Lower employee engagement tied to declining manager effectiveness

4 imperatives for managers to boost engagement, performance
By Shannon Klie
|Canadian HR Reporter|Last Updated: 03/01/2010

Managing in a downturn: In October, the Strategic Capability Network hosted an event with Dion Love, research director at the Corporate Leadership Council. His presentation focused on four imperatives to drive employee innovation and performance during an economic downturn. For more information about SCNetwork, visit www.scnetwork.ca.

Lower employee engagement tied to declining manager effectiveness

Don’t shoot the messenger (Strategic capability)

Economic downturn just another change (Organizational effectiveness) 

Back to basics (Leadership in action)

SCNetwork’s panel of thought leaders brings decades of experience from the senior ranks of Canada’s business community. Their commentary puts HR management issues into context and looks at the practical implications of proposals and policies.

Lower employee engagement tied to declining manager effectiveness

In the past two years, the number of global employees who are highly disengaged has increased from eight per cent to 21 per cent, according to data from the Corporate Leadership Council in San Francisco.

“Disengagement has gone from a problem we need to manage on the margins, on the fringe of our workforce, to something that is permeating our workforce to the extent that now almost one-quarter of our employees are highly disengaged,” said Dion Love, a research director at the Corporate Leadership Council, at a Strategic Capability Network event held in Toronto in October.

But most concerning are the figures that show discretionary effort — the willingness of employees to go above and beyond — has decreased. This is especially apparent in proactive discretionary effort, where employees volunteer extra effort, said Love.

Proactive discretionary effort, which drives innovation, has decreased up to 60 per cent since the beginning of 2008, according to quarterly engagement surveys of 200,000 employees around the world by the Corporate Leadership Council.

Discretionary effort, along with intent to stay with an organization, are two indicators of engagement. While the poor economy means most employees don’t want to risk leaving their employer, one in four high-potential employees plan to leave their employers in the next 12 months, said Love.

“High-potential employees will find opportunity in any economy,” he said. “These are the people we most need in order to position for the opportunity that will come with recovery and growth.”

Since engagement began to fall in 2007, well before the economic collapse in the fall of 2008, it’s likely the drop in engagement has less to do with the poor economy and more to do with other factors, said Love.

Managers a powerful tool

The most powerful tool in an organization’s arsenal to boost engagement, and thus performance, is managers, he said.

Employees rate managers as having the most impact on discretionary effort — up 50 per cent from 2006 and above compensation, recognition, development opportunities and empowerment, said Love.

But there has been a decline in effective management, with fewer employees reporting organizations are providing high-quality managers — down from 35 per cent in 2006 to 25 per cent in 2009.

4 imperatives for managers

Under any circumstances, there are 10 things managers can do to boost engagement and drive performance (see sidebar). But the Corporate Leadership Council has identified four new imperatives for managers, said Love.

Define employee objectives: Managers who define employees’ objectives — what is expected of employees on a day-to-day basis to meet organizational goals — can boost discretionary effort by 10 per cent, despite business uncertainty, said Love.

This will be especially important in the coming year as 83 per cent of CEOs predict significant organizational changes going forward.

HR needs to support managers to provide personalized, ongoing communication initiatives to ensure objectives remain relevant for each employee group, said Love.

Differentiated recognition: The engagement surveys also found employees’ desire for job recognition is increasing, up 15 per cent since 2008, but 81 per cent of organizations reduced salary increase budgets in 2009.

Instead of using what remains in the compensation budget to give all employees only a moderate salary increase, managers should instead focus on differentiated recognition and pay for performance, said Love.

“Employees who receive differentiated recognition have significantly higher levels of discretionary effort,” he said.

Aligning salary increases with employee performance increases perception of fair pay and boosts employee effort, he added.

Managers should also use “stay” interviews to find out what will motivate employees to stay with an organization. The executive team and HR should empower managers to provide those specific rewards on the spot, he said. This could range from a lunch with the CEO to beginning a mentoring relationship with a senior employee.

“It’s that differentiation that shows you’re sincere in what you actually appreciate,” said Love.

Encourage innovation: While 97 per cent of senior executives believe innovation will become more important over the next three years, managers have become less supportive of employees’ ideas and creativity.

HR can provide guidelines for innovation, said Love. For example, Cincinnati-based fruit producer and distributor Chiquita created a one-page idea evaluation for managers and employees. The evaluation asks three main questions: Is the idea innovative? Is it valuable? How risky is it?

Having a systematic approach such as this lets employees know innovation is still important and encourages them to share ideas, said Love.

Model ethical behaviour: In the past year, employee misconduct has increased from 15 per cent to 20 per cent. This includes everything from expense report fraud to bribing government officials for contracts.

The best way to counter this behaviour is for managers to model ethical behaviour, said Love. This has the side benefit of boosting discretionary effort by 12 per cent, more than the five-per-cent increase seen from managers expressing empathy for employees.

Organizations can support managers to do this by providing them with guidelines and actionable behaviours to model organizational values, said Love.

“It allows leaders to drive this process themselves,” he said.

Tips for managers

10 imperatives managers should always follow to drive performance

• Provide fair and accurate informal feedback.

• Emphasize employee strengths in performance reviews.

• Clarify performance expectations.

• Leverage employee fit.

• Provide solutions to day-to-day challenges.

• Amplify the good, filter the bad.

• Connect employees with the organization and its success.

• Instil a performance culture.

• Connect employees with talented co-workers.

• Demonstrate a “credible commitment” to employee development.

Source: Corporate Leadership Council

SCNetwork’s panel of thought leaders brings decades of experience from the senior ranks of Canada’s business community. Their commentary puts HR management issues into context and looks at the practical implications of proposals and policies.

Don’t shoot the messenger (Strategic capability)

By Matt Hemmingsen

The origin of the phrase “don’t shoot the messenger” dates back centuries and is referenced by the likes of Sophocles and Shakespeare. Essentially, it means don’t blame the person who is the bearer of bad news.

In this case, Dion Love of the Corporate Leadership Council (CLC), unfortunately, was the messenger reporting on the state of employee engagement or, perhaps more tellingly, commenting on the rapid rise of employee disengagement.

Based on input from its global database — more than 50 companies representing 200,000 employees — CLC paints a rather bleak picture of employee engagement. Given the underlying global economic conditions, one would expect organizations to be taking bold, decisive action, galvanizing the “human capital” to drive business performance.

After all, increasing employee engagement increases key business performance indicators. Gallup, for example, has proven growing employee engagement provides a direct linkage to return on investment, going beyond traditional measures such as productivity and profitability and confirming a higher earnings per share multiple for engaged organizations.

So what do we still not understand? The fundamentals have been defined and understood for years. Psychologist Abraham Maslow has shown we are each motivated by our needs, starting with basic survival through to the higher levels of self-actualization or personal growth.

This was reinforced in the Harvard Business Review article (January/February 1968) — “One more time: How do you motivate employees?” — where psychologist Frederick Herzberg shows the key motivators for job satisfaction focus on recognition, responsibility, growth and advancement or, in other words, personal development.

Why then the disconnect? When organizations are being challenged for their very existence, just like individuals, the focus is not on growth but on survival. In survival mode, a company will be less focused on individual needs and organizational culture and more on short-term, tactical solutions. Inadvertently, the result is a culture of exclusiveness.

As author Jim Collins highlighted in his seminal work Good to Great, the essence is “to get the right people engaged in vigorous dialogue and debate, infused with the brutal facts.” More often than not, the dialogue is limited to or restricted to an organization’s leadership team — the erroneous belief being that they alone hold the answers.

The reality is these leaders need to rise to the challenge and create cultures of inclusiveness, looking to employees for their input. Employees are engaged (achieve their growth needs) when their leaders recognize them as part of the solution. The messenger has delivered the news. It is now time for corporate leadership to respond.

Matt Hemmingsen is a commentator for SCNetwork on strategic capability. He has held senior HR leadership roles in global corporations. He is a managing partner with Personal Strengths Canada, a member of an international company focused on improving business performance through relationship awareness. For more information, visit www.personalstrengths.ca or email mhemmingsen@personalstrengths.ca.

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Economic downturn just another change (Organizational effectiveness

By Tom Tavares

The research presented by the Corporate Leadership Council reveals the percentage of highly disengaged employees has increased from eight per cent to 21 per cent since the start of 2007. Moreover, one-quarter of high-potential employees want to leave their companies within the next year. It is important to put this issue in context to reduce the potential for confusion and ineffective action.

Disengagement is structural, not cyclical. In good times and in companies considered well-managed, about 50 per cent of employees feel disengaged. Unfortunately, tools such as goal-setting and performance management have had little impact. When traditional solutions fail to work, it raises questions about our understanding of the problem.

Disengagement is connected to other issues. Most companies also struggle with weak internal communication and poor teamwork in executing strategic changes.

Challenges with disaffected employees, staying aligned with goals and working in silos are inter-related. These issues all reflect the fact people working in organizations often work in isolation.

Isolation results from the very structure of organizations. All companies are made up of jobs, which are clustered inside departments grouped within functions and divisions. Jobs keep attention focused on a narrow field of activity and everyone from the CEO to the data entry clerk occupies a job.

Performing a job in a company is like driving alone in a car on a busy highway. Although drivers are isolated from each other, the way they drive affects those around them and the flow of traffic.

Isolation poses a serious threat to business performance, especially as change speeds up. Priorities shift rapidly, making it difficult to keep people aligned. Issues grow more complex and problems accumulate and fester. Conflicts intensify over resources, eroding teamwork in executing changes. Activity levels have to rise to compensate for the erosion in efficiency.

Highly disciplined communication is needed to reduce the threat isolation poses to business performance.

Unfortunately, most leaders start out as specialists and treat communication as a soft issue and secondary priority. Instead, they immerse themselves in solving problems and become more isolated, which creates an impossible situation.

Management represents only 10 per cent of the jobs in a company. As change quickens, the complexity goes beyond the reach of this small number of minds, no matter how intelligent they are individually.

The solution is right at hand: Access the minds of the 90 per cent of employees who are underutilized in most companies. However, when activity is at a fevered pitch, the last thing leaders think of is taking more time to talk and listen to employees.

A fuller understanding of how people behave in organizations is the first step in taking effective action. Setting objectives and differential recognition are bound to fall short. Regardless of the economic cycle, priorities begin to shift as soon as goals are set, and top performers are but a small percentage of employees.

Continuous, high-quality communication is essential to keep people aligned and to tap 100 per cent of the intelligence in an organization. Communication has become as fundamental as finance, marketing and technology.

Could anything be more counter-intuitive to executives and managers?

Tom Tavares is SCNetwork’s lead commentator on organizational effectiveness and a senior organizational psychologist. In addition to managing in large corporations, consulting in varied industries and coaching executives, he has written extensively about the relationship between business performance, behaviour and change. He can be reached at dr.tomtavares@gmail.com.

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Back to basics (Leadership in action)

By Trish Maguire

Is it time to get back to basics? Have we marginalized good management practices with the prevailing focus on leadership? The Corporate Leadership Council’s (CLC’s) 2009 survey reveals significant deterioration in employee engagement and management credibility. HR’s challenge is to turn this data into knowledge and rethink how HR strategies and practices can drive employee innovation and performance in an uncertain economy.

Organizations have an opportunity to regenerate a sense of pride and ownership, mutual trust, respect and credibility and to reignite the fire in people’s eyes. To do this, HR may need to convince the C-suite to consider restoring cultures that are committed to an open-book approach, educating people on the business, throwing open the goal-setting process and ensuring managers let people establish their own goals.

A decrease in the level of managers’ credibility suggests they need to be reminded the fundamental principle of their role is to help people succeed. If managers are not taking the time to notice whether people’s work is good, bad or mediocre, people stop caring. HR may need to reassess management development programs and coach managers on how to hold meaningful conversations, build people’s confidence levels and actively listen to their concerns and ideas.

Equally important is the issue of personalized incentives, reward and recognition. People become de-motivated by rewards incommensurate with the above-and-beyond efforts they are asked to put out. Is it time to overhaul your compensation system? Is it based on profit goals, short-term functional goals or balance sheet targets? Is it designed to build a strong organization and eliminate weaknesses when the economy is uncertain?

Rekindling confidence in an organization requires well thought-out communication guidelines that will set the pace, tone and mood for an entire company. Have managers lost sight of the importance of holding weekly staff huddles to discuss the company’s challenges, encourage people to talk freely about the company numbers and air concerns? Keeping information moving up, down and across an organization can be improved by encouraging inter-company chatter. Using social media allows management to keep people informed of where a company stands and what is being done to improve the situation, hear people’s ideas, react quicker and uncover concerns.

A company’s success is the combined result of people’s pride, confidence and contribution to something beyond the company. As an HR professional, what strategic changes are you considering to drive employee innovation and performance?

Trish Maguire is a commentator for SCNetwork on leadership in action and founding principal of Synergyx Solutions, focused on developing customized talent management strategies for small entrepreneurial businesses. She can be reached at synergyx@sympatico.ca.

Next executive series

Would you like to attend one of the upcoming Breakfast Series in Toronto? Here’s a look at upcoming sessions:

January: The design of business, with Roger Martin, dean of the Rotman School of Management at the University of Toronto. (Jan. 14.)

February: Leading in turbulent times — building flexible and resilient organizations, with Jim Clemmer, a speaker and bestselling author of six business books. (Feb. 25.)

Visit www.scnetwork.ca for more information.

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