Presentation to conference on 18 February 2015 on employee engagement and productivty

1. What can employee
engagement do for
business productivity?
Mark Beatson
Chief Economist
CIPD

2. Content
• Understanding the link between employee
engagement and productivity
• The difference engagement can make to employees
• The impact on business performance
• Understanding why engagement initiatives can fail to
deliver

3. Understanding the link
between employee
engagement and
productivity

4. What are the channels?
• Release of discretionary effort (hours, effort, attention, imagination) –
“going the extra mile”
• Alignment of interests allows delegation and decentralisation
• Employee insights and knowledge of their customers support
innovation
• Social exchange
• External reputation – how an organisation treats its employees is one
of the key influences on how (potential) customers think about it

5. The importance of employees to
corporate reputation
20%
36%
37%
39%
41%
52%
55%
57%
60%
64%
67%
Blogger
Board of Directors
Entrepreneur
CEO
Government official
Regular employee
A person like you
NGO representative
Financial or industry analyst
Technical expert in industry
Academic or outside expert
Credibility as a source of
information on a company
27%
29%
29%
30%
33%
40%
40%
43%
50%
52%
54%
55%
56%
58%
59%
61%
Consistent financial returns
Partners with third parties
Top global company
Admired top leadership
Innovator
Addresses society's needs
Community benefits
Protects environment
Communicates often
Ethical
High quality products
Acts responsibly in crisis
Transparent and open
Looks after employees
Customers before profits
Listens to customers
Importance of actions in
building trust in a company
Source: Edelman Trust Barometer 2014.

6. The difference
engagement can make
to employees

7. Employees who feel inspired and
involved are better placed to handle
demanding workloads
0
10
20
30
40
50
60
70
80
90
Very true TRUE Somewhat
true
Not at all
true
Strongly
agree
Agree Disagree Strongly
disagree
% of employees who strongly agree that ‘my job
requires that I work very hard’
Always/often come home from work exhausted Work under great deal of tension
‘My job allows me to take part in
decisions that affect my work’
‘This organisation really inspires
the very best of me in the way of
job performance’
Source: Skills and Employment Survey 2012.

8. Does organisational commitment
reduce stress?
19% 17% 14% 12% 10% 10%
33% 35%
27% 28%
26% 25%
I will often take on
more work to
relieve my
colleagues'
workloads
I will often work for
more hours than
contracted to
relieve my
colleagues'
workloads
I know very clearly
what the core
purpose of my
organisation is
I am highly
motivated by my
organisations core
purpose
My organisation
gives me the
opportunities to
learn and grow
I am satisfied with
content of job role
Excessive pressure every day Excessive pressure 1-2 times per week
Source: CIPD Employee Outlook survey, spring 2014, employees only.

9. The impact on
business performance

10. Engagement is high on employers’ near
term priorities
3
9
18
19
22
23
28
28
33
44
50
Other
Improving digital literacy
Reviewing reward/recognition systems
Changing the skills mix of the workforce
Predicting future talent requirements
Employee retention
Recruiting to key vacanices
Business restructuring
Containing labour costs
High levels of employee engagement
Improving leadership skills/capabilities
Top three workforce priorities in the coming year (% of
employers)
Source: ‘Growth for everyone’, CBI/Accenture employment trends survey 2014.

11. What do employers expect to gain?
8
15
22
42
45
65
80
Improved health and safety
Increase innovation
Income growth
Increase retention
Reduced absence/higher well-being
Increased client/customer satisfaction
Increased productivity/performance
Major benefits of higher levels of employee engagement
(% of employers)
Source: ‘Growth for everyone’, CBI/Accenture employment trends survey 2014.

12. What’s the evidence on the impact
of employee engagement?
• ‘Nailing the evidence’ working group
found lots of studies … some more
plausible than others
• Causality is an issue – does
engagement lead to success or
success mean businesses can afford
engagement?
• Meta-analyses suggest causation
more likely from job attitudes to
performance – but this is something
difficult to nail down (if it matters)
• Impact often happens through impact
on customers and customer
satisfaction
• Engagement improves quality and
innovative behaviour
• Engagement reduces turnover and
absenteeism

13. Some big claims are made …
-37%
-28%
-48%
-41%
10%
21% 22%
Absenteeism Shrinkage Safety incidents Quality
(defects)
Customer
satisfaction
Productivity Profitability
% difference in performance between top and bottom
quartiles of employee engagement
Source: Gallup 2012, based on data from about 1.4 million employees in 192
organisations across 49 industries and 34 countries using Q12 measure of employee
engagement.

14. Is employee engagement spreading?
0% 10% 20% 30% 40% 50% 60% 70% 80%
Managers treat employees fairly
Managers deal with employees honestly
Managers can be relied upon to keep their promises
INTEGRITY
Satisfied with involvement in decisions
Managers allow employees to influence decisions
Managers good at responding to employee suggestions
Managers good at seeking views of employees
EMPLOYEE VOICE
Satisfied with sense of achievement from work
Good management-employee relationship
ENGAGING MANAGERS
I am proud to tell people who I work for
I feel loyal to my organisation
I share many of the values of my organisation
STRATEGIC NARRATIVE
2011 2004
Source: Workplace Employment Relations Studies 2004 and 2011, surveys of employees, GB,
workplaces with 5+ employees.
%s are those strongly agreeing/agreeing with the statement.

15. Understanding why
engagement initiatives
can fail to deliver

16. What are the common barriers?
• If it’s all one-way
• Work-life balance
• Development and progression
• Lack of job control
• Leadership behaviour
• Line managers
• Lack people skills
• Ineffective implementation of organisational HR policies
• HR practices
• Lack of trust
• Lack of effective voice
• Mechanisms
• Confidence to use them

17. What undermines organisational
commitment?
(% of employees highly motivated by core purpose of organisation)
70% 68%
59%
52%
36%
27%
“Important information is only shared
with a select few”
Secretiveness
Source: CIPD Employee Outlook survey, spring 2014, employees only.
72%
57%
38%
32%
24%
Strongly
agree
Agree Neither
agree nor
disgree
Disagree Strongly
disagree
“My working relationship with my
supervisor would be described as very
effective”
Poor managers

18. Do appraisals help or hinder
engagement?
• NHS Staff Survey 2010:
overall engagement
score = 3.9 for ‘good-
quality’* appraisals, 3.5
for ‘poorer quality’
appraisals and no
appraisals (West and
Dawson, 2012)
• *‘good-quality’ =
employee felt it useful in
understanding how to do
job, clear objectives set,
employee left appraisal
feeling valued by
employer.
93%
58%
25%
11%
4%
29% 29%
Fairness of performance management process
Engagement by perceived fairness
of performance management
Source: CIPD Employee Outlook survey, spring
2014, employees only.

19. And can you have “too much”
engagement?
• Burnout?
• Misallocation of
time – forgetting
the day job?
• Insufficient
challenge?
• Disappointment –
what happens if
leaders have feet
of clay?
• Implications for
future jobs –
“once bitten,
twice shy”?
19

20. Thank you