The Business Case for Employee Engagement That All CEOs Must Read

Benjamin Schneider, Ph.D.

If you believe in evidence and not in hype, read this. The bottom line is that senior leadership in companies is responsible for the work engagement of their people and that workforce work engagement yields corporate financial returns, corporate customer satisfaction, and corporate reputation. Interested in the details for what you can do to make these happen? Read on.

I’ve been trying for nigh onto 50 years now to help organizations understand their people and be successful. I am occasionally dismayed by what I see going on in companies and sometimes I am pleasantly astonished at seeing what is actually possible. The dismay comes from watching companies “incentivize” what they think they want from their headcount while ignoring the fact that what they want is something from “people,” not “headcount.” Headcount is a term that ignores the fact that it is people who work in and for their organizations; the fact that they are people with all of the talents and motivations that people can have for the good of themselves and their companies is ignored. I am pleasantly astonished when I work with companies that actually value their people, know they must provide the support and direction people need to be both whole people and contributing employees, and have come to grips with the fact that there is more to motivating people than “incentivizing” them. The “more” is jobs that are worth doing with the necessary support and direction so that the energy people have can be used for the good of both themselves and their companies.

I have also been doing research in and on companies and their people with the same kinds of results: dismay sometimes and pleasant astonishment on other occasions. I experience dismay when I run focus groups in companies to diagnose the way people are experiencing working in their companies. I hear about back-biting, supervisory abuse, lack of concern for serving customers because there is lack of concern for the people who serve them, and so on. One of my favorite quotes on service orientation is this one in a mortgage bank: “Our view of service is that the customer is guilty until proven innocent.” And when I administer surveys in such companies the average scores are depressing and nothing is done to improve them. Companies that produce this kind of work climate and a failure to attend to input from employees are depressing—and they have low customer satisfaction and high staff turnover.

Let me tell you about some recent research I did across 102 companies and my pleasant astonishment at the findings. The findings are excellent because they have perfectly clear implications for senior leadership in companies and what they can for their people to be more effective. And because the evidence has to do with companies being more profitable, maybe some companies will pay attention. I am talking EVIDENCE, not speculation and not wishful thinking here.

What is the evidence? I studied workforce engagement across 102 companies in different industries. Workforce engagement is the average engagement of people in the work they do. The data we collected reveals that across these companies, when workforce engagement is high so is:

* ROA

* Net Margin

* Customer satisfaction (via the American Customer Satisfaction Index or ACSI)

* Company reputation (via the Harris Reputation Survey)

In other words, the higher workforce engagement is the higher are these outcomes, statistically significantly so. And this is true even after ensuring that industry differences in the financials were adjusted for.

I said the target of the survey was workforce engagement in the work they do. That is, the work engagement measure was a measure of engagement in the work people did. We did not assess whether people were planning on staying with or leaving the company, whether they would recommend that a friend come to work in the company, or whether they had a friend at the company—which usually pass for items in a measure of work engagement but these are obviously not work engagement since they have nothing to do with the work people do. The measure we used assessed how engaged people were in the work they do. Here are the survey items: (1) “I am excited about the way in which my work contributes to my company’s success”; (2) “I feel energized by my job”; (3) “I feel that it is very easy to maintain my focus at work”; and (4) “I look forward to coming to work each day.”

The simple average of these four survey items for each person and then the average across each person in a company was what made up the workforce engagement index for a company. And it was that seemingly simple index that predicted the financial, customer satisfaction and reputation ratings of the companies.

The question then becomes, what do companies do so that their people will experience their work in this way and so that they will do the kinds of things that produce financial returns for their companies? Here is what the evidence revealed:

Senior leadership must be seen as:

*  Providing a clear direction for the company

*  Effectively communicating what the company is trying to accomplish

*  Making the changes necessary to compete effectively

*  Ensuring an attitude of service is common throughout the company

When the people in companies, in the aggregate, perceive senior leadership behaving in these ways their work engagement is higher and all good things follow for the company. Note that it is not how people’s immediate supervisors or managers are seen and not what the job is like but it is how senior leadership is viewed that matters most.

Why does workforce engagement produce such powerful results? Because if your people are engaged in the work they do you can build on that engagement to make a host of other wonderful things happen. You can build a powerful service orientation on an engaged workforce because you have your people’s attention. You can build innovative and creative teams in such a company because people will know where the company is headed and what senior leadership will value.

Okay, the evidence shows that the company has to be seen doing a few more things right to have an engaged workforce but the evidence is clear that the issues I have already presented are the keys to workforce engagement. Companies also have to treat their people fairly, ensure that good performance is rewarded and that excellence in doing the work is recognized.

Do you know where you want your company to be headed? Are you taking the steps necessary to get it there? Have you educated your people about where you are headed and what you are doing to get there? Are you seen as a company that recognizes and rewards excellence? Get with it and do these in ways that communicate clearly your priorities and your valuing of your people’s contributions and good things will follow; the evidence is in.

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The research paper on which this note is based is this: Schneider, B., Yost, A. B., Kropp, A., Kind, C. & Lam, H. (2017). Workforce engagement: What it is, what drives it, and why it matters for organizational performance. Journal of Organizational Behavior, Volume 39,pages 462-480.

Benjamin (Ben) Schneider is Professor Emeritus, University of Maryland and Affiliated Research Scientist, Center for Effective Organizations, Marshall School of Business, The University of Southern California.

Ben can be reached at: Benj262@outlook.com and on the web at: www.DrBenSchneider.com

Ben appreciates the encouragement, help and comments from Marla Gottschalk without whom this would never have seen the light of day.