement initiatives I would recommend you include three key kinds of metrics for your dashboard-
- Engagement drivers (don’t assume you know what they are)
- Engagement levels
- Business metrics
They need to be integrated and they need to be built into your culture and foundation.
Engagement isn’t a program, an initiative, or a survey. It is a culture and a strategic imperative…