Office of Chief Researcher

Employee Engagement in the Public Sector

ISSN 0950 2254 ISBN 978 0 7559 6614 1 web only publication www.scotland.gov.uk/socialresearch RR DONNELLEY B51563 4/07

Office of Chief Researcher

A review of literature

EMPLOYEE ENGAGEMENT IN THE PUBLIC SECTOR A REVIEW OF LITERATURE 4-consulting 15 Palmerston Road Edinburgh EH9 1TL in association with DTZ Consulting & Research One Edinburgh Quay 133 Fountainbridge Edinburgh EH3 9QG

Scottish Executive Social Research May 2007

This report is a web only publication. It is available on the Scottish Executive Social Research website www.scotland.gov.uk/socialresearch.

The views expressed in this report are those of the researcher and do not necessarily represent those of the Department or Scottish Ministers.

© Crown Copyright 2007 Limited extracts from the text may be produced provided the source is acknowledged. For more extensive reproduction, please write to the Chief Researcher at Office of Chief Researcher, 4th Floor West Rear, St Andrew’s House, Edinburgh EH1 3DG

CONTENTS SUMMARY

1

Employee engagement Drivers of engagement Variations in employee engagement Modelling engagement Impact of engagement Measuring and monitoring engagement Conclusions on the literature CHAPTER 1

INTRODUCTION

Objectives of literature review Literature review methodology Report structure CHAPTER 2 EVOLUTION AND DEFINITION OF EMPLOYEE ENGAGEMENT Introduction Evolution of the concept Definitions of employee engagement Summary and key findings CHAPTER 3 UNDERSTANDING EMPLOYEE ENGAGEMENT IN THE PUBLIC SECTOR Introduction Variations in employee engagement process Variations in employee engagement outcomes Summary and key findings CHAPTER 4

INTERPRETATIVE MODELS OF EMPLOYEE ENGAGEMENT

Introduction Modelling engagement The role of engagement in organisational outcomes Organisational variations Employee variations Summary and key findings CHAPTER 5

EMPLOYEE ENGAGEMENT IMPACT ASSESSMENT

Introduction Belief in engagement Extent of engagement Cost of engagement Summary and key findings CHAPTER 6

MEASUREMENT AND MONITORING OF EMPLOYEE ENGAGEMENT

Introduction Measurement at the recruitment stage Measurement among existing employees Monitoring engagement Summary and key findings

1 1 2 2 2 3 3 4 4 4 5 6 6 6 9 14 15 15 15 16 19 20 20 20 27 30 31 33 36 36 36 37 41 43 45 45 45 46 51 52

CHAPTER 7 CRITICAL ASSESSMENT OF THE LITERATURE ON EMPLOYEE ENGAGEMENT Introduction Key Findings in the literature Gaps and shortcomings of the literature Overall conclusions

53 53 53 55 56

ANNEX A

BIBLIOGRAPHY

57

ANNEX B

DETAILS OF LITERATURE SEARCH AND SCREENING

63

Literature search methodology Screening Process & Analysis ANNEX C

SCREENING FRAMEWORK

63 64 65

SUMMARY Early in 2007, 4-consulting in association with DTZ Consulting & Research was commissioned to undertake research on the importance of employee engagement within the public sector and how the Scottish Executive could improve the engagement of its employees. A staged approach was adopted as follows: •

Stage 1 – a literature review of employee engagement covering both the public and private sectors

•

Stage 2 – a review of the current status of employee engagement in the Scottish Executive and ways this could be improved.

This summary provides an overview of the key findings from the Stage 1 literature review. Employee engagement The literature on employee engagement builds on earlier research and discussion on issues of commitment and Organisational Citizenship Behaviour (OCB), but means more than what these terms encapsulate. The defining distinction is that employee engagement is a two-way interaction between the employee and the employer, whereas the earlier focus tended to view the issues from only the employee’s point of view. Definitions of engagement, or characteristics of an engaged workforce, focus on motivation, satisfaction, commitment, finding meaning at work, pride and advocacy of the organisation (in terms of advocating/recommending either the products or services of the organisation, or as a place to work). Additionally, having some connection to the organisation’s overall strategy and objectives and both wanting and being able to work to achieve them, are key elements of engagement. A recurring theme in the literature is the idea that engagement involves workers ‘going the extra mile’, and exerting discretionary effort over and above what is normally expected. Drivers of engagement It is clear that the organisation has a responsibility to lead engagement, and there are several key areas the organisation can address to encourage engagement among its employees. Leadership, effective management, open, two-way communication, pay and benefits, fair and equal treatment, employing the ‘right’ workforce, career development and training, working hours, and health and safety are all aspects of the work environment that organisations can control and influence and have been found to impact upon engagement levels. However, there is no ‘one size fits all’ model of engagement, and different employees will place different emphases on the extent to which they value each of these elements in return for ‘going the extra mile’.

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Variations in employee engagement The findings of this literature review suggest that there is no discernable difference between the dynamics of engagement within the public sector as opposed to the private sector. Rather differences in engagement levels result from organisational characteristics; in whichever sector that organisation sits. However, findings suggest that the public sector performs weaker in areas relating to strategic vision and change management, both of which are important to employee engagement. Engagement tends also to vary across individual and job characteristics, with minority ethnic employees and females found in some studies to have higher rates of engagement than men or those with a disability or medical condition. In general, managers and professionals have greater levels of engagement than their colleagues in supporting roles. Modelling engagement The models in the literature illustrate the factors that can affect engagement and how engagement impacts on the wider performance of the organisation. It is clear that there is no ‘one-size fits all’ model of engagement. However, what can be concluded is that the primary driving force behind engagement is the organisation, its view of engagement and how it acts to create an environment conducive to engaging employees. Important areas in which the organisation can work to improve engagement include training and career development, effective management, promoting a clear strategic vision, communication, fair treatment, pay and benefits, job satisfaction, cooperation and trust. These factors vary between those that tend to be taken as given, and written explicitly into the contract of employment (i.e. pay and benefits) and those that are organisational-dependent, cannot be taken for granted and require the organisation to take an initiative (i.e. ensuring two-way communication, promoting a strategic vision and building trust). Secondary to this are some variations in individual employees, with different groups or individuals responding differently to the environment in which they work, as discussed above. Impact of engagement Regarding the impact of engagement, this study examined the general sentiment of the literature, the evidence available and several case study examples of organisations across the private and public sector. The impact of engagement (or disengagement) can manifest itself through productivity and organisational performance, outcomes for customers of the organisation, employee retention rates, organisational culture, and advocacy of the organisation and its external image. Whilst there are several caveats to some of the results (discussed below), it is clear that some of the major employers in the UK (Royal Bank of Scotland (RBS) and the NHS for example) are taking employee engagement seriously and are actively implementing measures to increase engagement levels.

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Measuring and monitoring engagement Measuring the extent of engagement within an organisation is usually achieved through an employee survey. However, the real value in such a survey lies in the extent to which the results are used as a basis to identify the organisation’s strengths and weaknesses so that the necessary corrective actions can be taken. Although none of the literature covered explicitly referenced a monitoring framework, several methods to continually observe and measure engagement level were noted and included recurring surveys, focus groups, online communication, and in the case of RBS, an extensive human capital model. Conclusions on the literature It is concluded that the literature reviewed is more or less consistent in its view of employee engagement, in that the nature of engagement as a two-way interaction between employee and employer is emphasised as is the growing importance and relevance of engagement to organisational outcomes. However, it must be noted that these conclusions are drawn within the context of the type of literature available on the subject. Many of the authors in this field are either researching organisational experience and/or are responsible for the implementation of management consultancy solutions and therefore cannot be considered as strictly independent. There tends to be limited consideration of the costs of driving up employee engagement, although considerable attention is given to quantifying the benefits.

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CHAPTER 1

INTRODUCTION

1.1 Early in 2007, 4-consulting in association with DTZ Consulting & Research was commissioned to undertake research on the importance of employee engagement within the public sector and how the Scottish Executive could improve the engagement of its employees. A staged approach was adopted as follows: •

Stage 1 – a literature review of employee engagement covering both the public and private sectors

•

Stage 2 – a review of the current status of employee engagement in the Scottish Executive and ways this could be improved.

The focus of this report is to present the findings of the Stage 1 literature review. Objectives of literature review 1.2 Through discussion with representatives of the Office of the Chief Researcher (OCR), it was agreed that the research would focus on the following areas: •

Setting the context of employee engagement in terms of its definition, historical development and context within the private and public sectors

•

Understanding employee engagement in the public sector and the extent to which it varies compared to the private and voluntary sectors1

•

Reviewing interpretative models of employee engagement and their applicability to the public sector. The use of case studies should be used to give evidence of the practical application of employee engagement principles

•

Examining the impact that commitment to the employee engagement process has on outcomes such as efficiencies within the organisation

•

Establishing how employee engagement can be measured and monitored.

Literature review methodology 1.3

Our methodology was structured in three phases as follows: •

Search process – the identification of potentially relevant literature – this is the development of the ‘long list’

•

Screening process – the review of documentation on the long list to derive a ‘short list’ of the most relevant and seminal publications

•

Analysis – the process by which the literature was analysed

Each element in this methodology is described in more detail in Annex B. 1

It should be noted however that the literature did not explicitly reference the voluntary sector and the report reflects this by drawing on the available evidence for the public and private sectors only.

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Report structure 1.4 Chapter 2 provides an overview of employee engagement and discusses how the concept has evolved through the literature, which enables definitions of employee engagement to be drawn out. It is demonstrated in Chapter 2 that employee engagement builds on earlier models of employee commitment, motivation and organisational citizenship behaviour, but is usually taken in the literature to go beyond these ideas. The key distinction often drawn is that engagement is a two-way interaction between the employee and the organisation, and that employees can be motivated and committed without necessarily engaging with the organisation. 1.5 Chapter 3 discusses the nature of the public sector with regard to its characteristics and the applicability of employee engagement vis-à-vis the private sector. This important assessment informs the discussions in the following Chapters which look at modelling engagement, quantifying its impact and measuring levels of employee engagement. Given that much of the relevant research and survey analyses that form the basis of these discussions have been carried out solely on the private sector or cover both sectors, it is necessary to examine the validity of interpreting results in terms of the public sector and translating lessons learned from the private to public sector. 1.6 Chapter 4 looks at the various models that attempt to model the drivers of engagement. Since engagement is considered in much of the literature to involve employees ‘going the extra mile’ or exerting discretionary effort, it is important to understand what motivates employees to work above and beyond the normal call of duty and what employees consider important rewards in return for the extra effort. Understanding what drives engagement from an employee’s point of view is key for an organisation that wishes to increase engagement among its staff in a resource-efficient way. This helps to understand how organisations can lead and encourage engagement. In the main the models outlined in Chapter 4 are based on research and survey outcomes, and examples are provided across the public and private sectors. 1.7 Chapter 5 builds upon the models outlined in the previous Chapter and discusses some of the outcomes and impacts of employee engagement. As is highlighted, far from being an abstract concept, employee engagement is measurable and has real impacts upon the activities, outputs and outcomes of organisations. These impacts can be seen not only through effects on ‘bottom line’ financial outputs, but also in terms of productivity; the organisation or department ‘climate’; the organisation’s ability to achieve its strategies and outcomes; and in the case of the public sector, on the public’s opinion and trust in that organisation. Examining the evidence, sentiment and several case study examples leads to a discussion on the importance of employee engagement. 1.8 Chapter 6 looks at methods by which employee engagement can be measured and discusses the best practice emerging in the literature in this regard. As is the case throughout this report, it is important that this discussion assesses the applicability of these measurement tools across the public sector, as many will originate, or have been tested in the private sector. 1.9

Chapter 7 concludes the report with a summary of the key findings.

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CHAPTER 2

EVOLUTION AND DEFINITION OF EMPLOYEE ENGAGEMENT

Introduction 2.1 The purpose of this chapter is to review how employee engagement is defined in the literature in order to identify if a clear and common idea of what engagement is can be drawn out. Firstly the evolution of employee engagement as an increasingly popular concept is discussed. This allows us to build a picture of engagement, and demonstrate how it means more than earlier concepts of commitment, motivation or organisational citizenship behaviour (OCB). Next this chapter discusses the definitions of employee engagement throughout the literature and highlights the key characteristics by which an engaged workforce can be identified. Evolution of the concept 2.2 ‘Employee engagement’ is a relatively new term in HR literature and really started to come to prominence from 2000 onwards. Melcrum Publishing (2005) found that from a global survey of over 1,000 communication and HR practitioners 74% began to formally focus on the issue between 2000 and 2004. 2.3 Having reviewed an extensive amount of literature, the commentary on the evolution of employee engagement is summarised by the following points: •

It builds upon and goes further than ‘commitment’ and ‘motivation’ in the management literature (Woodruffe, 2006 as cited in CIPD, 2006a)

•

A desk review undertaken by Rafferty et al (2005) indicates that it originated from consultancies and survey houses rather than academia

•

The level of interest it has generated indicates that it is more than a passing management fad and a considerable amount of research and analysis has been conducted in the last 10 years or so building up our understanding of the term.

2.4 As pointed out in Rafferty et al (2005), the concept of employee engagement has as its foundation, two well-researched precursors – employee commitment and organisational citizenship behaviour.

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2.5 Commitment literature - Silverman (2004) (paper presented as Appendix 1 in Robinson et al 2004) discusses the different directions the study of employee organisational commitment (see definitions below) has taken over the previous decade, noting that more recent research emphasises the multidimensional nature of commitment that implies commitment cannot be realised through one single human resource (HR) policy. In other words, people are motivated by a range of factors, and these differ from person to person. The earlier commitment literature, which discusses the various kinds of commitment and the impacts of a committed workforce, lays the foundation for understanding of engagement and the evolution of the concept. As is discussed later, commitment and engagement are not considered to be one and the same. Whilst commitment is an important element of engagement, engagement is considered to be more than just employee commitment. 2.6 Tamkin (2005) reviews commitment in the literature and highlights an early model by Allen and Meyer (1990), which defines three types of commitment: •

Affective commitment – employees feel an emotional attachment towards an organisation;

•

Continuance commitment – the recognition of the costs involved in leaving an organisation; and

•

Normative commitment – the moral obligation to remain with an organisation.

2.7 As noted by Tamkin (2005), not all of these forms of commitment are positively associated with superior performance – employees who feel high continuance commitment for whatever reason, but lower levels of affective and normative commitment are unlikely to produce huge benefits for the organisation. 2.8 The closest relationship with engagement is ‘affective’ commitment as explained by Silverman (2004) (paper presented as Appendix 1 in Robinson et al 2004). This type of commitment emphasises the satisfaction people get from their jobs and their colleagues, and the willingness of employees to go beyond the call of duty for the good of the organisation. It also goes some way towards capturing the two-way nature of the engagement relationship, as employers are expected to provide a supportive working environment. 2.9 This point is expanded upon by Meere (2005), who highlights that organisations must look beyond commitment and strive to improve engagement, as it is engagement that defines employees’ willingness to go above and beyond designated job responsibilities to promote the organisation’s success.

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2.10 Organisational Citizenship Behaviour (OCB) literature – this predates employee engagement, but is highly relevant to it. The review of OCB literature by Barkworth (2004) (paper presented as Appendix 2 in Robinson et al 2004) defines its key characteristic as behaviour that is discretionary or ‘extra-role’, so that the employee has a choice over whether they perform such behaviour. These behaviours include voluntarily helping of others, such as assisting those who have fallen behind in their work, and identifying and stopping workrelated problems in the first place. As these types of behaviour are not normally part of the reward system, absence of such behaviours is therefore not punishable by the organisation but performance of them should lead to effective running of it. 2.11 Over 30 different forms of OCBs have been identified and defined and these have been classified by Podsakoff et al. (2000) in Barkworth’s paper (2004) (paper presented as Appendix 2 in Robinson et al) into seven themes: •

Helping behaviour – voluntarily helping others

•

Sportsmanship – being able to carry on with a positive attitude in the face of adversity and being willing to set aside personal interests for the good of the group

•

Organisational loyalty – promoting the organisation to the outside world, and staying committed to it, even when doing so could involve a personal sacrifice

•

Organisational compliance – following organisational rules even when not being monitored

•

Individual initiative – demonstrating performance over and above what is expected

•

Civic virtue – macro-level interest in the organisation as a whole, such as a loyal citizen would display towards their country

•

Self-development – voluntarily improving one’s own knowledge, skills and abilities in such a way as to be helpful to the organisation.

2.12 OCB links very strongly to employee engagement as it focuses on securing commitment and involvement which lies outside contractual parameters – often referred to as the individual ‘going the extra mile’. 2.13 In terms of the impact of OCBs on organisational effectiveness, three behaviours: helping behaviour, sportsmanship and civic virtue, appear to lead to performance gains. The fact that helping behaviour was not beneficial in all studies2 raises the issue of the context in which the behaviours are to occur, as they will not be suitable in all situations.

2

As it may be the case that whilst it may improve the performance of those receiving help, it takes up the time of the person helping, thus reducing their potential output.

8

2.14 Further, Barksworth (2004) (paper presented as Appendix 2 in Robinson et al 2004) notes research by Organ and Ryan (1995), which found that attitudinal variables such as job satisfaction, organisational commitment, fairness and leader supportiveness all have a positive relationship with OCB. Task-related variables are also identified in this literature as important antecedents to OCB. Barksworth (2004) (paper presented as Appendix 2 in Robinson et al 2004) quotes Podsakoff’s (2000) findings that such variables as feedback and satisfying tasks are significantly correlated to altruism, courtesy, conscientiousness, sportsmanship and civic virtue. 2.15 Variables that have a negative relationship include breach of the psychological contract3, abusive supervision and task routinisation. All of these issues are, in some way, linked to leadership style and behaviour, either directly or more subtly. Therefore, the obvious starting point in trying to harness OCB should be from the top-down, as the impact made by leaders and managers does seem to affect the demonstration of OCB. This finding links strongly to the role of management in securing engagement – see later discussion. 2.16 How does employee engagement differ? It appears that engagement, although sharing strong characteristics with each of these two concepts is about more than commitment and/or OCB on their own. Rafferty et al (2005) draw the distinction on the basis that engagement is a two-way mutual process between the employee and the organisation. Sharpley (2006) (as cited in Harrad 2006) also points out that it is important to distinguish between motivation and engagement, as it is possible to be motivated in one’s job without necessarily feeling an attachment to the organisation. In Sharpley’s (2006) (as cited in Harrad 2006) definition of engagement there must be a mutual feeling of support between the employee and the organisation. Definitions of employee engagement 2.17 As discussed above, it would seem that when engagement is talked about, it refers to a multidimensional concept that involves some kind of two-way interaction between the employee and the organisation. As the literature notes, employees can be motivated and committed to their jobs, without necessarily engaging with the overall strategies and objectives of the organisation, or without really feeling the wider impact of their efforts. 2.18 Most of the literature employs a multidimensional approach to defining employee engagement, where the definition encapsulates several elements required in order to achieve ‘true engagement’. For example, the CIPD (2007a) defines employee engagement as a combination of commitment to the organisation and its values plus a willingness to help out colleagues. According to this view, engagement is about more than job satisfaction and is a more complex concept than motivation. Similarly, Schmidt (2004) defines engagement as bringing satisfaction and commitment together. Whilst satisfaction addresses more of an emotional or attitudinal element, commitment brings in the motivational and physical elements. Schmidt (2004) contends that while satisfaction and commitment are the two key elements of engagement, neither on their own is enough to guarantee engagement.

3 CIPD (2007b) The Psychological Contract, employs the definition of the psychological contract as produced by Guest and Conway (2002) whereby the contract refers to “the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other”.

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2.19 Ellis and Sorenson (2007) point to the inconsistent way in which the term engagement has been applied by business leaders and human resource (HR) professionals over the last 20 years. They highlight the inconsistency of using the term to refer to attitudes or to employee perceptions of specific elements of their work environment or benefits, which they feel have ‘little’ to do with engagement. They endorse a two dimensional definition of engagement that defines an engaged employee as one who 1) knows what to do at work and 2) wants to do the work. It is their strong view that engagement should always be defined and assessed within the context of productivity, and that the two elements of engagement noted above are necessary for driving productivity. 2.20 Right Management (2006) defines true engagement as every person in the organisation understanding and being committed to the success of the business strategy, and that this goes beyond more than just simple job satisfaction and incorporates aspects of commitment, pride and advocacy about the organisation’s products and brand. Whilst the onus is on the organisation to manage communication effectively to involve employees and align them with the organisation, this clearly requires input and feedback from employees as well to make the process work. 2.21 The CIPD Annual Survey report (2006c) defines engagement in terms of three dimensions of employee engagement: • • •

Emotional engagement – being very involved emotionally in one’s work; Cognitive engagement – focusing very hard whilst at work; and Physical engagement – being willing to ‘go the extra mile’ for your employer.

2.22 The survey report states that the very engaged will go one step further and speak out as advocates of their organisation, in what they describe as a ‘win-win’ situation for the employee and the employer. 2.23 Some authors discuss the varying degrees of engagement employees can experience. Meere (2005) describes three levels of engagement: •

Engaged - employees who work with passion and feel a profound connection to their organisation. They drive innovation and move the organisation forward;

•

Not engaged – employees who attend and participate at work but are timeserving and put no passion or energy into their work; and

•

Disengaged – employees who are unhappy at work and who act out their unhappiness at work. According to Meere (2005), these employees undermine the work of their engaged colleagues on a daily basis.

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2.24 Buchanan (2004) describes the difference between rational commitment and emotional commitment. Rational commitment results when a job serves employees’ financial, developmental or professional self-interest. In contrast, emotional commitment, which has four times the power to affect performance as its more pragmatic counterpart, arises when workers value, enjoy and believe in what they do. According to the figures of the Corporate Leadership Council quoted by Buchanan (2004), about 11% of the workforce are classified as ‘true believers’ and demonstrate very high levels of both commitment types; another 13% at the other end of the normal distribution curve demonstrate little commitment and are classified as the ‘disaffected’. 2.25 In much of the literature, the definition of engagement is illustrated by the behaviour of good practice employers and the characteristics of engaged employees. Therefore, to summarise, Table 2.1 highlights the following key elements that are common across much of the literature. These have been categorised in terms of what elements can be classified as drivers of engagement and those that are the results of engagement and the characteristics of an engaged workforce. 2.26 The factors that determine engagement are primarily driven by the organisation, and it is the extent to which the organisation takes these issues on board and addresses them in an effective manner than will influence engagement levels. Of course engagement is a two-way process and whilst engagement is organisation-led, it requires inputs from the employee as well. It is explored in later chapters how employees place different values on these factors and also how these driving factors can potentially vary across demographic variables. 2.27 It was interesting to note that at no stage did the literature make any reference to how these characteristics might vary between the public and private sectors. As discussed in the next Chapter, on the occasions where the literature discussed sectoral applicability, it unanimously suggests that the key principles of employee engagement transcend all organisations irrespective of sector.

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Characteristics Defining Employee Engagement

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Definition Characteristics Description Drivers/inputs into engagement Two-way relationship • “Similarity to the psychological contract – unwritten, underpinned by trust – easy to break.” between employee and • “Organisations have to work to engage employees – and may have to put in a lot to reach their goal of employer a committed, enthusiastic and engaged workforce” • “An important point to note is that engagement is two-way; organisations have to work to achieve it.” Business appreciation & • “Employees must understand the context in which the organisation operates. It is insufficient for vision employees to be committed to their organisation; they also need an element of business appreciation, so that any changes they make to their jobs could be seen to have business benefits.” • “Of course, when you have the right people you have the trouble of creating ways of letting them know what is going on in the business and where they fit in …‘line of sight’ – in regards to business goals and objectives.” • “Knowing what to do at work – understanding the organisation’s vision of success and how the employee can contribute to achieving that vision…” • “We also have it confirmed here that communication – knowing what’s going on, what’s planned and why – is crucial. • “The report describes a group of people who receive a clear vision, are inclined to support the organisation’s objectives, and who are also highly engaged.” • “Fundamentally, good internal communications should be about effective transfer of knowledge or meaning within the organisation, so that people understand and support the organisation’s business goals – it’s not just about ‘broadcasting to the troops’.” Employee Involvement • “We talk more about words like ‘involve’, ‘participate’ and ‘respond’ rather than ‘engage’. That means creating shared meaning and understanding in a way that our people actively want to participate.” (BBC case study) • “These are interesting findings and can be taken to emphasise that people want a sense of involvement – or being to some extent in a partnership with their employer.” ‘Elbow room’ / • “….give them lots of opportunities to contribute….” discretionary behaviour • “… people who have reasonable autonomy in doing their job, sometimes called ‘elbow room’, and who find their job challenging are likely to have high levels of job satisfaction….” Effective Communication • “…employees having a voice – being able to express their opinion upwards to their manager and beyond.” • Ref management style – “…keeps the person in touch with what is going on. Listening to suggestions.” • “The main drivers of employee engagement are: having opportunities to feed your views upwards; and feeling well informed about what is happening in the organisation….”

Table 2.1

CIPD (2006a) CIPD (2006b)

CIPD (2006a)

Buchanan (2004) CIPD (2006a)

CIPD (2006a)

Melcrum Publishing (2005)

Investors in People IIP UK (2006)

CIPD (2006a)

CIPD (2006a)

Christian, M. et al (2007) Segal/Sibson (2006)

Penna Consulting (2006)

Robinson et al (2004) CIPD (2005) Robinson et al (2004)

Robinson et al (2004)

Sources

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Description • “… challenges you to raise the level at which you communicate with your people, making the dialogue increasingly two-way and giving people a greater say and stake in decisions which affect them.” Management • “This points to the primacy of the quality of the relationship between employee and supervisor, sometimes called ‘leader-member exchange’.” • “Managers themselves have to show commitment to the organisation, what we would call ‘committed leadership’.” • “…engagement, which is influenced by …..management capability – reflected in professional, fair and impartial behaviour. It is possible to be motivated in one’s job without necessarily feeling an attachment to the organisation or the management… however, a feeling of engagement requires a wider sense of supporting and being supported by the organisation.” Results of engagement/characteristics of an engaged workforce: Employee identification • “Employees need to believe in its [organisation’s] products and services, and particularly its values” with the organisation Commitment • “Wanting to do the work – obtaining a sense of satisfaction from the job and work content and being inspired by the organisation to perform the work.” • “Employee engagement, or ‘passion for work’, involves feeling positive about your job, as well as being prepared to go the extra mile to make sure you do the job to the best of your ability.” Pride & Advocacy • “…people’s commitment, pride and advocacy (what employees say about company products, services and brand).” • “We believe that the pride taken in working for their employer, and their willingness to recommend their employer as a place to work to friends, are excellent barometers of engagement and meaning” • “Engaged employees will help promote the brand and protect the employer from the risks associated with poor levels of service…..similarly, a strong employer brand will help in attracting and retaining employees”

Definition Characteristics

CIPD (2007a)

Penna (2007)

Right Management (2006)

Segal/Sibson (2006) CIPD (2006b)

Robinson et al (2004)

Sharpley (2006) (as cited in Harrad 2006)

CIPD (2006a)

CIPD (2006a)

Sources IIP UK (2006)

Summary and key findings •

The evolution of employee engagement lies in work on employee organisational commitment and organisational citizenship behaviour.

•

Although elements of these ideas are important to engagement, engagement is viewed in the literature to mean more than either implies. ‘Going the extra mile’, providing discretionary effort, being aligned to the organisation’s objectives, being capable of delivering the results and wanting to deliver results for the good of the organisation are defining characteristics of the engaged employee. Reflecting the two-way dynamic of engagement, capability arises from the employee’s own abilities but must also be supplemented by the employer providing an environment conducive to allowing the employee to work at their potential level.

•

The key elements that underpin a definition of ‘employee engagement’ include:

Drivers of engagement -

A two-way relationship between the employer and employee

-

The importance of the individual being able to align themselves to the products, services and values of the organisation

-

The ability of the organisation to communicate its vision, strategy, objectives and values to its staff so that they are clearly understood

-

Management give staff sufficient ‘elbow room’ and autonomy to let them fulfil their potential

-

The employer is highly effective at engaging in two-way communication with its staff, in particular encouraging upward communication

-

Lastly, that management from the top to the bottom of the organisation are ‘committed leaders’ and that the key role of the immediate line manager/supervisor is recognised as one of the most important conduits to achieving effective employee engagement.

Outcomes of engagement -

Staff are able to get ‘involved’ in the organisation and feel that they are genuinely participating and contributing to its performance

-

Staff have a pride in their organisation and endorse it as a place to work and do business with to people outside the organisation

-

Staff demonstrate real commitment to their job and the organisation and are prepared to ‘go the extra mile’.

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CHAPTER 3 UNDERSTANDING EMPLOYEE ENGAGEMENT IN THE PUBLIC SECTOR Introduction 3.1 The objective of this Chapter is to review the extent to which employee engagement varies between the public and private sectors. This was examined on two levels: •

Are there any fundamental differences in how employee engagement operates between the public and private sectors that would impact on interpretative models? In particular, do the drivers of employee engagement vary between the two sectors? And

•

What evidence, if any, is there on the effectiveness of employee engagement between the public and private sectors? Are there any marked differences between the sectors in terms of how engaged staff are?

Variations in employee engagement process 3.2 From our analysis of the models presented in Chapter 4, the differences between the public and private sectors have no impact whatsoever on how employee engagement works. This reflects the fact that the positive factors impacting on employee engagement apply with equal weight to the public and private sectors. In particular this includes: •

The importance of providing high quality management, especially at supervisory and immediate line management level

•

The importance of having a strong organisational vision and clarity in goals that are clearly articulated and communicated to staff at all levels

•

The importance of engaging in effective two-way communication between the organisation and its staff

3.3 No interpretative model (see Chapter 4 for details) of the employee engagement process assessed as part of the literature review has drawn any sectoral distinction: they are generic across all organisational types in the public and private sectors. This is a key finding of the literature review. 3.4 However, the employee engagement outcomes do vary according to a range of factors reflecting organisational and employee characteristics. The aspiration to find a ‘one size fits all’ model does not apply, either to all individual employees or to all organisations. These variations are discussed below.

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Variations in employee engagement outcomes 3.5 There is a surprisingly limited amount of research commenting on variances in employee engagement between the public and private sectors. This may relate to the fact that there is more in common between the sectors than there is variation and the principles of engagement tend to be generic across both sectors. The literature reviewed tends to highlight the relatively strong performance of the public sector in terms of job specific parameters (i.e. public sector workers are more likely to receive compensation for working extra hours, and find their work more worthwhile and personally meaningful) but its weaker performance in the critical employee engagement drivers such as strategic vision and management. For example, CIPD (2006c) in a national survey of 2,000 UK employees found the following: •

Hours worked – there are no differences between the public and private sectors in terms of hours worked. However, public sector workers are more likely to receive some compensation for working extra hours than those in the private sector;

•

Work-life balance – one would have expected that public sector workers would be receiving more help from their employer to achieve a good work-life balance, but actually there is no difference;

•

Employer negatives – public sector employees are more negative about their employers than their private sector counterparts, reporting that: -

They experience more bullying and harassment than those in the private sector

-

They are less satisfied with the opportunities they have to use their abilities

-

They are more stressed and under more pressure

-

They are more critical of their organisation

-

They are less likely to feel their senior managers have a clear vision for the organisation

-

They have less trust and confidence in their senior managers; and

-

They are also less likely to believe organisational communication.

•

Job positives – however, the public sector ethos is reflected in the fact that more public sector workers find their work worthwhile and personally meaningful. This is an important finding, as it is discussed later in Chapter 4, that Penna (2007) presents a model whereby ‘meaning at work’ is at the apex of the model, and one of the most important factors in driving engagement.

•

Individual/employee performance outcomes – public sector workers rate their own performance lower than private sector employees and are more likely to have taken more sick leave in the last year.

16

3.6 Ipsos MORI (2006) has highlighted the need for public sector organisations to improve the way in which they manage change and develop leadership capability. It is discussed later how engagement can help organisations manage change (see the Cambridgeshire County Council case study which highlights how engagement was brought in to assist a large and difficult change in the Council). Drawing upon research data from over 200 of the UK’s leading organisations, an analysis by sector shows that in many areas there is typically little difference in employee attitudes. However, in core aspects of working life (ref. ‘job positives’ above), public sector staff tend to be happier with: •

Job security

•

Being paid fairly and their pay reflecting level of performance

•

Training and development opportunities

•

The feedback they receive from line managers

•

Working hours.

3.7 As a result of the research, Ipsos MORI (2006) conclude that public sector employees are more likely to feel that the work they do is interesting and, in general, perceive a greater feeling of morale where they work. 3.8 In contrast, the public sector usually trails the private sector in two key areas: change management and leadership capability (this is despite the fact that public sector employees report a greater level of contact with senior management). The Ipsos MORI (2006) research found that whilst around three-quarters of employees in both sectors understand the need for change, there is a large disparity in terms of those who support the need for change – with 75 per cent of employees in the private sector supporting the need for change, compared to 65 per cent in the public sector. Moreover, public sector employees are significantly more likely to feel that some of the changes being implemented are unnecessary: they believe that “there is too much change for change’s sake”. Thus it is imperative that managers fully engage staff in understanding the rationale for change, rather than just communicating the change to them, and support employees through the change process. 3.9 In terms of the more practical aspects of change management, again public sector employees are more critical. A quarter of private sector employees, compared to just 15 per cent of public sector employees, believe that change is well managed in their organisation: see Figure 3.1.

17

Figure 3.1

Perceptions of Change Management by Sector

Source: Ipsos MORI (2006)

3.10 The Ipsos MORI (2006) research highlights other areas in which public sector staff are usually more critical than their private sector counterparts: •

Receiving recognition for good performance and providing opportunities for employees to let the organisation know how they feel about things that affect them in their work

•

Having adequate /sufficient facilities or resources to do their work effectively

•

The belief that their organisation puts customers first

•

Confidence that they are working for a successful organisation.

3.11 As a consequence, the public sector tends to trail the private sector in core areas that can lead to enhanced employee engagement, such as clarity of direction, effective communication and management. The conclusion of this research is that the public sector needs to concentrate more on how it manages change and develops leadership capability, to contribute to delivering the Public Sector Reform Agenda effectively.

18

3.12 These findings in the UK are supported by research in Canada conducted by the Auditor General of British Columbia (Office of the Auditor General of British Columbia, April 2002). The British Columbia public service received an engagement rating of 59 per cent compared to 79 per cent for the top 50 companies to work for in Canada (Hewitt Associates: The 50 Best Companies to Work for in Canada, as cited in Office of the Auditor General of British Columbia 2002). In comparison to the leading private sector companies, British Columbia’s public service employees are relatively happy with their work, are just as committed to staying with their employer, but due to a climate of distrust, a lack of confidence in their managers, and a feeling that the public hold a negative view of them as workers, they are not as proud of where they work. Only 43 per cent would highly recommend their department to a friend seeking employment, compared to 86 per cent in the comparison group. Again the public sector compares favourably in job content, but is weak in terms of organisational identity and advocacy amongst staff. Summary and key findings •

No interpretative model (detailed in Chapter 4) of the employee engagement process that has been reviewed has drawn any sectoral distinction: they are generic across the public and private sectors.

•

However, the employee engagement outcomes do vary according to a range of factors reflecting organisational and employee characteristics. The aspiration to find a ‘one size fits all’ model does not apply.

•

In general, public sector employees are more satisfied with their job characteristics, but are significantly less satisfied with key drivers of employee engagement compared to the private sector.

•

These weaknesses include lack of orientation to organisational objectives and lack of advocacy.

•

However, variations in employee engagement within sectors are far more significant and important than any reported variations between the public and private sectors. The challenge is for employers to understand the importance of employee engagement within their own organisation and to address it effectively. These issues are addressed in more detail in Chapter 4.

19

CHAPTER 4 INTERPRETATIVE MODELS OF EMPLOYEE ENGAGEMENT Introduction 4.1 This chapter looks at the models of engagement as found throughout the literature. It was highlighted in Chapter 2 that from an employer’s point of view, engagement is often about employees ‘going the extra mile’ or exerting ‘discretionary effort’. It was also discussed that many of the factors that drive engagement are under the control of the organisation. However, employees will place different emphasis on the extent to which they value each of these factors in exchange for their discretionary effort. This chapter therefore examines the models of engagement in the literature to determine what the key drivers of engagement are, and the extent to which employees value these, and what employees find connects them to the organisation, motivates them to perform above and beyond expectations and compels them to actively promote the interests and objectives of the organisation. 4.2 Although the organisation has primary responsibility for leading engagement, there are also secondary employee and job specific factors which can affect levels of engagement. These are also discussed in this chapter to provide a more comprehensive picture of the factors that determine engagement. The findings are presented under the following headings: •

Modelling Engagement – a series of the most relevant interpretative engagement models are presented.

•

Role of Engagement in Organisational Outcomes – this section illustrates the mechanisms through which engagement can impact on organisational outcomes.

•

Organisational Variations – an analysis of the extent to which engagement varies between organisations.

•

Employee Variations – an analysis of the extent to which engagement varies between employees.

Modelling engagement 4.3 As highlighted by CIPD (2007a) there is no definitive all-purpose list of engagement drivers. There are many individual and organisational factors that determine whether employees become engaged, and to what extent they become engaged. This section highlights the models that illustrate these factors and the importance that employees place on them in becoming engaged. 4.4 The approach to employee engagement, discussed by Robinson et al (2004), stresses the importance of ‘feeling valued and involved’ as a key driver of engagement. Within this umbrella of feeling valued and involved there are a number of elements that have a varying influence on the extent to which the employee will feel valued and involved and hence engaged. Figure 4.1, which is based on a diagnostic model in Robinson et al (2004), illustrates the drivers of engagement suggested through a survey of over 10,000 NHS employees. Robinson et al (2004) state that this can be a useful pointer to organisations towards those aspects of working life that require serious attention if engagement levels are to be maintained or improved. 20

Figure 4.1

Robinson et al (2004) model of the drivers of employee engagement

Source: Robinson et al (2004)

4.5 Although tested within the NHS, the authors suggest that many of the drivers of engagement will be common to all organisations, regardless of sector. However as is discussed later in this chapter, engagement levels can vary according to demographic and job related factors. What is noted from the model above is that some of these factors are what would be fundamental or contractual requirements for the organisation (the ‘hygiene’ factors), such as pay and benefits and health and safety, whereas others are the areas where the organisation must ‘go the extra mile’ to ensure effective communication, management and cooperation. 4.6 Penna (2007) presents a hierarchical model of engagement factors (see figure 4.2), which illustrates the impact each level will have on the attraction, engagement and retention of talent. They propose a model with “meaning at work” at the apex, which they maintain is borne out by the research carried out into meaning at work. In this context, Penna (2007) defines meaning at work as the situation where a job brings fulfilment for the employee, through the employee being valued, appreciated, having a sense of belonging and congruence with the organisation and feel like they are making a contribution. In this model, as the hierarchy ascends and the organisation successfully meets each of these engagement factors, the organisation becomes more attractive to new potential employees and becomes more engaging to its existing staff.

21

Figure 4.2

Penna (2007) model of hierarchy of engagement

Meaning

Leadership Trust Respect Increasing engagement Opportunity Promotion Development

Learning and Development

Pay Working Hours Benefits

Source: Penna (2007)

4.7 Interestingly in this model the ‘hygiene’ factors appear at the foundation of the model, indicating the nature of these factors as a necessary, but not sufficient, building block upon which the organisation must further develop in order to engage staff. 4.8 Work by Schmidt (2004) (see figure 4.3) frames engagement within the context of organisational health and Workplace Well-Being4 (WWB). As discussed in Chapter 2, engagement is defined by Schmidt (2004) as the overarching label that brings employee satisfaction and commitment together. This model highlights the importance of commitment to the job as driven by job satisfaction, and also notes the importance of the supportive organisation. By creating the right conditions to generate high levels of employee engagement, the organisation can drive high performance – with high performance being defined as the achievement of the overarching public sector goal of advancing the public good. The model depicts the flow of organisational dynamics that begins with recruitment and moves through support for work, to workplace well-being, to engagement and finally to high levels of organisational performance.

4

Note that the author (Schmidt 2004) defines WWB as “a holistic approach to creating high performance organisations through establishing the right conditions to generate high levels of employee engagement. This approach assumes that achieving high levels of organisational performance depends on employees who are strongly committed to achieving the goals of the organisation, and who show this through their actions. This behavioural objective is influenced in turn by levels of employee satisfaction, and by supportive, respectful and healthy work environments.

22

Figure 4.3

Schmidt (2004) model of organisational dynamics in the public sector

Advancing the greater public good

High Levels of Organisational Performance

Employee Engagement

Workplace Well Being

Physical Health, Safety and Wellness and Work Supports

Recruiting and Retaining the Right Workforce

Source: Schmidt (2004)

4.9 This model implies that the foundations of engagement lie in policies to recruit and retain the right workforce (i.e. in terms of employing specific competences, knowledge and experiences required for success as well as diversity) and to promote health, safety, and wellbeing. Schmidt (2004) bases the model on a variety of studies and writings, implicit in which is the notion that it is WWB that drives engagement. CIPD (2007a) concurs with this view of the importance of well being, stating that engagement is ‘wholly consistent’ with an emphasis on employee well-being. 4.10 In Schmidt’s (2004) discussion, WWB itself is driven by commitment and job satisfaction, which in turn are determined by a number of factors. It is a similar idea to the model presented by Robinson et al (2004) where ‘feeling valued and involved’ was the key driver of engagement, but in turn was influenced to a varying degree by a range of factors. As is the case throughout much of the literature, Schmidt (2004) does not present a definitive list of the drivers of commitment and satisfaction (as the drivers of engagement) but reviews several studies and reports. Concentrating here on the studies presented by Schmidt (2004) that appear to be based on a more robust approach (e.g. regression analysis as opposed to theorising) the following results are of interest:

23

4.11 WorkUSA (2000) - This survey used regression analysis to identify the key factors affecting employee commitment: •

Trust in senior leadership

•

Chance to use skills

•

Competitiveness of rewards

•

Job security

•

Quality of company’s products and services

•

Absence of workplace stress

•

Honesty and integrity of company’s business conduct

4.12 ERIN Research - The Region of Peel (a large municipality in Ontario, Canada) carried out an employee survey in 2002. Schmidt (2004) advocates the robustness of the results, from the Canadian public sector, due to the use of ‘advanced statistical techniques’ and ‘excellent’ return rates on the survey of 72%. The survey identified job satisfaction and commitment as the drivers for the engagement model, with the following factors found to be important to each: Job satisfaction: •

A career path that offers opportunities for advancement;

•

Fair pay and benefits;

•

The perception that the municipality offers good value to customers;

•

A satisfactory work environment, as defined by: -

A reasonable workload; Good relations with immediate supervisor; Smoothly functioning organisational dynamics; Good relationships with colleagues; and Effective internal communication.

24

Commitment: •

Job satisfaction;

•

A career path that offers opportunities for advancement;

•

A positive perception of senior management; and

•

The perception that the municipality offers good value to customers.

4.13 The analysis of the survey found a correlation between satisfaction and commitment of 0.57 suggesting that the two concepts are related but deserve separate analysis. Further, what also emerges from these results is that satisfaction is a driver of commitment, but not vice versa, as commitment does not appear as a key factor in the analysis of what drives satisfaction. Management and communication 4.14 The importance of good management and effective communication has been highlighted as key vehicles through which employee engagement can be implemented. As Robinson et al (2004) highlight, organisations must work to engage employees and establish a two-way relationship between the employer and employee. Michelman (2004) notes that the defining contribution of great managers is that they boost the engagement levels of the people who work for them. Michelman (2004) suggests that they achieve this through concentrating on four core areas of managing people: •

Selection;

•

Expectation setting;

•

Motivation; and

•

Development

4.15 Michelman (2004) points out that in leading engagement, great managers will seek the right fit for a person’s talent, they work to see that employees are rewarded for their performance and they endeavour to ensure that talent is developed through progressively more challenging and meaningful assignments. 4.16 A research report into employee engagement by Melcrum Publishing (2005) based on a global survey of over 1,000 multinationals concluded that from an organisation’s point of view it is the senior executives that ‘set the tone’ of engagement in an organisation, whatever the size. There are a number of actions and strategies that senior management can make use of to inspire engagement among employees and motivate them to go the extra mile. The six top drivers of engagement from the senior management perspective were found to be:

25

•

Communicating a clear vision of the future

•

Building trust in the organisation

•

Involving employees in decision making that will affect them

•

Demonstrating commitment to the organisation’s values

•

Being seen to respond to feedback

•

Demonstrating genuine commitment to employee’s well being

4.17 The same Melcrum Publishing (2005) report also examined the role of line managers in encouraging engagement. In this regard, the survey results imply that ‘creating a climate of open communication’ is the single most important action for line managers in affecting levels of employee engagement, with 60% of those surveyed claiming it is the most important element. 4.18 Regarding the importance of communication, Moorcroft (2006) discusses the restructuring that took place at the Royal Bank of Canada (RBC) in 2004. It was noted at that time that there was a need to engage rather than inform employees and thus better align their performance with the organisation’s vision and business goals. Formerly, communication strategies had focused on informing employees and creating awareness. However a new strategy was designed by the company in order to engage employees (and thus generate desired behaviours) that would help create outcomes (measurable effects) in support of the organisation’s objectives. 4.19

The strategy has four key objectives: i)

Help employees develop a better understanding of how what they do relates to the organisation’s vision, strategies and goals;

ii)

Create a more dynamic and interactive communication environment that involves employees in thinking about and understanding how they can influence business results;

iii)

Ensure employees are getting the information they need to help frame and guide their day-to-day decisions; and

iv)

Promote and recognise communication.

the

26

desired

behaviours

and

outcomes

in

4.20

This strategy is illustrated by RBC in the following model:

Figure 4.4

RBC’s new model of employee communication ENGAGE Outcome

Business Value

Processes

Tactics INFORM

Source: Moorcroft (2006)

4.21 Moorcroft (2006) notes that the ‘old’ model was focused on developing tactics and methods by which to inform employees, or create awareness, of company news and objectives. However, the new model (see figure 4.4 above) is based on engaging employees in the communication process in order to achieve the desired outcomes and thus build the business value. This is achieved by helping employees have a better idea of how what they do impacts upon the organisation and by promoting behaviours that help achieve organisational objectives. Moorcroft (2006) reports that the changes to employee communications are beginning to show solid results, with employee alignment and engagement scores improving. Interestingly, the communication budget has actually been reduced at the same time, illustrating that a more focused and thought through strategy can result in better value for money. The role of engagement in organisational outcomes 4.22 This section discusses the models that illustrate the place of engagement in the wider operations of the organisation and the mechanisms through which engagement can impact on the wider context. 4.23 Although a review of the quantitative evidence is provided in Chapter 5, this chapter brings together the elements of various models that illustrate the nature in which engagement can have an impact upon the organisation. Heintzman and Marson (2006) use the private sector service-profit chain model as a basis for producing a public sector equivalent (see figure 4.5). They base the model on research carried out in Canada on what the top public sector challenges are, namely; •

Human resource modernisation;

•

Service improvement; and

27

•

Improving the public’s trust in public institutions.

4.24 Heintzman and Marson (2006) point out that the private sector has, for over a decade, documented the links between employee engagement and client satisfaction, and between client satisfaction and bottom line financial results. The authors note that the third element (the bottom line) cannot be transferred directly to the public sector but based on research on the link between public service outcomes and the public’s rating of overall government performance, they suggest the following public service value chain: Figure 4.5: Heintzman and Marson’s (2006) public sector value chain

Engaged Employees

Citizens’ Service Satisfaction

Trust & Confidence in public institutions

Source: Heintzman and Marson (2006)

4.25 Whilst Heintzman and Marson (2006) state that work is still underway to document the drivers of employee engagement with respect to this model they state that possible candidates (based on secondary research quoted within the paper) are: •

Support for the goals and mandate of the organisation;

•

Effective leadership and management;

•

Supportive colleagues and work unit;

•

Tools, authority and independence to do the job;

•

Career progress and development; and

•

Workload.

4.26 Heintzman and Marson (2006) cite emerging Canadian evidence that supports this concept. They suggest that by understanding the drivers of engagement and the link between engagement and performance of the institution, this tool can be used across public sector management to make significant improvements in employees’ work and in the overall performance and perception of the public sector. 4.27 A model produced by the CIPD (2006c) and presented in the organisation’s Employee Attitudes and Engagement Survey’ of 2006, brings various elements of employee engagement together in one overarching model (see figure 4.6). This then formed the basis of the survey, which was carried out across the private and public sectors.

28

4.28 The model, which illustrates the linkages and important factors in each of these elements, is provided below, with arrows indicating directions of influence: Figure 4.6: The CIPD (2006c) model of employee engagement model WORKING LIFE

ATTITUDES TO WORK

INDIVIDUAL FACTORS

OUTCOMES

MANAGEMENT, LEADERSHIP AND COMMUNICATION

ENGAGEMENT

Source: CIPD (2006c)

4.29 Individual factors are those such as gender, age, ethnicity and disability (discussed in more detail later in this chapter). Working life describes factors such as occupation, hours of work and pay, as well as important issues such as bullying or workplace harassment. 4.30 Management, leadership and communication refers to how employees view their managers and leaders, how much opportunity they have to participate in organisational decision making and levels of trust. As CIPD (2006c) highlights, these factors have been found in research to be very important in determining levels of engagement. This is also the area where managers can have an important influence. 4.31 Attitudes to work refers to employees’ perceptions of their jobs and includes levels of well-being, satisfaction, enthusiasm, commitment and loyalty. It is important to note here the two-way interaction in this model between attitudes to work and engagement. Whilst satisfaction, commitment, stress and loyalty factors feed into levels of engagement, it follows from the model that organisations that successfully engage their employees will engender greater levels of job satisfaction and loyalty, for example. 4.32 The engagement box itself refers to the CIPD’s (2006c) three types of engagement (as discussed in section 2.21 above) – cognitive, emotional and physical. Finally, in the model above, engagement and attitudes to work lead to outcomes for the organisation, in terms of individual performance, intent to quit and absence levels. The model was used by CIPD in their annual attitude and engagement survey, with the finding that there is in fact a lot that managers and leaders can do to drive up engagement. Levels of trust and confidence in senior management and line managers were found to be ‘disappointingly low’ in the survey, however CIPD (2006c) cites this as an opportunity for managers to evaluate how their own organisation compares with the national sample and to consider how best to harness the engagement levels of their own workforce.

29

Organisational variations 4.33 The literature has highlighted that the primary responsibility for leading engagement, and influence over the factors that determine engagement, lies with the organisation. Whilst no evidence of difference has been found between the dynamics of engagement between the private and public sectors, what the literature does reveal is that the variations within sectors are in fact far more significant. In short, it appears that there is a clear distinction between leading edge organisations that are strong in employee engagement and the majority that are either ignorant of the subject or which are failing to address the matter effectively, irrespective of whether they are in the public or private sector. This section highlights some examples of this through case study evidence. 4.34 The literature identified a number of case studies of good practice in both the public and private sectors that were being held up as exemplars for others to follow. Examples, which demonstrate what can be achieved in the public sector, include Cambridgeshire County Council and Rotherham Metropolitan Borough Council – see case study profiles below. Cambridgeshire County Council – Good Practice Case Study5 Profile: 18,000 staff & turnover of £550m Approach: it has had a formal people strategy since 2001 – it is clear about developing the organisation, having a single culture, employee development and creative ways to reward good performance. In 2005 the Institute for Employment Studies (IES) ran a culture audit out of which the ‘Inspire Project’ was born – the objective being to change the way people work and communicate. A new framework defining 17 behaviours was rolled out with the assistance of the Hay Group. The project included work on leadership development, with managers – including the Chief Executive – receiving 360-degree appraisals and team-building workshops. It has also led to a new customer service charter and employee charter. The latter outlines not only what the Council can expect from its employees, but also what they can expect in return – “it is the psychological contract made explicit”. Impact: in HR benchmarks the Council has top quartile performance including absence management, and bottom quartile costs for HR service delivery. HR even sells its best practice to other public-sector organisations to generate revenue. The staff survey results are very strong: 85% of employees thought they were doing a worthwhile job 84% said that managers listened to their ideas 90% felt they had the chance to give feedback during appraisals; and 71% said they had enough opportunities to raise issues of importance “We are not a traditional authority – we seem to have more ways to get messages out and actively listen to people than you see in most organisations.” “If you don’t start with your workforce, how can you reach the public?” “18,000 ambassadors are better than 18,000 assassins.”

5

Johnson (2006)

30

Rotherham Metropolitan Borough Council – Good Practice Case Study6 Profile: 13,500 staff Historic Performance: in 2002 the Council was in the ‘doldrums’, with 1 star and rated as ‘weak’ in the Comprehensive Performance Assessment. Only 24% of staff rated morale as ‘high’. Approach: Rotherham’s ‘Exchange Programme’ was runner up in the ‘Improving Business Performance Through Engaging Staff’ category of the CIPD People Management Awards. A representative ‘Reach-in’ panel that gives detailed feedback and quarterly focus groups to handle hot topics supplemented conventional methods such as staff surveys and an employee suggestion scheme. Through effective promotion the number of employee suggestions increased six fold from 50 per year to 300. “Letting people know the outcomes of their suggestions was the most important part of the process.” The Council’s wider mission to motivate and inspire is encapsulated in their HEART approach: • • • • •

Help each other learn and develop Empower through open communication Appreciate and respect others Recognise and acknowledge contributions Try new ideas and initiatives.

Impact: Staff turnover is down from 18% to 9% Average absence is down from 13.8 days to 9.2 days Rotherham is now a three star council and rated as ‘strongly improving’. 65% of staff responded that they are happy at work. “Happy employees are more likely to come to work.” “We know staff feel valued, and confident that they are having an input into our success as a council.” “The culture has changed from one that was progressing slowly to one that wants to achieve, and is achieving results.”

Employee variations 4.35 The final variable impacting on employee engagement relates to employees themselves. A number of studies have produced quantitative research findings that demonstrate the impact that biographical and job characteristics can have on employee engagement. One of the most in-depth was conducted by the Institute for Employment Studies (IES) (as analysed by Robinson et al 2004) which analysed attitude survey data for 2003 from 14 organisations in the NHS (>10,000 completed questionnaires). The key findings were: Biographical characteristics •

6

Gender – the difference in engagement scores between men and women was not significant (although note that some surveys (see CIPD 2006c discussed below) find that females are generally more engaged than males – this difference may be due to the fact that the NHS study surveys across employees within the same organisation, whilst the CIPD survey cuts across a wide variety of industries and organisations).

Brockett (2006)

31

•

Ethnicity – minority ethnic employees have higher engagement levels than their White colleagues. Black, Chinese and Asian employees have higher scores than those in Mixed and White groups.

•

Age – engagement levels go down slightly as employees get older – until they reach the oldest group, 60 and over, where the highest engagement levels of all are displayed. The high level of engagement levels expressed by experienced employees, who may be considered to be approaching the end of their working lives, suggests an untapped source of potential in many organisations.

•

Work-life balance – those in their 40s and 50s have the highest levels of workplace stress and are likely to find it difficult to balance work and home life. Robinson et al (2004) therefore suggest that attention to family friendly policies could increase the engagement levels for this group.

•

Caring responsibilities – the need for a family-friendly approach and greater emphasis on work-life balance is further underlined by the fact that employees with caring responsibilities for children have significantly lower engagement levels than those who have no caring responsibilities.

•

Medical – those with a disability/medical condition have lower engagement levels than those who do not have such a condition.

4.36 CIPD (2006c) in their national survey of 2,000 employees across a wide spectrum of public and private sector employers found broadly similar findings to the NHS survey, although several disparities are noted: •

Gender – women were found, in general, to be more engaged than men, but they also tend to be doing different kinds of jobs. Women are more satisfied with their work and hold more positive views of their senior management team than do men. They are more loyal to their organisation as an employer and report higher levels of loyalty to their customers and clients than men. This is in contrast to the NHS survey result conducted by IES and analysed by Robinson et al (2004), where it was found that there was no discernable difference between engagement levels between men and women. As discussed above this may be due to the fact that the NHS study surveyed employees across the same organisation whilst CIPD (2006c) cut across a range of different industries and organisations. This may suggest that males and females are responding in a similar fashion to the same NHS environment but that in general differences in male/female engagement may be due to participation in different occupations and industries.

•

Age – workers aged 55+ are more engaged with their work than younger employees, and they are also happier with their work-life balance, working shorter hours than others. Employees aged under 35 are significantly less engaged with their work than older workers. Again this is contrast to the NHS results where it was found that engagement levels go down as age increases, although both surveys find that workers in the 55+ or 60+ bracket are more engaged.

32

•

Disability – employees with a disability are less engaged due to a range of negative factors including: bullying and harassment, not being listened to, the stress of work, a feeling of less control over their work, and higher levels of anxiety.

•

Managers – they find their work more important and more meaningful than nonmanagers do. Their responses on communication and involvement are much more positive than those of non-managers, and managers feel that they have more support and recognition and are listened to more than non-managers are.

•

Flexible contracts – some surprisingly strong differences were found between those working on a flexible contract (e.g. flexible hours, term time contracts, homeworking etc.) and other workers. Those on flexible contracts tend to be more emotionally engaged, more satisfied with their work, more likely to speak positively about their organisation and least likely to quit than those not employed on flexible contracts.

4.37 However, it is particularly important to point out that demographic variables should not be seen in isolation as predictors of performance or engagement. CIPD (2006c) stresses the following: “…what we have found is that good management practice and a conducive working environment can lead to high levels of engagement and performance amongst all groups of workers.” 4.38 CIPD (2006c) also note the following regarding job characteristics: •

Job group – the nature of the job makes a big difference to engagement levels. In general, managers and professionals have higher levels of engagement than do their colleagues in supporting roles.

•

Working pattern/hours – full-timers are significantly more engaged than parttimers, while employees who work days are more engaged than their colleagues on shifts or on a rota. This suggests that employers need to work harder with people who are not necessarily at work during ‘standard’ working times – to ensure that they receive communications, are managed effectively and have opportunities to grow and develop in their jobs.

•

Length of service – engagement levels go down as length of service increases – an indication to employers that they need to ensure that longer-serving employees continue to be exposed to new and interesting challenges.

Summary and key findings 4.39 This chapter provided a discussion of the key models that emerged from the literature. As discussed in Chapter 3, there is nothing in the literature to suggest that the models relevant to the private sector do not have a direct applicability to the public sector also. Although some survey results found subtle differences between the sectors, in general the differences in engagement across demographic factors apply across the board to both sectors. The key points that emerge from an examination of the models of engagement are:

33

•

There is no one-size fits all definitive explanation of what drives engagement. Each of the models and research studies discussed presented a range of different factors and placed varying importance on each. What can be concluded is that the organisation first and foremost has the power of influence over a range of factors (contractual and extra-contractual) and employees place a varying degree of importance on these.

•

Feeling valued and involved is the key to the Robinson et al (2004) model of engagement, although other factors such as training and development, communication and job satisfaction are important in determining the extent to which employees feel valued and hence engaged.

•

The Penna (2007) model of engagement noted that pay and benefits were at the foundation of the model but ranked lowest on the extent to which they would retain staff if other factors were lacking. In that model value and meaning at work are at the apex, with leadership and learning and development also cited as important factors in driving engagement from the employee’s point of view.

•

The RBC model of communication was also highlighted, and it was noted that it succeeded as it strived to engage employees rather than just inform. The organisation realised that the previous model of informing employees, rather than engaging them, was not helping to promote the ‘line of sight’ from employee actions to the overall objectives and outcomes for the organisation. This model highlights an important element of engagement – that communication is more effective as a two-way process that involves the employee, as opposed to merely presenting them with information.

•

Management and communication were highlighted in particular in several models (i.e. Robinson et al (2004) and Penna (2007)) as being key organisational drivers of engagement. Here it was found that promoting a clear vision of the future, being seen to respond to feedback and demonstrating a genuine commitment to the employees’ well-being are all important actions at an organisational/managerial level.

•

Several models that illustrate the overall impact of engagement and the mechanisms through which factors feed into engagement and how in turn engagement affects the overall organisational outcomes were also presented. What Schmidt (2004) points out as the overarching goal of public organisations – advancing the greater public good – can be affected by engagement levels through an overall mechanism that involves various elements from the ‘right’ workforce through workplace well-being, engagement, organisational performance and finally advancing the public good.

•

Finally the CIPD (2006c) model of engagement was presented, which presents an overall picture of the place of engagement within a wider scope of individual factors, aspects of working life, management, attitudes to work and outcomes for the organisation. This demonstrates that engagement should not be considered in isolation, and these other factors should be taken on board when measuring engagement and considering engagement strategies.

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•

The effect of the models was not found in the literature to vary across public and private sectors, rather it is organisational characteristics within either sector that determines engagement.

•

Secondary to the organisational lead in driving engagement are several demographic and job-related factors that highlight variations in engagement. It was noted from several studies that those in their 40s and 50s have the highest levels of workplace stress and are most likely to find it difficult to achieve a work/home life balance. Further, those with caring responsibilities for children are less likely to be engaged. These results tie in with the Robinson et al (2004) model which highlighted family friendly policies as an important organisational driver of engagement.

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CHAPTER 5

EMPLOYEE ENGAGEMENT IMPACT ASSESSMENT

Introduction 5.1 This chapter looks at the impacts of employee engagement, and is presented under the following headings: •

Belief in Engagement – the extent to which the literature supports the contribution of employee engagement to improved organisational performance.

•

Extent of Engagement – the extent to which employees are engaged based on survey evidence.

•

Impact of Engagement – a review of the impact evidence relating to positive outcomes in the following areas: productivity, customer outcomes, employee retention, ‘meaning at work’, advocacy and organisational climate.

•

Cost of Engagement – the extent to which the literature assesses the costs associated with employee engagement.

•

Importance of Engagement – the Chapter concludes with a review of case study evidence which highlights the importance of employee engagement to employers.

5.2 From the literature it appears that the impacts of engagement, and of disengagement are wide-ranging and can have effects at all levels, from individual employees, to the climate of the team or department through to organisational performance. Far from being an abstract concept, the literature finds very real and measurable impacts upon organisational performance of the effects of employee engagement and disengagement. However, the robustness of the evidence base must be considered before drawing firm conclusions. The subject of engagement is still relatively new in the literature and is not a well-studied academic research field; in particular, many of the studies have been carried out by management consultancies and research houses who may in part be biased towards positive results. Further, there is very little consideration in the literature regarding the cost of engagement schemes and how these compare to any benefits received. 5.3 However, notwithstanding these caveats, the literature does provide sufficient indicators and consensus for some broad conclusions to be drawn out, as discussed below. Belief in engagement 5.4 From the literature review it is clear that the overriding sentiment throughout the leading texts is very positive with regard to the impact employee engagement has on organisational performance. This is illustrated by some of the key statements that emerged from the literature: see Table 5.1.

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Table 5.1

Literature view on impact of engagement

Impact of Employee Engagement Statement “There are clear links between employee engagement and effectiveness, which, in turn, affect productivity. Employee engagement goes to the heart of organisational capability issues” “….high levels of engagement have been found to be associated with a whole range of beneficial outcomes, including high levels of performance” “….there appears to be a general willingness to accept the underpinning finding: the higher the level of employee commitment, the better the business outcome. If employee engagement is indeed onestep beyond commitment, the reward should be even greater” “….it takes little persuasion on a theoretical level to convince a business leader that employees who are more committed, work harder and smarter will be better for the company than those who turn up, do merely what they are obliged to do and leave” “Your organisation’s success depends on people’s true engagement…..Research has shown that engaged employees make for a stronger organisation and better business results” “Employers want engaged employees because they deliver improved business performance”

Source Briggs (2005), Australian Government Public Service Commissioner as cited in Meere (2005) CIPD (2006c)

Robinson et al (2004)

Melcrum Publishing (2005)

Right Management (2006)

CIPD (2007a)

Extent of engagement 5.5 The research findings which are emerging suggests that only a small proportion of employees can be described as engaged, with a far greater proportion of respondents to surveys reportedly either not engaged or disengaged. For example, a Gallup survey of 2004 (carried out on US employees, as reported in Meere (2005)) found that nearly one fifth of employees were disengaged and over half ‘not engaged’: see Table 5.2. Meere (2005) also provides statistics relating to the UK, which show a similar trend: see Table 5.3. Table 5.2

Results of US Gallup poll of employee engagement

Classification Engaged Not engaged Disengaged

2004 Results 26% 55% 19%

Source: US Gallup results quoted in Meere (2005)

Table 5.3

Results of UK Gallup poll of employee engagement

Classification Engaged Not engaged Disengaged

2003 Results 19% 61% 20%

Source: UK Gallup results quoted in Meere (2005)

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5.6 The CIPD (2006c) Employee Attitude and Engagement Survey 2006 finds slightly higher results than suggested by the statistics above. Covering 2,000 workers across the public and private sectors in the UK, the survey finds that 35% of employees are actively engaged with their work. However, care needs to be taken when discussing what workers are engaged to. Robinson et al (2004) highlights that an interesting finding in the NHS survey was that the professionals surveyed often felt a higher level of loyalty to their work (or to their patients) than to the organisation as such. Robinson et al notes that to some extent this may not matter to the organisation if these individuals perform in a manner that achieves the objectives of the organisation anyway. However, where engagement with the organisation will clearly be important is in regards to organisational level changes in strategy for example. In these instances organisations seek to have employees aligned with the overall strategy and perform their work to that end. Impact of engagement 5.7 The models presented in Chapter 4 illustrated the mechanism by which employee engagement can feed into overall organisational performance. It follows that if employees are not engaged with the overall strategies and objectives of an organisation then their day-today activities will not be focused on achieving these objectives. This section reviews evidence in the literature to determine the extent to which these effects can be described and quantified. Productivity and organisational performance 5.8 The Corporate Leadership Council (CLC) (2004) completed a study of engagement levels of over 50,000 employees across the globe and found that those employees who are most committed: •

Perform 20% better, which CLC (2004) claims infers that moving from low to high engagement levels will induce an increase in employee performance of 20 percentile points; and

•

Are 87% less likely to leave the organisation, which CLC (2004) states indicates the significance of engagement to organisational performance.

5.9 On the other hand, in reporting on the costs of employee disengagement, Meere (2005) discusses a survey carried out by ISR on 360,000 employees from 41 companies in the world’s 10 largest economies and finds that in companies with low engagement both operating margin and net profit margins reduced over a three year period, whilst in companies with high levels of engagement both these measures increased over the same time period. 5.10 Although this survey was based on private sector companies and measured organisational performance through financial indicators, the implications for an organisation, private or public are the same – the difference between low and high engagement can be real and substantial. The models discussed in Chapter 4 demonstrated the mechanisms through which low engagement can impact upon organisational performance, however that performance is defined and measured.

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5.11 Melcrum Publishing (2005) also report that in the US, Gallup estimates that disengaged workers cost US business between $270 and $343 billion per year due to low productivity. Meere (2005) also reports evidence that close to one-third of CEOs identified engaging employees in the company’s vision, values and goals, as one of the three factors most important to their organisation’s success. Customer outcomes 5.12 Customer focus is one organisational objective that does apply across both the private and public sectors, although it may manifest itself in a slightly different form. In this regard, a survey by Right Management (2006) found that 70% of engaged employees indicated they had a good understanding of how to meet customer needs, whilst only 17% of non-engaged employees scored high on this measure. As definitions of engagement would suggest, the engaged employees were found to have a better understanding of how their actions contributed to the organisation’s overall customer focus. Employee retention 5.13 Similarly, employee retention is an issue for the private and public sector alike. Right Management (2006) found that 75% of engaged employees planned to stay with the organisation for at least five years, whilst only 44% of non-engaged employees planned to stay. On this issue Towers Perrin (2003) also found that a highly engaged workforce is a more stable workforce – in their survey two thirds of highly engaged employees had no plans to leave their jobs versus just 12% of the disengaged. According to Towers Perrin (2003), whilst high engagement does not guarantee retention, it does increase the chances of retaining the very people who are probably going to be most attractive in a competitive labour market. 5.14 With regard to retention, Towers Perrin (2003) highlights an important impact related to the disengaged. Whilst organisations can potentially lose key employees through not successfully engaging them, there is also a risk to the organisation from the disengaged who are not actively looking for other employment and continue in their current employment but are disaffected and unproductive. Towers Perrin (2003) note that retaining the disengaged can have as serious consequences for performance as losing the highly engaged. The literature tends to focus on identifying the disengaged and outlining the potential negative impacts the disengaged can have on other employees and overall organisational performance. This may represent a significant gap in the literature where further discussion and research could perhaps be undertaken on how to reach the most disengaged, the extent to which it is worth trying to reach the most disengaged, and how the costs of these interventions weigh against any potential benefits of engaging these members of staff.

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Meaning at work 5.15 Penna (2007) presents the results of research carried out in 2005 on 1,765 British employees to identify what creates meaning at work for UK employees, the effectiveness of employers in creating meaning and what an employer who creates meaning can reasonable expect in return. Although not explicitly referencing ‘engagement’ many of the elements examined in this research are important components of the definitions of engagement discussed in Chapter 2. ‘Meaning at work’ as referred to by Penna (2007) (discussed in section 4.6) is the vehicle through which employers and employees can be brought closer together to the benefit of both. 5.16 The headline result is that organisations that devote resources towards creating meaning at work can anticipate increased motivation, loyalty, pride, and productivity. On the other hand, a proportion of respondents did not experience meaning at work and as a result 15% of employees surveyed would not recommend their organisation as a place to work and 7% would actively discourage others from joining. As the report highlights, pride taken in working for an employer, and willingness of employees to recommend their employer as a place to work to friends, are excellent barometers of engagement. Advocacy of the organisation 5.17 As mentioned in Chapter 2, CIPD (2006c) classifies three types of engagement (cognitive, emotional and physical) but states that engaged employees may also go one step further and act as advocates of their organisation. Advocacy can be in terms of recommending the organisation as a place to work, or in terms of believing in and recommending the products and services of the organisation. An interesting result that came out of the CIPD’s annual employee attitudes and engagement survey (CIPD 2006c) is that public sector workers are more critical of their organisation than their private sector counterparts. The survey concludes that employees who are more engaged are more likely to be advocates of the organisation. In the survey 37% of employees could be described as ‘Champions’ who willingly promote the organisation as an employer (potentially reducing recruitment costs by recommending/introducing key personnel) and its products/services, which in effect is free marketing and enhances the public image of the organisation. 5.18 Melcrum Publishing (2005) reports similar results and from their survey finds that only 3% of disengaged employees would advocate the organisation as a place to work, compared to 67% of engaged employees. Penna (2007) included similar measures in its ‘meaning at work’ research report, and finds that nearly a quarter of those surveyed would not recommend their organisation as a place to work. The report also notes a small hardcore of ‘corporate terrorists’ – the most disengaged - would actively discourage friends from joining their current organisation.

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Organisational climate 5.19 CIPD (2006a) discusses the impact that engagement has on the sense of community within an organisation. Whilst managerial actions are important, the results of the CIPD survey (CIPD 2006c) suggest that relationships among fellow workers are important in contributing towards job satisfaction. In turn, the impact of the organisational climate and the extent to which engagement is embedded in the organisation (or the individual team or department) is critical for employees in their willingness to stay working with their employer and the extent to which they advocate their organisation. This “affective engagement” is found to be strongly related to positive discretionary behaviour – or “going the extra mile”. Cost of engagement 5.20 Much of the literature reviewed does not raise the issue of cost alongside the benefits. One case study that does however is that of Cambridgeshire County Council, where it is questioned whether the outcomes achieved are worth the inevitable high cost of such a dedicated and comprehensive engagement scheme. In this case, Cambridgeshire County Council reported that the benefits do make the engagement measures worthwhile as there are time savings that result from a smoother process for implementing change and new policies. HR benchmarks suggest that the Council has the top quartile performance in terms of absence, coupled with bottom quartile results for HR delivery costs. A 2004 staff survey revealed that 85% of employees thought they were doing a worthwhile job, 85% said managers listened to their ideas, and 71% said they had enough opportunities to raise issues of importance. All of these results were up on the previous year, some as much as 15%. Importance of engagement 5.21 Therefore between the impacts that engagement can have upon an organisation (as shown by the models in Chapter 4 and discussed here in Chapter 5) and the relatively widespread trends of disengagement found in various employee surveys, it is clear that engagement has become an important topic in recent years. Table 5.4 highlights the commitment to employee engagement by a selection of leading players from both the public and private sectors and the underpinning rationale for their uptake of this new approach. They have recognised the importance of employee engagement and have acted accordingly to leverage the organisational benefits such an approach can deliver. The information is presented via case study extracts.

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Table 5.4

Importance of Employee Engagement – case study evidence

Case Study Public Sector Rotherham Metropolitan Borough Council

Evidence

Source

Runner up in CIPD People Management Awards – Judges’ assessment: “The council made big improvements in employee turnover, satisfaction and absence levels following an employee engagement initiative. Communication between the council officers, the community, unions and council members was outstanding. A good example of how to drive through change quickly, in collaboration with stakeholders.”

Brockett (2006)

“We are not a traditional authority. We seem to have more ways to get messages out and actively listen to people.” “If you don’t start with the workforce, how can you reach the public? 18,000 ambassadors are better than 18,000 assassins.”

Johnson (2006)

“….the BBC has moved very strongly and sincerely towards an engagement culture and is doing a lot to encourage behaviour that might, elsewhere, fit under this banner. But instead, we talk more about words like ‘involve’, ‘participate’ and ‘respond’ rather than ‘engage’. That means creating shared meaning and understanding in such a way that our people actively want to participate.”

Melcrum Publishing (2005)

Royal Bank of Scotland

RBS is the world’s fifth largest bank and it has the concept of employee engagement at the heart of its business strategy. Its model is based on engaging staff to: • ‘Say’ that the job and company are good • ‘Stay’ with the company and develop it • ‘Strive’ to go the extra mile for the company

Robinson et al (2004) – Appendix 3

Microsoft

“People need to become engaged with the business so that they become advocates of the business. This means that by your employer brand you have to employ the right people to begin with. Microsoft does this well. Not everyone wants to work for Microsoft, but those that are there love it”.

McKenzie, A. HR Gateway

Cambridgeshire County Council

Private Sector BBC

“The people who get in have a communications vehicle, systems and processes that reflect what they want in terms of the employer brand and what it stands for. Of course, when you have the right people you have the trouble of creating ways of letting them know what is going on in the business and where they fit in – in regard to business goals and objectives”. West Bromwich Building Society

“… it has a powerful people engagement strategy that consistently demonstrates the link between leadership, culture and business competitiveness. Most recently the society won the UK Business Excellence award for Employee Satisfaction, which recognises ‘outstanding performance in the area of staff development and involvement.”

IRS Employment Review (24 March 2006)

Royal Bank of Canada

“At RBC we decided to reinvent our employee communication so that it would not only inform employees, but do a better job of engaging and aligning their performance with our vision and business goals.”

Melcrum Publishing (Oct/Nov 2006)

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5.22 CIPD (2007a) suggests that employers want employees who will ‘go the extra mile’, whilst employees want worthwhile jobs. Where these objectives meet there is a ‘win-win’ situation where organisations can meet their needs and the needs of their employees. According to the CIPD (2007a), what organisations are looking for to bridge these goals in practice is an engaged workforce. The models outlined in Figures 4.5 and 4.6 demonstrated the way in which this process can work and the role that engagement plays in organisational outcomes. 5.23 As discussed, the impact of disengagement can have measurable effects upon performance, not only in quantitative terms of reduced productivity, reduced profitability, loss of customer satisfaction and/or employee turnover, but also upon the general climate of the organisation and other employees. With regards to the public sector, it is illustrated in Chapter 4 through a model based on Canadian research (Heintzman and Marson, 2006) that engagement can have a bearing on the performance of public institutions and the public’s perceptions and levels of trust in those organisations. Thus the importance of engagement can be demonstrated in terms of the effect it is found to have upon improving the welfare of the individual, other employees and ultimately on organisational performance, however it may be measured. Increasing recognition of these very real effects has brought the subject to the fore for many organisations. Summary and key findings 5.24 This chapter set out to review the evidence regarding the impact of employee engagement. It began by looking at the general sentiment throughout the literature and concluded that there is an overriding belief in the literature that employee engagement has measurable and significant effects on the organisation’s success. The review of the evidence then looked at number of areas and found that: •

The survey evidence tells us that the majority of the workforce in leading western economies is not engaged;

•

Engaged employees perform 20% better (CLC 2004);

•

Organisations with disengaged employees underperform against organisations with engaged employees (Meere 2005), with the costs of disengagement through lost productivity costing US businesses up to $343bn annually (Gallup results discussed in Melcrum Publishing 2005);

•

70% of engaged employees have a good understanding of how to meet customer needs as opposed to only 17% of disengaged employees (Right Management 2006);

•

Organisations not only lose key personnel by failing to engage them but they can also be harbouring a large body of unproductive disengaged staff who have no intention of leaving;

•

Employers who achieve meaning at work for their employees can expect increased motivation, pride and productivity;

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•

Engaged employees are more likely to advocate the organisation as a place to work and actively promote its products and services;

•

There is an identifiable gap in the literature through the exclusion of the costs of engagement alongside the discussions of the benefits. The case study of Cambridgeshire County Council did raise the issue that intensive engagement programmes incur costs, however in that case they felt the cost was justified. Nevertheless, the benefits discussed here do need to be read in the context of an absence of counterbalancing arguments and evidence surrounding the costs of running engagement schemes; and

•

Further, the literature does not discuss in detail how organisations should treat the most disengaged and because costs or cost-benefit analyses are not discussed, there is no discussion of how far organisations should go to try to engender engagement among the disengaged, or what level of engagement is optimal for different organisations.

5.25 The increasing interest and importance attached to employee engagement by organisations is evident through: •

The potential business benefits in terms of staff attraction, retention and performance; improved communication and service delivery to customers; and the bottom-line benefits these impacts confer in terms of sales and profits; and

•

The extent to which major employers are taking notice of the potential impacts that engagement and disengagement can have on the ability of the organisation to achieve its objectives. Several major players such as Microsoft, the Royal Bank of Scotland and the BBC are actively addressing engagement within their organisations.

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CHAPTER 6 MEASUREMENT AND MONITORING OF EMPLOYEE ENGAGEMENT Introduction 6.1 The research findings discussed in Chapter 5 imply that levels of engagement within an organisation can have substantial and measurable impacts upon the outputs of the organisation, whether that output is profit, productivity, customer/public satisfaction, achievement of strategies and objectives, or successful implementation of reform. As highlighted by Robinson et al (2004) it makes sense for organisations to monitor the engagement levels of employees and to take action to increase these if necessary. CIPD (2007a) also highlights the importance of monitoring levels of employee engagement as a key element in managing the organisation’s human capital. 6.2 This chapter explores methods the literature suggests are good practice regarding how employee engagement can be measured. The chapter is structured under the following sections: •

Measurement at the recruitment stage

•

Measurement among existing employees

•

Monitoring engagement.

Measurement at the recruitment stage 6.3 The Schmidt (2004) model presented in Figure 4.3 on the organisational dynamics of the public sector noted that the foundation of the model on which workplace well-being, employee engagement and ultimately organisational performance and the furtherance of the public good was based, was recruiting and retaining the right workforce. Penna (2007) recommends that employers don’t just hire for competence but hire for attitude and alignment with the organisation’s values. On this basis, McGee (2006) discusses research by Development Dimensions International (DDI) which involved over 4,000 employees in a variety of industries and revealed six characteristics that predict the likelihood of individuals becoming engaged employees: • • • • • •

Adaptability; Passion for work; Emotional maturity; Positive disposition; Self-efficacy; and Achievement orientation.

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6.4 According to the research, it is these factors that can help to predict which candidates will perform effectively, derive satisfaction from what they do and become engaged. McGee (2006) purports that taking time to screen applicants for ‘engagement readiness’ will yield a far greater return in the medium term than hiring solely for skills and knowledge. It is worth noting the Schmidt (2004) model (figure 4.3) highlighted that recruiting the ‘right’ workforce is a requisite foundation to achieving outcomes further up in the model. However, the literature and future research could perhaps be more focused on exploring the links between aspects of the recruitment process and levels of engagement in organisations. Measurement among existing employees 6.5 Clearly there is an onus on the organisation to retain key staff once they are recruited. Chapter 4 discussed the role of the organisation in effecting improvements in levels of engagement and discussed the type of actions organisations can take to encourage engagement. Ellis and Sorenson (2007) highlight that the first step in improving employee engagement is to adopt a definition and assess current levels of employee engagement. In order to help identify whether the organisation has an engagement problem, they suggest a diagnostic checklist in which a positive answer to any of the following example statements indicates that engagement levels could be improved upon in the organisation: •

People often come to meetings and nod in agreement but limited to no progress is made.

•

Superior performance is often undefined, unrecognised and/or unrewarded.

•

There is a lack of information sharing across business units, and a lack of collaboration toward common goals and results.

•

Employees feel far removed from the results of the business and have little understanding of how they can contribute towards the strategy.

•

People feel disconnected from the organisation’s customers.

6.6 Once it is identified that an engagement problem exists, the next step is to quantify the extent of engagement in the organisation and the amount and types of action required. It is important to identify how engagement levels among the existing staff body can be measured. In the literature, this usually takes the form of some sort of qualitative assessment across a range of factors, usually in the form of a staff survey. This section discusses several survey designs as found in the literature and makes an assessment of the key areas which form the basis for benchmarking and measuring employee engagement.

Employee Surveys 6.7 CIPD (2007a) notes that the first step towards building an engaged workforce is to get a measure of employee attitudes, and that most large employers in the private and public sector conduct regular employee attitude surveys. These can then be used to identify areas in need of improvement.

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6.8 Robinson et al (2004) notes that trying to get a measure of engagement is ‘challenging’, given the range of complex factors being assessed. The report notes the use of the attitude survey as a useful tool for collecting, measuring and analysing employee opinions. The report also notes the ‘bluntness’ of the survey tool, given the range and nuances of opinions. However, in assessing engagement levels within the NHS, Robinson et al (2004) developed a survey comprising of 12 ‘engagement statements’: •

I speak highly of this organisation to my friends

•

I would be happy for my friends and family to use this organisation’s products/services

•

This organisation is known as a good employer

•

This organisation has a good reputation generally

•

I am proud to tell others I am part of this organisation

•

This organisation really inspires the very best in me in the way of job performance

•

I find that my values and the organisation’s are very similar

•

I always do more than is actually required

•

I try to help others in this organisation whenever I can

•

I try to keep abreast of current developments in my area

•

I volunteer to do things outside my job that contribute to the organisation’s objectives

•

I frequently make suggestions to improve the work of my team/department/service

6.9 Robinson et al (2004) then tested the extent to which it would be valid to combine all 12 statements into a single engagement measure, with statistically encouraging results, which enabled Robinson et al to analyse engagement levels using an indicator that comprised all 12 statements. Robinson et al (2004) highlights that while this type of survey is useful in identifying levels of engagement across an organisation, its real value lies in comparing one group within the organisation to another, and measuring trends across time. 6.10 The case study discussed below demonstrates another important use of an engagement survey – identifying the strengths on which the organisation can build, as well as the sources of friction within an organisation, which can then be addressed.

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B&Q – Good practice case study7 Profile: Europe’s largest home improvement retailer. UK employment growth doubled from 17,500 in 2000 to 35,000 by 2003. Approach: Since 2000, B&Q has used a 12-question survey developed by Gallup, on seven occasions to measure employee engagement – defined by the degree to which workers are emotionally committed to their jobs. Employees respond to each of the 12 questions on a scale of 1 (strongly disagree) to 5 (strongly agree) on a range of topics related to employee needs in the workplace such as friendships, pay, benefits, progress reports, and job related growth opportunities. High scores reflect engaged employees whose needs are being met and who are fully engaged in improving workplace productivity. Middle of the range scores reflect workers who are not engaged, whilst low scores imply active disengagement – those employees whose needs are not being met and who can actually discourage productivity. However, the survey does not merely gauge prevailing workplace sentiment, rather it is designed to be a tool for action and strategy development. The survey asks about aspects of engagement that can be influenced by supervisors, such as recognition and communication. Thus depending on the outcome, managers can either plan how to exploit their strengths and/or address the weaknesses. Further, the survey is designed to translate the ‘softer’ aspects of workplace emotions and behaviours into a hard measure of engagement, which in turn can be linked to organisational outcomes. Impact: The use of the Gallup survey at B&Q over 7 separate occasions has allowed the company to build up a wealth of knowledge about what drives engagement within the company and how engagement levels link to greater productivity, better customer engagement and higher profits. The results of surveys have been taken forward into actions to improve scores. Earlier surveys revealed that company-wide, scores were fairly low, prompting management and employees alike to change their attitudes in order to improve engagement. For example, one store scored particularly low on the question ‘At work do my opinions seem to count?’ Managers changed the agenda of meetings to ask staff if they had issues to raise, and required managers to feed back subsequently on how the issue was being addressed. Thus the use of the survey here highlights how an issue can be identified, and how actions can be taken to create the environment to enable the issue to be resolved. B&Q customer surveys reveal that stores that score highly in the engagement survey also score higher on customer satisfaction. Translating this into organisational outcomes, the stores in the top half of customer loyalty generated £3.4m more in sales each year than stores in the bottom half.

6.11 Towers Perrin (2003) presents a range of engagement statements, many of which have elements common to the Robinson et al framework, including pride in being part of the organisation, advocacy about the products and services of the organisation, being inspired by the organisation to produce one’s best work, and willingness to put in effort above and beyond normal expectations. The full list of the Towers Perrin engagement statements is provided below:

7

•

I really care about the future of my company

•

I am proud to work for my company

•

I have a sense of personal accomplishment from my job

•

I would say my company is a good place to work

Tritch (2003) B&Q Boosts Employee Engagement – and Profits

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•

The company inspires me to do my best work

•

I understand how my unit/department contributes to company success

•

I understand how my role relates to company goals and objectives

•

I am personally motivated to help my company succeed

•

I am willing to put in a great deal of effort beyond what is normally expected

6.12 Based on use of these statements, Towers Perrin (2003) found that just 17% of respondents are ‘highly engaged’ whilst 19% were found to be ‘disengaged. The remaining middle are considered to be the ‘moderately engaged’. Measuring different types of engagement 6.13 In their employee attitude and engagement survey, CIPD (2006c) measured overall engagement but also outline that their research suggests that engagement has three components: •

Cognitive engagement – focusing very hard on work, thinking about very little else during the working day;

•

Emotional engagement – being involved emotionally with your work; and

•

Physical engagement – being willing to ‘go the extra mile’ for your employer and work over and beyond contract.

Although CIPD (2006c) does not place emphasis or importance on any one component of engagement, the breakdown provides us with an interesting analysis and classification of the types of behaviours that feed into engagement and how these impact on the overall engagement levels, as discussed below. 6.14 In measuring cognitive engagement the following four statements were put to surveyed employees, who were asked to either agree or disagree with the statements: •

Time passes quickly when I perform my job

•

I often think about other things when performing my job

•

I am rarely distracted when performing my job

•

Performing my job is so absorbing that I forget about everything else

6.15 In the CIPD (2006c) survey, only 31% of respondents were found to be cognitively engaged, and 22% disengaged, implying that this is an area that requires the most work by organisations to achieve engagement.

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6.16

Regarding emotional engagement, the following statements were put to employees: •

My own feelings are affected by how well I perform my job

•

I really put my heart into my job

•

I get excited when I perform well in my job

•

I often feel emotionally detached from the job

6.17 CIPD (2006c) found that levels of emotional engagement are higher than for the other two forms of engagement, with 58% of people reportedly emotionally engaged with their work and only 6% are emotionally disengaged. CIPD (2006c) highlights that effective individual and organisational management of the relationships and processes that increase positive emotions can also raise levels of overall engagement and performance. 6.18

As regards physical engagement, the CIPD (2006c) asked: •

I stay until the job is done

•

I exert a lot of energy performing my job

•

I take work home to do

•

I avoid working overtime whenever possible

•

I avoid working too hard.

6.19 According to the CIPD (2006c) results, 38% of employees are physically engaged with their work, whilst 11% are physically disengaged. It is clear that some of these elements of the survey of each type of engagement capture the ‘going the extra mile’ element of engagement, and some of these may not be viewed as positives (i.e. taking work home, working overtime). 6.20 As mentioned above, the real value of surveys lies in the extent to which the results are taken forward and actioned. The case study below of how Royal Bank of Scotland (RBS) uses its ‘human capital information’ is put forward as an example of good practice in this regard.

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RBS – How a major corporation uses its employee data – Good practice case study8 Profile: The Royal Bank of Scotland Group (RBS) has over 140,000 employees in 30 countries. Approach: RBS has recognised that in an organisation of its size, understanding the effectiveness of its people strategy and ‘employee proposition’ is a strategic imperative. From 2003, RBS developed a human capital strategy that provides its leaders with a detailed understanding of how effective the group is at attracting, engaging and retaining the best people. RBS has adopted a human capital ‘toolkit’ which includes diagnostic tools, benchmarking resources and employee research and measurement tools. RBS employs the use of comprehensive surveys which benchmark performance and report on a variety of topics such as absence, turnover and diversity. However, the key to the human capital strategy is its annual survey of employee attitudes delivered to all 140,000 staff. The results are communicated around the organisation and managers are provided with an action plan so that at a local level, tangible actions are agreed and targeted. “This is a sophisticated, business-focused strategy within which employee attitude surveys play a key role” (Aitken 2006 cited in CIPD (2006a)) Impact: RBS publishes its human capital measures in its annual accounts and in its corporate responsibility report. As Aitken highlights “By reporting how our people strategy drives business performance, we differentiate RBS Group as a great company to work for, invest with and bank with. Sharing our approach to developing a highly rewarding and productive workplace is a key part of this approach”. Implications for managers: Employee attitude surveys are a fundamental component of sophisticated strategies for managing human capital. Findings on employee engagement can be used to monitor performance, communication, diversity, leadership and work-life balance. Combining attitudinal data with other indicators in the organisation can provide managers with a greater understanding of the relationship between HR policies and practices and organisational performance.

Monitoring engagement 6.21 Much of the literature emphasises the use of surveys (as discussed previously) on an ongoing basis as a method to monitor engagement over time. However there are several other tools for monitoring engagement that are highlighted in the literature, for example focus groups (Cambridge County Council – see case study), a ‘human capital toolkit’ (Royal Bank of Scotland – see case study), panels and employee suggestions (Rotherham MBC – see case study) and monitoring online feedback (Moorcroft (2006) on Royal Bank of Canada). 6.22 However, what is missing from the literature is a discussion of an explicit monitoring framework detailing how changes in engagement can be measured, and how progression along a spectrum of engagement might be quantified. Although some of the literature places employees into categories of ‘engaged’ or ‘disengaged,’ or ‘highly’ or ‘moderately’ engaged, there is a lack of detail in the literature about monitoring progress in the literature and quantifying the steps between disengagement and engagement, for example.

8

Aitken.(2006) as cited in CIPD (2006a)

51

Summary and key findings 6.23 Our discussions earlier highlighted the importance of employee engagement, in terms of organisational performance, as well as on the outcomes for customers (of organisations in either the private or public sector), employee turnover, departmental climate and external advocacy of the organisation. Getting a measure of the extent of engagement and disengagement in an organisation is therefore of utmost importance in gauging the underlying causes of sub-optimal organisational performance. 6.24 It was discussed how the propensity for engagement during employment can be identified at the recruitment stage and several articles noted the importance of recruiting not only for ability, but for attitude and alignment with the organisation’s values. 6.25 It was also noted that the literature presents a diagnostic checklist (see paragraph 6.5) and the areas to be aware of in identifying whether an organisation or a department has an engagement problem. Such warning signs include good performance going unrecognised and/or unrewarded, meetings that do not result in actions, and staff feeling distanced from the organisation and its objectives. 6.26 It is identified throughout the literature that employee surveys are a key starting point for measuring engagement levels. A range of different factors are included in each of the surveys found in the literature, but some common themes include: •

The level of pride in the organisation;

•

Advocacy about the organisation as a place to work as well as about its products and services;

•

The extent to which the organisation inspires the best work from employees; and

•

The extent to which employees are motivated to put in effort above and beyond the call of duty.

6.27 It was also highlighted how organisations can identify different types of engagement – for example through the CIPD classification of cognitive, emotional and physical engagement. 6.28 Several case studies were identified to illustrate that the true value of engagement surveys lies in how they are used by senior management to identify strengths and weaknesses, which are subsequently addressed. 6.29 However, the literature was weak on how specific monitoring frameworks could be designed and used.

52

CHAPTER 7 CRITICAL ASSESSMENT OF THE LITERATURE ON EMPLOYEE ENGAGEMENT Introduction 7.1 This chapter critically examines the literature surveyed in Chapters 2 – 6. It goes beyond a simple summary of the findings which has been provided at the conclusion of each Chapter. Rather, it attempts to dig deeper and to provide an objective assessment of the evidence. 7.2 To provide such an objective overview is difficult in a field such as employee engagement. The vast majority of the authors in this field are either researching organisational experience and/or are responsible for the implementation of management consultancy solutions for organisations, and therefore cannot be considered as strictly independent. The focus of some of the literature is on convincing employers about adopting practices, which encourage employee engagement rather than providing an independent assessment. 7.3 Even those authors not directly involved in the delivery of such management consultancy tend to come from a field which emphasises strongly the worth and importance of happy employees to their employers, for example being involved in the Human Resources field. This indicates that potentially there are some underlying assumptions, for example about the relative importance of human capital to company success, which might influence the findings of the studies. 7.4 In addition, research in the field has not focused on identifying factors that have a direct causal effect on employee engagement. This limits the extent to which these findings can objectively demonstrate the value of employee engagement. In addition, there tends to be limited consideration of the costs of driving up employee engagement, although considerable attention has been devoted to quantifying the benefits. Key Findings in the literature 7.5 The key findings of the literature review should be considered within this context. However, there are still a number of strong messages that emerge clearly. These are noted below with a critical assessment of the reliability of these findings concluding this chapter. The key findings, as noted in the literature, are: •

Employee engagement matters as it impacts on companies’ bottom lines, both through HR related impacts (such as recruitment and retention) and through wider impacts on productivity, profit and achieving the aims and objectives of the organisation;

•

The evidence from large-scale quantitative surveys suggests that the majority of employees are neither engaged nor disengaged, with only around 10 to 30 per cent of employees fully engaged with their work;

53

•

There is no evidence in the literature of significant differences between how the concept of employee engagement can be applied to private and public sector organisations. Rather, there are significant differences between organisations within each sector;

•

The models of employee engagement that have been developed can be applied equally to the public and private sectors;

•

A range of themes emerge as factors that influence employee engagement. These include factors that have a direct influence on employees working conditions (such as the number of hours worked and the work life balance) and also wider influences linked to the organisation (such as the importance and value of what the organisation does). A common theme emerging from all studies is the importance of leadership and two-way communication, and the need for management to drive forward employee engagement;

•

There are differences in how developed these factors are in the public and private sector. While the private sector tends to perform less well on the direct influences on employees (with public sector workers found to be happier with job security, being paid fairly, and training and development for example) the public sector seems to have more difficulties around effective leadership;

•

In terms of impact, studies tend to emphasise the positive impact of employee engagement but few quantify this impact reliably. Where an attempt at quantification is made, the magnitude of the positive impact tends to be very significant (e.g. 20% increases in productivity);

•

Notwithstanding these measurement issues, there has been widespread recognition and endorsement of employee engagement by some of the ‘big names’ in the public and private sectors. Clearly, if the likes of the Royal Bank of Scotland and Microsoft are committing significant resources to employee engagement, then they are being motivated by the drive to secure hard business benefits;

•

It is clear that ‘employee engagement’ has moved beyond HR discussion papers and concepts into the mainstream strategic and operational management. It is not a fad it is reality for many organisations who view it as having benefits and are using it as a tool to further the organisation’s objectives. The next challenge is to quantify robustly the cost-effectiveness of organisational commitment to employee engagement. In this area the literature has less to say and the jury is still out; and

•

There is general agreement that staff surveys can be designed to effectively measure employee engagement and there are a number of good practice examples which can be drawn on to design such surveys.

54

Gaps and shortcomings of the literature 7.6 In light of the comments made in the introduction to this chapter, there are a number of shortcomings associated with the literature, as well as gaps not currently covered. These are charted below: •

There is an inherent positive bias in the literature as noted above;

•

The literature tends to emphasise that improvements to employee engagement is always positive. There is no consideration that a certain level of employee engagement might be optimal which might differ between different organisations;

•

Related to this, further work is required to determine where the focus of the intervention should be. The literature seems to steer us towards addressing the disenfranchised majority, but says little relating to the minority of seriously ‘disaffected’. Arguably, if there are significant parts of the workforce disengaged, this will have negative impacts, meaning that employers will need to think carefully about how they identify this portion of the workforce and address the problem (i.e. through further engagement measures or letting this section of the workforce go);

•

There is also the related issue of how organisations go about recruiting staff that are likely to have a higher engagement propensity. Several articles were identified which discuss this issue, but it is suggested that this area would benefit from more bespoke research related to employee engagement;

•

The importance of the different factors underpinning employee engagement have not really been tested. For example, pay and conditions are not emphasised but a number of empirical studies outwith this study field show that pay and conditions are critical in job satisfaction for particular individuals and organisational types. More detailed disaggregation of employee surveys by organisational and employee type as drivers of engagement would be really useful to assess whether employee engagement is dependent on the factors stipulated in the literature;

•

The degree to which effective implementation of any new initiative depends on the readiness of staff to engage with the change. This is especially critical within the public sector as surveys show more resistance to change;

•

There is no real consideration of the cost of achieving higher levels of employee engagement;

•

The small number of studies attempting to quantify impact rely on identifying relationships between factors (e.g. current employee engagement and future profitability). This correlation data cannot determine cause and effect issues (e.g. the extent to which employment engagement can directly influence future profitability); and

55

•

There is no evidence which shows that the models for employee engagement are equally applicable across all types of work. Arguably, jobs which are very unpleasant or jobs which are very monetary focused (e.g. stock market dealing) are more easily incentivised by monetary rewards. In addition, it is likely that different individuals will be more or less motivated by different factors, which is not reflected in the current models for employee engagement.

Overall conclusions 7.7 In light of these shortcomings and gaps, can conclusions reliably be drawn from the literature? This is not necessarily an easy question to answer. The absence of more critical appraisals of the concept and impact of employee engagement must be highlighted in the interpretation of the literature reviewed. 7.8 However, there are sufficient indications in the literature to draw some broad conclusions even if these are not necessarily strongly underpinned by objective evidence. The key conclusions drawn from the literature are as follows: •

Employee engagement matters, but the extent to which it can lead to a step-change in organisational performance is uncertain. In particular, even where there is a clear vision and understanding of what needs to be done, there can be significant barriers to effecting ‘change on the ground’, for example if staff are generally opposed to change or if the capacity to implement change is limited by resource constraints;

•

Some of the approaches aimed at improving employee engagement can significantly increase employee engagement (as measured by staff surveys) and, in turn, this can have a measurable impact on HR variables such as retention and staff sickness. The links to wider impacts in areas such as client service, satisfaction levels and for private sector business – turnover and profitability - tend to be more tenuous; and

•

Increasing employee engagement is highly dependent on leadership and establishing two-way communication where people’s work and views are valued and respected. There are thus ways in which any organisation can work towards better employee engagement without incurring high costs as long as there is the organisational determination to focus on this issue. Even in the absence of robust impact data, the principle of employee engagement is to be endorsed in terms of good practice in people management and the softer benefits this confers to organisations.

56

ANNEX A

BIBLIOGRAPHY

British Psychological Society. Emotional bond key to success. Available online at http://www.bps.org.uk/media-centre/press-releases/releases$/division-ofoccupational-psychology/bond.cfm [retrieved on 6 March 2007] Brockett, James (2006) The exchange factor (change management at Rotherham Borough Council), IN People Management, Vol 12 No 22 9 Nov 2006, pp34-35 Buchanan, Leigh (2004) The Things They Do for Love, IN Harvard Business Review, Vol 82 No 12, Dec 2004, p. 19(2) Cabinet Office/Trade Union Congress. Drive for Change website. Available online at http://www.driveforchange.org.uk/ [retrieved on 6 March 2007] Cabinet Office. Total reward framework. Available online at http://www.cabinetoffice.gov.uk/workforcematters/pay_and_rewards/total_rewards/framewor k/ [6 March 2007] Chartered Institute of Personnel and Development (CIPD) (2005)Reward Management surveys. Available online at http://www.cipd.co.uk/subjects/pay/_rewrdmansurv.htm?IsSrchRes=1 [retrieved on 6 March 2007] Chartered Institute of Personnel and Development (CIPD) (2006a) Reflections on employee engagement: Change agenda. London: CIPD. Available at http://www.cipd.co.uk/changeagendas [retrieved on 6 March 2007] Chartered Institute of Personnel and Development (CIPD) (November 2006b) Annual survey 2006: How engaged are British employees. Available online at http://www.cipd.co.uk/NR/rdonlyres/E6871F47-558A-466E-9A744DFB1E71304C/0/howengbritempssr.pdf [retrieved on 6 March 2007] Chartered Institute of Personnel and Development (CIPD) (2006c) Working Life: Employee attitudes and engagement 2006 Research Report. Chartered Institute of Personnel and Development (CIPD) (2007a) Employee engagement. Available online at http://www.cipd.co.uk/subjects/empreltns/general/empengmt.htm?IsSrchRes=1 [retrieved on 6 March 2007] Chartered Institute of Personnel and Development (CIPD) (2007b) The Psychological Contract. Available online at http://www.cipd.co.uk/subjects/empreltns/psycntrct/psycontr.htm?IsSrchRes=1 [retrieved on 6 March 2007] Clifton, James K. Engaging your employees – six keys to understanding the new workplace. Virginia: Society for Human Resource Management. Available online at http://www.shrm.org/foundation/engaging.asp#six [retrieved on 6 March 2007]

57

Common Assessment Framework (CAF): Improving an organisation through selfassessment. October 2002. 2nd Quality Conference for Public Administration in the EU. European Institute of Public Administration. Available online at http://www.eipa.nl/CAF/Brochure/CAF2002_Eng.pdf [retrieved on 6 March 2007] Confederation of British Industry (CBI) (May 2006) Working Together: Embedding Good Employment in Public Services. Available online at http://www.cbi.org.uk/pdf/workingtogether0706.pdf [retrieved on 6 March 2007] Corporate Leadership Council (2004) Driving performance and retention through employee engagement (summary, website extract). Ellis, Christian M. and Sorensen, A. (2007) Assessing employee engagement: the key to improving productivity. Perspectives Vol 15 no 1 January 2007. Available at http://www.sibson.com/publications/perspectives/Volume_15_Issue_1/ROW.cfm Funk, Lothar (8 March 2004) Few employee engaged in their jobs, poll finds. EIRO Online. Available online at http://eurofound.europa.eu/eiro/2004/03/inbrief/de0403102n.html [retrieved on 6 March 2007] Garrick, Lesley (Hay Group) (2007) Cracking the code: the challenge of optimising efficiency across the Scottish public sector. Public Service Management People, Glasgow SECC 30/31 January 2007. Stockport: PSP Events Harrad, Kate (2006) Employee engagement: An interview with David Sharpley. Nelson Consulting. Available online at www.nelsonconsulting.co.uk/Articles/engagement. [retrieved on 5 March 2007]

Heintzman, Ralph and Marson, Brian (June/July 2006) People, service and trust: links in the public sector service value chain. Canadian Government Executive. Available online at http://www.hrma-agrh.gc.ca/veo-bve/publications/atricle_e.asp [6 March 2007] Investors in People (IiP) Engaging with people – key points. Available online at http://www.investorsinpeople.co.uk/Standard/Businessimprovementtopics/Engagingwithpeop le/Pages/Keypoints.aspx [retrieved on 6 March 2007] Ipsos – MORI (13 October 2006) Change Management And Leadership: The Challenges For The Public Sector. London: Ipsos – MORI. Available online at http://www.ipsos-mori.com/publications/mis/change-management-andleadership.shtml [retrieved on 6 March 2007] Ipsos – MORI and Work Foundation (2007) The Workers Index 2005/2006 – series of papers. London: Ipsos – MORI Available online at http://www.ipsos-mori.com/employee/workersindex.shtml [retrieved on 6 March 2007] IRS (2006) Getting engaged: employee satisfaction at West Brom IRS Employment Review 843, 24 March 2006.

58

Johnson, Rebecca (2006) Singular focus (employee engagement), IN People Management, Vol 12 No 18 14 Sep 2006, pp36,38 McGee, Lucy (2006) How to interview for engagement, IN People Management, 27 Jul 2006, pp 40-41 McKenzie, Alasdair (2003) Reason, purpose and value IN Interviews on Communications and HR pp16-17. HR Gateway Meere, Michael (December 2005 ) High cost of disengaged employees Victoria: Swinburne University of Technology. Available online at http://www.swinburne.edu.au/corporate/industrysolutions/ee/reports/Employee%20Engagem ent%20Industry%20Briefing%20Paper%20Dec%202005%20.pdf [retrieved on 6 March 2007] Melcrum Publishing (2005) Employee Engagement: How to build a high-performance workforce. An independent Melcrum Research Report Executive Summary. Michelman, Paul (2004) Methodology – how great managers manage people. Harvard Management Update. 1 August 2004 Boston: Harvard Business School Publishing Moorcroft, D Realising RBC’s new vision for employee communications, IN Strategic Communication Management Volume 10, Issue 6, October/November 2006. Available online at http://www.melcrum.com/articles/vision_at_RBC.shtml [retrieved on 6 March 2007] Office of the Auditor General. Building a strong work environment in British Columbia’s public services through employee engagement. 2002. Available online at http://www.bcauditor.com/pubs/2002-03/report1/workenviron.pdf [retrieved on 6 March 2007] Office of Public Services Reform. (2004) Trade union and employee involvement in public service reform. London: Cabinet Office. Available online at http://archive.cabinetoffice.gov.uk/opsr/workforce_reform/involving_managers/trade_union.a sp [retrieved on 6 March 2007] Penna (2006). Meaning at Work Research Report. Available online from http://www.epenna.com/newsopinion/research.aspx [retrieved on 6 March 2007] Rafferty, A.N et al (2005) What makes a good employer? Geneva: International Council of Nurses. Available online at http://www.icn.ch/global/Issue3employer.pdf [retrieved on 6 March 2007] Right Management (2006) Measuring True Employee Engagement. Philadelphia: Right Management. Robinson, D., Perryman, S. and Hayday, S. (2004) The drivers of employee engagement. Brighton: Institute for Employment Studies.

59

Schmidt, F of Schmidt & Carbol Consulting Group, Inc. Identifying the drivers of staff satisfaction and commitment in the public sector – updated version 2004 for the Public Service Human Resources Management Agency of Canada. Ottawa: PSHRMA. Available online at http://www.hrma-agrh.gc.ca/hr-rh/wlbps-eeoppfps/documents/EngagementPaperUpdatedVersion.pdf [retrieved on 6 March 2007] Schmidt, F (2004) Workplace well-being in the public sector – a review of the literature and the road ahead for the Public Service Human Resources Management Agency of Canada. Ottawa: PSHRMA. Available online at http://www.hrma-agrh.gc.ca/hr-rh/wlbpseeoppfps/documents/WorkplaceWell-Being.pdf [retrieved on 6 March 2007] Segal Sibson (2006) Rewards of Work Study The Segal Group Inc. Available online at http://www.segalsibson.com/publications/surveysandstudies/2006ROWno1.pdf [retrieved on 6 March 2007] Szwarc, David Putting Our B.E.S.T. Foot Forward: Improving Service Through Employee Engagement NetworkedGovernment (Canada). Available online http://www.networkedgovernment.ca/BESTPracticesSzwarc [retrieved on 6 March 2007] Tamkin, Penny (2005) The Contribution of Skills to Business Performance. Brighton: Institute for Employment Studies Available at http://www.dfes.gov.uk/research/data/uploadfiles/RW39.pdf [retrieved on 6 March 2007] Towers Perrin (2003) Working today: understanding what drives employee engagement. Towers Perrin. Available online at http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2003/200309/Talent_200 3.pdf [retrieved on 6 March 2007] Tritch, Teresa B&Q boosts employee engagement - and profits, IN Gallup Management Journal. 8 May 2003 Available online at http://gmj.gallup.com/content/1036/BQ-Boosts-Employee-Engagement----and-Profits.aspx [retrieved on 6 March 2007]

60

List of organisation related resources checked

Government/public bodies Audit Commission Local government information unit - LGIU Local government Association - LGA Local Government Employers - LGE Improvement and Development Agency - IDeA Office for Public Management Office of Government Commerce Public Services Forum Cabinet Office Department of Work and Pensions Drive for Change – Cabinet office/TUC COSLA Unison Welsh Assembly European industrial relations observatory - EIRO International Labour Organisation - ILO OECD The European Monitoring Centre on Change - EMCC Professional and trade organisations The Work Foundation Investors in People Society of Local Authority Chief Executives and Senior Managers - Solace Public sector people managers’ association – PPMA and Public Service Management conference proceedings Institute for Welsh Affairs Institute for Management Development Chartered Institute of Personal Development – CIPD European Association for Personnel Management - EAPM European Employers Councils European Institute of Public Administration The Human Capital Institute European Association of Work and Organizational Psychology (EAWOP) European Centre of Enterprises with Public Participation and Enterprises of General Economic Interest - CEEP Institute for Citizen Centered Advice - ICCS Corporate Leadership Council - CLC Management journals/bodies IRS Employment Studies Personal Today Peoplemanagement.com website and journal McKinsey Quarterly

61

Harvard Business Review Management Today Gallup Management Journal Academic departments/organisations London School of Economics University of Bath School of Management Institute of Employment Studies British Academy of Management Warwick Business School Industrial Relations Unit Warwick Institute for Employment Research Manchester Business School School of Management and Organisational Psychology, Birkbeck Robert Gordon University Said Business School, Oxford Swinburne Institute of Technology Australia Centre for Business Performance, Cranfield University Business Manpower Roffey Park Consultancy Melcrum – research and training business ERIN Research Inc Penna Towers Perrin IPSOS - Mori Public services.co.uk Public Service Partnership Ltd – Public service events Other European Case Clearing House Demos - think tank Catalyst – think tank Daniel Goleman – personal website Databases for articles Policy library – database of think tank resources Ingenta Emerald IDOX Blackwell Synergy

62

ANNEX B SCREENING

DETAILS OF LITERATURE SEARCH AND

Literature search methodology At the outset of the search process a series of the key search parameters and terminology was established. These were: •

Geography – the main geographical coverage was to focus on the UK, but to include any relevant international literature

•

Timing - there was no date restriction on the literature although we anticipated more recent (last 10 years) literature to be located.

•

Sector - the emphasis of the literature search was on the public sector. However, texts discussing employee engagement in the private sector where there is evidence of a generic application to the public sector were considered.

•

Search terms - the key themes and free text search combinations are set out in Table 1.1. On websites where keyword searches were not possible, any publication lists or documents were scanned using the parameter criteria.

Table 1.1

Illustrative keyword terms used in the literature search process

Key theme Employee engagement Employee performance with engagement Engaged employee Combined with:

Sector Public sector Local, regional and central/national government Government department(s) and bodies Trade union(s) Public service Private sector (if required to supplement material specific on public sector)

Process

Examples

Model Toolkit Blueprint System Application Policy Practice

Case study Best/good practice Success story Exemplars/ example Lessons /lessons learnt Effective

Combined with Change Management

Measuring Outcomes Output Outcome Evidence Review Assessment Monitoring Evaluation Measurement/ measuring [engagement]

The main focus on the search was a comprehensive trawl of a wide range of resources. The resources essentially fell within the following main areas: •

Academia covering centres of excellence and academic home pages

•

Think tanks and policy

•

Local government and public sector organisations

•

Government offices and agencies

63

•

Professional HR related organisations

The findings were a combination of abstracts, full text reports and articles, conference proceedings and web based resources such as the TUC Drive for Change website. All the literature was collated for the screening process between 13th February 2007 and 27th February 2007. Screening Process & Analysis Over 150 documents comprised the ‘long list’. Senior members of the study team examined these and, if deemed relevant in principle, they went forward for detailed assessment against a bespoke screening framework – see Annex C. The screening framework contains fields of information relevant to the focus of the research and the documents were assessed against these fields: context and definition, public sector focus, models, case studies, impact, measurement and monitoring and international focus. Based on the range and quality of information, each document was then assessed as follows: •

‘Yes’ – a definite for inclusion in the literature review (44 documents)

•

‘Possible’ – a possible for inclusion in the literature review (21 documents)

•

‘No’ – rejected from the literature review (33 documents)

From over 150 documents, 50+ were rejected outright as being non-relevant, with 98 going forward for detailed screening. Given the richness of the literature base on employee engagement it was agreed with OCR that the research would focus on the 44 ‘high relevance’ documents. A full list of all the sources examined is provided in Annex A. The analysis of the literature was facilitated by the structuring of the screening framework against the main Chapters in the report structure.

64

HR Gateway

Penna plc

Corporate Leadership Council

20

22

25

36

29

Segal; Sibson

Harvard Business Review Dec 2004 Chartered Institute of Personnel Development

Right Management

19

26

CBI Conference 270207

Melcrum Publishing People Management 270706

The Drivers of Employee Engagement

Institute for Employment Studies People Management 140906 People Management 091106

Reward Management Assessing Employee Engagement: The Key to Improving Productivity

The Things They Do for Love

Meaning at Work Driving Performance and Retention thorugh Employee Engagement and Engaging the Workforce

Measuring True Employee Engagement Interviews on Communications & HR (pages 16 - 17)

Employee Engagement

The Exchange Factor Employee Engagement: How to build a highperformance workforce …interview for engagement

Singular Focus

Title

Source

Paper

Report

Paper

Paper extract

Report

Papers

Report extract

100%

100%

100%

100%

100%

Partial

100%

100%

100%

100%

Report extract Paper Progra mme only

Partial

100%

100%

Employee Engagement Focus

Paper

Paper

Report

Docum ent

SCREENING FRAMEWORK

Document

14

9

8

7

6

1

No.

ANNEX C

Χ

Χ

Mixed Χ

√ √

66

Χ

Χ

Χ

Χ

Χ

√

Χ

√

√

√

Χ

Χ

√

Χ Mixed

√

Χ

√

√

Public Sector

√

Context & Definition

√

√

√

√

√

Partial

√

√

√

√

√

√

√

Models

Χ

Χ

?

Χ

Χ

√

Χ

√

Χ

√

√

√

√

Case Studies

Screening Criteria

√

√

√

√

√

Χ

√

√

Χ

√

√

√

?

Impact

√

Χ

Χ

Χ

Χ

Χ

√

√

Χ

√

Χ

Χ

√

Measurement & Monitoring

√

Χ

√

√

Χ

Χ

√

Χ

Χ

√

Χ

Χ

Χ

International

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Yes No

Y

Y

Y

Y

Y

Seminal

Assessment

CIPD

CIPD

CIPD

IiP UK

Ipsos MORI and The Work Foundation

40

41

42

44

45

Cabinet Office Cabinet Office / TUC CBI International Council of Nurses

61 62 63

67

Schmidt & carbol consulting group, inc.

Cabinet Office

60

64

Institute for Employment Studies

57

56

54

Ipsos MORI 2nd Quality Conference for Public Administration in the EU British Psychological Society

CIPD

39

48

Segal; Sibson

Source

37

No.

The Common Assessment Framework (CAF) Emotional bond key to success The Contribution of Skills to Business Performance Trade union and employee involvement in public service reform Total Reward Framework Drive for Change Working Together What makes a good employer? Identifying the drivers of staff satisfaction and commitment in the public sector – updated version, 2004

The Workers Index – May 2006 Change Management And Leadership: The Challenges For The Public Sector

Employee Engagement Reflections on Employee Engagement How engaged are British Employees? (2006) The Psychological Contract Engaging with People Key Points

Title 2006 Rewards of Work Study

Document

Report

Report

Toolkit Toolkit Report

Report

Report

Article

100%

Partial

Partial 100% 100%

Partial

Partial

100%

Partial

Partial

Article

Report

100%

100%

100%

100%

100%

100%

Partial

Employee Engagement Focus

Report

Paper

Report Fact Sheet

Report

Paper Fact Sheet

Docum ent

√ √ Mixed √

Χ √ Χ √

67

√

√

Χ

√

Χ

√

√ √

√

Χ

√

Mixed

√

Χ

Mixed

√

√

Mixed

√

√

Mixed

Χ

√

√

√ √ √

Partial

√

√

√

Χ

Χ

√

√

√

√

√

Mixed

√

Models √

Public Sector

√

Context & Definition

√

Χ

Χ √ √

√

Χ

Χ

Χ

Χ

Χ

Χ

Χ

Χ

√

√

Χ

Case Studies

Screening Criteria

Χ

√

√ √ √

√

√

√

Χ

√

Χ

√

√

√

√

√

√

Impact

Χ

√

√ √ √

√

√

√

√

√

√

√

Χ

√

√

√

√

Measurement & Monitoring

√

√

Χ Χ Χ

Χ

√

Χ

√

Χ

Χ

Χ

Χ

Χ

Χ

Χ

√

International

Y

Y

Y Y Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Yes No

Y

Y

Y

Y

Y

Seminal

Assessment

eironline

IRS Employment Review

90

93

Gallup Management Journal

85

Harvard Business School Publishing

Swinburne Univ. of Technology

83

86

Melcrum Publishing

71

81

Office of the Auditor General of British Columbia

70

80

NetworkedGovernme nt.ca

69

Towers Perrin Society for Human Resource Management

Canadian Government Executive

77

Schmidt & carbol consulting group, inc.

Source

68

No.

How Great Managers Manage People Getting engaged: employee satisfaction at West Brom

The High Cost of Disengaged Employees B&Q Boosts Employee Engagement - and Profits Few employees engaged in their jobs, poll finds

Gallup - 6 Keys to the New Workplace Realising RBC's new vision for employee communications

Title Workplace well-being in the public sector – a review of the literature and the road ahead People, Service and Trust: Links in a Public Sector Service Value Chain Putting Our B.E.S.T. Foot Forward: Improving Service Through Employee Engagement Building a Strong Work Environment in British Columbia’s Public Service: A Key to Delivering Quality Service Working Today: Understanding What Drives Employee Engagement

Document

Paper

Paper

Paper

Paper

Lit Review

Paper

100%

Partial

100%

100%

100%

100%

Partial

100%

Report Paper

Partial

100%

100%

100%

Employee Engagement Focus

Report

Article

Article

Report

Docum ent

68

Χ

Χ

Χ

Χ

Χ Χ

Χ

Χ

Χ

Χ

Χ √

Χ

Χ

√ Χ

√

√

√

√

Public Sector

√

√

√

√

Context & Definition

√

√

Χ

Χ

√

√

Χ

√

√

√

√

Partial

Models

√

Χ

Χ

√

√

√

Χ

Χ

√

√

Χ

Χ

Case Studies

Screening Criteria

√

Χ

√

√

√

√

Χ

√

√

√

√

Χ

Impact

√

Χ

√

√

√

√

√

√

Χ

√

√

Χ

Measurement & Monitoring

Χ

Χ

√

√

√

√

√

√

√

√

√

√

International

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Y

Yes No

Y

Seminal

Assessment

Hay Group

CIPD

98

Source

97

No.

Title Cracking the Code' - the challenge of optimising efficiency across the Scottish Public Sector Working Life: Employee Attitudes and Engagement 2006

Document

100%

100%

Presen tation Report

Employee Engagement Focus

Docum ent

69

√

Χ

Context & Definition

Mixed

Χ

Public Sector

√

√

Models

Χ

Χ

Case Studies

Screening Criteria

Χ

Χ

Impact

√

Χ

Measurement & Monitoring

Χ

Χ

International

Y

Y

Yes No

Seminal

Assessment

Employee Engagement in the Public Sector

ISSN 0950 2254 ISBN 978 0 7559 6614 1 web only publication www.scotland.gov.uk/socialresearch RR DONNELLEY B51563 4/07

Office of Chief Researcher

A review of literature