That was the best training I ever had for team leadership, the director told me, after a half-day employee engagement training. The objective of the program was to improve the relationship building skills of leaders with each of their team members—and employee retention.
The director went on to explain that he always achieved his goals, was good at delegation, and performance management. But after the employee engagement training, he felt he had achieved a break-through with some difficult-to-motivate team members. For the first time, he believed, they were connecting.
He was beaming! That was seven years ago. Today, after seeing more empirical evidence on employee engagement, we know it is only a start to driving bottom-line success.
The truth is, employee engagement will take your organization only so far. Companies realize that employee engagement alone is not providing actionable items and that the employee engagement survey is an aging idea[i].
Gallup’s State of Global Workforce reports show that overall employee engagement as measured by its survey has not improved much since Gallup’s first survey in 1997. Starting with Gallup’s first report, actively engaged employee scores have ranged from 13% to 20% and disengaged employee scores have ranged from 26% to 30%.
Research shows that investing in learning and career development goes farther to reduce turnover than classic employee engagement efforts[ii]. Many employees figure, if I can transfer out from under this lousy manager, rather than quit, I can take advantage of the excellent career development this company offers and advance faster here than starting over somewhere else.
Employee engagement, as a workforce strategy unto itself, is taking a back seat to innovation. For 97% of CEOs around the world, according to a PwC Survey, innovation remains a top priority for their businesses, and because of the urgency to significantly improve innovation, chief executives are increasingly taking more direct involvement in their company’s innovation strategies and execution.[iii]
The rise of digital technology, artificial intelligence, and other technological breakthroughs have required companies to do more than incremental product and service upgrades to remain competitive. Companies need innovative breakthroughs and new business models to create value beyond what their current strategies enable. As global companies, they need to continue to learn how to adapt their innovations to address differences by regions, and national cultures, laws and economies.
The research from InnovationOne has found that strong organizational cultures of innovation[iv] and strong talent management practices—not just employee engagement—lead to higher profits.[v] Dynamic, transparent and inclusive cultures of innovation lead to higher employee commitment to company mission and levels of discretionary effort on the job.
We have found that highly innovative companies build innovation into the DNA of their organizations, They create highly curious and adaptive workforces and external partners. Highly innovative companies do the following:
- Treat innovation as a strategic imperative—as important as the company’s financial plan, annual operating plan, product technology plan, and sales and marketing plan.
- Develop dynamic, transparent and inclusive cultures of innovation. With the framework of a culture of innovation, our research shows that employee engagement is about one-tenth of the solution. These cultures also invest heavily in organizational learning. They create knowledge management systems for innovation, sharing new information on market tends, technologies, social/economic trends, and what the competition is up to. They align their performance management systems to reward innovation. They align their operations and sales organizations to implement innovative solutions and business models quickly.
- Measure their innovation progress and benchmark their efforts.
Our 2017 Global State of Innovation Survey has found that both leading and lagging innovation companies use methodologies such as Design Thinking. Both use digital innovation technologies such as Crowdsourcing, but what distinguishing the leading innovators from the lagging innovators are the above factors.
Our research is not alone. Going back 25 years, Harvard’s John Kotter found that adaptive, performance-based cultures improve an organization’s top and bottom lines.[vi]
Human resources leaders should be playing an important role in their organizations to improve innovation as developers of innovative cultures. HR leaders ought to be introducing digital collaboration software, such as Slack, not waiting for IT to suggest it. HR leaders can now lead the investment in employee skills and career development—not because of altruism, but because it drives innovation and the bottom line.
If you are focused on employee engagement, you are making a good start. But the real return to your organization’s bottom line lies with innovative cultures.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on innovation, global talent strategies, developing agile leaders and teams, and other strategic initiatives. Questions? Please email Victor at email@example.com. Visit http://www.victorhrconsultant.com for valuable free reports. For innovation visit http://www.InnovationOne.io.
[i] Josh Bersin (Jan. 26, 2015), “Becoming Irresistible: A new model for employee engagement,” Deloitte Review Issue No. 16. Found at: https://dupress.deloitte.com/dup-us-en/deloitte-review/issue-16/employee-engagement-strategies.html.
[ii] Jason McPherson, “With Development Opportunities, Having a Good Manager Matters,” Culture Amp. Found at https://blog.cultureamp.com/its-about-development-opportunities.
[iii] “Innovation a top priority for business,” (July 2, 2013) PWC. Found at http://press.pwc.com/News-releases/innovation-a-top-priority-for-business/s/918ccaab-2d82-4889-bc41-9905b3a4b9ec. The pulse survey is a follow up to ….
[iv] Dr C. Brooke Dobni and Dr. W. Thomas Nelson, Jr. (2013) Innovation Nation? Innovation Health Inside the Fortune 1000. Available for free at InnovationOne.io; and Dr. C. Brooke Dobni, (2011), “The relationship between innovation orientation and organisational performance,” The International Journal of Innovation and Learning, Vol 10, No.3 Pages, 226-240.
[v] “Best Places to Work.” Glass Door’s Employees’ Choice Awards 2016. Found at https://www.glassdoor.com/Award/Best-Places-to-Work-LST_KQ0,19.htm; and “Why Tech is Winning the War for Talent,” Fortune. January 26, 2016. Found at http://fortune.com/2016/01/26/tech-is-winning-the-war-for-talent/.
[vi] John P. Kotter and Hames L. Heskett (1992), Corporate Culture and Performance, The Free Press, Macmillan, Inc.