Paul M. Sanchez ABC, APR CSF Consulting Employee Engagement- More Important than ever …harder to develop than ever IABC, San Diego June 24, 2009

Overview We will cover: n From satisfaction to engagement n Defining employee engagement n The rise of engagement studies n Engagement measurement n Stages of engagement n Why pay attention to engagement n Engagement planning implications

Session guidelines …according to Andrea To explore the topic of employee engagement – and have three “ take-aways ” To have three “ give-aways ” Share a real-life “ Engagement ” success story along the way … Southwest Airlines

From Satisfaction to Engagement

Over the last couple decades, employers’ focus has moved beyond just “satisfied” or “committed” employees, to employees who are “engaged” Satisfied with pay, benefits, supervisor, working conditions, etc. Not considering leaving the organization SatisfactionCommitmentEngagement 1980s1990s2007? ++ Willing to go the “extra mile”

Defining Employee Engagement

Defining Employee Engagement T-A n Engagement is the result of how employees feel about the work experience–about their employer, its leaders, the work and the environment n Employee engagement drives discretionary behaviors: –To be advocate for the organization –Willingness to go the extra mile –Motivation to perform to the highest standards –Creative energy applied to their work –Mutual and vested interest in the company’s success as well as one’s team and self T

8 Human Capital & Communication Strategy Company Strategy Brand values Business Environment Business Performanc e -Customer Satisfaction -Performance -Quality Metrics -Employee Retention Employee Perceptions & Behaviors Employment Value Chain From Strategy to Performance Results

From Satisfaction to Engagement Research 1 has established that work environment and resulting perceptions drive behaviors that bear on performance outcomes Organization Performance Productivity Customer Satisfaction Safety Behavior Employee Retention 1 See, for example, Harter, J.K., Schmidt, F.L., & Hayes, T.L. (2002). Business-unit-level Relationship Between Employee Satisfaction, Employee Engagement, and Business Outcomes: A Meta-Analysis. Journal of Applied Psychology, 87(2), Satisfaction, Commitment and Engagement

A Winning Employee Experience Drives Key Business Outcome T-A Research demonstrates that high levels of engagement (typically 60% or more) create positive employee outcomes which, in turn, drive business results Izzo & Withers (2000)National Research Forum (2004) Corporate Leadership Council (2004) 29% higher in Revenue 50% higher in Customer Loyalty 44% higher in Profitability 44% higher Retention 56% higher Customer Loyalty 50% higher Safety 30% more Productive 33% more Profitable Engaged employees: increased performance of up to 20 percentile points are 87% less likely to leave an organization Vance (2006) 70% more Productive 34% higher Customer Satisfaction 80% fewer Union Grievances Highly Engaged Companies Highly Engaged Companies 10

Falling Levels of Engagement n In the past six to nine months– at least four major consulting firms issued reports about Engagement and related topics –Buck/IABC/RF –Towers –Watson Wyatt –Mercer –Studies report similar elements n First hand reports of the toll on the workforce –Happy to have a job, –Distrustful of management, –Will do the what it takes—just –Head down –Concerned about extra workload

Employee Engagement Index and Drivers of Engagement

Engagement and Drivers Employee Engagement Index generally are comprised of five items: Employee Engagement Index 1.I feel a strong sense of commitment to this company. 2.I am proud to work for this company. 3.I would recommend my organization to others as a good place to work. 4.I am not considering leaving this company in the next 12 months. 5. I am willing to go “above and beyond” in my job to help this company be successful.

Drivers of Engagement Once indexed, need to know what drives engagement? The experience of: Strategy Structure Processes …and other People Identified and analyzed Six factors Twelve + dimension Fifty to sixty “items”

15 How is an engaged workforce visible? We’re a place where innovation is valued We care about rewarding people for creativity in the work place What would employees say when asked: “What’s it like to work here?” When we take care of employees they take care of customers Quality and customer service are first in our minds Employees act like owners We want to have a sense of fun in our work Employees are also important customers What would employees say when asked: “What’s it like to work here?” Whatever you do, do it at Microsoft. We’re the best and brightest We’re different from everyone else We may be geeks, but we’re rich

Engagement Stages

From Satisfaction to Engagement Employee Engagement Model © with four phases or facets: Engagement Model CommittedAdvocate MotivatedSatisfied Disengaged

Satisfied

n Enjoys job n Is not dissatisfied with terms and conditions n Content to work alone n Does not go “above and beyond” n Not necessarily a team player n Often focused outside of work

Motivated

n Contributes energetically n Strives to achieve personal goals n Values achieving personal goals more than team/organizational goals n Focused individual contributor n More loyal to personal professional goals rather than organization

Committed

n Loyal to organization, optimistic for the future n Sees the bigger picture with a sense of how job fits in n Collaborates to achieve team goals n Openly ambitious for self, team and company n Believes the organization will enable his/her good performance n Has a sense of belonging to organization–feels valued and involved at work

Advocate

n Contributes discretionary effort n Proactively seeks opportunities to serve the mission of the organization n Speaks positively about the organization’s products, services and people n Recommends organization as an employer n Is willing to withhold criticism and/or be constructively critical for the good of the organization n Resilient to short-term dissatisfiers

26 Why do organizations need to pay attention to engagement now? n General uncertainty in the economy n Employees face worry at work and at home—can lead to reduced job focus n Customers/clients cut back, actual environment grows more competitive n Employees are oriented, trained, and motivated through a spectrum of experiences that ultimately shape how customers/clients are treated n Failure to win the hearts and minds of employees put all customer/client interactions at risk

Core Engagement Elements and Implications and Possible Action Points Acts in accord with the expressed values of the organization Allocates resources in ways that support strategy Visible & transparent involvement with the customers and employees Making the connections between strategy and process that will aid employees in seeing the big picture Treated with respect Work valued for overall contribution Opportunity to grow in job and laterally Work aligned with the success of the enterprise Participating in developmental opportunities Reward practices that are perceived as fair and competitive Total compensation approach (bringing it all together) Benefits components integrated with the total reward package Employees recognized in tangible and immediate ways Exploration of non-cash recognition for outstanding performance Organization culture that is built on a two-way exchange of information Communication that is planned Supervisors are active participants in the cascade of information Full mix of media to reach all levels of the organization Communication training for supervisors Leadership The Work Itself Recognition and Rewards Communication

28 Engaged Employee Experience System typical drivers Employee Engagement n Confidence and trust in CEO/leadership n Leadership visibility and communication n Line of sight between individual performance and company performance n Career growth and development opportunities n Communication’s program n Relationship with supervisor n Recognition and rewards *Based on Mercer HR study Common Operating Drivers* Employee Work Experience Employment Brand People/Communication Strategy

29 Why employers fail to build engagement programs Importance not clear “Too difficult” “Too expensive” Remedy not clear Satisfaction surveys and customer research often did not emphasize importance employee’s role Responsibility for engagement is seen as too diffuse to assign, manage or measure Building an engaged workforce may be seen as a luxury the company cannot afford Improving employee engagement means understanding the specific and unique drivers of engagement

30 Winning employee support Employees unaware Employees hostile Employees not motivated Employees not able Provide information and training to build knowledge of touch-points and positioning Provide information and training about the mutual interests between org. employees and clients/customers Institute recognition & reward programs that support quality and service goals Develop skills and processes to design and deliver winning customer/client service AttitudesBehaviors Communications & HR Programming

The Employee Experience: what employees report Source “What’s Working” Mercer Global Report on Engagement 2007

32 Company Pride Organization has good reputation for “customer” service Feedback from customers used to improve products and services % Favorable

33 Commitment I feel a strong sense of commitment to my organization I would recommend my organization to others as a good place to work % Favorable

34 Starting with vision and values Vision and values have been clearly communicated Values provide direction for employees Management behavior is consistent with the organization’s values Regarding values % Favorable

35 Communication and leadership Communication about the future direction of organization Trust in management communication % Favorable

36 Upward Communication My manager encourages open, honest two-way communication I feel encouraged to come up with new and better ways of doing things % Favorable

The Employee Experience: what employers can do

38 Employee Engagement process (sample plan) Research Planning Testing Implementation  Review and analyze key data points – employee surveys, workforce analytics, competencies, demographics, external brand research, etc.  Analyze data for preliminary “working” plan  Development of cross-functional team (Coms, HR, Operations)  Confirm and refine working assumptions  Identify key employee groups for testing  Identify preliminary areas of alignment and misalignment  Test concepts with employee groups from Customer Service, Mfg. IT, Retail Sales and Business Sales  Adjust elements based on testing  Review and adjust further with Discovery Team sub-group  Align with HR, Mktg and Ops. marketing action plans to begin the process of developing a more engaged workforce  Gain leadership support  Confirm metrics for success/ROI

39 Communication nWhat is happening and why? nFuture vision? nWhy are we doing this now? nHow will I be affected? nWhat do I need to do to help? nWhat do I need to do differently? nHow will I be measured? nWhat training/career development opportunities are there? nWhat support/resources will I have? nHow will I be rewarded? nWhat am I worth to the company? Translating Engagement to Communications Messages Culture and employer brand Senior executives External centres of influence Supervisors Managers HR, Comms, Marketing Most valued employee Stakeholders

40 If You Work on Engagement, Will It Pay- off? n Collective problem solving n Improved performance/customer/client service, hence customer loyalty, profitability and (ultimately) share price n Internal brand recognition/third party attention –new hire interviews –positive press mentions, –best employer lists n Employee innovation, enthusiasm and willingness to go that extra-mile Ability to hold critical skills; and reduction in early attrition and later turnover

41 Conclusion (Action Areas) Critical success factors: n How the mission is framed and internalized for employees n How values are lived (made apparent) by leaders and managers n How customer input information is used n How employees are treated –Two-way communication environment –Recognition –Rewards –cash, benefits, development, affiliation –Career paths

Paul M. Sanchez ABC, APR CSF Consulting Employee Engagement- More Important than ever …harder to develop than ever IABC, San Diego June 24, 2009