· 10 min read · Features

CEOs fail to get behind engagement strategies, HR research reveals

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We want staff to perform miracles yet about half of UK organisations are ignoring expert advice and failing to give employee engagement the executive sponsorship it needs. CEOs aren't listening to HR.

An exclusive survey of HR directors and senior managers by HR magazine, conducted in association with career management expert Fairplace, finds that the progression of employee engagement in the UK appears to have hit a brick wall, in the form of board-level reluctance to commit. The survey reveals that, although the British HR community overwhelmingly believes in the power of staff engagement, with 98% agreeing that it has an impact on business success, almost half (47.7%) say there is no executive sponsorship of engagement initiatives within their organisations. While 72.9% of respondents measure engagement levels of staff, the research shows that taking the next step - linking engagement to business outcomes - is not happening in 40% of workplaces.

This implies a distinct lack of 'buy-in' from the top. We learn that in 27% of instances there is no attempt to measure employee engagement levels at all. Managers are held accountable for their teams' engagement levels in only 46% of organisations. And very disappointingly only 44% say their company considers employee engagement as 'a strategic approach for driving organisational change' - everyone else thinks of it as 'an HR initiative' only (32.6%), or they don't have an opinion on it at all (23.1%).

Furthermore, many companies are merely paying engagement lip service.

Of the 14.6% that specify 'other' means of measuring employee engagement (rather than the 67.5% that have an annual engagement survey), typical assertions were: 'Employee survey carried out every few years' and 'we have informal discussions with staff'.

HR directors are concerned about the findings.

"Attitudes like this are worrying. If you measure in two-year periods, how much board level airtime is engagement getting?" wonders Andy Doyle, group HR director at ITV. "I'd say none."

The fact that 98% of HR professionals acknowledge engagement as a business driver is to be expected says Michael Moran, chief executive of Fairplace.

"In the wake of last year's engagement-endorsing MacLeod Report Engaging for Success, which so clearly set out the vision for staff engagement driving up productivity and profitability levels in Britain, engagement can't fail to be a hot topic in HR circles," he says.

"But what this survey has flagged up very clearly is that too few CEOs have engagement on their agenda today. And as we face several more years of austerity, and are telling staff it's 'shoulders to the wheel' time, that's a very dangerous position to be in."

Moran feels that with pressurised situations in the workplace, such as "eight people doing the job of 10" today, there's a real risk of motivation plummeting, and chronic disengagement setting in. "So now more than ever attitudes towards employee engagement at board level need to change."

"I believe people will remember how you treated them through the recession, and when the labour market does pick up, colleagues are more likely to stick with you if they've continued to feel involved and valued," comments Jacki Connor, director of colleague engagement at Sainsbury's. "I think the HR survey findings show many organisations are worried about return on investment from engagement programmes, but we've proved that if you work hard enough you can see a link between engaged employees and customer satisfaction, leading to sales growth, and many other benefits.

"In our case, if a store is scoring well on our employee survey 'Talkback', it will also very likely be achieving high mystery shopping scores, which means well-run, and customer-focused stores boosting sales."

Connor says that, while you do have to watch how you spend during a downturn, there are ways to continue pursing higher levels of engagement while watching costs. "We've just refreshed our survey to ensure we're asking the right questions, and seeing the highest possible ROI," she says. "This time for instance, we are asking more about line managers, because we recognise that in a downturn the relationship our people have with their direct manager is really important - individuals might have problems outside work, so they need extra support and motivation from line managers."

Much in the HR survey points to the core foundations of engagement not being in place. Clearly leaders aren't always fully committed, and we find that line managers who are held accountable for their teams' engagement levels are in a minority (only 45.9% of organisations do this). "If line managers can't measure performance, give feedback, communicate both strategic and operational objectives and inspire and motivate their people, then even starting engagement is unwise," comments Chris Roebuck, visiting professor of transformational leadership at Cass Business School.

ITV's Doyle agrees that the survey exposes a missed opportunity regarding managers. "Once line managers become part of the process you can move on from simply measuring employee attitudes, to driving a culture of engagement and delivering business benefits," says Doyle. "We've recognised that helping managers become better managers is ultimately what drives engagement. If they 'get it', are doing things right and are being given the necessary tools to do so, you'll be heading in the right direction." ITV recently won an award for its innovative training programme that coached employees who faced redundancy, and targeted others who might feel disengaged as the company went through a period of change. "Because we are committed to the benefits of engagement it was right to invest time and resources on these groups, and particularly to ensure our line managers had the skills required for the change programme," says Doyle. "When you are making 1,000 people redundant you want to support them through a dignified exit process, and it's also important that those remaining are impressed with how the company has handled those departures."

Philip Barr, HR director at Yell, says Yell's highly-engaged workforce relies heavily on the motivational and support skills of excellent line managers. "Our line managers see it as part of their job to ensure teams are as engaged as possible, so I think without that structure it would be hard to deliver business benefits," says Barr. "We have a culture of taking pride in engaging our teams, and if there are instances when the very high standards slip for any reason, our line managers will act fast and have the tools and training to sort problems out."

Connor at Sainsbury's does understand how daunting organisations may find the prospect of setting out on an engagement programme from scratch. "It's a long journey and there are no short cuts. You have to put in the resources, allow staff the time to fill in surveys and attend focus groups, do all the necessary training, coaching and communication. What's vital is that you actually go out and act on the feedback," she says.

"If you're not going to take it seriously, execute your strategy professionally and keep driving it with real commitment and passion, it's not worth embarking upon." Having a chief executive like Justin King leading the engagement agenda from the top helps enormously too, she says.

Of the 39% of organisations that have no strategy to increase employee engagement levels, 31 % says 'cost is prohibitive', 22% say 'leader does not understand the concept', and 19% say 'leader is not aware of business benefits'. Engagement expert David MacLeod recognises that many bosses are still not seeing the transformational potential of engagement, but he's hopeful that all the compelling reasons for increasing engagement levels continue to be promoted by government and business leaders.

"There's a UK-specific need to come through this recession and return to growth and prosperity for the sake of the domestic economy. And there's a global need for us to compete effectively internationally, as the BRIC (Brazil, Russia, India, China) countries grow more powerful in so many markets," he says.

"In the years to come we are going to have to be extremely good at what we are good at, and that will require highly engaged people performing at their peak."

Raising the profile of engagement among leaders in all sectors of the economy is the MacLeod Report recommendation, and work is on-going in the current government to this effect, says MacLeod. He believes much can also be achieved by "learning from best practice".

Case studies in the report from organisations such as the Department for Work and Pensions, and private sector companies including Telefonica O2, The Co-operative Group, KPMG, Amey and Standard Chartered, show what can be achieved. It's well-known that companies such as Aviva, Sainsbury's, Diageo, Rolls Royce and AstraZeneca place great importance on colleague engagement, and have seen business benefits such as improved profitability, more innovation, brand advocacy and better safety in the workplace.

Yet these are the enlightened few. In our survey, comments from respondents reveal a sense of not knowing where to start, and comments posted - particularly from smaller organisations - expose an ignorant, sometimes arrogant attitude to the issue. "Engagement is already really good here"; "employee engagement is just another flavour of the month," and "there are more pressing priorities for leadership," were typical dismissive thoughts.

Many HR experts feel that the recession has caused a polarisation of opinion among CEOs about engagement, and this also reflects the MacLeod Report's view that there are two levels of engagement in workplaces across the UK. The first is carrying out measurement and engagement activities that aren't integral to business strategy, and the second is about employees being viewed as integral to delivering the overall business strategy.

"Where we see employee engagement viewed in the first way, as just an 'add on', the benefits will be limited," says MacLeod. "But where employees are at the head of strategy development and delivery, where views and ideas allow the organisation to be more market responsive, where identified improvements are acted upon, you're driving transformational engagement," says MacLeod.

The CIPD's research into organisations implementing employee engagement strategies suggests that around 75% fall into the first category and 25% into the second, he adds. HR magazine's survey found that 44.3% of respondents felt their organisation considers employee engagement as 'a strategic approach for driving organisational change', but the number genuinely executing this could of course be lower.

"In this climate we are seeing some leaders relegating engagement to low priority as they battle to survive, but then others are embracing it more fully as a proactive growth tactic," says Andy Brown, partner for analytics at Engage Group, an engagement consultancy.

"Those pushing ahead with employee engagement want reliable analytics so that they can see a measurable return on investment and we're expecting that, as we come out of recession, clients will embark on projects to re-engage their people in the wake of major change or redundancy programmes," he adds.

"The smart CEOs are looking forward, envisaging what can be achieved with a highly engaged workforce. They realise that it's often the low-cost elements that drive engagement -not necessarily higher rewards and more benefits, but listening to staff, good day-to-day management, clear communication channels."

Brown believes that taking the data-driven approach will arm HR professionals with hard figures - evidence that working to improve engagement is delivering results.

"Then you see that engagement shoots up the board agenda," he says.

Shirley Barnes, client services director at Dinamiks, the employee performance management solutions provider, isn't surprised that our research found a significant disconnect between the positives about staff engagement and what is actually happening in organisations.

"In looking at their ideal world, companies will say staff engagement is of vital importance, because, let's face it, it is. But in everyday business the subject seems to be relegated to lower down the pile of actions to take, or, more likely, gets lost in translation.

"Strategy-making really is not that difficult, particularly if external experts are brought in to help the CEO or board create the strategy and launch a powerful vision.

But, experience teaches us, long-term success happens only in a minority of cases. The majority of these projects sink or underperform because there is no step-by-step rollout and often a lack of direction from top."

Barnes argues that measurement shouldn't be a tick box exercise but used to inform business decisions and really drive action. "You can prove engagement's worth by running small or large scale test projects and measuring 'before' and 'after' personal and business performance," she says. "This should be enough to make the board take action, especially in an economic climate where it's more important than ever to get the best performance possible out of a business."

Our survey found that 72.9% of organisations do attempt to measure employee engagement and most (67.5%) do have an annual engagement survey. But when it comes to linking engagement to business outcomes, the figure drops to 59.7% and 'correlating employee engagement to business performance' was happening in only 51.6% of workplaces. "Clearly too many companies are looking at the employee survey as an isolated HR project and not a change process," says Stephen Young, director of employee surveys at Towers Watson. "Having a meaningful strategy with buy-in from the CEO is the exception rather than the rule. Too often companies think about raising their engagement score and are thinking about improving satisfaction levels, but don't make the intrinsic link to how acting on the findings can drive higher performance. It doesn't have to be a massive project because you can target the metrics to where there's a specific performance problem, and act on a micro level to deliver results."

A robust communication strategy is needed to drive any professional, far-reaching engagement project, yet our survey shows 40% of organisations aren't maintaining a focus on employee engagement throughout the year. The recent revelation that only 38% of BBC employees believe senior leaders communicate their strategies effectively, and just 45% of staff feel BBC executives behave in a way that is consistent with the broadcaster's values, shows how damaging poor communication can be.

Christopher Hopkins, managing director at employee communications specialist Caburn Hope, finds it surprising that business leaders naturally understand the concept of marketing their products and services to the outside world, but don't think any kind of marketing to employees is required to persuade them to buy into their companies' core values and aspirations. "Your employees won't go the extra mile - work an extra 20 minutes to get work finished, make special efforts with your customers, promote the brand for you outside work - unless you have created an environment that will make him or her want to do those things," he says. "That means you must have key elements right - be that benefits and rewards, the appropriate management style, visible leadership involvement, culture and values - but most importantly, communicating all that effectively throughout the organisation.

This survey shows that leaders currently lack understanding about what drives engagement, and if 48% of companies don't correlate employee engagement with business performance, as the findings reveal, it means a vast number of organisations are missing a trick," says Hopkins.

Highly-engaged workers will undoubtedly be needed to haul UK plc out of recession, but our survey shows the issue is currently overlooked, or too HR-centric. Successful improvements to employee engagement levels need to be dynamically linked to overall business performance urges Moran at Fairplace. "What if executives' bonus pay-out were dependent on achieving a certain level of employee engagement?" he suggests. "Buy-in will only be achieved if organisations start thinking that way."

MACLEOD'S VIEW

David MacLeod admits the HR survey findings are "not a surprise", as many barriers to engagement are explored in his report, including lack of awareness, unreceptive organisational culture and not knowing how to start. "Unfortunately, although there are great examples out there of businesses driving performance on the back of rising engagement levels, these are simply too scarce today," he says. "Extending employee engagement is not an issue for legislation or regulation, but it does require cultural change in this country. More people need to 'get it' and more people need to do it."

THE HARD BUSINESS BENEFITS

A survey by Melcrum of 1,000 HR and corporate communications professionals found that many credited employee engagement programmes with the following benefits:

- More than 50% report improvements in employee retention and customer satisfaction

- 33% report higher productivity

- 28% report improvements in employee advocacy

- 27% improved status as a "great place to work"

- 27% report increased profitability

- 25% report improved absenteeism