Why businesses must focus on employee engagement

Organisations are spending hundreds of millions of dollars on employee engagement programmes, yet their scores on engagement surveys remain abysmally low. How is that possible?

Because most initiatives amount to an adrenaline shot. A perk is introduced to boost scores, but over time the effect wears off and scores go back down. Another perk is introduced, and scores go back up – and then they fall again. The more this cycle repeats itself, the more it feels like manipulation. People begin to recognise the short-term fixes for what they are.

When organisations make real gains, it's because they're thinking longer term. They're going beyond what engagement scores are telling them to do in the moment and redesigning employee experience, creating a place where people want, not just need, to work each day.

But what does that mean, and what does it look like?

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Business leaders

To understand this, I interviewed 150 psychologists, economists and business leaders around the world. The executives included heads of human resources, innovation, information and technology, and diversity. They represented a range of industries and sectors like tech, manufacturing, retail, professional services, education, start-ups and others.

Based on those conversations, I identified three environments that matter most to employees: cultural, technological and physical. Next, we developed survey questions to determine how organisations are faring in each area.

After analysing more than 250 organisations, drawing on the Fortune 100 and various "best workplaces" lists, I found that over half the companies were rated poorly by their employees in at least one of the three areas, and 20 per cent got very low scores across the board.

Although 23 per cent were making strides in all three areas, just 6 per cent were investing heavily in all three – and those "experiential organisations" (Adobe, Accenture, Facebook, Microsoft and others) saw performance gains.

When I interviewed business leaders at the top-scoring organisations, they told me their investments in the three employee experience environments had led not only to happier employees but also to larger talent pipelines and greater profitability and productivity.

Compelling evidence

Some of the most compelling evidence lay in the financial data. I wasn’t able to find every single metric for every single company, but the results were still striking. Compared with other companies, the experiential organisations had more than four times the average profit and more than two times the average revenue.

They were also almost 25 per cent smaller, which suggests higher levels of productivity and innovation.

Looking at the data, it’s clear that there is a significant return to organisations that focus on employee experience over the long term, not just engagement in the here and now.

The important thing is to shift your attention away from those fickle engagement numbers and focus on how people experience your organisation day by day. This means moving away from putting people into outdated workplaces and redesigning workplaces and practices around your employees.

– Copyright Harvard Business Review 2017

Jacob Morgan is the author of The Employee Experience Advantage, The Future of Work and The Collaborative Organization.