Engagement and the Employee Value Proposition

Speak to many consultants and you may hear the suggestion that engagement is a free resource that you should tap and that you should always engage your work-force more—for better results. I encourage you to question this assumption. I don’t think much in life is completely “free.” There is an element of reciprocity involved in all relationships—even employer-employee relationships. Dilbert offers some wisdom about this.

Different Takes on the Psychological Contract 

A psychological contract exists between employers and employees. Historically, the contract was a reciprocity of “lifetime pay and benefits in exchange for loyalty.” This month's HBR has an important article by Tamara Erickson that explains how this contract can be understood by generational differences (e.g., Baby-boomer v. Generation-X). I agree with Tamara.

It is more important, however, that the psychological contract reflects the talent management strategy. This contract is critical to understanding links between employee engagement, talent management, and leadership. In this post, I will describe these links in more depth.

Since the early 1990s, HR pundits have argued about the “new” employer-employee value proposition. The arguments goes something like this: large organizations in a more stable business environment offered continuing employment, pay and retirement in exchange for employees’ on-going loyalty and effort. As the pace of global and organizational change has increased, unfortunately this implicit agreement has been broken. The pundits, however, are still arguing about what will replace the old contract. 

The arguments about the psychological contract can be replaced with a question: “what does your organization need from employees to be successful and what does it offer in return?”   

Fundamentally, the psychological contract is about the employee value proposition.  This value proposition has two points of view: the employers and the employees.  Both must be balanced. Employees must feel like they are getting a reasonably equitable deal, or they will disengage or leave. My colleague Amy Bladen wrote about this in the the April edition of Leadership Excellence (read the article here)

The universal employee value proposition is gone.  In its place are a number of employee value propositions that vary according to organizational strategy, employee class (some employees are more critical to organizational success) and generation.

Organizations can literally balance and harmonize the employers and employees value proposition—try using two columns and write some words.  Be careful, the reciprocal relationship in employee engagement is nuanced! It is important to think about what your organization needs as well as what your employees, or classes of employees, need.  When thinking about your employees’ needs, it must be from their point of view.

Reciprocity and trust are critical to building employee engagement.  Without trust for their leaders and organizational direction employee have no foundation for inspiration let alone energy for achieving the vision.

From the Employers Point of View    

Different organizations need different types of employee engagement and as such the value proposition varies with corporate strategy. To some organizations retaining employees is critical; to others only a few years of intense effort is needed. Yet others need to retain customers and as such employee engagement with the customer is critical. Others rely on employee innovation and skill as the strategy. The list could go on—ask yourself "what does your organization really need from its employees?" In all likelihood you will need different types of engagement from different classes of employees, so you may also ask "are there groups of employees that need to have a special type of engagement?"

Some organizations have a business model based on "employee churn." Life insurance sales organizations have a reputation for paying largely on commission and accepting that a large percentage of employees will leave when they cannot make ends meet. Employee churn is a reasonable business model. Life-insurance sales organizations need producers and they can use churn to find the one out of ten applicants who can actually sell life insurance to strangers (versus selling to family and friends). 

Other organizations have an up-or-out value proposition. These organizations often provide great opportunities a highly stimulating environment and these organizations benefit from hiring younger employees with alacrity. If employees run out of engagement in a few years, more can be hired.

Companies pursuing a product innovation strategy often rely upon skilled employees who have a deep understanding of their product--for example consulting, technology and pharmaceutical firms. In these companies the value proposition has to do with retention and reward of the key talent that enables the innovation-- for example expert consultants, critical skill engineers and R&D/Commercialization professionals. Again, employee value proposition should vary with strategy. 

Also some employees, within an organization, need to be especially engaged.  Consider actuaries in the life insurance industry.  Few life insurance companies want actuary turnover—the few individuals can accurately predict mortality to set insurance rates are rare and critical to a business success.  While high turnover of sales representatives is acceptable, actuary turnover is not. 

Organizations, for cultural reasons, often have a general employee value proposition. Thus, some life insurance companies may overlook low engagement or high turnover. In many pharmaceutical companies, retention-tactics are applied to all employees; these tactics, such as higher pay, lead to higher HR costs.

From the Employees Point of View   
Employees view the world through their own eyes.  As the Tamara Erickson's article highlights, Gen-X employees believe that their employer seems them as “replaceable,” and this colors their interpretation of corporate life. Baby-boomers are more likely to believe in the old psychological contract and act accordingly.

Employees will engage in any organization, even those with a churn or an up-or-out employee value proposition. However, the value proposition must be transparent to earn engagement. 

A leader can build trust if he or she is transparent about the employee value proposition.  I consider transparency to be part of being authenticity. A young and ambition prospective employee is likely to join a leader who says “I’m going to give you an opportunity and it will be challenging. You will learn a lot that will be useful in your career.  If you are successful you are likely to make some reasonable money.”  If, however, the employee value proposition is not made clear some new hires will have other expectations and be disappointed.  This is the basis of the realistic job preview. 

High potential employees may have another worldview.  They may, realistically, see themselves as having more opportunities than typical employees.  As such, they may require more opportunities or compensation in return for their engagement and loyalty.

Implications for HR and Leaders
The challenge for organizations is to understand the links between the value propositions and strategy and then to make the contract explicit. This becomes more difficult when you have multiple value propositions in the same organization. This is where front-line leadership comes in; supervisors need to authentically relate to employees and build trust on the basis of reciprocity. Organizations need to ask themselves:

• "Are our managerial ranks are up to this task?” 
• “Does the organization support supervisors to have authentic relationships with employees?”

As ever, I would like to hear your thoughts.  Does your organization have an aligned employee value proposition? Does your organization have multiple value propositions for different employee classes, or should it?

Charley Morrow

www.SageAssessments.com

How Surveys and Feedback Improve Organizations, and a Note of Caution

Motivation to improve is the bedrock of employee engagement efforts. While engagement is intellectually interesting, engagement surveys are conducted to improve organizations. Let's revisit how this happens.

Last week I attended a conference for organizational psychologists and spent a lot of time on employee engagement.  One presenter, Scott Brooks, provided a great model of “what employee surveys provide.” His work elaborates the above diagram . Dr. Brooks has clearly worked with, and thought about, organizational surveys a lot.

According to Scott’s model, Surveys help by providing
1.    Motivation to inspire/drive change
2.    Guidance by focusing action on what to change
3.    Enablement to help change
4.    Tracking to provide a measure of change

This model a clarifies why feedback works to improve engagement. Further, by targeting and amplifying these four areas, we can get better results from engagement surveys.  When planning engagement feedback consider all four areas.  The model also helps plan how leadership, HR, supervisors and others key roles can support improvement from the survey.  For example, leadership can drive organizational change by interpreting implications of the survey results (Motivation), directing appropriate actions (guidance), supporting others to take action (enablement) and setting goals for improvement (tracking).  

Use correctly, the model can organize the management team to work harmoniously for organizational improvement.

A Note of Caution
Many stakeholders want organizational change—it is not just management that hopes for change.  The traditional advice is "do not complete a survey unless you plan to do something about the results."  When employees complete a survey, their expectations are raised.  Raising expectations and doing nothing only decreases engagement.  Decreased morale can be an unintended consequence of surveying! 

The model also highlights how employees view survey results.  Many want to be in a different work environment and the survey results can provide motivation, guidance and enablement on how it should be better!  But employees understanding of survey results can can hurt and help management. Survey results can provide negative and outspoken employee more to complain about.  These employees may use the results to support their own negative agenda with work teams and peers.  Results can help management focus employees on the positive aspects of improving the organization for all stake holders—employees, customers, and shareholders. It is better to proactively frame the issues and the forward-looking agenda.

When providing results to employees, it is important to communicate the four factors.  It is especially important to state how the results will drive change (motivation), what will change (guidance), request employees help with the change (enablement) and to note how the changes will be measured (tracking).  This will allow management to stay in control of the messages and conversations about the survey.

Measuring Employee Engagement

As employers realize that they have “engagement issues,” many are trying to quickly assess the state of their workforce. Many will buy a “ready to go” survey that includes an engagement index. This is fine, but there are lots of options.  I will write about a few.

What sort of engagement is important for your organization?
There are many types of engagement. Consider, does your organization need better engagement with safety, with customers or with the mission of the organization? I have an engineer friend who tells me he always is engaged.  He loves his profession designing manufacturing controllers, but he has very stormy relationships with employers. As a result, this skilled and valuable engineer is constantly changing jobs.  If this personable guy had closer relationships with his boss and co-workers he might stick around. A focus on retention is missing in his employers. Be clear on what is strategically important to your organization.

Your organization may be more interested in engaging certain types of employees—high potentials, hard-to-staff skill groups, or generational groups (e.g., Boomers, Millennials). Knowing what is strategically important to your organization is critical to measuring engagement.

Surveys
Most organizations will choose a survey to understand workforce engagement. At first blush, this is an easy choice. Surveys results are easy to stratify by demographic category (such as age, education-level, or department). These stratifications allow fine grained review and comparison of different groups. This helps to target intervention and to provide useful feedback to managers.

Surveys, however, do require expertise to write, implement and interpret. The difficulty in developing surveys goes beyond the technical aspects of writing and implementing surveys. Surveys are difficult to write because they require the developer to understand the dimensions of workforce sentiment that are important to employees and the strategy well enough to ask intelligent questions.

“Census” surveys, which invite the entire population of employees to take part, are most common. In addition to the time it takes to have all employees take part in the survey, asking about engagement can raise employee expectations that “something is wrong,” or “something is going to change” around here. It is critical to act upon survey results; raised expectations can actually reduce engagement!

Standardized surveys, such as Gallup’s Q12, the Great Places To Work Institute’s Survey and Sage Assessment’s REALI-Index are easy solutions in that they are research based and have evolved through use in multiple organizations. They often include norms that allow you to compare your organization to others. Ultimately, comparisons within your company are more useful, but people are often curious about “how do we compare?”

Successful organizations have a unique strategy, which suggests a need to develop your own survey. Yet, this is time consuming and requires experience and skill in developing surveys. Perhaps the best balancing act is to use a standard survey and add a handful of custom questions to ensure that your specific culture and strategy are included in the survey.

Focus groups
Compared to surveys, focus groups are blunt instruments. But, not all projects call for razor sharp precision—sometimes a more general tool is needed. Stratification and contrasts are not really possible with focus groups, rather you learn about general sentiments. While surveys do extremely well at slicing data, focus groups allow a nuanced understanding of the issues that matter to employees. Focus groups can be easy to conduct-- and can give you a quick directional sense of engagement.

Surveys are primarily static questions to which employees respond. Focus groups are more generative— groups of employees can frame the issues that matter to them.

Years ago I ran focus groups at a large organization with very high engagement. Most employees in this pharmaceutical company truly believed they were working in alignment with the words of one of the founders: “… medicine is for the patient. It is not for the profits...” While consulting, I was genuinely impressed by the engagement in the organization. It was a joy to be in this organization—employees were excited about their work and excited about their organization.

In the midst of the scheduled focus groups, however, a key product was pulled from the market.  The media suggested the organization knowingly endangered patient safety by recklessly selling the product despite knowledge of deadly side-effects. The impact was immediately obvious in the focus groups. Focus groups were markedly different before and after the recall.  Individuals whose self concept was built on working for an ethical company were wracked with doubt. Suddenly, employees in focus groups started doubting the company, distrusting management and disengaging. Concerns about management were voiced.  The abrupt changes provided insights into how to proceed with a culture change initiative. I learned that informal focus groups tell you lots about engagement and they provide you with insights that you would never learn from a survey.

You can run a focus group of the key talent group to understand the engagement of small fractions of employees. This will provide you with insights into specific strata without a survey.

Remember Engagement, Not Measurement, Matters
Regardless of how you do it, I encourage you to understand engagement in your organization. I’m a measurement guy but I have to say the goal is not measurement.  The goal is to understand and improve engagement.  It is a mistake to focus too much on measurement perfection—what matters is engagement.

I’d like to hear about how you are measuring engagement. Please comment!

Charley Morrow
www.sageassessments.com