Senior leadership drives employee engagement: Study

Research debunks myth that immediate manager plays strongest role

The organization, not an employee’s direct manager, has the most effect on employee engagement, according to research by consulting firm Towers Perrin.

The 2007 Global Workforce Study of more than 88,000 employees in 18 countries, including 5,000 in Canada, found organizational factors such as senior leadership, learning and development and image and reputation are the primary influencers of engagement.

“This debunks the myth that the immediate manager is the strongest influencer,” said Jane Kwon, a senior consultant with Towers Perrin in New York.

However, an employee’s experience with his direct manager does play a role, said Kevin Aselstine, managing principal for Towers Perrin HR Services in Toronto.

“It’s a shared responsibility of the organization and the managers to create an engaged workforce,” said Aselstine.

With the study finding only 23 per cent of Canadian employees are engaged, organizations, senior leaders and managers are failing to live up to this responsibility.

Respondents gave senior management low scores on several dimensions, including making employees feel they are sincerely interested in their well-being (38 per cent), communicating openly and honestly (36 per cent), supporting new ideas (45 per cent) and being ¬accessible (47 per cent), said Aselstine.

And despite chief executive officers espousing the idiom employees are the most important part of the organization, only six per cent of respondents feel this to be true.

“There is pretty blatant evidence here that there’s a disconnect,” said Aselstine.

This disconnect between what CEOs say and how employees perceive them can cost organizations the extra effort employees are willing to give to the organization, he said.

The study found 90 per cent of Canadians enjoy challenging work and 86 per cent look for opportunities to develop new knowledge or skills, which indicates employees want to help their companies succeed.

But the low engagement scores show organizations aren’t able to tap into this desire, said Aselstine. This is partly because organizations aren’t showing employees what’s in it for them, he said.

Only 39 per cent of respondents said they feel they’re fairly compensated for their contributions, 36 per cent said they have excellent career opportunities at their organization and 23 per cent said top performers at their organization are rewarded with higher pay.

Companies that don’t have an engaged workforce are putting themselves at a competitive disadvantage because engagement is highly correlated with business performance, according to two studies Towers Perrin conducted and reported on in the 2007 Global Workforce Study.

One of the studies, which looked at 50 global companies over 12 months, found companies with a highly engaged workforce saw a 19.2-per-cent growth in operating income while those with a disengaged workforce saw a 32.7-per-cent decrease.

While this shows engagement and profits are correlated, it doesn’t prove engagement causes profits, but causality isn’t important, said Aselstine.

“The fact they are highly correlated is important,” he said. “Poor business performance begets low morale and low morale begets less effort to help achieve objectives and therefore results in lower business performance.”

Because the correlation works both ways, good business performance leads to high morale, which leads to employees putting in more effort, which in turn will lead to higher business performance, he said.

In fact, the study found engaged employees are more likely than their disengaged counterparts to feel like they can impact key business drivers, such as work quality, customer satisfaction and revenue.

“If you focus on doing the right things from a business perspective to get great business performance and you also focus on doing the right things to get great levels of engagement in your employees, then you’re in a virtuous cycle upwards,” he said.

Engaged employees are also less likely to leave. The study found only three per cent of engaged employees are actively looking for another job compared to 33 per cent of disengaged employees.

So what can companies do to improve engagement? Unfortunately, there’s no one right answer, said Aselstine.

That’s because specific engagement drivers are different for every company. To improve engagement, a company first has to understand which drivers are important to its workforce and how the organization delivers on those drivers, said Aselstine.

“That should serve as the road map for what you do to try and improve levels of engagement,” he said. “You need to start thinking about knowing your employees in the same way that an organization does an excellent job in knowing its clients.”

Canada’s numbers are fairly consistent with the global results. Globally, only 21 per cent of employees are engaged.

“It’s not like there’s any nation out there that really has it nailed,” said Aselstine. “There’s issues for everybody in terms of improving overall levels of engagement, no matter where you are.”

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