One of the most important leadership topics in the past few years is employee engagement—or more precisely, the lack of it—in businesses in the United States and all around the world.
According to Gallup, engaged employees are “involved in, enthusiastic about, and committed to their work and workplace.”
A few years ago, Harvard Business Review Analytic Services published a report on employee engagement based on a survey of more than 550 executives. According to the survey, while 71 percent of the executives said that employee engagement is “very important” to achieving overall organizational success, only 24 percent reported that employees in their own organization are “highly engaged.”
While most leaders intuitively know that this engagement gap is not a good thing for their organizations or for their people, the data reveals that it actually has a tremendously negative effect on the productivity of American businesses. Deloitte calculates that American businesses suffer $300 billion in lost productivity each year as a direct result of disengaged workers—that is, employees who are not involved in, not enthusiastic about, and not committed to their work and workplace.
So, what can be done to move the needle, to create a workplace with happier, more satisfied, and more engaged people who provide more value to your customers and clients?
This is where you come in. Leaders have the ability to dramatically change the environment in their organizations for the better. But to do that, you've got to deeply care about your people, your customers, and the communities in which you do business, and you've got to act. In the sections that follow, we'll explore what you as a leader can do to engage your team for higher performance.
Engagement Is a Driver of Both Growth and Profits
You often hear chief executive officers (CEOs) say, “People are our most important asset,” but in many cases their actions don't support those words. Many things are on the minds of CEOs and other executives—from share price to quarterly results to disruptive competition and much more—and a company's employees unfortunately often end up somewhere down the list of priorities.
Most C‐level executives consider their most important job to be increasing shareholder value, and right or wrong, this means they naturally prioritize investor returns over most anything else they do. The good news for most executives is that higher levels of employee engagement can actually lead to a higher stock price and higher valuations.
In its 2017 State of the American Workplace report, Gallup found that businesses with engaged employees have higher earnings per share (EPS) than their competitors. According to Gallup, the actual EPS of best‐practice organizations increased at a rate 4.3 times higher than their competitors. In addition, Gallup found that business units in the top quartile for engagement experienced the following improvements over business units in the bottom quartile for engagement.
- Absenteeism: 41 percent lower
- Productivity: 17 percent higher
- Sales 20 percent higher
- Profitability: 21 percent higher
Why does employee engagement lead to such favorable return‐on‐investment results? How does it work?
The answer is what I call the Engagement–Shareholder Value Chain, which is an expanded form of the Service Profit Chain described by James L. Heskett, W. Earl Sasser, Jr., and Leonard A. Schlesinger in their classic, groundbreaking book, The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value (Free Press, 1997).
According to the authors:
Service Profit Chain thinking maintains that there are direct and strong relationships between profit; growth; customer loyalty; customer satisfaction; the value of goods and services delivered to customers; and employee capability, satisfaction, loyalty, and productivity.
Heskett, Sasser, Jr. and Schlesinger found that the strongest relationships were between:
- Profit and customer loyalty
- Employee loyalty and customer loyalty
- Employee satisfaction and customer satisfaction
Ultimately, their research revealed the fact that satisfied customers help create satisfied employees, and—in a virtuous circle—satisfied employees help create satisfied customers. Heskett, Sasser, Jr., and Schlesinger also explored this topic in What Great Service Leaders Know and Do: Creating Breakthroughs in Service Firms (Berrett‐Koehler, 2015).
In my Engagement–Shareholder Value Chain, I take their work one step further. I posit that engaged employees provide better service, leading to increased customer satisfaction and loyalty. This, in turn, leads to increased employee satisfaction and loyalty. In addition, engaged employees are retained longer by their companies—again leading to increased customer satisfaction and to increased productivity. All this means lower recruiting costs, lower training and on‐boarding costs, and increased growth and profit.
Many management experts have stated that culture will generally prevail over strategy. You can have the best strategy in the world, but if your employees aren't engaged and active participants in its development and execution, it isn't going to matter. The converse is true. As a leader in my own businesses, I often had the wrong strategy, but because I had great people working with me in a great culture, they figured out for themselves the best strategy to pursue and then delivered the high‐return outcomes our company needed. They wouldn't let me get in their way.
Leading Your Way to a More Engaged Workforce
While the data clearly indicates that only about one‐quarter of American workers are highly engaged in their work, it's clear that leaders have the ability to push this number up—often significantly higher—by taking some relatively simple but well defined steps. As with any other leadership initiative, the keys to a successful outcome are focus, consistency of practice, and follow through.
For this approach to work, you've got to keep your eye on the long‐term outcome you seek and not set it aside or prematurely jump to another approach when it doesn't bring immediate results. Give it time and give it your full attention. If you lead, others will follow. Here are some proven ways any leader, in any organization—large or small—can improve employee engagement and loyalty, and thus customer satisfaction.
Measure It
Fortunately, leaders have the ability to measure employee engagement. Surprisingly, however, many companies do not bother to measure the current state of their employee engagement, for reasons including not knowing how to do it, not considering it a priority, or simply perceiving it to be too difficult or too costly to do. In its study, Harvard Business Review Analytic Services found that fewer than 50 percent of companies are effectively measuring employee engagement against such metrics as increased market share or customer satisfaction.
If your company is already running an annual engagement survey and you're getting a report on how your team is doing, you're on the right track, but you can do even better. The problem with assessing engagement just once every year or two is that events that have a significant impact on employee feelings and morale—such as a round of layoffs, or the granting of bonuses—can and often do impact the scores, skewing the results in ways that can make the data less meaningful. Thus, doing an engagement check at least once every six months ensures that you see the big picture and that the nuances of external events are at least somewhat smoothed out.
But some companies prefer to measure engagement and its effect on customers even more often than that. Karen McKay, vice president, human resources and learning and development, for Eli Lilly Canada, reports that her company uses a technique called net promoter system (NPS) via internal and external surveys to measure how the engagement of its employees affects the experience of the company's customers. Her team gets together every three months to review feedback from the surveys, and employees are then rewarded for improvements in the service they deliver. The surveys also have the added benefit of revealing pockets of dissatisfaction in the organization and possible areas for improvement.
Share the Results
After conducting an engagement survey, share the results in a meeting with your team. It's important to show that you acknowledge the data you have gathered and that you value it. Many employees are cynical about employee surveys because they take up a lot of time, nothing ever seems to come from them, and their leaders don't really seem to care.
While leading my various companies, I consistently conducted an engagement survey every six months and then shared the results with my team using a PowerPoint deck with just two slides.
The first slide would just show the averages for all the questions. (Important: You never want to show individual results in a team meeting because that would breach the confidentiality of your survey.)
The second slide would show a graph depicting the results over time. Are we getting better or worse? Did we improve on the items we focused on, or did we decline? The key is to facilitate a discussion about the results (emphasis on facilitate; engage others in feedback and be open to their thoughts and ideas).
Sharing your survey results publicly, even if the scores are low, shows that you are serious about the engagement process. You'll earn the respect and trust of the members of your team just by being transparent with their current engagement level.
Build a Rhythm of Two‐Way Communication
Communication—from you as a leader, and from the organization back to you—is particularly critical because it forms the backbone for all other engagement efforts. To influence growth, recognition, trust, and understanding within your team, communication is key.
Increasing the level of employee engagement requires building strong formal and informal two‐way communication channels between you, other leaders in the organization, and the people who work for and with you. Taco Bell wanted to improve the communication leaders received from the company's front‐line staff, so it put into place a technology solution that solicits feedback from those people. In just one example, the feedback received from employees via the system led Taco Bell to offer greater support to those who are working to complete post‐secondary education. Initiatives such as these have landed Taco Bell firmly in the top‐five favorite restaurants of any kind for average‐income teens, according to a 2018 Piper Jaffray survey.
Create a system of two‐way communication with a consistent schedule of communication touchpoints. Here's what I consider to be the minimum:
- Annually: Each year spend a half‐day or full day with your team making sure they know what the company's goals are for the year and how your department and their individual goals align with the company goals. The idea is to create a line of sight between what they do every day and what the company is trying to achieve.
- Quarterly: Reviewing goals and key metrics annually isn't enough—too much time passes without reminders, reinforcement, and adjustments. In addition, too many new hires may have come on board in the interim who won't have alignment with your ultimate goals. Think of how many professional sports are broken into four quarters or periods—the plays that are called in the fourth quarter or period are often very different than the ones called in the beginning of the game.
- Weekly: Meet one‐on‐one with each of your direct reports for 15 to 30 minutes. This is vital. Not only does this provide you a few minutes of personal time so you can know about any major things going on in their life, it also enables you to review progress from the prior week and priorities for the current week. I always end these meetings with the same question: “What specifically do you need from me this week?”
Foster Growth
When it comes to growth, people need to feel that they are advancing towards their career objectives and are learning new things. They need to feel that their manager cares about their growth and advancement. And, of course, you should.
For each direct report, schedule a one‐on‐one “career meeting” with them, and repeat this meeting every six months. The goal is simply to help them to identify their career goals and what they need to achieve them. Ask:
- What are their career goals for the current year? For the next three to five years?
- Can those goals be accomplished within your department? Within the company?
- What knowledge, skills, and attitudes are required for their current position? What about for their future desired position?
When thinking about career development and skill‐building options, don't just think of traditional training programs. Consider other low‐cost options that might actually be more valuable, such as assigning a coach, mentor, developmental project, or job rotation. Ultimately, you want to create a culture that fosters growth among all team members. Knowing what their goals are and what skills they need to develop will help you to provide assistance along the way.
Recognize Employees
Leaders who show appreciation for their employees get more of the behavior they want while fostering greater levels of engagement and loyalty. Employees need to feel appreciated. For most people, appreciation comes from the more routine actions of their manager, on a day‐to‐day basis—not from large cash bonuses or other monetary forms of recognition. A simple “thank you,” sincerely delivered, can make all the difference in the world for employee engagement.
According to a 2016 Gallup workplace survey, 28 percent of the employees surveyed reported that the recognition most memorable to them came directly from their manager, while 24 percent said the most memorable recognition came from a high‐level leader or CEO. Other sources of memorable recognition came from the manager's manager, a customer, and peers.
Instead of mandating a rewards and recognition program to employees, Google turned the typical approach on its head, instead asking employees what kinds of programs they wanted. The result was four specific programs:
- Spot bonus, where managers can reward employees their choice of a cash or non‐cash bonus (such as dinner at a local restaurant).
- No‐name bonus, which allows executives to reward entire teams with such things as team trips or celebrations.
- Peer bonus, which allows employees to nominate their coworkers for cash rewards.
- Kudos, where employees have the ability to send thank‐you notes to one another without the approval of their managers. Kudos can be accumulated by employees and traded in for cash or non‐cash awards.
Get in the habit of a three‐part thank you: (1) say “thanks,” (2) mention the specific behavior or achievement you're recognizing, and (3) explain how the person or team's actions have advanced the company's goals or aligned with your strategic priorities.
Create a Trust‐Based Culture
When it comes to trust, your employees need to trust not only that you and the other leaders in your organization are honest and ethical, but also that their leaders will get them to the Promised Land—the long‐term vision that you have set for the business.
You might think that being honest and ethical isn't something that needs to be taught. You'd think almost everyone acts ethically. Unfortunately, in my own experience I've encountered many executives who, for whatever reason, can't fully be trusted.
Here are some basic reminders:
Your words and deeds must match. I've known “leaders” who promised bonuses but gave pies instead, who promised benefits wouldn't change and then they did, who promised to meet one‐on‐one but never fit it into their schedule, who promised the office would get a fresh coat of paint but it never occurred, and on and on and on.
In most of these cases, I think these were good people who got caught up in the moment, or perhaps found it easier to offer good news than reality. Regardless, when they didn't deliver on what they said they would, they were immediately judged to be not trustworthy by their followers.
Be careful what you say, and make sure to keep your promises. Be transparent; share the bad news along with the good. While you don't want to dwell on the negative, you gain trust by giving people the information they need to make their own judgments. In addition to being honest, instill confidence in the future—your team needs to trust that you can take them to your stated objectives. Ultimately, this may very well be one of the most important qualities of any leader.
In Conclusion
While the employee engagement gap might seem like a daunting obstacle for leaders to overcome, it is possible to turn an abysmally low‐engagement organization into one that is high performing, and for which its people actually look forward to coming to work each day. I've seen leaders of organizations large and small, in every industry, turn around toxic cultures that seemed permanently damaged.
It won't take much time out of your schedule to consistently execute the steps I've outlined above. In fact, it will take you far less time to raise the level of engagement in your organization than it will take you to deal with all the problems that result from disengaged employees. The upside is huge, and the downside virtually nil. Building a team that is fully engaged and performing at its peak is a time saver and definitely not a waste of your time.
This article was republished with permission from Leader to Leader. It was authored by Kevin Kruse, the creator of the Leading for Employee Engagement eLearning program for managers. and author of the bestselling book, Employee Engagement 2.0.