Employee engagement is one of those perpetual trending topics in HR and recruiting, probably because for years now, pundits and practitioners alike still haven’t figured out how to confront what seems to be a fairly endemic case of malaise and apathy perpetually plaguing our workforce.
I’m not sure why it is that talent leaders and recruiting pros can’t to have a near obsessive fixation on what’s inherently an amorphous and highly ambiguous concept, but I think the primary driver of our engagement fetish is that it seems to be a convenient, categorical catch-all that’s more or less seen as the whipping boy for all of the manifold problems plaguing the HR and recruiting profession today.
Inherently, we know that an engaged workforce is more satisfied in their jobs and tend to be happier, more productive and stick around for longer tenures and lower pay, a pretty compelling business case for justifying the significant chunk of change we spend on employee engagement initiatives – Bersin by Deloitte estimates employers spend approximately $720 million on employee engagement improvement annually.
While this represents a staggering sum, what’s already a bull market looks likely to continue its boom for the indefinite future, considering that as ubiquitous as employee engagement has become, only about 50% of employers report actively investing in related programs, products or initiatives last year, meaning that only 50% of the overall market for employee engagement solutions has even been tapped.
Stop and think about that for a minute. Organizations are spending almost three-quarters of a billion dollars (that’s billion, with a “b”) every year for dedicated employee engagement solutions, and that’s still only about half of the estimated $1.5 billion a year companies will ultimately spend annually in the Quixotic hopes of finally finding a fix for their engagement related problems.
While recruiting and HR, as a rule, tend to be prodigious in their profligate spending on stuff they don’t really need (see: video interviewing platforms, “talent communities,” employer branding consultants), I’m pretty sure that employee engagement represents the biggest money pit in an industry landscape littered with them.
There’s no other category in HR or talent technology today where there are such dismal returns for such staggering investments, with companies flushing three quarters of a billion dollars every year towards a problem that remains as persistent as ever. According to Gallup’s monthly employee engagement survey, a whopping 34.1% of all workers considered themselves “engaged” or “highly engaged” in their jobs last month.
This is a sad number, surely, but what makes it even sadder is this represents a new record, with a higher percentage of workers reported feeling engaged at their jobs last month than at any point since Gallup started tracking employee engagement all the way back in January 2011.
In fact, April’s report represented the first time employee engagement has topped 33% (or 1 out of 3 US workers) since 2012. That’s right. For the billions we’ve thrown at employee engagement solutions over the years, this last month was the very first time in four friggin’ years where even a third of the workforce reported feeling they were “fully engaged in their work and had sufficient support to cope with and resolve work situations.”
What, exactly, am I missing here?
I suppose, on the surface at least, it makes sense to spend on employee engagement, and the returns on these engagement investments are supported by manifold sources and statistics out there supporting the business case for investing in employee engagement improvement. According to the Workforce Research Foundation, increasing organizational investment in these initiatives by just 10% annually could realize a bottom line increase of $2400 in net profit per employee, per year.
Additionally, the same study showed that companies with highly engaged workforces have much lower levels of absenteeism than their less engaged counterparts, using an average of 2.69 sick days a year, compared with the 6.19 annual sick days every disengaged worker uses up on average, and the Carnegie Foundation reports that “highly engaged” employers outperform their less engaged competition by an average of 202% a year.
So if we know the importance of employee engagement, and recognize that we kind of suck at actually improving it – remember, only 1 out of 3 workers actually feels engaged at work, and that’s an all time record – then what in the hell is it that employers are getting, exactly, for that $720 million in annual spend?
Well, that depends, of course, on how exactly these employers even define “employee engagement” in the first place. According to Bersin research, we seem to have drastically divergent definitions around this critical concept and core competency, ranging from alignment with company vision and values, to enjoying coming into work every day to the ability to align individual job performance and personal objectives with the bigger business picture and company goals.
No matter how you define engagement, of course, if you’re going to be buying solution, you’ve got to know exactly what employee engagement means at your organization, because you can’t improve what you can’t define (nor can you measure or manage it).
Before selecting a provider, make sure you’re looking at the ones whose solutions best align with your actual employee engagement problems – which means that the vendors you’re talking to better define this topic the same way you do, or else they’re probably solving for a different problem than the one you’re trying to solve.
Everything In Time.
The fact that we can’t even come to a consensus on how to define “employee engagement” seems to be a pretty obvious problem that’s preempting our profession from actually moving the needle on this critical recruiting and retention challenge. If we can’t clearly state what “employee engagement” means at our individual employers, and how engagement is monitored or measured, then any attempt to actually implement improvements is doomed for failure, because if HR can’t understand what we’re going for with these programs, how the hell can we expect our employees to buy in?
This misalignment probably leads to a lot of the money being thrown mindlessly at a problem as pressing and pervasive as employee engagement, even though results to this point have been pretty crap, if we’re being honest. And we’ll continue to throw down even bigger bucks in the future, if current purchasing behavior holds.
We all know how important employee engagement is, and desperately want to improve this critical competency in our own organizations before it’s too late, and damn it, if that means doubling down and throwing good money after the bad chasing what’s more or less an illusion wrapped in an enigma wrapped in a buzzword, then that’s a small price to pay for getting even a little bit closer to the silver bullet for recruiting and retention alike.
Of course, since you can’t measure opportunity cost and fully 4 in 5 employees would consider leaving their current role for a better one, this conventional wisdom is pretty much bullshit. Which, in HR, kind of goes without saying, I suppose.
Here are some of the ways organizations can start to think about the concept of engagement differently. Forget the buzzwords and BS and stick to these common sense strategies for improving employee engagement today – and tomorrow.
Push and Shove.
While a high salary and competitive compensation are definitely the most significant drivers of recruiting and retaining top talent, statistically speaking, there’s little to no correlation between total rewards and employee engagement, particularly when workers feel fairly compensated or like they’re being paid what they’re worth. According to research from Indeed, 61% of candidates rate compensation as their primary driver for looking for a new role; however, fully 80% of employees report they’d be open to making less money in exchange for more flexible work arrangements, like having the option to work remotely or being able to dictate their own schedules, even if those aren’t during regular business hours.
Let’s not kid ourselves – a big salary definitely makes a big difference in employee engagement, but both direct and indirect incentives count for just as much as base salary or total comp. It’s a pretty big mistake to assume that money is the exclusive motivator for most employees. Sure, it’s probably the biggest consideration for candidates and employees alike, but statistics suggest that an annual salary of $75,000 is the “break even point” the average employee needs to reach in order to feel motivated and engaged. Studies suggest any amount under this baseline leads to rapidly diminishing returns when it comes to recruiting and retaining top talent, but anything over and above this amount is unlikely to have a significant statistical impact on an employee’s job satisfaction or relative levels of engagement.
Of course, if an employee hates the company, their job, their colleagues, coworkers and your culture, then there’s no amount of money that’s going to make them satisfied enough to stick around over the long term, either. But pay your people fairly, offer them decent perks and adequately incentives (ideally tied to individual and team performance), and you’ll see that there’s no devaluing the importance of compensation.
Dolla dolla bills, y’all.
Rock Steady: Who’s Getting Employee Engagement Right.
While most of us still suck at employee engagement, there are a handful of forward looking companies who have already implemented the kind of innovative initiatives and proactive programs which underscore their commitment to building a culture of engagement – and provide a pretty good example for those of us who are still trying to figure out how the hell we’re even supposed to get started. Of course it’s important to notice that there’s no necessary link between a strong company culture and an engaged workforce – take Google, for example.
While its culture is so renowned that Vince Vaughn and Luke Wilson actually made a feature length employer branding video featuring such well publicized Google perks as free food, on site dry cleaning, free daycare, the ability to bring your pet to work and the standard three month sabbaticals the company gives workers to pursue personal “passion projects,” it’s no wonder that the Mountain View company (and its parent, Alphabet, Inc.) continually rates as the most in demand employer or “dream company” for job seekers.
Despite these recruiting inducements, however, having such a strong culture doesn’t actually lead to engaged employees or even retention – in fact, Google’s average tenure of just over a year is among the shortest of any Fortune 500 employer, in the tech sector or otherwise.
It seems that in addition to compensation and culture, one of the other principal drivers of employee engagement seems to be stability, which is just behind salary as the top driver for candidates when looking for a new job, with 3 in 5 job seekers reporting that stability was one of their most important considerations for choosing an offer – and according to Gallup, 44.1% of workers would choose a steady job at a stable company over a higher paying opportunity that they perceived as less secure, no matter how much more that riskier job paid in terms of direct rewards.
That’s why companies like Southwest Airlines, with a median job tenure of 5.9 years (compared to the average of just over two for the average Fortune 500 employer), had among the highest percentage of engaged or “satisfied” employees of any organization, with a whopping 74% employee engagement rate (against an average of 33%).
Augmenting their reputation as a stable, steady employer with a “promote from within mentality” with salaries that are aligned (and often just above) their direct competitors in the airline industry and perks such as free flights, personal development options like tuition reimbursement or professional learning opportunities like rotational programs and leadership training have helped propel Southwest to one of the most engaged workforces in the world of work.
Similarly, Yahoo! might be on the margins of the tech scene, but the venerable Sunnyview company retains its employees by bringing in highly influential speakers to motivate or inspire their staff, a series that’s included such luminaries as Tom Cruise, Deepak Chopra and even Michelle Obama.
While Yahoo!, like most big tech players, has a leafy, collegiate corporate campus replete with on-site basketball and volleyball courts, those pickup games are anything but a joke; NBA player Stephen Curry and Olympian Gabrielle Reese have been known to show up and see who’s got next – which is pretty cool. Of course, so too are the company picnics, which feature marquee names from some of music’s biggest stars, including top artists like Taylor Swift and Bruno Mars (just another day at the office, right?).
Of course, none of that helped Yahoo! stay viable and solvent, and many of those employees it successfully retained it’s probably in the midst of letting go, proving that you don’t need the biggest pop stars of our time or the best athletes out there to raise your employee engagement game. There are plenty of other perks you can offer; consider Lifelock, who actually surveyed their employees before rolling out their most recent benefits package – one which included rewards their employees actually asked for and valued the most.
These include such benefits as wellness reimbursements and rewards, 4 weeks of PTO for first year employees, paid time off to volunteer with company sanctioned community service programs, healthy stock option grants, tuition assistance and even a free Lifelock membership designed to build engagement while also building brand advocates. So far, in the 18 months or so since introducing its revamped rewards program, Lifelock’s investment seems to be working; in fact, employees now directly refer approximately 25% of the company’s annual consumer business – a trend that first began when the company started giving away its product to workers as part of its standard package of perks.
And when it comes to the potential payoff of investing in employee engagement, that’s the bottom line.
By Matt Charney
Matt serves as Chief Content Officer and Global Thought Leadership Head for Allegis Global Solutions and is a partner for RecruitingDaily the industry leading online publication for Recruiting and HR Tech. With a unique background that includes HR, blogging and social media, Matt Charney is a key influencer in recruiting and a self-described “kick-butt marketing and communications professional.”
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