With the dramatic change in the global economic environment, organisations need more than ever before to focus on creating an engaging performance environment for their employees. But how do you create an employee engagement strategy and communicate it effectively? And how can organisations measure the return on investment from employee engagement?
An engaging environment
Recent research has highlighted HR’s lack of strategic authority. A 2008 survey by consultants McKinsey found that 60% of senior managers see HR as ‘an administrative department, not a strategic business partner’, while TalentDrain’s 2008 Employee Retention Survey revealed that 75% of HR departments have no retention strategy in place for their organisation.
Without a compelling strategy or business case, it’s no wonder that the HR budget is often one of the first to be cut when the going gets tough. The good news, though, is that the basic value of employee engagement is well established and largely accepted – even by senior managers who recognise that employee-related expenditure is typically an organisation’s highest cost.
With the ongoing war for talent, and a fast-approaching global labour shortage, it’s important not only to retain employees, but to ensure that they are capable and motivated to deliver high performance.
How do I create an engaging performance environment?
The first step is to make a clear strategic aim of what you are looking to achieve – your ’employee value proposition’ (EVP). This is ascertained by aligning your organisational objectives with what you need from your employees to deliver these – and with what you offer employees to make them feel engaged.
Your EVP needs to articulate what value employees will get from working for you and how you are different to competitor organisations. It should encapsulate what current and potential employees perceive as the value of being part of, and contributing to the success of, your organisation.
Given the EVP is about the organisation, it needs to be owned by your leaders with a high degree of input from employees at all levels. HR’s role is to facilitate the process and to communicate the results.
Delivering the value
Having defined your EVP, you need to develop an engagement strategy that will deliver it. Research suggests that there are 12 core areas that drive employee engagement, all of which are central to any HR strategy – from compensation and benefits to organisational communication, and from leadership behaviour to performance management.
While your strategy will focus on the entire employee life cycle, the exact balance of where you place your priorities will depend on your EVP.
Developing a strategy will enable you to confidently allocate budget to your key priorities. However, it is more than an exercise in developing smart goals. It should be about creating a coherent story that articulates how engaging your employees is central to delivering your organisational objectives.
As such, an engagement strategy is the same as an HR strategy, but with one subtle but key difference: an HR strategy tends to focus on creating a series of people-related initiatives aimed primarily at increasing organisational efficiency through people processes an engagement strategy, however, should focus on creating the best performance environment possible for your people. This distinction, if delivered correctly, can transform HR from being an interested party into being a central player in business planning.
Communicating the strategy
In simple terms, organisational communication is about delivering a message, and checking it has been received and understood. Engagement is about bringing the message to life and helping people make sense of it and what it means to them.
A common communications mistake is to simply announce the initiatives being run, rather than how they will add value to the organisation. For HR, the key to successful communication lies in changing the language it uses and investing time to ensure that people understand and engage with the message.
For example, instead of focusing on the cost of recruiting and ‘onboarding’ a new employee, focus on the question: ‘At what point, do we make a return on investment on a new employee?’ This immediately shifts the focus towards how HR can work with the business to either increase an employee’s performance, or adjust the levels of investment in them so they can more quickly contribute to the organisation’s success.
It is also important to set the strategy in context. For example, while one impact of high attrition rates is an increase in recruitment and training costs, the longer-term, more serious impact is likely to be a decline in customer satisfaction and ultimately a reduction in customer spending.
Measuring the return on investment
To demonstrate a return on investment, you need access to the right information at the right time. This information will come from different sources – from business metrics, feedback from employees and managers, feedback from customers, and from every stage of the employee lifecycle (including staff turnover rates, employee engagement survey data and absenteeism statistics). It should be quantifiable in real costs to the business.
Ultimately, the return on investment is dependent on what your engagement strategy is looking to deliver. However, each aspect of the strategy should have metrics that are aligned to the overarching EVP.
As well as the organisational benefits, what makes defining the EVP really compelling is that it can change the perceived strategic value that HR provides to the organisation.Gordon Barker is director of consulting at employee engangement and retention specialist Talent Drain