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What Is This Thing Called Employee Engagement?

By Richard Hadden

Cows-3-Cover-200-300What do companies like J.M. Smucker, Southwest Airlines, General Mills and Marriott Hotels know that seems to elude many of their competitors? What’s one thing that has contributed to each organization’s decades-long record of growth and profitability?

The answer may lie in a paraphrase of an advertising slogan long used by Carnation Milk, “Contented cows give better milk.” Translation: satisfied, engaged employees give better performances, which results in better business outcomes.

Employee Engagement: What is it? Why do I want it? And how do I get it?
How into your job are you? How connected do you feel to the organization whose name appears on your paycheck? How much of your career can you see spending there? How much of yourself do you put into your work, because you want to, not because you have to?

The answers to these questions define the term Employee Engagement better than any dictionary-style definition we might offer. More than employee satisfaction, engagement speaks to a deeper emotional bond between employee and employer, a bond that drives individual and group performance and has a direct bearing on business results. In fact, our firm’s research over the last 18 years shows that an intentional strategy of having a focused, engaged, and capably led workforce is one of the best things any company can do for its bottom line.

In our latest book, Contented Cows Still Give Better Milk, Bill Catlette and I were able, once again, to put forth a compelling business case for Employee Engagement. In this go-round, a sequel to our 1998 work, Contented Cows Give Better Milk, we compared the financial performance of 12 “Contented Cow” employers (companies with stellar employer reputations and strong strategies around people practices) to the performance of the economy at large. Over a 10-year study period, our corporate exemplars managed to outperform the S&P by nearly 10%. They grew at a rate of 23.4%, compared to the U.S. economy’s anemic 2.7% growth rate over the same period. And these companies, who appear to care about their employees at least as much as they do about their shareholders, rewarded their investors, in aggregate, with a $70 billion average annual wealth premium over owners of the average publicly traded stock.

No matter how we slice it, the numbers keep pointing to our original premise: how you treat people at work matters. Especially if you enjoy earning a profit.

But why worry about the workforce today? Many businesses are still trying to recover from a devastating recession. Unemployment is hovering around a still-too-high 7%. And don’t most workers feel lucky just to have a job?

That kind of thinking misses the point. In a recovering economy, characterized by slow, sometimes fragile, but determined improvement, no organization can succeed without the full, willing, and enthusiastic engagement of everyone on the payroll. In other words, your leaders’ ability to motivate your workforce to go above and beyond has everything to do with your company’s ability to sustain a competitive advantage.

And yet, if we can put any trust in the Gallup organization’s most recent data on Employee Engagement (hint: we probably can), this idea of engagement is facing some formidable headwinds. Gallup’s 2013 results show that only 30% of the American workforce is truly engaged at work; more than half, 52%, fall into the category of “not engaged” (getting the work done, but just barely); and 18% are “actively disengaged”, sabotaging the efforts of the ones who do want to be there. I don’t know about you, but I know that most businesses, including mine, can’t afford to operate with 70% giving less than everything they’ve got.

Besides, nationwide unemployment figures notwithstanding, workers, especially highly skilled ones, do have more options today than even a year ago. It’s probably safe to say that your best people probably the top third of your employees are looking right now, unless you’ve made vigorous efforts to engage them. For many employers, that fact alone may pose the single greatest threat to mounting and sustaining a strong recovery.

So how do we get a more fully engaged workforce, one whose output shows up in a better bottom line? It’s not as easy as upping compensation or plugging in the latest, most elaborate and costliest employee perks. Instead, today’s best and most profitable employers focus on sound organizational and leadership practices that get the most willingly and enthusiastically from everyone on the payroll. Here are five things you can begin doing right now that will have an immediate and long-lasting impact on your company’s ability to succeed through its people practices.

1. Hire for fit. Skills, expertise and experience aren’t enough. Identify what it takes for people to be happy, productive and successful in your organization. Sit down with your senior leadership team, and articulate those non-technical ‘fit’ requirements things like strength, attitude, heart, and passion. Teach those fit requirements to all hiring managers and provide incentives for hiring around those factors. Use behavioral interviewing techniques to identify those candidates whose values and attitudes set them up for success in your organization.

2. Define your mission in clear and compelling terms. I’m not talking about having the best-worded mission statement in the world, but having a clear sense of mission is motivating. Make sure everyone from your CEO to your newest hire knows why your business exists, and can articulate its most important priorities. Here’s something you can do right now to see how you’re doing in this department. On a piece of paper, write down what you believe to be your organization’s top three business priorities. Put the paper in your pocket and go out and ask the first five or six employees you happen to see the same question. Compare their answers with yours and with each other’s. Should the answers stray too far from one another, you’ll know it’s time to get busy focusing everyone on what matters most.

3. Start reinvesting in training. During the economic downturn, many employers slashed training, as if they were going to work their way out of an earnings slump by dumbing down the workforce. Your employees want to be confident in their competence. There are few things more frustrating than being asked to perform without proper preparation. Ask employees what training they need, source the best training available (internally or from professionals outside) and make sure people know they’re expected to use what they learn. Whenever anyone completes any kind of training, on-the-job or otherwise, ask them to write down, in one page or less, a) three things they learned and b) how they’ll use the training.

4. Teach people how their work matters. One of the most important engagement factors is having meaningful work. People need to have an abiding sense that their work matters that it makes a real difference. The minute someone loses sight of the importance of his work (namely, the customer), he can’t possibly perform at the top of his game. And yet, if you’re like most businesses, you have some good people who, in the regular course of performing their jobs, never encounter a real Jive paying customer.

Change that! Create opportunities for everyone on your payroll to have a “customer connection”. Get your back office professionals out on the counter from time to time. Let technicians go on sales calls. Send your HR manager out on an equipment installation. Every now and then, ask individual employees, “Tell me one way you’ve seen that your daily work has a direct impact on what we do.” If they can’t give you a good answer, don’t blame them. Teach them.

5. Be there when the wheels come off. Whether at work or in our personal Jives, we all experience pain, tragedy and difficult circumstances beyond our control. Caring leaders show up, in person, to help employees through the tough times. I once heard Dan Cathy, president of the restaurant chain Chick-fil-A, tell a group of his company’s managers, “When an employee experiences a personal hardship, I want you to go above and beyond for them; when you do, you’ll have their full attention when you talk about going above and beyond for our customers.”

Business leaders can learn a lot from dairy farmers. Leaders who hire well, articulate a clear mission, enable people to do their best work and care about (I didn’t say coddle) their employees will get a full measure of engagement from the best and most talented people in the business, resulting in better business outcomes. Contented Cows Give Better Milk.

Richard Hadden is a Managing Partner at Contented Cow Partners, which can be found online at contentedcows.com. He will be speaking on Tuesday, May 6, 2014, at the 2014 MHEDA Convention at the Loews Portofino Bay Hotel at Universal Orlando in Orlando, Florida.