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The annual employee engagement survey and it’s outcomes are often a bugbear in many organisations.  Powerful analytics slice and dice the surveys in an attempt to extract vital information to allow organisations to better understand why their engagement might be low and lacklustre.  In today’s tight labour market, employee engagement has been put firmly back on the front burner as organisations grapple with fast changing market conditions in trying to both attract and retain the human resources critical to the survival of the ongoing operations.  What can we learn from organisations where engagement and retention are typically higher to their industry peers?  In this article we examine the top five factors most highly correlated with good or bad employee engagement.

The role of Leaders

Senior leaders in the business have a powerful and important role to play in employee engagement.  The 2017 Corporate Governance Reform whitepaper introduced and brought to the fore the requirement for greater formal ‘employee voice’ for UK organisations. Principle D of the UK Corporate Governance Code states:  ‘In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, these parties.’  The code recognises the key role that both executive and non-executive directors have in driving engagement.

Whilst response to the new code has been a mixed bag in the UK, ongoing work has identified the key ways in which engaged leaders can directly affect employee engagement:

  • Being accessible when required
  • Being connected to the people and the business
  • Being available and visible in online and open forum type events
  • Being seen to be actively involved in issue identification and dispute resolution

Strong employee engagement begins with the active and visible involvement of the business leaders.  Giving employees a ‘voice’ through the leadership and governance structure is vitally important in overall levels of engagement.

  1. The role of Managers

The second factor in driving employee engagement and retention is the competence, style and quality of managers in the business.  Whilst the role of the senior leaders within the organisation remains important, evidence suggests that for most employees, it is the relationship with their direct supervisor or manager that has the biggest influence on overall levels of happiness and engagement and on their willingness to stay and contribute to the organisation.  Culture and training are the two factors that organisations can employ to develop and guide better managers.  A good manager is better able to translate the objectives of the organisation into goals for the team and individuals, and to support the ongoing development and career progression aspirations of his reports.  Better managers will lead to more engaged employees and better business and people outcomes across the entire organisation.

  1. The role Pay and Benefits

Pay and benefits have a significant effect on employee engagement, motivation and morale.  Pay equity has been identified as probably the biggest single concern for a number or organisations and the one that can most negatively impact on engagement.  Ensuring that your pay and reward structures are objective, fair and transparent can go a long way to ensuring that pay equity and concerns around pay equity can be properly managed.  Benefits are also increasingly in the spotlight as the workforce model changes in the post-Covid world.  As remote work develops and evolves, a number or organisations are looking critically at their benefits.  Do the benefits support home working and flexible working options?  Do the benefits offered allow the organisation to compete for and retain a remote workforce that includes the gender (and other) diversity that is part of the overall people strategy?  Does the organisation have a formal and approved remote working policy that is well aligned with the market in terms of allowances and benefits?

  1. The role of Recognition

Outside of pay and benefits, recognition also plays and important part in employee engagement.  Fair reward and recognition create a culture where employees know how they can contribute to the success of the organisation, and at the same time, feel valued when they do.  Your organisation’s performance management system should be both objective and reasonable and aligned with the individual and team behaviours and culture the organisation is targeting as part of their strategy to engage and retain more talent.  Recognition, both monetary and non-monetary, should be designed to reinforce your performance management principles.  A system that encourages objective performance measurement, drives motivation and engages mindsets can go a long way towards supporting overall employee engagement objectives.

  1. The role of Development and Career Progression

In employee feedback, especially from younger and developing talent, one of the key factors that nearly always comes out in surveys are opportunities for career progression and personal development.  Where organisations have well defined career paths, or ladders, and opportunities for growth, and where these programmes are more formalised, we see better engagement from younger employees.  A well thought out and approved policy around both career and aligned pay progression is crucial in retaining millennial talent.  In-career progression and opportunities to become more diverse and multi-skilled are likewise highly valued by the organisation’s more experienced workers.  Whilst it is true that opportunities for learning and growth might be more easily achieved in high growth industries, it is also true that the competition for top talent is commensurably also higher in these industries, and that regardless of the industry you are in, devoting appropriate levels of care and attention to learning and development will pay dividends in the quest for improved employee engagement. In being better able to provide meaningful work options, employee engagement is greatly improved.

The factors that will improve levels of employee engagement include:  channels for employee voice, visible and engaged business leaders, high quality managers, appropriate and equitable rewards and recognition, along with opportunities for career progression and skills development.  To the extent that these factors are woven into the fabric of the business with sufficient care and authority and to the extent that they are properly aligned with the business objectives and support the overall strategy, organisations will see increased levels of employee engagement and a commensurate increase in levels of business success.  Something that is good news for both business leaders and staff, as well as for shareholders and other stakeholders, in a fast-changing and competitive market.

    Paul is the founder and Principal consultant at People. Performance. Reward. an independent Human Capital Advisory. Paul has over twenty years’ experience in a professional advisory capacity and has been a keynote speaker at conference, industry and client events. He has been widely published on human resource related topics.

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