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January 10, 2008 - Richard Donkin
One of the biggest challenges facing European businesses in the struggle to compete in the global marketplace is to maintain and increase productivity among workforces that have developed under social conditions that differ markedly with those elsewhere in the world.
Even within Europe there are broad differences in working conditions, regulations and wage levels from country to country and often between regions within individual states.
Free movement of labour has allowed employers some much-needed flexibility in labour sourcing but this has not relieved human resources professionals from the need to ensure that employees are working enthusiastically, focussing their efforts and abilities in line with the aims of their employing businesses.
This explains why concerns for employee engagement have been moving up the European employment agenda. The theory behind employee engagement is quite simple: it holds that committed employees, demonstrating a desire and willingness to undertake discretionary work – popularly referred to as “going the extra mile” – are going to be more productive than those who are simply going through the motions in return for their pay.
Indeed the theory is becoming reality since research has shown that more engaged workforces deliver higher profits. But how can a business know the extent to which a workforce is engaged with its work and with the aims of the business?
The best way to find out is to ask people using an employee opinion survey. Employers can build their own questionnaires or use proprietary sets of questions such as the Gallup Q12, a 12-item survey instrument refined from research among more than a million employees exposed to hundreds of questions over a 25 year period.
The research was designed to sift out those questions that would identify top performing work groups in addition to measuring how well companies met employee needs in the workplace.
This is significant because there is a direct correlation between the two. People do good work when their working conditions are good, when they are paid fairly and well managed, where they have scope for development and where their efforts are recognised and respected.
Research within some employers has found that there are people who are intrinsically engaged. Conversely there can be people within the same organisation, sharing the same pay and working conditions, who are less contented in their work.
Extensive engagement surveys within Standard Chartered Bank, for example, discovered that people who were continually complaining about their pay levels were usually more disengaged, and less productive than colleagues who were happy with their pay.
These findings demonstrate that employee engagement is a complex issue that is influenced by a series of factors, including individual personalities and working relationships.
In spite of, and perhaps because of, this complexity, engagement is a feature of employment that cannot be ignored. A recent survey by Towers Perrin,* the human resources consultants, based on information from more than 88,000 respondents in 19 countries, found that companies were beginning to understand the need to build engaged work teams. But Towers Perrin said that no more than one in five employers surveyed in the research could be described as having “fully engaged” workforces.
The research did, however, find clear evidence that engagement made a difference. When the researchers compared engagement levels with financial performance they found a correlation between high engagement and higher net profit margins. Studies have found that there are savings to be made in recruitment and employee turnover costs too, since highly engaged employees are more likely to stay with their employer.
It should be recognised that there is nothing new about engagement, except the use of the term by HR professionals. But employers are being forced through changing social and economic conditions to pay more attention to the way they relate to employees.
People must feel they can influence the way they work. There is an imperative therefore for those in senior management to ensure that all members of staff understand how they can make a difference. It is no coincidence that the first Gallup question asks: “Do you know what is expected of you at work?”
Unfortunately, as a study by Watson Wyatt,** another HR consultancy, revealed, many managers know less than they think about the motives and intentions of employees.
The survey of 946 companies in 22 countries worldwide highlighted relatively poor understanding of employee priorities. For example, managers underestimated concerns among employees for the nature of their work. The research also exposed deficiencies in the way that performance management initiatives were being communicated among employees. Typically HR departments would be devising training programmes with poor take-up among employees, barely aware that training was available.
Companies must respond by ensuring that HR departments are liaising closely with management and employee needs. At the same time it's important that managers ensure that people know exactly what is expected of them, with clear and measurable objectives for which they have received effective training.
Further, as working options become more flexible, affording people increasing choice over contractual arrangements, companies in future will need to develop their employer propositions in order to attract the best workers.
This will involve a degree of attention that goes beyond merely offering competitive pay rates and reasonable working conditions. As employee choice broadens, the winners in tomorrow's labour markets will be those employers that are willing to extend their working options in a way that meets the changing needs of people at different stages of their careers. Everyone will be seeking better work and work that fits their lifestyles. Employers must ask themselves: “Can we deliver?”
*Playing to Win in a Global Economy, the global strategic rewards report and European findings is published next month by Watson Wyatt, http://www.watsonwyatt.com/ 
**Towers Perrin 2007 Global Workforce Study, http://www.towersperrin.com/
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