Employee Engagement is Good For Business

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Employee Engagement is Good For Business

Blog Post

Written by John Berry on 5th May 2017. Revised 23rd July 2017.

7 min read

Group of employeesEmployee Engagement is a term that is thrown around, but what does it mean? Put simply, employee engagement occurs when an employee feels proud about the firm in which they work, they feel fully involved and they feel empowered to make decisions. It appears simple to understand that a motivated employee is a more productive employee. However not all firms engage their staff? Why is that?

The Chartered Institute of Personnel & Development has published lots of research confirming the link between positive employee attitude and increased business performance. Watson-Wyatt research also supports this.

This blog discusses the concept of employee engagement and considers what actions can be taken to promote such engagement. It concludes with a look at how the psychological contract impacts the employee-employer relationship and therefore how it can fundamentally influence employee engagement.

Employee Engagement Defined

Employee engagement is not something that just happens; it has to be worked at. It is not something that can be seen, but it is something that is felt and it is something that has a huge impact on the firm. To explain just what the term means let’s consider two scenarios.

  1. Firm A has 30 employees. The MD manages the whole firm with five manager reports. They each have 5 staff reporting to them. The MD holds company meetings to tell the staff what they need to know. Each person gets on with their job, and no more. Each task has to be carried out as defined by the MD. Decisions about new product, restructures and other important business issues are made by the MD and staff are told after the event.
  2. Firm B has 30 staff. The MD has five manager reports. They each have five staff reporting to them. Company meetings are held every month and a different manager hosts each meeting. Projects are discussed, the financial status of the firm in shared and staff are encouraged to participate in the meeting by asking questions and also by making presentations to their colleagues about their work. Decisions about new products and company restructures are made following input from staff. Indeed some staff form working parties for larger decisions.

Consider how you would feel if you were a possible new recruit to the firms and were going for your first interview. Which firm would you be more attracted to? Consider too how you would feel as an existing employee of the firms: in Firm A, you’d be thinking it was time to move on in search of Firm B. You won’t be surprised to learn that Firm B has the more engaged employees. Employee engagement is about pride in the firm, it’s about a feeling of belonging and ownership.

Creating and Engaged Work Force

Employers want staff who are motivated. They want staff who are committed to the firm. Engaged staff are often characterised by their ‘going the extra mile’ to satisfy the firm’s customers. In typical French style the French word engagement is subtly different from its English equivalent. In the French meaning there is the idea of deep commitment. This idea of commitment in both directions from employee to firm and back typifies what many SME principals strive for.

Typically engagement is characterised by six attributes:

  • Openness to new ideas, willingness to adopt new approaches
  • Maintaining a positive view despite the stress and frustration of daily work
  • Maintaining customer focus even under stress, putting results before ego
  • Eagerness to help others and be an outstanding team-player
  • Being confident in one’s own ability
  • Sustaining a personal drive to succeed and excel personally

There are three simple things that can be put in place to achieve engagement.

Firstly, involve staff in business change and improvements.

Secondly, ensure that staff are fully aware of what is happening in the business – celebrate the good things and inform on the not-so-good things.

Thirdly, by your own actions prove to the staff that you care about the business.

Whilst not the whole story, getting these three right can really boost your business and make you an employer of choice. Bath University has developed a ‘black box’ model which focuses on a central equation:

P = f(A, M, O)
result P is dependent on variables A, M and O

Where P, the firm’s performance is a function of its ability (A), the motivation of staff (M) and the opportunities presented to it (O). The Bath research goes on to establish a group of 18 critical human resource management practices that go to optimise performance.

If managers are seen to be fair and reasonable they create an environment where staff will choose to perform in a highly positive way and the each employee chooses to become engaged. Where the manager is seen not to care, then the staff will be less inclined to engage. This choice affects the ‘feel’ or climate of the firm and this affects performance.

Understanding how people feel about the firm really does help to put in place corrective action if people are not as engaged as you would like. The sheer act of asking people how they feel will begin to allow people to feel a little engaged – albeit very apprehensively. Areas for improvement can be identified and people management policies and processes can be implemented to generate and improve engagement.

According to CIPD there are three aspects to engagement: intellectual engagement (thinking about how I can do my job better), affective engagement (feeling positive about doing a good job) and social engagement (discussing how to improve performance with others at work). All are important.

Psychological Contract

The term 'psychological contract' was first used in the early 1960s but became more popular recently. It’s an expression that tries to capture the “the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other”.

Significant elements of the contractual relationship are unwritten

A relatively small part of these perceptions are written in HR policies and practices. The most significant elements of the psychological contract are unwritten or tacit, implied from management actions, or handed down as custom and practice. The psychological contract describes the environment set up in which staff work. Engaged employees can be found in firms that create the correct environment for staff to exercise their choice to become engaged. Research conducted by the CIPD showed that the following aspects influence the psychological contract:

  • The people management practices within the firm
  • The employee’s expectations of fairness and trust.
  • The employee’s belief that the firm will honour ‘deals’

The research also confirmed that a positive psychological contract has a positive impact on a firm’s performance. Likewise, a negative psychological contract has a negative impact on job satisfaction, commitment, performance and engagement.

So Why Worry About Engagement?

We have seen that when staff are engaged their performance is optimised and they will also promote the firm by their positive comments and attitude. SME principals fundamentally control the ability of their staff to become engaged through their actions in setting up the right environment.

As CIPD notes: there is no short-cut to building and maintaining employee engagement but the time, effort and resource required will be amply repaid by the performance benefits.

If you don’t feel your workforce are fully engaged, call TimelessTime today for a no-obligation discussion. Our consulting and coaching services will help you achieve this. For more information on engagement and the elements that go to ensure engagement is achieved see our various blogs and white papers.

  1. Emmott (2006); McGee (2006) in Buchanan D A and Huczynski A A, (2010) Organisational Behaviour, Pearson Education, Harlow, UK, p286.
  2. Fact Sheet on Employee Engagement at http://www.cipd.co.uk/hr-resources/factsheets/employee-engagement.aspx accessed on 14 May 2011.
  3. Factsheet on the Psychological Contract at http://www.cipd.co.uk/hr-resources/factsheets/psychological-contract.aspx accessed on 14 May 2011.
  4. Guest, D.E. and Conway, N. (2002) Pressure at work and the psychological contract. London: CIPD.
  5. Factsheet on Employee Engagement, ibid.