Engagement depends on a clear psychological contract between employee and employer

The MacLeod report received mixed reviews, with the HR community generally being unimpressed and criticising its lack of a toolkit. Conversely, the CIPD has applauded it as an endorsement of what many HR professionals already do and as a stimulus for more to be done. But we believe something more fundamental needs to be understood if the recommended awareness-raising campaign to promote employee engagement to UK organisations is going to stand a chance of success.

Everyone talks about employee engagement, but what is it really? The MacLeod reviews identifies over 50 different definitions, more than enough to confuse even the most positive people managers. David Guest, professor of organisational psychology and human resource management at King's College London, shares our concern by highlighting a lack of definition and the confusion around when engagement refers to attitudes, behaviour or outcomes.

For real progress in employee engagement to occur, we need to address a more fundamental issue: the employer-employee relationship. Recent research from The Work Foundation highlights the strong preference of knowledge workers to be managed in a culture of trust and loyalty rather than one dominated by rules. Employer-employee relations are fragile and cannot be taken for granted, particularly when job security is an issue and training budgets tight. Here the deal to engage staff begins to look decidedly one-sided. Employers want enthusiastic advocates for the organisation who make the effort to give their best. Employees want to feel ‘respected, involved, heard, well-led and valued' in an organisation. This is not to be under-estimated, underpinned as it must be by integrity, mutual trust and recognition that the individual is far more than a cog in the wheel. Yet, if the deal is underpinned by integrity and mutual trust, who is responsible for maintaining the health of the relationship and exchange between employee and the organisation? 

And if the values that underpin that ‘psychological contract' are breached, who notices and acts? Is it clear who takes action when espoused values are ignored or when the big decisions do not take on board the staff voice? Line managers can only do so much to bridge organisational needs and employee expectations. Who then holds the organisation, individual managers and staff to account for upholding behaviours that go beyond a transactional relationship? This may not be a comfortable role for HR but may perhaps be an important one for the function in the future and this is one of the issues we are currently exploring.

For HR to deliver on this, it requires its future leaders to develop strong credibility and integrity. They will need to understand as never before the organisation's workings and the financial model that underpins it. This way, they can steer change in a way that balances the needs of all stakeholders, including employees. They will need to be clear-thinking in order to step in and act quickly and diplomatically as well as remain strategic, innovative and decisive. This is not how many line managers would currently describe HR.

The Future of HR, a major research project at The Work Foundation, aims to shed more light on what really works in this important relationship. Early emerging themes suggest that the agenda for tackling the downturn may also indicate the future shape of people management. Our first publication, Quality People Management for Quality Outcomes provides a succinct but comprehensive survey of existing evidence on managing people at work - providing a synthesis of what is already understood but also an outline of what we now task ourselves to find out.

Though the concept of a psychological contract has largely fallen out of favour, it is ultimately, at the heart of employee engagement. The difficulty with it, of course, is that a psychological contract is implied. Unless there is real clarity about how it plays out with the various agents of people management - HR, line managers and the leadership team - we believe that line managers will continue to struggle to deliver employee engagement. If the foundations of employee engagement are not built properly, then any campaigns or recommendations designed to improve employee engagement in the UK will fail miserably.

Marianne Huggett is associate director, The Work Foundation