Happy Days

The best staff will stick around if there are flexible conditions and they feel part of the decision making process.

The Sydney Morning Herald, August 23, 2005

editorial_employee_engagement

As companies fight to retain their top staff in an increasingly tight talent market, ’employee engagement’ has become a hot corporate topic. But although most organisations see work life balance as critical to better engagement, some experts are saying it is far less important than many CEOs think.

Dr Peter Langford, lecturer in organisational psychology and human resource management at Macquarie University, recently released the results of a two-year survey of 10,000 employees from 700 organisations, including small, medium and large companies.

The survey assessed 28 management practices to identify which had the most impact on outcomes including employee engagement, employee turnover, absenteeism and profitability.

Even Langford didn’t expect that work life balance would actually be the worst predictor of whether employees were ‘engaged’ – meaning they were satisfied with their jobs, committed to their organisation and intending to stay with it.

“It was a surprise to us,” he says. “Work life balance is such a hot topic at the moment, and a lot of time, attention and money is being spent on it.”

What does engage employees are what Langford calls the “three Ps” – purpose, participation and progress.

“Purpose means people believe in what the organisation is doing,” Langford says.

“Participation means they feel involved in decision-making, recognised and are given opportunities in the organisation. Progress means they see the organisation as being successful and achieving goals.”

Of lesser importance were ‘property’ (resources and technology) and ‘people’ (teamwork and working with talented people). The least important was ‘peace’, which relates to stress management and work life balance.

“This defies what is coming through most of the media at the moment, which implies that work life balance is very important, and most organisations are doing it badly,” Langford says. “The reality is completely the opposite. It’s really not very important at all, and most organisations are doing quite reasonably at it.”

Langford (whose recommendations for improving engagement are set out in the accompanying table), says the more engaged employees are going to be those who in some way have the worst work life balance.

“They may want some flexibility around how they spend their time, but they don’t think they necessarily need to demarcate work and family any better than they are doing now.”

When results were analysed by age and family status, work life balance was more important for those who were aged 30 to 40, married or had children.

“But it doesn’t increase dramatically, and there are still other things of considerably greater importance for employee engagement,” says Langford.

He also puts forward a strong business case for improving employee engagement, basing this on a 200 person organisation with an average total salary cost of $80,000 per employee and revenue of $30 million.

If engagement can be improved by five per cent, turnover costs will fall by $240,000, absenteeism costs by $21,400 and profitability would be $300,000 higher.

Peter Fuda, founder and managing director of PCD, a boutique change leadership consultancy, also believes work life balance is a “bit of a furphy as an issue” in employee engagement.

Fuda, whose clients include major banks, financial services companies and government bodies, says lack of engagement is an outcome for companies which still apply an “industrial age mindset to the 21st century economy”.

“This manifests itself in generational issues and disengagement in the workplace,” he says.

Fuda lists the beliefs of industrial-age management as: people don’t need to see the future; they just need to follow the rules and do what they are told; they can’t be trusted; nothing good happens without the carrot and the stick; the leader makes all the important decisions; detailed policies and close supervision are the key to performance.

While this belief system is held by a large proportion of baby boomer leaders, Fuda says it simply doesn’t work any more, particularly with Generation X and Y employees who now make up half the workforce.

“When baby boomers try to get things done by making all the decisions and telling people to do what they are told, that’s the fastest way to disengage, disorient and disempower,” he says.

If you want to engage employees, transparency about your business operations is critical, as is having work designed in a way that is meaningful.

“Even a group of janitors can be engaged if they’re involved in the work design and how they go about getting their work done,” Fuda says.

There must be a “direct line of sight” between every individual and the contribution they make to achieving major organisational goals.

Leaders must understand how people learn and become engaged – it is not through death by PowerPoint or CEOs pitching their conclusions to employees.

“We have a saying that people will tolerate the conclusions of their leaders, but they will only act upon their own conclusions,” Fuda says.

“So what you are trying to do is generate thinking and dialogue around the conclusions that you’ve come to, in order to allow workers to come to the same conclusions.”

And if you come to quality decisions based on good data, your people will generally come to the same conclusions. Companies must be clear on their purpose, vision and strategy, and have a clear set of agreed values and shared standards.

This means taking the mission and vision statements off the wall, and understanding what words such as ‘integrity’, ‘respect’ and ‘communication’ mean to baby boomers, Generation X and Y, because each has a different language.

In enlightened organisations, Fuda says baby boomer CEOS are looking to their smartest young staff to give them a clear understanding of what is actually going on, and how the CEO can connect with their peers.

Gabrielle Riddington, senior principal at recruitment consultants Hamilton James & Bruce, says staff retention issues are now high on boardroom and CEO agendas because they are starting to markedly affect business performance.

“The market is tight, and it is getting really, really hard to attract quality and skilled employees,” she says.

Riddington believes work life balance is important, particularly because some 45 per cent of workers now have a caring responsibility for children or aging parents. The number of single parent families has grown dramatically, increasing the need for workplace flexibility.

Generation Y staff also have a high need to balance personal objectives and outcomes with business objectives, and therefore want workplace flexibility.

Riddington quotes a recent young job candidate who said: “I want less politics, more action, I want more flexibility, I want to be able to respond faster, I want the opportunity to make a bigger impact and I want more control.”

She says small to medium enterprises (SMEs) are in a good position to provide “real responsiveness and ownership” to younger workers, because, even though large companies offer best practice and learning experiences, they may also be constrained by global processes.

“I think SMEs have quite a competitive advantage over the large corporates to address this issue, and if they get it right it’s a huge selling point.

“Generation X and Y really like to say ‘give me the problem and let me solve it. Don’t tell me how, tell me why and what you want.’ In an SME, that’s really exciting stuff, because sometimes there’s no precedent for the way it’s been done.”

Riddington says it’s essential for baby boomer managers to learn how to manage generational differences. They must live the company values so the reality matches the rhetoric, transparency is essential, communication must be collaborative rather than dictatorial and employees must be involved in decision making.

Coaching is a critical core competence, because that’s what Generation X and Y respond to.

“They don’t respond to telling,” Riddington says. “You’ve got baby boomer managers who tell, so they leave.”

Case Study

At age 39, Robert Sakker, director of Globalstar Australia, is Generation X. His business partner, Peter Bolter, is aged 43 and is a baby boomer. So are there differences in the way they think and manage?

Sakker thinks there are slight differences, but says such differences become even more apparent in baby boomer managers in their late 40s or 50s.

“I do think the older school expects to be able to see productivity, to walk into the office and see things happening,” he says.

“But I think nowadays you can’t necessarily be present when productivity is happening, because people are working in different ways. It’s sometimes hard to see what people are delivering until they’ve delivered the end goal.”

Globalstar employs 51 staff, most of whom are Generation X and Y. Sakker says trust is very important to these younger workers if they are to feel engaged.

They want to be trusted by the organisation, they want transparency in the business and they want to achieve their goals by being outcome driven, not task driven.

This can mean working flexible hours, particularly if they feel they are more effective at night than during the day.

Sakker and Bolter, who bought the Globalstar business from Vodaphone as a distressed asset in January 2003, recently realised the company is now of a size where formal values and standards need to be articulated and understood. They are working on this with their staff.

“We reached the point at the start of this year where we felt it was time for us to really make sure we identified what culture we wanted in the organisation, the things we are really good at, and to reinforce what’s stopping us going down tracks we don’t want to take. For example, we don’t want to be an organisation with internal politics,” Sakker says.

“What we are pushing for is for people to take ownership of what they do, for people to be engaged and involved with others. And to really set a vision and a goal for people to respond to.”

New staff will be selected on the basis of their value fit with Globalstar. If they don’t fit the values, Sakker feels they will “self select” themselves out of the company, because it won’t be a comfortable place for them.

This has already happened with some senior managers he and Bolter appointed last year, only to find they left after about three months. All were aged over 40, and Sakker now feels this may have been a cultural mis-fit.

“That was a wake up call six months ago that it really was time to get values into the organisation, he says.

Breakout

To improve employee engagement, companies must strengthen ‘purpose, participation and progress’, foster three core attitudes and build 12 core practices, according to Dr Peter Langford of Macquarie University. The table below sets out his model.

Three core systems to strengthen

Three core attitudes to foster

Purpose

“We believe in why we’re here, what we do and how we do it.”

Participation

“We belong in this organisation, we are recognised, involved & growing.”

Reward & recognise staff in a fair manner.Improve skills of, & communication with, senior management.

Progress

“We achieve our goals, we are getting better & our future is positive.”

12 core practices to build – both in reality and perception

Build belief in the purpose, values & work of the organisation.Develop, clarify & communicate the vision, values & strategy so that staff can personally identify with them.

Promote, demonstrate & reward ethical &
socially responsible behaviour.

Consult staff & encourage feedback.

Evaluate staff & provide directions for improvement.

Improve the way staff are recruited.

Provide job-related

& career-related development opportunities.

Build staff belief in the current & future performance of the organisation.Manage change well, promote innovation & facilitate organisational learning.

Promote product & service quality & an understanding of
customer needs.