A truly engaged workforce is rare. In the U.S., a recent Gallup research shows that less than a third (31.5%) of U.S. employees felt engaged in their jobs last year. The remaining 68.5 percent of employees were either not engaged or actively disengaged. Employee engagement has its place and is an excellent way of retaining high performing staff. But do business leaders understand the impact they have on long-term organisational performance?
As leaders are promoted and take on more responsibility, they are responsible for ensuring that their company is high performing, no matter what field they are in. And over the last decade, employee engagement has become one of the key priorities for organisations and HR professionals. Organisations have prioritised employee engagement as a means of creating a happier workforce in order to drive performance. However, this is not necessarily the best route to this end goal.
The benefits of employee engagement are important for business growth. For instance, Deloitte’s Human Capital Trends study shows that organisations that prioritise employee engagement, organisational fit and strong leadership outperform their peers and are more likely to beat their competition in attracting top talent. Other studies also suggest that engaged employees are more productive.
However, if leaders prioritise employee engagement over and above other key business objectives, this can be distracting. If companies overvalue engagement, this can hinder strategic decisions that will impact on staff morale, such as closing several offices, even if this is best for the business.
This is especially true when a business is going through a transformation period, be it rebranding, diversifying or introducing new products to the mix. In this instance, leaders naturally wish to prevent staff worries about the transformation. Yet if leaders seek high engagement above all other factors, they may decide not to close certain offices or fire people.
However, companies pay a high performance price for this decision. Overvaluing engagement can have a critical impact on the business performance. High engagement is good but not at the price of compromising sound business decisions. While it is important that employees enjoy working for the organisation, it is a mistake to prioritize this above other business goals.
Employee engagement can often help fulfil short-term objectives but has very little impact on a company’s long-term objectives, even where talent retention is concerned. A report by Aon’s most recent Trends in Global Employee Engagement revealed that although engagement overall has increased, employees’ intent to “stay” with their companies has not changed. Despite many companies heavily investing in training, this has little impact on loyalty. Just over half of employees do not think they will stay with their current company for a long period of time.
Business leaders ought to focus on critical priorities that will see their companies delivering long-term performance. Satisfying shareholders and competing in the market is far more important. Valuing engagement above performance is equal to becoming preoccupied with the symptom rather than the cause. Instead, companies should be aiming for long-term organizational health. This is the factor that drives long-term performance.
So how can leaders walk this tricky line? Often the first thing they should do is make sure organizational health matters to the board. Often organizational health is underestimated or undervalued. There is a common misconception that it doesn’t deliver value and isn’t worth investing in as it brings little return. However, putting short-term performance above organisational health is like jettisoning your food on the first day of a round the world race.
Companies often ignore health, especially when the company is having financial difficulty. The temptation is to throw resource at improving performance instead, especially if they must reassure shareholders. However, leaders must ignore these worries and have faith that focusing on health will bring long-term benefits. If leaders revert to type and go back to focusing on performance, they will be sacrificing the health of the organization for short-term benefits. So how can companies support and maintain this mindset?
Firstly, measure the state of the company’s health and set clear, precise aspirational targets to where the company should be over a period of time. When it comes to setting aspirations, some companies spell out bold long-term visions, such as, ‘to be known as the best-of-the-best service provider in the world’. However, this is not the right approach for every organisation. Having a medium-term goal, set for two to three years, can give a company a sense of immediacy and tangibility needed to inspire stakeholders, including the workforce.
Secondly, identify the company’s capabilities needed to achieve those aspirations. After measuring the company’s health, executives will be further informed on the company’s strengths and which areas of the business needs bolstering. The ability to determine what is needed to fulfill a company’s aspirations will help in the quest to tackle the obstacles that would prevent the company from achieving its objectives.
Finally, work out what the company needs to do to achieve the desired goals. To make the transformation manageable, break it down into a portfolio of change initiatives. Following a portfolio approach and setting clear targets, milestones, resources and leadership for each initiative means an organisation is 3.5 times more likely to achieve it’s aims.
Getting the people part of the business right can be a challenge but ensuring the company is healthy is crucial. Leaders that look after the health of the organization can be assured that performance and engagement will swiftly follow.
Chairman at Co Company
David it’s a good provocative question, and an interesting viewpoint which reveals that your experience is that some organisations perceive employee engagement as an end in itself, rather than a means to an end. I’m sure that some do, albeit not those that I have worked with: I’ve never found that the focus of their employee engagement efforts are anything other than to support key business objectives. Whether those objectives are the right ones or not is a different matter. But if they are the wrong objectives, that isn’t a problem brought about by employee engagement. Rather it’s likely the result of poor strategic decision-making. Equally I’d argue against your assertion that employee engagement has little impact on a company’s long-term objectives: rather, employee engagement with the wrong things can have a negative impact on any business objectives (long or short-term). Finally, I’m mindful that exactly how employee engagement is defined and measured is key to the points that you’ve raised. So my response to your question is that employee engagement can be both a hindrance and a help.
Colin – really good read as ever and I very much agree that company health is crucial.
In my view engagement is not an end in itself. I feel it is much more about the values we bring to achieving a business goal or change so that the what we do and how we do it have equal importance. In my company we have had tough decisions to make; including closing sites. To shy away from those decisions was never an option but to transact that business in a way that meant we treated people guided by great values did in fact lead to an increase in overall engagement in that population. Something that happened time and again. So for me engagement is never a hinderance and always a help.
Great article Colin. I will pass it along my social media channels.
Nice to see your writing and great point of view. I will pass this along my social media channels.