Is reward enough for employee engagement?
The value of an engaged workforce to the organisation is that employees are more loyal thus reducing the costs associated with high turnover
Engaged employees are willing to serve as advocates by recommending the organisation to family and friends
For many organisations, Employee Engagement has become the number one metric to measure the impact that employees have on business success. A question that is frequently debated within organisations is the impact that Reward, or how much we pay our employees, has on Employee Engagement. Before we can answer this question, we must first recap what Employee Engagement is and why it has become such a popular discussion point on the agenda of many company CEOs.
It is difficult to find a single definition of Employee Engagement. However, it is generally agreed that engaged employees are committed and proud of their organisation, and are willing to serve as advocates by recommending it as a good place to work to family and friends. The value of an engaged workforce to the organisation is that employees are more loyal, thus reducing the costs associated with high turnover. They work harder and smarter, and are willing to display discretionary effort to go beyond the call of duty in their role.
Employee Engagement, however, is not just about maximising productivity; it is also about creating a psychological affiliation with the organisation so that employees feel that what they do is ‘more than just a job’. The factors that tend to contribute to this psychological affiliation include confidence in the organisation’s future, support for work-life balance, career development and training, valuing and recognising employees and a good relationship with one’s manager or leader.
While there are some differences in the importance of these factors by industry and geography, the frequency that these factors appear as potent drivers of engagement across organisations is remarkably consistent.
More recently, the concept of high performance engagement has started to emerge within academic and research literature. The premise of high performance-engagement is that having an engaged workforce, while important, is only the first part of the engagement challenge. Research studies have shown that factors linked with high performance-engagement include a strong customer orientation, an emphasis on quality, and investment in training and involvement in decisions. Another way to view this is attitudinal engagement (having an engaged workforce) and strategic engagement (having a high performance focused workforce). These two concepts of engagement have both been shown to have powerful relationships with business performance metrics and are, therefore, considered to be complimentary goals.
Let’s take an example of a customer service representative working in a retail store. It is important that this employee is attitudinally engaged with the organisation. This will ensure that he/she is loyal (less likely to leave), that he/she is an advocate for the organisation and he/she is willing to apply discretionary effort when doing his/her job. However, it does not necessarily mean that the employee will be a high performing employee. This is where strategic or high performance-engagement comes into play. The customer service representative who is also strategically engaged will do everything he/she can to ensure that every customer is satisfied.
So, where does Reward and Recognition fall within the concept of a high performance-engagement model?
Every year, Kenexa®, a leading provider of business solutions for human resources, captures the opinions of thousands of employees all over the world via our customer base and the Kenexa Research Institute. This data is collated into powerful normative databases to provide organisations with contextual information regarding how they compare on employee engagement factors. In addition, Kenexa publishes an annual WorkTrends™ Report that illustrates global drivers of employee engagement and other trends within these vast employee data sets.
The last three years of analysis on the global drivers of employee engagement reveal some interesting findings in relation to Reward and Recognition. Reward is typically measured by questions such as: ‘I am paid fairly for the work I do;’ ‘If I left my current job, I would be able to find another job that paid me similarly or better than what I earn now;’ and ‘Overall I am satisfied with my pay.’ Recognition is typically measured by questions such as: ‘I regularly receive the recognition I deserve;’ ‘My Manager provides me with regular recognition for my work;’ and ‘Where I work, employees are recognised for delivering outstanding customer service.’
In 2007, the overall theme of satisfaction with pay (Reward) appeared as a global top 10 driver of engagement, as did the overall theme of satisfaction with Recognition. However, for the years 2008 and 2009, the theme of Reward did not appear and instead, the theme of Recognition started to appear as a global top 10 driver. These findings indicate that how much employees are paid (Reward) has a limited impact on how engaged they become with the organisation. Rather, it is the concept of receiving Recognition for their work that is much more important. These global analyses are supported at an organisational level, where it is significantly more common for a Recognition question to appear as a key driver of engagement. Reward questions, on the other hand, rarely, surface. In addition to Recognition appearing as a key theme over the three years, themes of Career Development and Training Opportunities have also surfaced.
So what are the implications of these findings?
These findings present a clear picture that simply increasing an employee’s pay (Reward) is unlikely to result in improved Attitudinal or Strategic Engagement. More important is the recognition, career development and training opportunities that are provided to employees. While every organisation’s story of engagement can be different, generally speaking, an investment in initiatives around these themes will produce a higher return in terms of driving overall engagement levels within the organisation.
The manager population in any organisation plays a critical role in addressing these themes of Recognition, Career Development and Training. Obviously, there needs to be an infrastructure in place (clear career development paths, training programs, et al), but at the same time the manager’s role in personalising these areas for each individual is what makes the difference. We know this to be true as there have been various studies that show that managers who are considered to be high performers also have higher overall engagement scores for those that they manage.
Therefore, an organisation can gain great leverage from learning from their very best managers in driving overall engagement. These managers do great things when managing their reports on a day-by-day basis, so a smart organisation will take the opportunity to learn from these talented people. I will share with you a personal example about the best manager I have ever had. Whenever I called this person, he always used to say “How can I help you be successful?” These very simple words are incredibly engaging, as they show a genuine interest from the manager in my individual success. It is this type of simple behaviour that effective managers display on a consistent basis across all aspects of people management.
So in summary, if you are serious about driving Employee Engagement, focus on Recognition and not just on Reward. Ask yourself the question: ‘What makes our very best mangers so good at what they do?’ The answer will provide you with a large part of the secret recipe to create a high performing and highly engaged workforce.
Simon Gluyas is the Executive Consultant at Kenexa for Asia Pacific