March 16, 2017

2017’s Real Keys to Employee Engagement

2017 EMPLOYEE ENGAGEMENT TRENDS GRAPHIC - LI

Chapter 5

EMPLOYEE ENGAGEMENT

Employee Engagement is the focus in 2017 for small and mid-sized companies.  The tight job market, new hiring, and the cost of losing top talent – roughly half their annual salary – has companies focused on retaining their best people. But, per Gallup’s new 2017 ‘State of the American Workforce’ report, only 33% of American workers are engaged; 47% of employees say now is a good time to find a quality job; and, 51% are actively searching for new jobs or watching for openings. 91% of those that find new jobs find them at another company.

Part of the problem is that old ways of hiring and managing are less effective today.

This Post is one chapter in our new 2017 HR TRENDS Toolkit – 40 pages of Trends, Tips & Findings on Recruiting, Benefits, Compliance Issues, Risk & Employee Engagement.

2017 HR TOOLKIT FOR SMALL AND MID-SIZE COMPANIES - LETTER SIZE - STAFFLINK

Fill Out the Form Below, and Download Your FREE COPY!  


Millennials, who will soon make up more than half the employment workforce, approach a role with a highly define set of expectations: they want their work to have meaning and purpose; they want frequent communication with their manager, development opportunities, flexibility and autonomy, coaching, and a sense of stability and security.

But that’s not what’s happening; thus, turnover is high, and employee engagement low. Employees are not motivated to perform to their full potential. Per the Gallup study, there are three major reasons for this apathy: unclear and misaligned expectations; inactive and infrequent feedback; and, unfair evaluation practices and misplaced accountability.

Regarding feedback, only 23% of employees strongly agree their managers provide helpful feedback. On evaluation practices, only 30% say their managers include them when setting goals, or even understand their strengths.

But retaining talent is not the only reason to improve Employee Engagement. Higher workplace engagement leads to 37% lower absenteeism, 41% fewer safety incidents, and 41% fewer quality defects. Organizations that have over 50% Employee Engagement keep 80% of their customers – an 18% improvement. Highly engaged employees can increase profits $2,400 per employee, per year. And, regarding retention, high engagement business units achieve 59% less turnover.

KEYS TO EMPLOYEE ENGAGEMENT

Employee engagement is the new focus in 2017. Managers, per the Gallup study, need to approach their role as ‘coaches,’ rather than ‘bosses.’ The rewards are significant; the consequences of not adapting are too.

Pay is important, but it is not among the top three drivers of Employee Engagement.

A study in a recent Glassdoor Survey revealed that when selecting a job, salary and benefits are important, but that the most important consideration is company culture; and, salary does not even rank in the top 3 when it comes to employee engagement.

In contrast, culture and values, career opportunities, and trust in senior leadership are the biggest drivers of long-term employee satisfaction. What is culture? Glassdoor described it this way:

An employer’s culture and values rating probably represents a combination of factors that contribute to overall well-being such as company morale, employee recognition, and transparency within the organization.

I think you could add career advancement opportunities to that definition.

Companies with the best engagement scores get it. They treat their employees well, provide great benefits and promotional opportunities, and provide an outstanding company culture.

The Glassdoor survey revealed the Top 50 Best Companies work for, according to employees. Delta Airlines ranked 21 on the survey, and one of their employees described their experience this way, “Delta is in a fast-paced industry, and treats employees well, provides good compensation and great benefits … a diverse work environment and everyone loves to travel. Good opportunities to advance.”

Similar comments were made about all the companies in Business Insider’s top 50. But this quote from an associate analyst at Southwest Airlines, #28 on the list, sums up what sets these companies apart:

Great flight benefits, amazing 401K matching, many insurance options, and a great company culture. You can tell they really value their employees.

 The focus on company culture and career advancement opportunities confirm a recent Korn Ferry research study that showed nearly two-thirds of respondents would prefer to get a promotion with no salary increase than a salary increase with no promotion.

The focus on employee engagement is causing a shift in some company spending, too.  Kraft Foods had been buying national ads on the Super Bowl for several years. This year, Kraft decided to abandon their Super Bowl Ad, and put that money into a ‘paid day off’ for their employees.

THE PRIMARY IMPORTANCE OF GOOD MANAGERS

Career advancement opportunities and great benefits both contribute to an attractive company culture. But one of the findings of Gallup’s State of the American Workplace study reveals the primary role of management in engagement. The report confirms the modern proverb, ‘people don’t quit jobs, they quit managers.’

Most people become managers because they’re great at a core skill – sales, marketing, coding, and so on. It usually isn’t because they’re great leaders. But leaders are necessary for an engaged workforce. The Gallup study found that employees who are supervised by highly engaged managers are 59% more likely to be engaged themselves. The study also found that 80% of those dissatisfied with their managers are also disengaged from their employers; and, 50% of adults have left their job to get away from their manager.  Conversely, employees who believe their managers can name their strengths are 71% more likely to feel engaged and energized, and 67% of employees who strongly agree that their manager focuses on their strength or positive characteristics are highly engaged.

The importance of managers to employee engagement and profitability is so important, per HR guru Tim Sackett, that he thinks it is time to ‘adjust the rules.’ In a recent post for Inc., Sackett lists ‘free fixes’ to develop better employee retention. At the top of his list is “fire the manager with the lowest retention rate.’  Per Sackett:

You have the data and you know who is turning people over. Your organization needs to send a message that managers, not HR and not the CEO, are responsible for retaining talent. This has to be the first step! Your leaders must have a clear understanding it is their job to retain their employees, and it’s your job to hold them accountable for it.

How can you evaluate the effectiveness of management and employee engagement practices at your company? The Gallup study created 12 specific questions for their survey. These questions provide insight into what constitutes effective leadership and an engaged workforce.

  • I know what is expected of me at work
  • I have the materials and equipment I need to do my work right.
  • At work, I have opportunity to do what I do best every day.
  • In the last seven days, I have received recognition or praise for doing good work.
  • My supervisor, or someone at work, seems to care about me as a person.
  • There is someone at work who encourages my development.
  • At work, my opinions seem to count.
  • The mission or purpose of my company makes me feel my job is important.
  • My associates or fellow employees are committed to doing quality work.
  • I have a best friend at work.
  • In the last six months, someone at work has talked to me about my progress.
  • This last year, I have had opportunities at work to learn and grow.

Gallup describes this need for actively involved leader-managers as those who see their role not as ‘bosses’ and ‘task masters,’ but as ‘coaches’ who are actively engaged in helping employees improve their performance through constant, positive feedback and collaboration, with a view toward future performance.

As one writer put it, “Managers leave accomplishments; leaders leave people transformed through love and character.”

PERKS THAT AREN’T WORKING

Companies have tried several different things to increase engagement and retention, but not all of them work. Before we get to those that do, we’ll take a moment to review a few trends informed companies are phasing out.

Junk Food

In our chapter on ‘Employee Benefits,’ we mentioned that free food and entrees can save employees time and improve productivity. But some companies are abandoning ‘junk food’ because it contributes to reduced productivity, tiredness, and late morning and afternoon ‘blahs.’

Unlimited Time Off

Unlimited time off is a recent trend touted in business publications the past few years, but studies show that this benefit is harming employees because they do not know how much time is truly ‘OK’ with senior management; and, they can’t decide what to do with the unlimited possibilities.  Thus, they are taking less time than before UTO policies, and experiencing lower levels of productivity and higher levels of burnout.

Kickstarter is one company that experienced this problem. As a result, they amended their policy to allow 25 days of paid leave – a substantial improvement over the standard two weeks. They now report employees are taking more time off, and coming back refreshed – the goal.

Closing the Open Office

Perhaps the ‘worst’ idea for improved engagement has been open offices. Studies show that 77% of employees prefer quiet when they need to focus, and 69% are dissatisfied with noise levels at their primary workspace. Studies reveal workers are up to 66% less productive when exposed to just one nearby conversation.

The European Union has also found open offices to be a costly business. They commissioned a study that found lost working days, healthcare costs, impaired learning and reduced productivity from open office environments cost European businesses about 52 billion dollars (US) annually. Buried within that figure are lots of sick days.

Workers in open-plan office spaces take 70% more sick days than home workers. And, the Gallup study found that 41% of employees would change jobs to have a door they could shut.

As far as employee engagement, open offices are one thing companies should consider jettisoning in 2017.

WHICH ENGAGEMENT PRACTICES WORK ?

Beyond the importance of leader-managers, there are several Employee Engagement ideas practices proving valuable: flexible schedules, adjustable benefits, employee development programs, paid time off, and genuine praise are some of the most significant. And you can expect the best companies to utilize some of these strategies in 2017.

Flexible Schedules

Flexible schedules are the #1 preference among millennials, and 51% say they would change jobs for this benefit. The ability to leave early for a child’s game or activity and make up that time somewhere else is highly desired by this demographic with children. If you can run your business in a way that allows for flexible work schedules, you have a talent advantage.

If you can’t, you’ll soon be fighting for talent that is second-tier.

Adjustable Benefits Packages

Due to wild growth in employee benefits, the best companies have better opportunities to create ‘customizable’ benefits, where an employee selects benefits from a ‘pool’ that work best for his or her situation. This approach usually comes with a budget, so it is not a costly benefit.

Paid Time Off (PTO)

Companies that can improve on the customary 2 weeks of paid time off are at a strong advantage in this year’s recruiting wars. AirBnB, considered by some to have the best benefits package in the U.S., provides their employees a month of paid time off to travel anywhere in the world. Paid time off is one of the most important benefits to millennials, and you can expect the better companies to increase it to lure the best talent.

Genuine Praise and Recognition

Take notice of this one. This can be powerful, yet inexpensive. Across the entire spectrum of employee demographics, praise and recognition are two important elements in good company culture and high employee engagement.

A Harvard Business Review article revealed that a study of 60 strategic business unit leadership teams found that teams with the greatest number of positive interactions had significantly higher scores in financial performance, customer satisfaction ratings, and feedback ratings from team members. The average ratio for the highest-performing teams was 5.6 positive comments to every negative comment; medium performing teams averaged 1.9 positive comments to every negative comment; and, the lowest performing teams averaged one positive comment to every three negative comments.

Companies that focus on positive, encouraging interactions and training for managers will retain their employees to a greater degree, and experience higher engagement.

Autonomy

The importance of autonomy in company culture, employee engagement, productivity, and overall well-being is receiving greater visibility in 2017. A recent post in Inc. cited two studies showing that autonomy is the most important key to personal happiness, and employee productivity.

An article in Fistful of Talent revealed that autonomy, more than anything else, improves engagement. Per the author, “Asking employees the question, ““How much control do you want over what you do every day?is guaranteed to ‘blow up’ your engagement scores.

Think about it, owners, managers, and entrepreneurs have the highest engagement because they have the most ‘control.’  Yet, in difficult times many managers ‘micro-manage’ to get the result they want. Studies, however, show the key to engagement is to provide employees greater control. One study found an association between “high levels of perceived control with high levels of job satisfaction, commitment, involvement, performance and motivation, and low levels of physical symptoms, emotional distress, absenteeism, intent to turnover, and actual turnover.”

A University of Michigan study found an association between “autonomy and high levels of job satisfaction and organizational commitment, lower turnover, increased performance, increased effectiveness, and increased motivation … When employees are genuinely empowered, they’re more likely to act, work independently, and still feel fulfilled by what they do.”

Autonomy, company culture, flexible work schedules, and leader-managers that coach are the  leading Employee Engagement trends in 2017.

Performance Reviews

In recent years, there has been a movement to abandon performance reviews. But research shows that eliminating performance reviews reduces employee productivity by as much as 10%. The key to effective reviews, says the literature, is changing ‘how’ they are conducted.

The 2017 Gallup State of the American Workplace report identifies three changes that improve the effectiveness of performance reviews: greater frequency throughout the year (at least twice); a greater focus on the future than on the past; and, the inclusion of ‘peer’ reviews because peers understand the work and challenges of their co-workers.

SUMMARY

Autonomy, company culture, flexible scheduling, career growth opportunities, genuine praise, and managers that work as coaches rather than top-down bosses, are the keys to employee engagement, and the trends one finds among the best companies in 2017.

Managers hold the key to the door of improved employee engagement. Rather than viewing employees as hired, replaceable help, engagement grows as managers invest and coach employees.

An earlier quotes sums it up well, “Managers leave accomplishments; leaders leave people transformed through love and character.”

HAVE AN HR QUESTION?  WE CAN HELP.

STAFFLINK is a PEO (Professional Employer Organization) that helps small and mid-size companies:

Recruit, Train and Retain Top Talent

Create Fortune 500 Benefits Packages

Prevent Compliance Issues

Minimize Risk

Improve Employee Productivity

Call me, Abram Finkelstein, President, at 1-877-899-LINK if you have HR questions, or would like to know how we can save you time, and help grow your company.