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Ensuring strong employee engagement

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In allowing employees greater freedom and autonomy, employers can expect a happier workforce in return. So, are companies starting to realise that employee engagement and productivity are mutually inclusive?

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Even by its own ambitious standards, it is doubtful Netflix expected such widespread appreciation for the set of 124 PowerPoint slides it shared online back in 2009 outlining its employment culture.

Netflix culture

Yet, the streaming service’s model struck a chord – particularly with fellow Silicon Valley enterprises – and has now been viewed over 18 million times. Facebook’s chief operating officer Sheryl Sandberg reserved the highest praise, saying it “may well be the most important document ever to come out of the Valley”.

So, what makes the presentation so pioneering? The answer is perhaps best encapsulated in its title, “Freedom and Responsibility”. Staff at Netflix can expect to receive unlimited holidays. Just as they are free to choose their working hours. Yearly performance reviews are non-existent, as are bonuses.

At the presentation’s heart is employee engagement, eschewing top-down, corner-office styles of management for higher levels of autonomy across the workforce. Netflix will only hire “fully-formed adults”, the company likes to claim. Staff are therefore encouraged to make their own judgements and take responsibility for their actions, rather than take a back seat to processes and management.

The applicable rule here is that employee engagement equates to better productivity all round for your business.

In Netflix’s case, this ethos appears to be paying dividends. Despite some rocky periods – its price on Wall Street slumped to $53 at one point in 2011, after an attempt to spin off its DVD-by-mail business – the company’s performance continues to defy the predictions of analysts. For the first three months to March this year, revenues hit $3.7 billion – the highest quarterly increase since it first introduced online streaming back in 2007.

Studies into the relationship between employee engagement and output are by no means a new phenomenon. Back in the 1930s, a series of experiments at Western Electric’s factory in Hawthorne, Chicago (known as the Hawthorne effect) highlighted the positive effects of improved working conditions on the factory’s output. Highly progressive for the time, the study also posited that cutting the working day by just 30 minutes could improve productivity.

Employee engagement over the years

Similarly, a 1950 paper by sociologist James Worthy, which looked at the working conditions of over 100,000 employees at Sears, the US department store chain, across a 12-year period, suggested the higher the level of staff autonomy, the higher their morale and engagement.

More modern research backs this up further. A 2012 piece of research by Gallup of 192 companies spanning 49 industries, 34 nations and 1.4 million workers, found that the best-performing players when it came to employee engagement had almost double the output levels compared to those who scored poorly on team engagement.

“Financial performance is best viewed as a downstream outcome,” read the report’s final summary. “Employees with positive attitudes toward their workplace are likely to carry those attitudes over to customers and to engage in the discretionary effort it takes to serve . . . at a high level.”

What are the key ingredients to creating a happier workplace? Employee engagement is primarily based on a bedrock of the trust employers have in their staff. If team members are encouraged to come up with ideas of their own – as opposed to have them foisted down from the top with no consultation – they are more likely to obtain greater job satisfaction.

Consequently, many companies have revised their management structures, limiting the management strata to employees, team leaders and a smattering of executive teams. For instance, US manufacturing company WL Gore’s workforce, which totals over 10,000, is compartmentalised into autonomous sub-teams of up to 12 employees, who direct their own work and pay. Staff also get to have a say in the election of the company’s CEO.

What is HR’s role?

The role of employee engagement within HR is in flux, too, as is evidenced by the creation of new positions, such as chief learning officer and “chief employee listening officer”. This only goes to demonstrate how the topic of engagement has become more entrenched in everything HR departments are required to do.

HR also needs to be more proactive in pushing forward a culture of listening, as well as implementing reward systems that are consistent with employee engagement goals.

The big no-no when it comes to employee engagement is submerging the independence of staff under a tangle of complex processes, systems and metrics.  Neither should employee engagement be limited to singular events, such as the Christmas part or team-building away days. Instead, it should be ingrained within day-to-day life at a company, which prioritises self-fulfilment, education and training.

As well as being driven by personal goals, employees are also more likely to perform better when there is a focus on team engagement. Legendary American Football coach Vince Lombardi said it best: “Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilisation work.”

This is part of the reason why some companies such as Netflix have removed bonuses from their payment systems, for a fear that personal incentives to coin an extra dollar risk creating a culture of unhealthy competition within the workforce, as opposed to cooperation.

Employee engagement should be transparent by its very nature. Rather than attempt to conceal knowledge gaps or mistakes, staff should be comfortable and open enough around each other to ask questions when they don’t know the answers. The mantra of former Lego group CEO Jorgen Vig Knudstorp – widely credited with saving the toy manufacturer from collapse when he took over the reins in 2004 – is “blame is not for failure, it is for failing to help or to ask for help”.

Employee engagement surveys and questionnaires still have a place in helping management identify and head off any potential disgruntlement within the workforce. Rather than asking simple yes/no questions, an increasing number of companies opt for open-ended questions with response scales. Common questions/statements could include “I can see myself working here in five years’ time”; “I’m proud to represent this company”; “I can see how my work affects this company’s success”.

All of the above is inextricably linked to the notion of employee wellbeing. According to the Centre for Mental Health, mental health problems in the workplace cost the UK economy almost £35 billion in 2016 – that’s roughly £1,300 for each employee in the country. This would suggest that companies need to do more to look out for the health and wellbeing of their workforces.

Writing in an op-ed in the Financial Times in 2017, Peter Simpson, chief executive of Anglian Water, credited the company’s renewed, holistic approach to employee wellbeing with reducing staff absences and raising productivity.

The figures speak for themselves. For every £1 spent by Anglian Water, it now receives £8 in return, said Simpson. Sickness absence rates per employee have also fallen from a median of 5.5. days in 2012 to just four days.

“Our goals of improving service and productivity have been met,” said Simpson, whose company was named Responsible Business of the Year 2017 by Business in the Community.

“This has made it easier to recruit good people and has attracted praise from independent sources too.

“We’re now in a more mature position when it comes to wellbeing. We focus on the “whole person” — we still spend on safety, but not exclusively.”

Other areas of wellbeing explored by Anglian Water include everything from the provision of nutritional advice to staff attending mental health workshops. The group has partnered with mental health charity Mind, as well as pledging its support to its Time to Talk campaign.

To help employees struggling with money worries – according to a recent report by the Chartered Institute for Personnel and Development, one in four employees in the UK felt anxiety over their personal finances had affected their performance at the grindstone – the group has teamed up with fintech platform Neyber to offer financial guidance and loans.

“Our goal is to implement ways of working that improve the whole life of our employees,” said Simpson. “I really believe work can have a positive effect on colleagues that will repay the business many times over.

“As the benefits become clearer and easier to quantify, more companies will see the merits in promoting the wellbeing of their workforces.”

Yet, some organisations, despite claiming to prioritise employee engagement, appear to still be falling short in the creation of happier workplaces. A 2013 Gallup survey indicated that over 70% of workers in the US as “not engaged” or “actively disengaged”.

Others still appear to hold the belief that successful companies create a happy workforce, rather than the other way around. Those operating under such a credo risk gaining a reputation as regressive in their attitudes. Worse yet, they continue to ignore the needs of their most vital asset of all: their people.

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