Fishburn Hedges

15.06.2009

Today has seen publication of findings from the MacLeod Review of Employee Engagement and Investment. The review was set up by the government to enhance understanding of employee engagement - its benefits, drivers and barriers - and to find out what makes employees committed and enthusiastic to come into work on a Monday morning. It also examined whether wider engagement of the workforce could improve UK competitiveness.

It’s no surprise that the report’s authors respond with “an unequivocal yes”. They collate compelling evidence for the impact of employee engagement on organisational performance, and explore drivers such as leadership, line management and employee feedback. However, in our view, the report leaves employers needing more: it is short on the clear, practical support that employers need to respond (particularly in the current climate, when everyone is struggling to deliver more for less). The report is a comprehensive reference document - but there’s not enough on how to deliver the engagement that it shows is so important.  

The report’s core recommendation is that the government creates “a nationwide discussion” to build “widest possible understanding of the case for engagement”. There is a risk that this simply becomes another talking shop, when rapid action is required. The case for ‘what’ and ‘why’ has been well made in this document: it’s time to look at the ‘how’.

Clear evidence

When he launched the Review last September, John Hutton (then Business Secretary) declared it was intended to “better understand what drives some businesses to engage with their workforce … and look at how we can urge others to do the same”. The Review’s publicity material talks about “examining ways to boost the performance of employees and improve British business success”. In the Foreword to today’s report, Lord Mandelson says “there has never been a more important time to think about employee engagement in Britain”.

Today’s report presents clear evidence of the role effective engagement plays in business success. Its collation of statistics and case studies is impressive; the detail here should be sufficient to convince the most sceptical of employers. For example, a study from Gallup on the earnings per share (EPS) growth of 89 organisations found that the growth rate of those with top quartile engagement scores was 2.6 times that of employers with below-average engagement scores. Taking another approach, evidence from Nationwide shows that - in areas of its organisation with high engagement - sales of banking products were 14% higher and sales of general insurance were 34% higher than for areas of the business with low engagement.

Much of this research has been available from other sources in the past, but the report brings it all together into a compelling body of evidence. It shows how engaged employees make a major difference to productivity, profit, voluntary turnover rates, absence rates, innovation and competitiveness. It makes the points that this applies across sectors and sizes of employer, and this is supported by a wide range of organisational case studies.

Four key drivers

The big question, then, is how can employers grasp these benefits? The report highlights four key drivers of effective employee engagement:

- Leadership - based around a “strong strategic narrative”
- Engaging managers
- An effective and empowered employee voice
- Organisational integrity, so that behaviours in all areas consistent with stated values

Again, the report provides useful evidence in all areas, including findings from Accenture’s internal research that 80% of the variation of engagement levels is down to line managers.

But whilst this is sensible stuff, it’s hardly ground breaking. Most organisations will intuitively grasp the importance of their leaders and managers in getting the most from their people, and involving/equipping employees in ways that ensure that they can make the contribution expected of them. This is perhaps best illustrated by the report’s use of terms such as “respect”, “trust”, “courtesy” and “integrity” - fundamental elements of good management practice.

It’s also interesting that the report omits discussion of an organisation’s infrastructure of communication tools and channels. For example, it quite rightly confirms the importance of effective communication from leaders, but does not explore the mechanisms through which leaders can create the desired engagement (e.g. presentations, webcasts, speeches, written communiqués, ‘surgeries’…). In addition, the report emphasises the importance of establishing an employee voice, but doesn’t explore ways and means through which employers can stimulate this.

Action now?

These points contribute to the major issue regarding this report in our view. It is a great reference document on employee engagement - it contains a lot of useful evidence - but it does not give employers sufficient guidance on the steps they could/should be taking to realise those benefits right now. It doesn’t contain sufficient emphasis on actions that could inspire the enthusiasm, energy and commitment from employees (and avoid that ‘Monday morning feeling’).

Of course, this may come out of the government’s action plan in response to this report, which is due in the Autumn. But we are concerned that “a nationwide discussion” to build “widest possible understanding of the case for engagement” may not deliver the action required, and that the proposed range of support for employers by March 2010 might not be quick enough for some employers (or enable employee engagement to play a greater role in bringing Britain out of recession). It’s a promise of ‘jam tomorrow’ when employers need more immediate support.

For these reasons, the report is a platform for progress, but it’s also a missed opportunity: in our view, it could have gone further and provided a clearer steer on the actions that employers could be taking now. We’ll keep a watching brief, and we’ll offer any support we can, but for now employers only have part of the story.