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Effective Practice Guidelines Employee Engagement and Commitment

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Effective Practice Guidelines Employee Engagement and Commitment

    SHRM Foundation’s Effective Practice Guidelines

    Employee Engagement and Commitment A guide to understanding, measuring and increasing engagement in your

    organization

    By Robert J. Vance, Ph.D.

Table of Contents

Foreword………………………………………………………………………………...2

Acknowledgments…………………………………………………………………….. 3

About the Author……………………………………………………………………….. 4

Employee Engagement and Commitment……………………………………………… 5

     Employee Engagement: Key Ingredients

     The Link Between Employer Practices and Employee Engagement

     A Closer Look at Workforce Surveys

    Designing Engagement Initiatives: Guidelines to Consider

    Conclusion

References…………………………………………………………………………… 38

Sources and Suggested Readings……………………………………………………….41

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

Foreword

    The SHRM Foundation Board of Directors appreciates how difficult it is for HR practitioners to keep abreast of current research findings and incorporate them into their own HR practices.

    Human resource professionals juggle multiple responsibilities and do not have time to read long research reports, no matter how beneficial. Realistically, most HR practitioners will seek guidance from research findings only if they are presented in a clear, concise, and usable format.

    To address this issue and make research more accessible, the SHRM Foundation created the Effective Practice Guidelines series in 2004. The Foundation publishes a new report

    annually on different HR topics. Past reports, available from the Foundation, include Performance Management and Selection Assessment Methods. You are now reading the

    third report in the series: Employee Engagement and Commitment.

    To create each report, a subject matter expert with both research and practitioner experience distills the research findings and expert opinion into specific advice on how to conduct effective HR practice. The report is then reviewed by a panel of academics and practitioners to ensure that the material is comprehensive and meets the needs of HR practitioners. An annotated bibliography is included with each report as a convenient reference tool.

    Our author is Robert J. Vance, a partner of Vance & Renz, LLC of State College, Penn. Dr. Vance has 25 years of consulting, research, and teaching experience. He is uniquely qualified to lead us through the topic of employee engagement.

    The newly created SHRM Foundation Research Applications Committee oversees production of the reports. Our goal is to present relevant research-based knowledge in an easy-to-use format. Please let us know if you think we’ve achieved that goal.

    The Foundation’s vision is ―The SHRM Foundation maximizes the impact of the HR profession on organizational decision-making and performance, by promoting innovation, education, research and the use of research-based knowledge.‖

    We are confident that the Effective Practice Guidelines series takes us one step closer to

    making that vision a reality.

    Frederick P. Morgeson, Ph.D. Maureen J. Fleming, Ph.D.

    Co-Chair, Research Applications Committee Co-Chair, Research Applications Committee Associate Professor of Management Professor of Management

    Michigan State University University of Montana

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

Acknowledgments

    The SHRM Foundation is grateful for the assistance of the following individuals in

    producing this report:

    Editor

    Frederick P. Morgeson, Ph.D.

    Associate Professor of Management, Eli Broad College of Business Michigan State University

Reviewers

    Judith L. Clark, SPHR, CPC

    President, HR Answers, Inc.

JT Kostman, Ph.D.

    Director, People Equity Solutions, Metrus Group

William A. Schiemann, Ph.D.

    Chairman and CEO, Metrus Group

Project Manager

    Beth M. McFarland, CAE

    Manager, Special Projects, SHRM Foundation

    For permission to include engagement definitions, survey items, models, and business

    results in this report, sincere thanks to:

    ; Brian Gareau, Caterpillar Inc.

    ; Rachel Safferstone, Corporate Leadership Council

    ; Jennifer Kaufman, Dell Inc.

    ; Paul Bernthal, Development Dimensions International

    ; Ray Baumruk, Hewitt Associates LLC

    ; Craig Ramsay, Intuit Inc.

    ; Jack Wiley, Kenexa

    ; Carla Shull, Molson Coors Brewing Company

    ; Jim Harter, The Gallup Organization

    ; Tom Davenport, Towers Perrin

Major funding for the Effective Practice Guidelines series is provided by the Human

    Resource Certification Institute (HRCI) and the Society for Human Resource

    Management (SHRM).

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

About the Author

Robert J. Vance, Ph.D.

    Robert J. Vance is a partner of Vance & Renz, LLC, of State College, Pa., a provider of customer-focused solutions to problems in human resource management and organizational development. Dr. Vance has 25 years of consulting, research and teaching experience. He has directed projects in many private and public sector organizations in the areas of personnel selection, training, performance management, safety, employee and customer surveys, organizational development, innovation implementation and workforce development.

    A member of the Society for Industrial and Organizational Psychology (SIOP), the American Psychological Association (APA), the Academy of Management, and the American Association for the Advancement of Science, his work has appeared in such publications as the Journal of Applied Psychology, Personnel Psychology, Leadership

    Quarterly, Group and Organization Management, and Human Performance. Recent

    publications include a chapter in Customer Service Delivery: Research and Best

    Practices (edited by L. Fogli), and ―Organizational Cynicism,‖ a contribution to the forthcoming Encyclopedia of Industrial and Organizational Psychology (edited by S.

    Rogelberg).

    Dr. Vance served on a National Research Council committee examining future directions for occupational analysis and classification systems, and on an APA task force on workforce analysis. He is a corecipient of the SIOP’s 1998 M. Scott Meyers Award for Applied Research in the Workplace, and the national University Continuing Education Association’s 1994 Programming Award. He received his Ph.D. in industrial and organizational psychology from Pennsylvania State University.

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

Employee Engagement and Commitment

    Employee engagement first. [No] company, small or large, can win over the

    long run without energized employees who believe in the [firm’s] mission and understand how to achieve it. That’s why you need to take the measure of employee engagement at least once a year through anonymous surveys in which

    people feel completely safe to speak their minds.

    Jack and Suzy Welch

    Employees who are engaged in their work and committed to their organizations give companies crucial competitive advantagesincluding higher productivity and lower

    employee turnover. Thus, it is not surprising that organizations of all sizes and types have invested substantially in policies and practices that foster engagement and commitment in their workforces. Indeed, in identifying the three best measures of a company’s health, business consultant and former General Electric CEO Jack Welch recently cited employee engagement first, with customer satisfaction and free cash flow coming in 1 ―Reaping Business Results at Caterpillar‖ and second and third, respectively.

    ―Engagement Pays Off at Molson Coors Brewing Company‖ show two examples of

    companies that benefited from enhancing engagement and commitment.

    Reaping Business Results at Caterpillar

    Construction-equipment maker Caterpillar has garnered impressive results from its employee engagement and commitment initiatives, including:

    ; $8.8 million annual savings from decreased attrition, absenteeism and overtime

    (European plant)

    ; a 70% increase in output in less than 4 months (Asia Pacific plant)

    ; a decrease in the break-even point by almost 50% in units/day, and a decrease in

    grievances by 80% (unionized plant)

    ; a $2 million increase in profit and a 34% increase in highly satisfied customers

    (start-up plant)

    Engagement Pays Off at Molson Coors Brewing Company

    At beverage giant Molson Coors, engaged employees were 5 times less likely than nonengaged employees to have a safety incident and 7 times less likely to have a lost-

    time safety incident. Moreover, the average cost of a safety incident for engaged

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

    employees was $63, compared with an average of $392 for nonengaged employees. By strengthening employee engagement, the company saved $1,721,760 in safety costs

    during 2002. Engagement also improved sales performance at Molson Coors: Low-

    engagement teams fell far behind engaged teams in 2005 sales volumes. In addition, the difference in performance-related costs of low- vs. high-engagement teams totaled

    $2,104,823.

    But what are employee engagement and commitment, exactly? This report examines the ways in which employers and corporate consultants define these terms today, and offers ideas for strengthening employee engagement. Though different organizations define engagement differently, some common themes emerge. These themes include employees’ satisfaction with their work and pride in their employer, the extent to which people enjoy and believe in what they do for work and the perception that their employer values what they bring to the table. The greater an employee’s engagement, the more likely he or she is to ―go the extra mile‖ and deliver excellent on-the-job performance. In addition,

    engaged employees may be more likely to commit to staying with their current

    2organization. Software giant Intuit, for example, found that highly engaged employees

    are 1.3 times more likely to be high performers than less engaged employees. They are also 5 times less likely to voluntarily leave the company.

    Clearly, engagement and commitment can potentially translate into valuable business results for an organization. To help you reap the benefits of an engaged, committed workforce at your organization, this report provides guidelines for understanding and measuring employee engagement, and for designing and implementing effective engagement initiatives. As you will see, everyday human resource practices such as recruitment, training, performance management and workforce surveys can provide powerful levers for enhancing engagement.

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

    Employee Engagement Defined

CORPORATIONS

    Caterpillar

    Engagement is the extent of employees’ commitment, work effort, and desire to stay in an organization.

Dell Inc.

    Engagement: To compete today, companies need to win over the MINDS (rational commitment) and the HEARTS (emotional commitment) of employees in ways that lead to extraordinary effort.

     3Intuit, Inc.

    Engagement describes how an employee thinks and feels about, and acts toward his or her job, the work experience and the company.

CONSULTANTS and RESEARCHERS

    Corporate Leadership Council

    Engagement: The extent to which employees commit to something or someone in their organization, how hard they work and how long they stay as a result of that commitment.

Development Dimensions International

    Engagement is the extent to which people enjoy and believe in what they do, and feel valued for doing it.

The Gallup Organization

    Employee engagement is the involvement with and enthusiasm for work

    Hewitt Associates

    Engagement is the state of emotional and intellectual commitment to an organization or group producing

    behavior that will help fulfill an organization’s promises to customers and, in so doing, improve business

    results.

Engaged employees:

    ; Stay They have an intense desire to be a part of the organization and they stay with that

    organization;

    ; Say They advocate for the organization by referring potential employees and customers, are

    positive with co-workers and are constructive in their criticism;

    ; Strive They exert extra effort and engage in behaviors that contribute to business success. 4Institute for Employment Studies

    Engagement: A positive attitude held by the employee toward the organization and its values. An engaged employee is aware of business context, and works with colleagues to improve performance within the job

    for the benefit of the organization. The organization must work to develop and nurture engagement, which requires a two-way relationship between employer and employee.

    Kenexa

    Engagement is the extent to which employees are motivated to contribute to organizational success, and

    are willing to apply discretionary effort (extra time, brainpower and effort) to accomplishing tasks that are important to the achievement of organizational goals.

    Towers Perrin

    Engagement is the extent to which employees put discretionary effort into their work, beyond the required

     7 minimum to get the job done, in the form of extra time, brainpower or energy.

    ? 2006 SHRM Foundation. All rights reserved. Copyright Towers Perrin, reprinted with permission. Effective Practice Guidelines-Employee Engagement and Commitment

Employee Engagement: Key Ingredients

    ―Employee Engagement Defined‖ shows examples of engagement definitions used by various corporations and consultancies. Clearly, definitions of employee engagement vary greatly across organizations. Many managers wonder how such an elusive concept can be quantified. The term does encompass several ingredients for which researchers have developed measurement techniques. These ingredients include the degree to which employees fully occupy themselves in their work, as well as the strength of their commitment to the employer and role. Fortunately, there is much research on these elements of engagementwork that has deep roots in individual and group psychology. The sections below highlight some of these studies.

Occupying the Job

    56Psychologist William Kahn drew on studies of work roles and organizational

    7socialization to investigate the degrees to which people ―occupy‖ job roles. He used the terms ―personal engagement‖ and ―personal disengagement to represent two ends of a

    continuum. At the ―personal engagement‖ end, individuals fully occupy themselves—physically, intellectually and emotionally—in their work role. At the ―personal

    disengagement‖ end, they uncouple themselves and withdraw from the role.

    How do people become personally engaged in their work activities? Why do they become more engaged in some activities than others? Scholars have proposed answers to these questions based on their studies of the psychology of commitment.

Committing to the Work and the Company

    Some experts define commitment as both a willingness to persist in a course of action and reluctance to change plans, often owing to a sense of obligation to stay the course. People are simultaneously committed to multiple entities, such as economic, educational,

    8,9familial, political and religious institutions. They also commit themselves to specific

    individuals, including their spouses, children, parents and siblings, as well as to their employers, co-workers, supervisors and customers.

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

    Commitment manifests itself in distinct behavior. For example, people devote time and energy to fulfill their on-the-job responsibilities as well as their family, personal, community and spiritual obligations. Commitment also has an emotional component: People usually experience and express positive feelings toward an entity or individual to

    10 Finally, commitment has a rational element: whom they have made a commitment.

    Most people consciously decide to make commitments, then they thoughtfully plan and

    11carry out the actions required to fulfill them.

    Because commitments require an investment of time as well as mental and emotional energy, most people make them with the expectation of reciprocation. That is, people assume that in exchange for their commitment, they will get something of value in returnsuch as favors, affection, gifts, attention, goods, money and property. In the world of work, employees and employers have traditionally made a tacit agreement: In exchange for workers’ commitment, organizations would provide forms of value for employees, such as secure jobs and fair compensation. Reciprocity affects the intensity of a commitment. When an entity or individual to whom someone has made a commitment fails to come through with the expected exchange, the commitment erodes.

    Dramatic changes in the global economy over the past 25 years have had significant implications for commitment and reciprocity between employers and employeesand

    thus for employee engagement. For example, increasing global competition, scarce and costly resources, high labor costs, consumer demands for ever-higher quality and investor pressures for greater returns on equity have prompted organizations to restructure themselves. At some companies, restructuring has meant reductions in staff and in layers of management.

    Although restructuring helps organizations compete, these changes have broken the traditional psychological employment ―contract‖ and its expectations of reciprocity.

    Employees have realized that they can no longer count on working for a single employer long enough to retire. And with reduced expectations of reciprocity, workers have felt less commitment to their employers. Many companies, having broken both formal and

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

psychological employment agreements, are struggling to craft effective strategies for

     reviving employees’ commitment and thereby revitalizing their engagement.

10 Common Themes: How Companies Measure Engagement

Employers typically assess their employees’ engagement levels with company-wide

    attitude or opinion surveys. (See ―Employee-Engagement Survey Items: Samples.‖) A sampling of the criteria featured in such instruments reveals 10 common themes related

    to engagement:

    1. Pride in employer

    2. Satisfaction with employer

    3. Job satisfaction

    4. Opportunity to perform well at challenging work

    5. Recognition and positive feedback for one’s contributions

    6. Personal support from one’s supervisor

    7. Effort above and beyond the minimum

    8. Understanding the link between one’s job and the organization’s mission

    9. Prospects for future growth with one’s employer

    10. Intention to stay with one’s employer

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    ? 2006 SHRM Foundation. All rights reserved.

    Effective Practice Guidelines-Employee Engagement and Commitment

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