Don’t manage to an employee engagement score. Instead, drive business value.

The $74 billion employment engagement industry has a serious problem. After nearly 18 years, it is not driving sufficient business value to justify its costs. Instead, values, business purpose, organizational learning, and culture are the true factors that drive business value.

Employee engagement is an outdated idea that needs to be overhauled.

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 report in 2001. From then until Gallup’s most recent report in 2017, engaged employee scores have ranged from 26% to 33% and disengaged employee scores have ranged from 15% to 20%.

Gallup CEO John Clifton, in his 2017 State of the Global Workforce report, writes that it’s misguided to focus on employee engagement scores. Executives need to manage to the end game: the company’s improved market share and financial success.

Here’s how contemporary research shows employee engagement fares when compared to other types of workforce investment:

  • The Metrus Group has learned that investing in learning and career development goes further to reduce turnover and improve performance than classic employee engagement efforts.
  • Research by Facebook People Analytics shows that redesigning jobs to play to employee strengths and interests does more than classic employee engagement efforts to prevent turnover.
  • Research by Culture Amp shows the following investments go further than employee engagement:
    • aligning the workforce to the company’s purpose and strategies,
    • building the trust of executive leadership,
    • providing learning and career development opportunities, and
    • improving the confidence in the company’s strategies and ability to execute.
  • The food chain Jack in the Box has found that among its nine measures that drive individual restaurant success, it is training that drives the most value and not employee engagement or financial discipline.

Academic researchers have been preaching the importance of improving adaptive and innovative cultures and investments in employee learning for nearly 30 years.

In Hidden Value, Dr. Charles O’Reilly of Stanford explains that companies create value by aligning their workforces to the values and purpose of their organizations and by developing collaborative cultures.

In Corporate Culture and Performance, Harvard’s Dr. John Kotter identifies the impact culture can have on business performance. He examines the characteristics of cultures that block innovation and change and the aspects of cultures that embrace change, innovation and are adaptive. The difference in financial performance between these two cultures is nothing short of incredible.  Kotter tracked results for 11 years. The 12 companies with adaptive cultures have:

  • revenue growth that is four times greater than the stubborn cultures,
  • employment growth that is more than seven times greater that than stubborn cultures
  • stock price growth that is more than 12 times greater than stubborn cultures
  • net income growth that is an astonishing 756% for the adaptive cultures and only 1% for the stubborn cultures.

Culture can be measured and managed. You can manage what you measure. The results from this study should convince even the most stubborn critics that developing adaptive, collaborative cultures, and agile organizations drives business value.

Many executive leaders believe that culture represents the values of the organization and its artifacts, such as the company’s start-up story, its values hanging on a plaque in a conference room, and its traditions. The academic research of Dr. Brooke Dobni of InnovationOne shows that culture is more than values and artifacts. Culture also defines how work gets done in organizations, the willingness to take risks, how workers share new information, how they learn from each other and how they make decisions.

Culture shapes an organization’s processes and systems, and if its processes and systems are used for compliance and maintaining the safe status quo or for innovation. Culture shapes what we measure. Culture defines an organization’s agility. Culture governs how quickly organizations share new information, generate new ideas, explore ideas with external partners, and prototype new ideas with customers. Culture shapes how quickly decisions are made. Finally, culture defines how quickly and reliably organizations commercialize the new ideas with the organization’s operations.

In this five-minute, fast-paced DisruptHR presentation, I cover the disappointing track record of employee engagement and the role that organizational values, organizational purpose, and culture plays in driving business value—not just an employee engagement score. I also provide a short case study on how an organization used its organizational purpose and values, and how it improved its culture of innovation to drive business value. The changes made by the organization propelled it to be No. 1 in its global market.

I invite you to listen to my disruptive presentation and to download for free the valuable paper, “Insights from Highly Innovative Companies: Results from The Conference Board and InnovationOne Global State of Innovation Survey 2017.”

Please contact me regarding any questions about the presentation or how to develop your organization’s culture to drive business value.

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults and provides “hands-on” support for innovation, global talent strategies, developing agile leaders and teams, and other strategic initiatives. Contact Victor Assad at VA@VictorHRConsultant.com. Visit http://www.victorhrconsultant.com for valuable free reports. For research on innovation visit http://www.InnovationOne.io.

One thought on “Don’t manage to an employee engagement score. Instead, drive business value.

  1. The elephant in the room that people are trying to ignore is the common denominator for EE’s failure to launch, HR is the gatekeeper, which makes no sense at all. This problem has nothing to do with whether HR is qualified, brilliant, proactive, etc. The problem is they are not positioned to get anything accomplished, and the employees know this even before the game starts. CHROs would not have careers if they fought their peers all the way to the CEO every time someone hiding in the culture, politics, or silos tried to block a good idea. If you cannot get the CEO engaged then how do you expect to get leadership and management engaged? This whole thing is quite sad. We work only with the CEO; HR has no role to play in our ten-week EE initiative. We report directly to the CEO and handle all the employee input. Good ideas which are blocked end up in the CEO’s staff meeting for discussion. Yep, you guessed it, that doesn’t happen very often, only one in twenty years and that did not end well. We execute the changes nearly every day giving the employees more incentive to join the game. Here’s an example of what we accomplished with the CEO and a process that suspends the culture, politics, and silos.
    https://chiefexecutive.net/employee-engagement-ceos-actually-listening/

    Like

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