Skills shortages are some of the biggest issues facing UK businesses right now. Unemployment is predicted to fall this year to 5.2 percent; a point considered to indicate that everyone who wants to work is in work. On top of that growing control over immigrant workers is adding more pressure in some sectors. The heat is really is on for HR professionals responsible for talent acquisition and retention.
In the words of a recent Deloitte report, “After decades of corporate discourse about the war for talent, it appears that the battle is over and talent has won …”
But skills shortages aren’t the only challenge facing HR. We’re dealing with a national epidemic of low productivity. The ONS reports that output per hour in the UK was 18 percent below the average for the rest of the major G7 advanced economies in 2014, the widest productivity gap since comparable estimates began in 1991. Although not exclusively an HR issue, HR has a key role to play in changing this worrying statistic.
High engagement equals high productivity
I believe the answer to help address both of these issues is increasing employee engagement. We already know that high engagement levels result in a tangible improvement in business performance which leads to a positive impact on the bottom line. But, although we know it, the evidence suggests we’re still not doing it well.
Deloitte’s millennial survey says 44 percent of millennials would quit their job within two years. Glassdoor feedback reveals average engagement is rated at a low 3.1 out of 5. Gallup research shows that only 13% of employees are highly engaged in the business they work in; perhaps more worryingly 26% are actively disengaged.
It’s pretty depressing reading.
Gallup is a leading provider of employee engagement surveys and published a major review in 2014 – ‘First, Break all the Rules.’ In this review, they have teased out the 12 questions that companies with high engagement or high performance have employees answering ‘yes’ to. Many of these questions are what you would expect, ‘Do I know what is expected of me at work?’ and ‘Does my supervisor seem to care about me as a person?’ Some are more striking – things like ‘Do I have a best friend at work?’
It makes some interesting points; that engagement is different depending on how long you’ve been with a company, that striving to make people feel cared about and able to do their best work is key. If you haven’t had the chance to read this, I urge you to.
Deloitte also published a paper last year, ‘Becoming irresistible.’ They argued that a more action orientated approach to engagement was needed. It provided a framework for businesses under five key elements and 20 specific practices. . One of the key findings was that among the organisations researched, pay and reward was a hygiene factor. So, organisations had to get pay sorted and make sure it was seen and believed to be fair before taking any other actions – otherwise these actions would not have the desired effect.
So, are there any common themes among the various opinions; some simple steps that businesses can take to start improving engagement?
- Get your pay sorted – pay is a hygiene factor for most people. It doesn’t have to be the highest pay in the market but it does have to feel fair. Open, transparent, market driven and internally equitable pay is the foundation to build engagement. So you need to do your market benchmarking, internal job evaluation and be clear about your pay policies and grading structure. Transparency around pay leads to confidence and a feeling of fairness.
- Think about the purpose of your business – Steve Jobs said about Apple that its mission was to “remove the barrier of having to learn” technology. It wasn’t about making money – that was the nice side effect! You and your board may know the company’s purpose, its why, but are you communicating it clearly in your conversations and internal communications? More importantly are you communicating it in your actions, decisions and policies? Share your purpose, live it and talk about it with your people.
- Use more than just financial measures – are you backing up that purpose with how you measure success and reward people. Are you using more than just the business’ financial performance as a measure of success e.g. total shareholder return (TSR) or EBITDA? Think about the metrics you use for variable pay schemes and the objectives you measure against in performance reviews. Businesses are starting to introduce other more qualitative metrics when they are developing their reward programmes, but financial measures still dominate.
- Finally, real time feedback – the way we provide input and feedback is changing. Annual (at best) engagement surveys and annual performance reviews have had their day. They provide a snapshot in time but don’t offer any real insight into employees’ views – the internal business is falling shamefully behind the external market. In the same way that people use TripAdvisor to share their opinions on travel, they want to do the same thing at work – instant feedback. Technology is delivering the solutions it’s only a matter of time before we see business adopting them more widely.
That’s it, four steps and you’ll be on your way to increasing engagement and helping to tackle the big issues of low productivity and a diminishing talent pool. It’s important for HR to be seen working at this strategic level and demonstrating the value that effective, commercially focused HR can add – tackling engagement will certainly do that.
Deborah Rees is a director of consulting at Innecto. As a Reward and Performance expert, Deborah has led multiple global projects in pay structure, variable pay design, total reward, performance management and reward strategy. Her clients range from SMEs to very large multinationals, who all have in common, a need to change and re-define their business to grow. She has also worked with organisations which are going through merger or acquisition scenarios and understands the particular issues they face.
Deborah has a depth of experience in the knowledge economy, particularly in financial services, retail, IT, television, professional services and sports; clients include ITV, Channel 4, Mothercare, Boden, Arsenal Football Club and Fox International Channels.
