The 4 Pillars of Employee Engagement

The world of management is still obsessed with the mechanistic view of employees as resources, something that can be acquired and exploited in the quests for profit. This has been covered up by improvement in working conditions, benefits and skill training programs and it has even made the executive wall: People are our greatest strength. Despite this apparent progress most corporations still treats people as a commodity. HR departments are tasked with getting the best resource, shaping the resource with skills training, keeping the resource with competitive compensation packages and finally getting rid of the resource if it does not live up to expectations.

The employee is seen as something that has certain characteristics that can be changed (skills) and something that cannot (personality and motivation). When something goes wrong the problem is assigned to the employee rather than the corporation and the personal improvement process starts often resulting in a termination and a search for more appropriate resource.

Assuming that employees can be “good” or “bad” and corporations are always “right” makes the life of management a lot easier but not necessarily more profitable. The task will become to locate engaged employees and attract them with appropriate reward.

Research has shown that although engagement is clearly a state of the employee, the creation of engagement is an activity that both depend of the employee and the corporation. Progressive and innovative corporations know that employee engagement is not the responsibility of the employee. This gives them an opportunity to create long term sustainable competitiveness even in mature industries interlocked in the Race to Zero (margin).

Employee engagement can be viewed as being founded on 4 different pillars:

Fairness: The concept of fairness as being important for employee engagement is not new. What is often forgotten is that fairness is completely subjective and changes over time. People don’t see their parents work contract as fair. For younger generations, the concept of fairness goes well beyond the psychological contract between the corporation and the employee – it involves the fairness towards all stakeholder groups.

Identity: Through the development of social psychology it has become apparent that people’s decisions are heavily influenced by social settings and what group people belong to. As work represents a significant part of most people’s lives they derive a lot of their identity from work. Great corporations understand this and create jobs and an organisation that individual are proud of being associated with.

Growth: Being appropriately challenged and given the opportunity to learn and grow is a key element in employee engagement. Is the corporation a place where mistakes are seen as learning opportunities or where they are punished? Is HR and their policies and procedures seen as enabling people or limiting them? Do employees have the opportunity to be promoted at appropriate points in their career or are they locked in their current position. Great corporations know that this is the responsibility of the corporation.

Purpose: The days of pure focus on shareholders are over. Money, profits and growth is not a purpose – it is an outcome of successfully pursuing a purpose. Being the very best “x” in the “x” industry is a very common vision, but not a powerful purpose. A powerful purpose is in its essence something that benefits many if not all stakeholders of the corporation – a purpose that benefits society and humanity. This might sound soft to hardnosed finance people but customers and employees do not get engaged by cost cutting and headcount reductions in a race to zero margin as most mature companies are engaged in.

Purpose is connected with creation of prosperity – the solution to human problems

Companies that believe in people and in their ability to create value for customers and society have the potential to rally all stakeholder groups around a strong purpose and will prosper as they will create engagement in all groups.

The essential role of capitalism is not allocation – it is value creation.

Research from Gallup has proven that companies with engaged employees creates engagement in the corporations stakeholders and as a result creates better financial results. Corporations with engaged employees outperform companies with lack of engagement:

-          22% better profitability

-          21% Higher Productivity

-          147% better earnings pr share

-          10% better customer ratings

-          41% reduction in quality defects

-          65% reduction in turnover

-          50% reduction in accidents

-          37% reduction in absenteeism

All companies have the phrase “People are our greatest strength” hanging at the walls unfortunately most miss the opportunity to create sustainable competitive advantage through employee engagement. It starts with believing the sign.

“One great employee equals three good employees”  Kip Tindall, CEO Container Store