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Functional Area 3—Employee Engagement & Retention Here is SHRM’s BoCK definition: “Employee Engagement and Retention refers to activities aimed at retaining high-performing talent, solidifying and improving the relationship between employees and the organization, creating a thriving and energized workforce, and developing effective strategies to address appropriate performance expectations from employees at all levels.” Key Concepts - Approaches to developing and maintaining a positive organizational culture (e.g., learning strategies, communication strategies, building values) - Approaches to recognition (e.g., performance or service awards) - Creation, administration, analysis, and interpretation of employee attitude surveys - Creation, planning, and management of employee engagement activities - Employee lifecycle phases (e.g., recruitment, integration, development, departure) - Employee retention concepts (e.g., causes of turnover) and best practices (e.g., realistic job previews [RJP]) - Influence of culture on organizational outcomes (e.g., organizational performance, organizational learning, innovation) - Interventions for improving job attitudes - Job attitude theories and basic principles (e.g., engagement, satisfaction, commitment) - Job enrichment/enlargement principles and techniques - Key components of, and best practices associated with, performance management systems - Methods for assessing employee attitudes (e.g., focus groups, stay interviews, surveys) - Principles of effective performance appraisal (e.g., goal setting, giving feedback) - Retention and turnover metrics (e.g., voluntary turnover rate) - Types of organizational cultures (e.g., authoritarian, mechanistic, participative, learning, high performance) - Workplace flexibility programs (e.g., telecommuting, alternative work schedules)
The following are the proficiency indicators that SHRM has identified as key concepts: Maintaining an engaged and satisfied workforce and a culture that employees perceive to be positive is an important function for HR. Employee turnover, along with poor performance, is costly and also disruptive. HR’s practices can mitigate these potential problems by monitoring and improving organizational performance and the retention of key talent. Understanding Employee Engagement Employee engagement is a broad outcome-driven concept that recognizes certain characteristics that contribute to behaviors that will positively influence employee job performance. HR authorities often define employee engagement in terms of “commitment,” that is, the identification with an organization and the commitment to active participation in its future. Engagement is the degree to which employees are psychologically invested in the organization and motivated to contribute to it success. It can also be described as the discretionary effort toward attaining organizational goals.
There are three types of professional HR engagement. - Trait engagement The personality-based elements that make an individual be inclined to be involved, to have a natural curiosity, and to have an interest in addressing and solving problems. - Stage engagement The influence of the workplace environment on an individual’s inclination to become involved. Organizational interventions can directly influence this type of engagement. - Behavioral engagement The effect of individual effort that creates the satisfaction from a job well done. Behavioral engagement can occur in cases when both trait and stage engagement are present. Employee Engagement Levels While individual surveys differ to some degree, all indicate that the U.S. workforce is typically less engaged than employers expect or hope for. Most results show a relatively low level of employee engagement of about 30 to 40 percent. Other parts of the world show even less engagement. Benefits of Employee Engagement A 2013 Gallup study66 on employee engagement involving 142 countries indicates only 13 percent of employees worldwide are engaged at work; further, 63 percent are not engaged, while 24 percent are actively disengaged. At a regional level, the United States and Canada have the highest proportion of workers who are engaged, 29 percent, followed by Australia and New Zealand. Significant observations indicate that actively disengaged employees outnumber engaged employees by nearly two to one. Gallup describes engaged employees as those employees who work with a passion and feel a profound connection to their company. They drive innovation and move their company forward. Not engaged employees are essentially “checked out.” They’re “sleepwalking” through their workday, putting in time but not energy or passion into their work. Active disengaged employees are just unhappy at work; they’re busy acting out their unhappiness. Every day, these workers undermine what their engaged co-workers accomplish.
In 2012, Gallup conducted a meta-analysis of its research data across 192 organizations, 49 industries, and 34 countries. This study confirmed a well-established connection between employee engagement and a number of performance outcomes. The median differences between top-quartile and bottom-quartile units were as follows: - 10 percent in customer ratings - 22 percent in profitability - 21 percent in productivity - 25 percent in turnover (high-turnover organizations) - 65 percent in turnover (low-turnover organizations) - 48 percent in safety incidents - 37 percent in absenteeism - 41 percent in quality defects Drivers and Role of Organizational Culture in Engagement Organizational culture is a system of shared assumptions, values, and beliefs that govern how people behave in organizations. These shared values have a significant influence on people in the organization and dictate how they dress, act, and perform their jobs. An organization’s ultimate goal is to align its culture and strategy. Global Engagement Drivers There are four drivers of engagement from an international perspective. - The work itself as well as the development opportunities the work provides - Stability and the confidence that is placed in an organization’s leadership - Rewards and recognition - The upward and downward flow of communications
These drivers vary from country to country in a global context. Whereas the confidence that career interests can be met, a sense of personal satisfaction, and confidence in the organization’s success are primary in the United States, top drivers in Canada include a good work-life balance and being respectfully treated. Other countries value other drivers. Some international drivers include the need for achievement and competence, but difference occurs between individualist cultures and collectivist cultures. Individualist cultures prefer personal feedback, whereas collectivist cultures prefer group feedback. A need for control is universal, but personal control is preferred in an individualist culture, whereas collective control is preferred in collectivist cultures. Effective Management and Employee Engagement Management’s behavior is critical to employee engagement and to an employee’s well-being. Managers who manage in ways that encourage employee engagement are essential to the engagement of their employees. Recent studies conclude that there is a link between employee engagement and leadership practices that encourage and support employee performance rather than dictate employee performance. The following are three leadership practices that encourage and support employee performance: - Transformational leadership This is a style of leadership where the leader is charged with identifying the needed change, creating a vision to guide the change through inspiration, and executing the change in tandem with committed members of the group. - Authentic leadership This is an approach to leadership that emphasizes building the leader’s legitimacy through honest relationships with followers who value their input and that is built on an ethical foundation. - Supportive leadership This is one of the leadership styles found in path-goal theory (a theory based on specifying a leader’s style or behavior that best fits the employee and work environment to achieve goals). A supportive leader attempts to reduce employee stress and frustration in the workplace. Challenges to Employee Engagement Many external factors present obstacles to effective employee engagement, including global competition, economic conditions, continuous innovation, and new technology. In addition, the blurred line between work and nonwork conditions exacerbates the difficulties faced by employers whose goal is to maximize conditions that support effective employee engagement. Global competition coupled to less-than-ideal economic conditions places significant pressure on organizational managers to aggressively target production goals. Along with this, continuous innovation and new technology add another layer of pressure on work performance even as they offer new capabilities to the workplace. Further, technology in the form of the Internet and mobile interconnectivity creates a new gray area as to where work time ends and nonwork time begins. All of this places a new role for HR to create a business case for the need now, more than ever, for managers to invest in the issue of employee engagement. HR’s Employee Engagement Strategy As part of its strategic management role, HR is tasked with developing effective strategies incorporating good employee engagement practices designed to best achieve the organization’s business goals. Assessing Employee Engagement Employee engagement is the level of personal investment an employee has in his or her work. According to the Harvard Business Review, “Much has been studied about the impact of employee engagement on company performance, and there is general agreement that increased engagement drives results: Gallup, for example, suggests a 20% or better boost to productivity and profitability for companies with high engagement. Such companies, however, may be few and far between: Gallup also reports that only 30% of American workers, and 13% of global workers, are engaged in their jobs.” Gathering Information About Employee Engagement If you want to measure employee engagement, consider employee surveys or focus groups. Both can produce a great deal of information about how people feel about their jobs and their contributions to the organization. Employee Surveys Perhaps the most frequently used device for gathering information about employee engagement is the employee survey. It can be used to work on issues in the entire employer organization or in only a small part like a department or division. When the accounting department is having problems and a new manager is appointed to manage the department, an employee survey of accounting personnel could be helpful to identify the issues employees want to see improved. Help your employees with the issues they believe are important, and they will react by being nicer to the customers they contact and other employees within the company. Benefits of Conducting Employee Surveys Why use an employee survey to measure employee engagement? Well, they are reasonable in cost, can be done fairly quickly, and can provide some great insights into the thinking of your employees. Surveys are versatile and can be done anonymously. Survey Questions Questions are constructed so there are no right or wrong answers (unlike the SHRM certification exam). Here are a few examples: - On a scale of 1 to 10, where 10 is the best, please rate the quality of supervision in your work group. - What word would you use to describe the company’s strategy? - On a scale of Strongly Agree to Strongly Disagree, how would you rate your views of this statement? The company executive team is open and accessible to all employees. - Please rank order the following five things on a scale of 1 to 5. Use each number only once.
Developing Surveys To begin a survey project, you should identify the goals you want to meet by having a survey. If it is to determine levels of employee satisfaction with the new company headquarters building, that would be worthwhile. If it is to see what employees thought of the new office binder supplier, there may be less value to be gained. Once you have the goal in mind, identify the population that you want to invite to participate in the survey. Is it the entire employee body or only the group that is working at a given location? Then determine whether you want to build and implement the survey internally or hire an outside vendor to build and implement the survey for you. Construct the survey questions and test them with your HR staff (and even executives). Once all edits have been made, finalize the survey document and plan for its dissemination to your target audience. Gather and summarize the responses. Prepare a report on results.
Guidelines for Employee Engagement Surveys
This Table describes the critical drivers to consider when building an employee engagement survey, according to Qualtrics.com.
Table: Employee Engagement Survey
Online Survey Method Turn on your computer and start cruising the World Wide Web, and you will be presented with a great many opportunities to participate in customer surveys. There are an equal number of companies that are willing to help you prepare your online survey. Survey fraud is likely the greatest disadvantage of online surveys. You can’t be positively sure about who is completing the survey. It could be someone who wants to distort your results, such as a competitor or unscrupulous employee. Yet the costs are low for using online surveys. If you can be sure that only specific people are able to participate, then you may find that this is a survey method you can use in your organization. Managing Effective Employee Survey Projects Aside from being careful in the construction of your survey, the most important part of the process is to get senior executive support both for the survey process and for taking actions that are necessary once results have been tabulated. Employee trust can be lost as quickly as you can blink if you ask people for their opinions and then do nothing to fix problems that are unveiled in the process. Using Focus Groups and Interviews to Gather Engagement Information When surveying employees, the last question should generally be, “May we contact you to discuss your responses?” Those people who say “yes” become candidates for follow-up interviews or participation in focus groups. Focus groups are designed to gain input from people who meet certain criteria such as more than 2 months of service, working in the engineering department, and within the past 2 years working for one of [named] competitive companies. The focus group can discuss any subject and is highly structured, led by a facilitator who presents questions to get responses from group participants. Sometimes the sessions are recorded for later study. Participants need to be told that to avoid legal complications. There are consulting firms that specialize in focus group facilitation. They assist with designing the questions, the photos or written slogans, advertising, or other company options, and they run the focus group sessions. One-on-One Interviews This is a technique for delving more deeply into the opinions expressed by individuals who responded to the employee survey. It can also be used to explore comments and opinions expressed during a focus group session. Someone who has a strong belief that the company benefit program should include paid parental leave could have some valuable input if discussed in a personal interview. Analyzing Data on Employee Engagement How do you feel when you are asked for your opinion and then ignored when you give it? That is what happens when employees sense the survey was just an exercise for show, in other words, a PR stunt. When the results are compiled and analyzed and action plans developed based on those results, employees will sense that their opinions actually matter. Communicating Survey Results One common failing of employee survey projects is that employees don’t get any feedback about what the survey showed. Remember the communication cycle? We must complete the cycle by providing feedback to the employees about the survey results. How that is done can be quite creative. Or, it can be simple. Just be sure to do it. And, let employees know before sending out a press release explaining the results to the world. That sends the message to employees that their input is just being used for a publicity stunt. Determining Actions from Survey Results How do you determine what should be done with the survey results? First, summarize the responses so there is a composite view of employee thoughts. Then, analyze those composites to determine what they are saying. Separate them into “urgent,” “important,” and “later” categories to reflect how quickly the issues should be addressed by the employer. Finally, build an action plan to determine what is to be done, who is assigned the tasks, and when those tasks should be completed. Follow up to check on progress and eventually resurvey the workforce to see how they feel after you have taken the action based on their first input. Selecting Employee Engagement Initiatives It is sometimes difficult to know where to start fixing employee engagement problems. Using employee survey results, you can analyze areas of need and then build some plans to address them. Rank ordering the problems is a way to set priorities. And, involving employees in the action plan is a way to further their involvement and engagement. Start with the most important priority and work your way down the list, no matter how long it may take. Keep at it, and tell employees what you are doing from time to time. Business Case for Engagement Employee engagement affects nine performance outcomes. Compared with bottom-quartile units, top-quartile units have the following: - 37 percent lower absenteeism - 25 percent lower turnover (in high-turnover organizations) - 65 percent lower turnover (in low-turnover organizations) - 28 percent less shrinkage - 48 percent fewer safety incidents - 41 percent fewer patient safety incidents - 41 percent fewer quality incidents (defects) - 10 percent higher customer metrics - 21 percent higher productivity - 22 percent higher profitability
It should be rather easy to convert these percentages to dollars in your organizational impact statement. Once that is done, a cost analysis to determine the budget requirements for spending to accomplish those results will help you prove the impact that your employee engagement project will have on the financial bottom line. Engaging Employees from Hiring to Separation Employee engagement is not only integral to your organization’s workforce satisfaction, it’s also imperative to the bottom line. According to the 2015 Journal of Corporate Finance, organizations with employee engagement programs saw a 26 percent year-over-year increase in annual company revenue, compared to those that did not have formal programs. Making employees feel like their contribution makes an impact, facilitating opportunities for them to form relationships, and collecting feedback are ways to engage employees. If you’ve been tasked with implementing employee engagement initiatives at your organization with a large number of employees, or a company with multiple locations, the task may seem daunting. Start with feedback. Collecting feedback is a great place to start engaging your employees because you can use this feedback to inform the rest of your employee engagement strategy moving forward. For example, new hires are an important group to gather feedback from so you can refine your onboarding process, as are employees who are exiting the organization; they can give you insight into how you can better retain your current employees, if they will be candid with you. There are many different tools you can use to collect feedback. Using Glassdoor to collect feedback gives you a forum by which you can collect and respond to feedback. Engaging Employees Throughout the Employee Lifecycle There are critical key points in an employee lifecycle with the organization. Engagement begins with the first contact with the new employee and continues throughout their employment. HR plays an important role in increasing employee overall satisfaction and engagement for the get go. Engagement Practices During Hiring and Onboarding HR professionals have a great amount of influence with employee engagement, beginning with the hiring and onboarding phase. The period that begins with the hiring is an important opportunity to begin the engagement process. Gallup’s report “State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders” clearly points out that new hires are more engaged in their first 6 months on the job than they are at any other time during their employment.
There are five practices that can be employed and used by HR during the hiring and onboarding processes. - Make the job application process simple and yet informative. - First impressions count—create an accurate first impression. - Make the first day on the job organized and meaningful. - Have a structured onboarding process to provide new hires with 90 days of orientation and fitting in. - Define and communicate a path to success for the new hires so they are aware of the career advancement paths. Engagement Practices During an Employee’s Career In the same Gallup report cited earlier, after the first 6 months are done, the honeymoon is over. Gallup stated that engagement fell to 44 percent by the tenth year of employment. There is plenty of opportunity for HR to shift those percentages by developing programs and leadership training that are specifically focused on employee engagement throughout the lifecycle of an employee’s career. We address some of the approaches in the functional areas of Learning and Development and Total Rewards in this guide. They include the topics of job enrichment, compensation, noncompensatory rewards, and career management. Developing Policies and Procedures to Promote Engagement By helping to create policies, HR professionals are supporting how the organization defines roles and explains what actions and behaviors are acceptable and those that are not. Policies are meant to cover the majority of situations, and yet there will always be an exception to a policy that will occur. Policies lead to the creation of procedures and processes for implementing the policy. HR needs to regularly assess its current policies and how they impact employee engagement. Work-life balance policies are an example of a type of policy that has great impact on employee engagement and that requires review on at least an annual basis. Work-Life Balance Because of technology growth and social pressures/changes within the family or community, work-life balance (WLB) is growing as an engagement issue for employees and organizations alike. Many organizations offer a number of WLB programs and policies that greatly enhance employee engagement. Telecommuting, child care on-site, gym memberships or gyms on-site, concierge services, and PTO flexibility—the list is growing in innovation. Developing Policies When developing policies associated with work-life balance, the HR professional can rely on other organizations’ best practices. These include having clear guidelines for management to apply and addressing a variety of situations (employee positions/roles) that they will apply to. Policies are created to address a “real need”—be sure that the work-life balance policies do just that in the business unit of the organization. First, identify the “need” for the WLB policy. Next, determine what the policy’s content will be in simple language. Avoid rigid rules that must be followed exactly in all circumstances. Move to the next phase of development, which is to obtain stakeholder support. Share the draft with those who will need to apply the policy and look to see where refinement may be needed. Now that the policy is ready to be implemented, go to your communication plan—the when, who, what, where, and how for the policy’s launch. As mentioned earlier, keep an eye on the policy to determine when it needs refinement, refreshment, and/or revision. How Policies Can Affect Employee Engagement Policies can be one of the greatest sources of disenchantment for employee engagement. Notice what is brought up on the list of enhancements during labor relationship and contract negotiations. Pay attention to the exit interviews and preferable the “stay interviews” that provide feedback pointing to ineffective or behind-the-times policies. When it comes to employee engagement, HR can be the keeper of the keys when it comes to policies that affect employee satisfaction. Using Motivation Theories to Increase Engagement Motivation is essential for engaging employees in their work. Three underlying principles of human behavior are directly linked to motivation. - All human behavior is caused. This means people have a reason for doing what they do. - All behavior is focused on achieving an end result or goal. People do things to attain something tangible or intangible. Their behavior is not random, though it could be unconscious. - Every person has a unique fingerprint and is unique in that no one has the exact experience, heredity, or environmental/relationship influences. Understanding these principles of human behavior will assist you as an HR professional with motivational pursuits, not just in the learning process but in all matters related to the work and employment relationship, especially engagement. Motivation is like a shower; it washes off, and you need another in a couple of days. It puts a smiley face on an empty gas tank signal. Inspiration, however, lights up like a fire and grows—it comes from deep within people. Transformational leaders cause people to be inspired, inspiring their employees to take action and providing them with self-esteem versus “shelf-esteem.” As an HR professional and one who trains organizational leaders, try to seek the authentic inspirational skills to motivate and engage employees. The event will be lasting and sustained.
There are several other long-standing motivational theories, and we will briefly review them to refresh your memory about what you most likely learned in your secondary educational endeavors. Maslow’s Hierarchy of Needs In Maslow’s theory, there are five basic human needs arranged in a pyramid, necessitating that the first level (bottom of the pyramid) must be met first before moving up the pyramid.
This figure shows Maslow’s hierarchy of needs. Lower-level needs on the pyramid will always have some influence on behavior.
Figure: Maslow’s hierarchy of needs
You can fulfill these needs in the workplace through the following: - Safety and security Employment security such as an employment contract, pay and benefits, working conditions - Belonging and love Teams, good leadership, participation in groups, employee associations, customer base assignments - Esteem Training, recognition, awards, special assignments - Self-actualization Job growth opportunities, project team participation, becoming a mentor NOTE It’s important to recognize today that not all motivational models of Western culture, like Maslow’s hierarchy of needs, are going to apply in many of the global and diverse organizations of today.
Herzberg’s Motivation-Hygiene Theory This theory asserts that employees have two different categories of needs and that they are essentially independent of each other, but they affect behavior in differing ways: hygiene factors, which are considered extrinsic, and motivational factors, which are considered intrinsic. The latter is associated with recognition, achievement, and personal growth–related events in the job, whereas hygiene factors are associated with job security, pay, working conditions, supervision, and co-worker relations that can quickly lead to job dissatisfaction.
Theory X, Y, and Z McGregor’s theories X and Y offer two approaches to motivating employees. Theory X suggests an authoritative management style because it assumes that employees inherently do not like to work and must be controlled and closely monitored. Theory Y suggests a participative style of management, under the belief that employees dislike controls and inherently want to do their best. It is obvious to see that a theory Y type of supervisor will provide better leadership and produce greater satisfaction. Theory Y is a participative style of management that “assumes that people will exercise self-direction and self-control in the achievement of organizational objectives to the degree that they are committed to those objectives.” It is management’s main task in such a system to maximize that commitment.
Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction. Theory Z is Dr. William Ouchi’s71 theory called Japanese management style popularized during the Japan economic boom of the 1980s. In the 1980s there was a huge demand for Japanese products and imports in America, mostly with the automotive industry. Why were U.S. consumers clambering for cars, televisions, stereos, and electronics from Japan? It was because of two reasons: high-quality products and low prices. The Japanese had discovered something that was giving them the competitive edge. The secret to their success was not what they were producing but how they were managing their people—Japanese employees were engaged, empowered, and highly productive. Ouchi studied Japan’s approach to workplace teamwork and participative management. The result was his theory Z: a development beyond McGregor’s theory X and theory Y that blended the best of Eastern and Western management practices. For Ouchi, theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job.
Theory Z makes certain assumptions about workers. One assumption is that they seek to build cooperative and intimate working relationships with their co-workers. In other words, employees have a strong desire for affiliation. Another assumption is that workers expect reciprocity and support from the organization. According to theory Z, employees want to maintain a work-life balance, and they value a working environment in which things like family, culture, and traditions are considered to be just as important as the work they do. Under theory Z leadership, not only do workers have a sense of affiliation with their fellow workers, but they also develop a sense of order, discipline, and a moral obligation to work hard. Finally, theory Z assumes that given the right leadership, workers can be trusted to do their jobs and look after their own and their co-workers’ well-being.
Skinner’s Behavioral Reinforcement Theory One of the most influential American psychologists, B. F. Skinner, developed the theory of behavioral reinforcement that deals with shaping behavior. In Skinner’s theory he found that behavior modification has four intervention strategies that are reactions to eventually shape behavior. There is positive reinforcement, negative reinforcement, punishment, and extinction. - Positive reinforcement involves providing an employee with a desired or appreciated reward to encourage the desired behavior. - Negative reinforcement involves avoiding an undesirable consequence by giving the employee an appreciated reward when they exhibit a desired behavior. - Punishment is just as it sounds—something negative occurs when an undesirable behavior occurs by the employee. - Extinction involves no response. When the behavior is not reinforced through positive, negative reinforcement, or punishment, the employee’s behavior will diminish and become nonexistent.
Intrinsic Motivation Intrinsic motivation is behavior that is driven by internal rewards. The motivation to engage in a behavior arises from within the employee because it is satisfying to them. Author Daniel Pink writes about the research that has been done globally on the topic of motivation. In his book Drive: The Surprising Truth About What Motivates Us, Pink states that if-then rewards (pay-for-performance) work well for tasks where there is a simple set of rules and a clear destination, such as accounting and computer programming (the left-brain work).
For the tasks that exercise more right-brain, which would be creative, research, and conceptual, a pay-for-performance leads to poorer performance. Science has determined that intrinsic motivation is far more effective for the right-brain types because it is associated with doing tasks, work, and things that matter; because it is interesting; or because the employee likes it.
Using Rewards and Recognition to Increase Engagement The purpose of having employee recognition and reward programs is to acknowledge the value of employees, their contributions, or some other identification. The intention is to show gratitude, appreciation, loyalty, and trust, as well as to continue engagement and motivation. An effective program highlights valued and desired behaviors. Of course, forms of recognition address the psychological needs of people.
Forms of Rewards and Recognition There are financial rewards and nonfinancial rewards. Rewards need to demonstrate appreciation and are more effective when they are customized to an individual employee, such as tickets to an interest or hobby they may have. HR can be highly effective with designing appropriate recognition rewards through innovation and creativity, looking to other organizations for their best practices, and simply getting to know the employees in their organization. Awards can run the gamut from plaques, jewelry, and certificates to flex time off, conference attendance, tickets to events, and opportunities to fill in for an advanced position on a temporary/interim basis.
Recognition in Multinational Organizations SHRM conducted research in 2006 that linked performance management and employee engagement in multinational enterprises operating across developed and developing economies. This research had the following key findings:73 - Having a broad range of performance appraisal outcomes was positively linked to engagement. - Key elements of high levels of job/company resources were linked to employee engagement. - Employee involvement in setting goals is linked positively to engagement. Consistency and transparency in HR practices were highlighted as being critical.
Role of HR in Employee Recognition In the 2016 SHRM/Globoforce Employee Recognition Survey,74 the following findings were reported by HR professionals: - Organizations that had strategic recognition programs reported less frustrated and more engaged employees. - Programs tied to the organization’s values were more effective than programs without ties. - Empowering employees to give and receive formal recognition had good results. - When more than 1 percent of payroll was spent on employee recognition, employee engagement was better. Engagement Practices During Separation Employee separations happen; it’s a fact of the employment cycle. Be it for reasons that are positively focused such as retirement or for reasons that are unpleasant such as terminations for cause or reductions in workforce (RIF). How these separations happen can have a positive or negative effect on employee engagement for those remaining in the workforce. HR can support fair, humane, and yet compliant processes with regard to separation. Exit interviews, as mentioned earlier, can be helpful for feedback on employee engagement. And well-done separations for cause can actually attract better employees capable of engagement and contribution where the departing employee could not. In many organizations, especially in the tech industries, it is not uncommon for former employees to return to the organization with new skills, providing new value at higher-level positions. The level of engagement and treatment at the separation can influence the possibility of key valued employees returning to the organization. Performance Management Performance management is a systematic process that helps improve organizational effectiveness by providing feedback to employees on their performance results and improvement needs. Employee accomplishments and contributions drive the business results of an organization, so a regular feedback system discussing individual performance is at the core of a good performance management system. It ensures that employees are on course for the completion of tasks and goals that are aligned with the organization’s goals and that the resources and support are provided for the employee to perform such functions.
Employee performance management systems include the following: - Delegating and planning work - Setting expectations for performance results - Continually monitoring performance - Developing a capacity to perform to new levels for personal and professional growth - Periodically rating performance in a summary fashion - Providing recognition and rewarding good performance Organizational Values and Goals Creating and communicating the organization’s vision, mission, strategies, specific goals, and values form the foundation that is needed for the performance management system. Then performance standards are agreed upon by both the line management and the employee on what the job requires and what will be measured. At this stage, it is essential that employees clearly understand the standards, including expected behavior standards set forth for their jobs. Feedback is the next stage and can be both informal and formal. Formal feedback would entail a written performance appraisal. When it comes to performance management within a global organization, there are additional considerations. Different cultural values and societal norms will affect the definition of standards and performance criteria as it relates to a global workforce. Different languages will also have to be considered for the interpretation of performance definitions and standards. Recognizing that there are differing behaviors for different cultures can be a challenge for setting the behavioral standards and expectations of individuals. Performance Standards Employees need to know and understand what specific performance is expected of them in performing their jobs and the acceptable behavior. This communication begins with the very first discussion in a job interview and certainly with the job offer and new-hire onboarding orientation. The discussion continues on a consistent basis both with the reinforcement of organizational standards that are outlined in employee handbooks and other written material and with performance appraisal review sessions. The clearer the expectations set for employees, the greater the success in having expectations met. Employee Performance Job performance means the extent to which an employee generates work output that meets expectations for quality and quantity. Measurement and Feedback Everything can be measured, even if it is inherently subjective. Once measured, feedback should be provided to the employees so they can know how they are doing in their job efforts. Appraisal Methods Performance appraisals satisfy three purposes. - Providing feedback and coaching - Justifying the allocation of rewards and career opportunities - Helping with employee career planning and development plans
For the organization, performance appraisals can foster commitment and align people to contribute to initiatives with their upcoming performance contributions. The most common performance appraisal method involves just two people: the employee and their direct supervisor. In some companies, others are asked to be involved in the appraisals such as peers, another level of management, and sometimes colleagues in the organization whose job function interacts with the employee. These are known as 360-degree appraisals.
Methods for rating the performance can be completely narrative, management by objectives (MBO), behaviorally anchored ratings (BARS), category rating, and comparative ratings with others in like functions.
The least complex of the methods is the category rating where the reviewer simply checks a level of rating on a form. These three types of rating formulas are typically used in category ratings: - Graphic scale The most common type, where the appraiser checks a place on the scale for the categories of tasks and behaviors that are listed. A typical scale is 5 points, where 1 means not meeting expectations or low, and 5 means exceeding expectations or high. These types of performance appraisals normally have a comments section that the appraiser completes that provides justification for the rating. - Checklist Another common appraisal rating in which the appraiser is provided with a set list of statements/words to describe performance. The appraiser selects the one word or statement that best describes the performance—for example, “Employee consistently meets all deadlines” or “Employee consistently misses deadlines. - Forced choice A variation of the checklist approach (but in the checklist method, the appraiser is required to check two of four statements).
One check is for the statement that is most like the employee’s performance, and the other check is for the statement that is least like the employee’s performance—a combination of positive and negative statements. This method can be difficult to convey to employees and understand from an employee’s perspective.
With comparative methods, employee performance is compared directly with others in the same job. The appraiser will rank the employees in a group from highest to lowest in performance. This causes a forced distribution known as a bell curve. Ten percent will fall in the highest and lowest of the rating scale, another 20 percent will fall on either side, and then 40 percent will meet job standards and expectations. An obvious fault with this type of system is suggesting that a percentage of employees will fall below expectations.
This figure displays a bell curve distribution.
Figure: Bell curve distribution
Narrative evaluations are time-consuming for an appraiser to complete, yet they can be the most meaningful to the employee being evaluated. There are three methods that are the most common for the narrative appraisal. - Essay format The appraiser writes an essay describing each category of performance. - Critical incident The appraiser logs the dates and details of both good and not-so-good performance incidents. This method requires the appraiser to keep good, detailed notes on a routine basis during the appraisal period and not rely solely on an employee’s most recent performance.
- Behaviorally anchored rating methods Referred to as BARS, this appraisal method describes desirable behavior and undesirable behavior. Examples are then compared with a scale of performance level for the rating. BARS works well in circumstances in which several employees perform the same function. A BARS appraisal system requires extensive time to develop and maintain to keep the performance dimensions up-to-date as the job functions change. However, the BARS methods offer a more accurate gauge of performance measurement, provide clearer standards to employees, and have more consistency in rating.
- Self-assessment Coupled with the direct supervisory management evaluation, many employees are asked to self-assess their performance. This approach assists with creating a truly two-way dialogue in the evaluation interview and offers an opportunity for the employee to provide their own perception of performance. Additionally, it engages employees in a proactive means of creating goals and objectives, along with triggering a discussion about career development.
This figure provides an example of a self-assessment—both a category rating and open-ended questions to elicit a narrative commentary.
Figure: Self-assessment performance appraisal
Errors in Performance Appraisal As with any subjective system, performance appraisals are subjective because they are based on people’s perceptions and opinions, so there can be shortcomings. Here are the most common errors made on the part of appraisers: - Halo This occurs when the employee is doing well in one area and is therefore rated high in all areas. - Horn This occurs when an employee is demonstrating a strong weakness and is thus rated low in all other areas. - Bias This happens when the evaluator’s bias (consciously or unconsciously) influences and distorts their perspective. - Recency A recency error occurs when more emphasis is placed on a recent occurrence and all earlier performances during the review period are discounted. - Primacy The opposite of recency. The evaluator gives more weight and emphasis to earlier performances, discounting more recent performance. - Strictness An evaluator is reluctant to give high ratings, and their standards are higher than other evaluators. - Leniency The evaluator does not provide low scores and instead gives all employees a high rating on their appraisals. - Central An evaluator rates all their employees in the same range and does not take into account differences of actual performance among the group rated. - Contrast The evaluator is providing an employee rating based solely on a comparison to that of another employee and not objective standards. NOTE These common errors can be avoided with narrative format methods.
Appraisal Meeting Once you have completed the written evaluation of your employee’s performance, there are some key factors to consider in planning for the success of your feedback session with the employee. Here is an agenda outline for that meeting: - Review the purpose of the feedback meeting and the importance of the appraisal process. - Review results or accomplishments achieved against objectives and explain how these contributed to the work group’s efforts. - Identify reasons for success and causes of problems. - Agree on action to be taken by you and by the employee, and discuss ideas for development. - Summarize the discussion and express confidence in the employee’s ability to succeed.
Documenting Employee Performance Some performance evaluation systems have elaborate forms that must be filled in by the supervisor. Some require the employee to fill in forms because self-evaluation is part of their system of performance evaluation. Other documentation requirements are rather simple. A simple table with the information shown in Table 4-9 might suffice.
Table: Example of Simple Performance Documentation Business Results and Employee Growth Business results and employee success are tightly linked. Employee growth can occur with chances to increase knowledge (learn something new), develop new skills (practice welding), or develop abilities that are new (enhance ability to take off and land an airplane). When a flight school’s success depends on the ability of its instructors to help student pilots achieve their licenses, the level of business success cannot be separated from the level of instructor success.
Business Results Business results can be measured in a host of possible ways. Some of the most common are profit and loss, ranking in the industry among competing companies, number of clients served during the year, and the return on investment for employee training.
Employee Growth and Rewards In a 2013 Gallop poll,75 it was discovered that 70 percent of American workers are “not engaged” or “actively disengaged” from their employer’s mission. The 30 percent positive result matched the all-time high measured by Gallop since it began the study in 2000. Currently, 52 percent of workers in this country are not engaged in their work. Worse, another 18 percent are actively disengaged in their work. The polling experts estimate that actively disengaged employees cost the United States between $450 billion and $550 billion each year in lost productivity. And, they are more likely to steal from their companies, negatively influence their co-workers, miss workdays, and drive customers away. The solution harkens back to the basic motivational research results. People want recognition for their work and accomplishments. They want real responsibility, and they want a chance to feel they are achieving good things on their job. All of those are possible if first the basic working conditions, policies, supervisor relationships, and compensation/benefits are acceptable. Rewarding employees by simply and sincerely thanking them for their contributions can go a long way toward their feeling engaged in their work. Retention Once hired, the best business outcome is for the new hire to stick around for a while. Depending on the level of the job in your organization’s structure, you can determine how long it will take for you to reach a “break-even” point for the organization to cover the cost of recruiting and hiring.
*Cost of recruiting and hiring includes things such as search fees, HR recruiter expense (salary for time involved), and hiring manager expense (salary for interviews, paper reviews, discussions about candidates) Business Case for Retention While many employers say “employees are our greatest asset,” in fact, actual business practices have often been inconsistent with this concept. With a relatively high unemployment rate, in many cases employers have adopted a casual attitude toward talent acquisition. In some cases, this has gone so far as to think that a focus on retention is not so important; after all, employees should be happy they are employed. This is a false premise. Companies that don’t continuously focus on attracting and retaining the very best talent are companies that will soon find themselves at the “back of the line” when it comes to being a competitive force in the marketplace. Increasing employee engagement with the goal of keeping key talent on board is not just a matter of making employees feel good. It’s about challenging them, asking them to reach their peak productivity, and providing them with meaningful work in which they can take pride. In other words, a poor retention rate means that the business is losing money it could otherwise save. Satya Radjasa, a reward practice lead with the Hay Group, outlined just how costly it can be when essential employees fly the coop. He noted that there is a series of four different expenses that come up when a valued staff member leaves. The first is the financial cost, which can be particularly high for people tasked with bringing in and keeping revenue streams, such as salespeople and account managers. The second layer of monetary impact, the cost of finding someone to fill the vacated role, can be even more dramatic. “Replacing an employee can cost from 30 to 200 percent of annual salary, depending on their level. So if 15 percent of your ‘critical’ people are leaving, what would the cost be?” There is always a need for good talent regardless if there is a high unemployment rate or other adverse employment factors causing a large labor pool. Companies that don’t recognize this fact will soon find themselves uncompetitive in the market.
Why Retention Matters Retention has some level of correlation with morale. If people are constantly coming and going from the payroll, lack of consistency can be a deterrent to productivity. When such things make doing a job more difficult, frustration builds, and people soon become unhappy. Having an organization where people stay for long periods of time means consistency is higher in all respects. Then there is the cost of turnover, which can be controlled or eliminated if the revolving door can be slowed or stopped altogether. Retention Practices and Strategies HR professionals don’t generally leave retention to chance. There is usually a written plan that describes how the organization will address retention issues.
Drivers of Retention According to Robert Half, the following are some of the contributors to retention success:77 - Onboarding and orientation - Mentorship programs - Employee compensation - Recognition and reward systems - Work-life balance - Training and development - Communication and feedback - Dealing with change - Fostering teamwork - Team celebration
Retention Initiatives Retention is something that can be addressed like other HR issues. It needs focus and definition. It needs content in business case terms. Then, it needs to be addressed with goals and action planning.
Other Retention Practices Providing these things can go a long way toward producing better retention results: - Clear and consistent job expectations - Supervision - Training and development - Promotional opportunities - Recognition - Respect - Perceived equity
Evaluating Retention Of course, the most obvious means of evaluating a retention program is to monitor the retention rate. That can be done for the organization as a whole or for components like departments, divisions, or service units. Another method for evaluating retention programs is to conduct exit interviews with people who are leaving the payroll. The reasons why they are leaving are really important for survey input. Stay interviews are another source for information. These types of interviews survey key employees and what is causing them to stay with the organization. Analysis of those pieces of intelligence can help identify weaknesses in the employer’s organization that can be fixed to bring positive improvement in retention. In the end, it is employees who decide to stay or go. It is up to us as HR professionals to influence their decision to the fullest extent possible. Retention Measurements Employee retention is the positive side of employee turnover. You will recall that turnover costs can be computed and over time can give an indication of the impact your retention programs may be having. So, employee turnover is a solid indicator for retention. Absenteeism is another such indicator. Employees who are absent a lot tend to have a lower sense of dedication to their work. Production levels are another indicator of retention program results. Look around, and you will find many more. Evaluating Employee Engagement So, you have conducted your employee survey, analyzed the results, and implemented your action plan to improve employee engagement. Ultimately, conducting another employee survey can give you more data about how far you have come in your employee engagement efforts. Measuring Engagement Employee engagement is measurable just like other HR variables are measurable. Remember, if you can’t measure it, you shouldn’t be spending time on it. There is no specific metric called employee engagement. We use substitutes based on indicators that employee engagement is rising or falling. Those indicators can be measured. They revolve around what happens in the workplace when employees are happy with their work versus when they are not happy with their work. Absenteeism and turnover are two key variables in that regard. Earlier in this guide we cited nine outcomes that can represent effectiveness of an employee engagement program. Engagement Metrics To measure your results, you need to have a “stake in the ground” from which to stretch your tape. Before you begin the program, take a reading of things such as your absenteeism rate, turnover rate, product/supplies shrinkage, accident rates, customer metrics, quality scores, and productivity rates. Then, once implemented and given time to work, take the same measurements again. That will tell you with empirical clarity how your program is doing.
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