VaLUENTiS Employee Engagement WGUHWGUT HRDS JAN 2013 final dist copy

HR Directors Summit ICC
Birmingham UK 2013

Employee Engagement:
What got us here
won’t get us there
The new reality for ambitious HR functions
‘Think
Nicholas J Higgins, DrHCMI MSc Fin (LBS) MBA (OBS) MCMI HR.
CEO, VaLUENTiS Ltd & Dean, International Think
School of Human Capital Management (‘ISHCM’)
Human
Capital.’
Tour
2013

Video version available through WTG on-demand service.

All rights reserved. No part of this presentation may be reproduced, translated, stored in a
retrieval system or transmitted in any form or by any means, electronic, mechanical,
photocopying, microfilming recording or otherwise without the express permission of the
author.

Please e-mail nicholas.higgins@valuentis.com regarding any matters of reproduction/
organisational distribution.

© 2013

NOTE:
Slides [4 to 52] on auto presentation to music
introduction.

2013 sees VaLUENTiS celebrate its
tenth year….

Some notable achievements…

First British firm to introduce Employee Engagement model (known as the ‘5D’)

First to introduce standard ‘employee engagement surveys’ as opposed to ‘generic’ employee
surveys

First to publish live client HR scorecard linking with employee engagement

First to introduce ‘Qual-Quant’ people management evaluation tool (‘Management Pathfinder’)

First to introduce global value-based HR function (VB-HR™) profiler

First to publish global Human Capital Reporting Standards (GHCRS2006) including the
‘PeopleFlow’, ‘HC Operating’ and ‘HC Productivity’ template statements…

Globally, first to set-up dedicated, practitioner-based Business School on Human Capital
Management and introduce ‘M. Sc. in Human Capital Management’

First School to offer Masters qualification with CMAS® technology (‘non-essay’ based) and for less
than £1000

HCMI first to offer membership by association not subscription……

7

VaLUENTiS continues to support those
organisations and HR functions who wish
to push the boundaries on employee
engagement and organisation
performance……….

A long time ago in a far, far away place we
started with the question:

If employee engagement was the answer,
what was the question?

And, what constituted employee
engagement and how did it impact on
performance?

Which led us to evaluating much empirical
research, and, finally to this…

The concept of Employee Engagement:
A synthesis of antecedent theories and empirical evidence with human capital
management practice related to organisation performance – 100 years in the making

•Leadership theory •Decision-making theory
•Organisational ‘fit’ theory •Conflict theory •Organisation performance &
measurement*
•Commitment theory •Trust theory
•High performance work systems
•Goal setting and task theory •Teams theory •Group theory Human Capital Management practice/systems:
•Expectancy theory •Talent management
•Equity (justice) theory •Performance management
•Motivation theory •Reward & recognition
•Job satisfaction •Employer brand
Individual Immediate Wider Organisation •Human capital retention
•Needs theory
Team Group •Resourcing & selection
•Trait theory
•Social cognitive/ •Training & Development
self efficacy theory •Workforce diversity
•Psychological contract •Leadership
•Organisation Citizenship Behaviour •Organisation design
•Taylor - Scientific management
•Emotional Intelligence •Organisation communication
•Munsterberg - Industrial psychology
•Behaviourism •Organisation culture
•Fayol - Principles of management
•Cognitive dissonance
•Follett - Management relations/integration
•Learning theory
•Mayo/Hawthorne studies
•Wellbeing/Burnout
•Lewin (MIT) - group dynamics/behaviour
•Other I/O psychology
•Likert – Management system/measurement scale
contributions
•Tavistock – Socio-technical systems
•McGregor Theory X/Y
•Hertzberg – Two factor theory
•Drucker – Practice of management
Source: The antecedents of Employee Engagement, Nicholas J Higgins - VaLUENTiS technical paper 2003 •Kahn – Personal engagement

But organisations needed something to use
practically…

That led to the 5D construct…

Five
domains… Performance
link
Line of
sight

Reward
(equity)

Operating
culture

Work Development
environment

Plus
performance

Which used seven core theories as its root
structure…

VaLUENTiS 5D Employee Engagement:
Core empirical theories that combine to form the root structure of the VaLUENTiS model

measurement*
•Needs theory
•Trait theory
•Learning theory
contributions

“But all the others have a part to play…” •Hertzberg – Two factor theory

Over time working with clients, we noticed
that organisations needed to focus on six
areas to sustain successful employee
engagement…

Known as the ‘Six Pillars’…

Grounded understanding of Employee Engagement

Working definition of Employee Engagement

Measurement wisdom

Actioning infrastructure

EE PLAYBOOK
Dynamic EE-Performance ‘playbook’

DELETE
Competent leadership/management

Initial research and observation revealed
essentially four types of organisation…

Organisations and employee engagement:
The ‘4-ball’ practice model ‘We don’t...’

‘It’s all about PR…’ Play down

Play act
‘At least we audit/
benchmark...’
Play safe

‘We do it…’
Play make
The four progressive states
of employee engagement
embeddedness in
organisations

The ‘4-ball’ Employee Engagement reality matrix
Pillar ‘PLAY DOWN’ ‘PLAY ACT’ ‘PLAY SAFE’ ‘PLAY MAKE’

Grounded
I
Exists in pockets with Good working knowledge
understanding of Limited.
Little. variation in line embedded across
employee engagement Mostly ephemeral in nature.
management. organisation.

Maybe borrowed with
II Working definition of Most likely borrowed Distributed ‘ownership’,
internalisation or adapted
employee engagement No definition in use. without any real ownership, whether borrowed, adapted
after some organisational
or ‘false’ ownership. or created.
focus.
Probably undertaking Will do measurement basics, People management
III
Limited to absenteeism
Measurement wisdom surveys but with no valid even to the extent of evaluation/measurement
metrics, employee surveys
construct; response rate/PR engagement index etc. seen as ‘core’ on a par with
seen as event driven if done.
main focus. Tick box is main focus. CRM , finance etc.
Probably in the form of basic Will have a number of Will have necessary ‘toolkit’
IV
Probably in the form of basic
Actioning management courses. Most actioning elements in place to hand with ongoing
training/management
Infrastructure likely carry out some form of but not necessarily joined programmes to suit
courses.
branded programme. up. organisation focus.
May have something Playbook in the form of Easy access in different e-
V EE-Performance
Playbook
Does not exist.
articulated on ‘strategies’.
Most likely collection of
‘manager manual’ or on-line
knowledge-share. Still being
/physical formats at
different levels. Signals
irrelevant case studies. developed. ‘embedded’ intent.
Will have varied mix of Will have varied mix of Will have varied mix of Cohort of well-trained
VI Competent leadership/
management
skilled people managers.
Existing good performers
skilled people managers but
level of competency higher
people managers exists with
talent pools. Regular
more through luck. more through luck. than Play-Act organisations. evaluation/reinforcement.

Choose your organisation
(or business unit/division/directorate
etc)…

And decide which box mostly describes
your chosen organisation/organisation
unit…


Grounded
I

‘PLAY DOWN’ ‘PLAY ACT’ ‘PLAY SAFE’ ‘PLAY MAKE’

Maybe borrowed with
II Working definition of
employee engagement No definition in use.
Most likely borrowed
without any real ownership,
Distributed ‘ownership’,
whether borrowed, adapted
focus.


III Measurement wisdom metrics, employee surveys
surveys but with no valid
construct; response rate/PR
even to the extent of
engagement index etc.
evaluation/measurement
seen as ‘core’ on a par with


IV
training/management
courses.


V EE-Performance
Playbook
Does not exist.


management


Grounded
I

Maybe borrowed with
focus.
III
IV
training/management
courses.
V EE-Performance
Playbook
Does not exist.
management

What does your quick assessment tell you…?

And now, a few
questions for you…

1. Which decade were employee surveys
first introduced as a management
tool…?

2. Which famous experiments took place
at Western Electric Co in the 20th
Century…?

3. Which US company is most associated
with employee surveys and causal
studies linking to performance …?

4. Which author, with an article
published in 1990, is attributed as being
the first to use the term ‘employee
engagement’…?

5. Employee engagement is…?

a) A work-place approach
b) A concept
c) A strategy
d) All of these
e) Something else

6. What is the connection between job
satisfaction and job performance…?

7. What is ‘acknowledged’ as the single
biggest factor in an individual’s
engagement at work…?

8. What’s wrong with Maslow’s
pyramid?

9. What are the SEVEN core empirical
theories that form the root structure of
VaLUENTiS 5D employee engagement
model?

10. Complete this ‘well-known phrase’:
“If employee engagement was the
answer, …………………………......?”

What got us here
won’t get us there
The new reality for ambitious HR functions

Part I
Getting us here…

53

A look back at The original Sears E-C-P Chain…
(an early forerunner of ‘employee engagement’ with causal performance link)

A compelling
A compelling place to work A compelling place to shop
place to invest

Customer
Attitude Service recommendations
about the
Helpfulness
job
Return on assets
Employee Customer
Operating margin
Behavior Impression
Revenue growth
Attitude Merchandise
about the
Value
company
Employee Customer
retention retention

5 unit increase 13 unit increase
0.5% increase in
in employee in customer
revenue growth
attitude impression

The Employee-Customer-Profit chain at Sears
By Anthony J. Rucci , Stephen P. Kirn and Richard T. Quinn
Harvard Business Review Jan-Feb 1998
57

Organisation Performance
(as defined by organisation/unit scorecard measures and derivative metrics)

Examples of organisation performance areas:

Sales Service Patient
delivery Operational Organisation
Revenue Customer care risk
satisfaction Procurement Product support Quality
development Safety
Cost…

Impaired Employee Engagement:
Impact on individual and team productivity/performance

Sub-optimal performance,
i.e. less than achievable

Or
Sub-optimal costs,
i.e. higher than necessary

Or
Both
59

Psychological Conditions of Personal
Engagement and Disengagement at Work
William A. Kahn
Academy of Management Journal 1990

“Personal Engagement is the simultaneous employment and
expression of a person’s ‘preferred self’ in task behaviors that
promote connections to work and to others, personal presence
(physical, cognitive and emotional), and active, full role
performance.”

61

poorly
communicated
reorganisation perceived
short-staffed reward inequity
interpersonal
planned conflict
training
cancelled

uncaring new incentive
boss misalignment

enlarged Well-received
role performance
appraisal hit personal
targets/ hit team
objectives targets/
objectives

“A further, more up to salary enrolled on MD
date interpretation…” increase programme

Employee engagement as a sum of constant work
‘forces’ (VaLUENTIS EESoF model) illustrative vectors 62

Illustrating the management influence using VaLUENTiS
5D Employee Engagement Framework

Line-of-Sight Work Environment

Objectives awareness Cultural elements
Behaviour alignment Team dynamics
Role ‘fit’ Communication
Performance management Organisation operating Resources
culture
Feedback Local management
Capability Physical environment
Organisation design
Performance/talent
management
Remuneration equity ‘Corporate’ Leadership Career progression
Communication
Bonus/incentives Decision rights Competencies
Benefits Work values Succession planning
Trust
Role equity Job/ Role architecture
Recognition Training/ Learning
Promotional aspects Coaching/ Mentoring

Reward (equity) Development

© VaLUENTiS Ltd 2002-12

A manager has influence in many areas of engagement, some more than others…
66

VaLUENTiS 5D Employee Engagement:
Core empirical theories that combine to form the root structure of the VaLUENTiS model

measurement*
•Needs theory
•Trait theory
•Learning theory
contributions

“But all the others have a part to play…” •Hertzberg – Two factor theory
69

Observation 101

Absenteeism, turnover, ill-discipline, manager
resistance, communication and/or trust issues
etc are all, to a great degree, manifestations
of poor employee engagement in some
form.

“Many case studies and indeed academic comment, however,
seem to ignore this fact. Thus, we’re seemingly praising ourselves
for putting a fire out – the very one we started as an
organisation! What happened to the ‘Why’ in the first instance?

As an industry practitioner question - What’s going on here?”

71

Part II
Getting us there…

72

Back to the ‘Six Pillars’…

1. Grounded understanding of Employee Engagement

2. Working definition of Employee Engagement

3. Measurement wisdom

4. Actioning infrastructure

EE PLAYBOOK
5. Dynamic EE-Performance ‘playbook’

DELETE
6. Competent leadership/management
73

What got us here/Getting us there…1

• Insufficient appreciation of existing empirical research
Grounded understanding of
Employee Engagement • Evidence Based Management still not widespread
• Thinking ‘too simple’ (instead follow Einstein’s dictum)

74

The concept of Employee Engagement:
A synthesis of antecedent theories and empirical evidence with human capital
management practice related to organisation performance – 100 years in the making

measurement*
•Needs theory
•Trait theory
•Learning theory
contributions
•Hertzberg – Two factor theory
75

HR as…
Evidenced Based

Management (EBM)
Practitioner

Objective: Proficient knowledge embedded across HR function
to enable good working knowledge to be embedded across
organisation.


• Many definitions omit productivity or performance
Working definition of Employee
Engagement • Definitions vague – difficult to translate to frontline
• Too few involved in the ‘understanding process’

77

Employee Engagement Definition
One that provides the basis of a measurable construct
(and simplified from the overall EE complexity):

“Employee engagement is an ‘outcome-
based’ concept*. It is the term used to
describe the degree to which employees
can be ascribed as ‘aligned’ and ‘committed’
to an organisation such that they are at
their most productive.”
VaLUENTiS/ISHCM
2005

*Consistent with Kahn’s original paper; employee
engagement as a concept but with a more performance-
oriented and dimensional construct. 78

‘P12 modes of productivity’
More likely to
More likely to More likely to produce higher
achieve goals set embrace set grade/quality of
values work (less errors)

More likely to be More likely to give
flexible to discretionary effort More likely to ‘own’ More inclined to More inclined to
organisation needs (if above contractual their development input into ideas/ share knowledge
equitable) obligations innovation

Less likely to suffer
Less inclined to take Less likely to move stress
days off employer (but more likely to
suffer burn-out)

Applied across all job roles in the context of the role
specificity and environment which impact on individual and
collective performance
79

Staff engagement: The challenge for organisations
(The A-C Matrix)

Fully congruent
‘Doing the right things
the right way for the
right reasons’ Knows what to
do/achieve Could do Fully “Only one box in
but unlikely to more productive
achieve it nine reflects the
constant ‘high bar’
Less than challenge for
Individual’s More likely to optimally organisations in
degree of have Job gets
performance/
productive - optimising
Alignment capability issues
done Could do
more ‘well’ engagement across
the workforce on a
Likely to have
performance,
More likely to
High probability daily basis”
‘Doing the wrong have objective
attitudinal of wasted
things/ wrong way/ and/or
and/or effort/
wrong reasons’ ‘potential’
behavioural frustration
issues
Incongruent issues

‘Having to stay’ ‘Feeling of ought to stay’ ‘Wanting to stay’
Continuance Degree of Affective
© VaLUENTiS Ltd 2002-12 80
Commitment

Staff engagement: The challenge for organisations
(The A-C Matrix)

Fully congruent
‘Doing the right things
the right way for the
right reasons’ Knows what to
do/achieve Could do Fully
5%
but unlikely to 15%
more 15%
productive
achieve it

Less than “Typical
Individual’s More likely to optimally
degree of have Job gets organisational
10%
performance/ 25%
done 10%
productive -
split”
Alignment capability issues Could do
more ‘well’
Likely to have
More likely to
performance, High probability
‘Doing the wrong have objective
attitudinal of wasted
things/ wrong way/ 10%
and/or 5%
and/or
‘potential’
5%
effort/
wrong reasons’ behavioural frustration
issues
Incongruent issues

‘Having to stay’ ‘Feeling of ought to stay’ ‘Wanting to stay’
Continuance Degree of Affective
81
Commitment © VaLUENTiS Ltd 2002-12

HR as…

Knowledge Facilitator

Objective: HR function facilitates ‘organisation learning’ and
enables distributed ‘ownership’ of working definition of employee
engagement for frontline use.


• Poor survey design, measurement and analysis
Measurement wisdom
• ‘Laissez-faire’ process, over-focus on response rate
• Over-focus on line item benchmarking

83

The employee survey expertise model
HIGH
HCM subject matter expertise

Myopic 20/20 Foresight
Result: Result: organisation has
misleading or erroneous sufficient in-depth, robust
interpretation knowledge to act upon

Blind Unfocused
Result: end up with ‘garbage in- Limited insight due to limitations
garbage out’ syndrome of HCM knowledge

Survey instrument design & measurement expertise
LOW HIGH
“Still too many in2006 red box…”
© ISHCM
the 84

 Awareness of objectives/goals 27 35 15 12 8 3  Local management/leadership role model 28 25 24 11 12 1

 Individual’s behaviour aligned 30 31 11 15 10 3  Intra-team relations/cohesiveness 15 28 13 23 18 3

 Individual ‘fit’ with assigned roles 28 44 12 9 5 2  Have resources to carry out job 21 32 7 33 13 4

 Performance management effectiveness 21 29 7 19 22 2  Team effectiveness/trust 18 31 9 23 15 4

 People receiving timely feedback/acted on 24 25 14 22 12 3  Physical environment/facilities 24 37 19 12 7 1

 Know capabilities for promotion 14 25 6 20 27 8  Work-life balance 9 22 10 32 22 5

 SMART targeting/goals 24 33 11 24 6 2  Sense of accomplishment 22 33 5 18 17 5

 Values alignment 20 21 9 21 25 4  Team diversity 21 20 19 17 17 6

Line of Operating culture Work
 Inter-team relations/cohesiveness 11 18 15 26 22 8

Sight  Organisation decision rights
 Performance/talent management
13

15
24

28
18

10
19

23
16

15
10

9
Environment
OVERALL   ‘Corporate’ leadership 8 21 14 26 26 5
OVERALL OVERALL 
 Pride with organisation 24 31 14 17 11 3 
OVERALL   Effective decision-making 11 17 13 29 26 4 OVERALL 
Reward &  Work values
Learning &
18 29 11 25 14 3

 Organisational trust & openness 9 20 14 30 21 6

This is an example where front-line client projects meet management learning.
Recognition Development ‘5D’ Employee Engagement case study
diagnostic sheet © 2004-12

VaLUENTiS has customised Harvard/ECCH case studies by adding employee 5 21
 Reward equity intra-organisation 22 31 6 21 17 3  Individuals possess requisite competencies 23 42 6 3
engagement profiles along with32 24 2 capital data and analytics to create a7 far
 Reward equity extra-organisation 13 20 9 human  Utilisation of individual skills 17 29 24 17 6

 Benefits package component balanced practical learning experience for managers/practitioners.7
more enriched and 19 29 7 25 15 5  Pro-active training/ learning 18 25 26 19 5

 Performance-reward link 20 20 10 26 21 3  Opportunities for personal development 14 22 12 29 20 3

 Recognition for contribution  Structured coaching/mentoring
It’s also unique and cheap to 8deliver (and also effectively on-demand).
14 21 31 21 5 12 25 8 25 22 8

 Promotion for contribution/performance 19 29 15 21 12 4  Job/role architecture 14 32 15 20 13 6

 Incentives encourage correct behaviour 7 24 10 29 21 9  Career progression paths 19 33 7 21 17 3

 Incentives encourage achievement 17 28 16 18 16 5  Succession planning 13 24 6 29 21 7

Employee Engagement triangulation
“Squaring the circle…”
New (re)hire data

Customer/client/ Performance
patient/citizen appraisal data
data

Social media
data Employee/management
survey data

Critical Case data
incident data

Organisation Other internal
event log data survey/assessment
data

Exit data 86

HR as…

Smart Operator

Objective: HR function collectively possesses (or has access to)
measurement nous in people management evaluation.


• Tendency to focus on one-off isolated actions
Actioning infrastructure
• Still treated as ‘imposed task’ not as part of culture
• Over-focus on PR/Branding

88

Actioning Employee Engagement Infrastructure
(Purpose: ‘to embed’)
‘Live’ Employee
Engagement
adapted QFD
Defined ‘how to’ (‘House of
strategies around Quality’)
People Manager
engagement
evaluation/
elements
appraisal
Supportive top (regular
leadership and ‘practice runs’)
Organisation
Links into wider event logs
organisation ‘signalling’…
intelligence EE related
analytics development/
Multi-survey learning
mapping and programmes
& workshops
‘Interactive’ people planning
management evaluation overlay
process
map
Nominated Wider
People Manager communications/
Engagement line branding
champions
Dedicated
internal focus team or
nominated ‘on-point’
person
“Spinning plates cogs…”
89

Employee Engagement - Actioning Infrastructure

1
4

2

3

“Thus…”
90

HR as…
 ‘Perpetual’ Programme
Director

Objective: HR possesses the necessary ‘executive toolkit’ to
hand, in driving/creating ongoing engagement programmes ‘to
embed’ that complement organisation focus.


• No EE playbook
Dynamic EE-Performance ‘playbook’
EE PLAYBOOK
• Little knowledge capture
• Signalling opportunities missed

92

EE playbook example content

Contents

Strategies
1. Engagement strategies
2. Engagement operating ‘system’ models and
analytics templates
3. Question-statement selection and construct

Models
design
4. Measurement index construction,
maintenance and reporting

“Have you 5. Engagement Driver Factor (EDF) analysis
“Would you

Implementation
6. Engagement ‘forcefield’ analysis
got one…?” 7. EE project management methodology and
flowcharts
like one…?”
8. Engagement ‘issue work-through’ tools
9. Management learning programme design and
evaluative criteria

Learning
10. Engagement Transformation Programme (ETP)
methodology
11. Core applied theory summary capsules
12. Human Capital Management framework

4 EE playbook

93

HR as…

‘EE Playbook’ Guardian

Objective: HR function creates, maintains and evolves the ‘EE
playbook’ on behalf of the organisation to enable frontline
dissemination (whilst also signalling serious intent/reinforcement).


• Too few managers with understanding of EE
Competent leadership/management
DELETE • Little focus on managers own ‘engagement’
• Still too much tolerance of poor or average
leadership/management 95

910
‘Line Management’
engagement score by 860

percentile 813

790

760

“Often overlooked:
Impaired manager engagement…
And its impact…”

Management client cadre sample 2010-11
Sample size: 1400 managers representing 20,000 employees
96
Source: VaLUENTiS Engagement database Score range 200-1000

‘Line Management’ engagement scores ‘bell curve’

“Same data as previous slide – different Management client cadre sample 2010-11
graphic format… Sample size: 1400 managers
Looking outside ‘norms’ that’s one in (employee population: 20,000)
seven line managers posing serious Score range 200-1000
concern…”

14.5% below one 13.9% above one
standard deviation standard deviation

200 738 1000

“And so…” 97
Source: VaLUENTiS Engagement database

HR as…
 People Management
‘Enforcer’

Objective: HR function as ‘enabler/enforcer’ to ensure cohort of
well-trained/engaged people managers exists within organisation.

EE Pillars and HR Masks…[recap]

Grounded understanding of Employee EBM Practitioner
Engagement

Working definition of Employee Knowledge Facilitator
Engagement

Measurement wisdom Smart Operator

Actioning infrastructure ‘Perpetual’ Programme
Director

EE PLAYBOOK Dynamic EE-Performance ‘playbook’ ‘EE Playbook’ Guardian

Competent leadership/management Management ‘Enforcer’
DELETE

99


HR functions have to embrace the fact
that the de facto ‘reason for being’ is to
be instrumental in optimising employee
engagement within their organisation.

“It’s no good talking about recruitment or talent
management or any other HR processes for that matter if
employee engagement is not embedded as core…

…Impaired engagement means individual effort and talent
is just wasted. So therefore, what is the point of it not
being de facto?” 10
100
0


Grounded
I

Maybe borrowed with
focus.
III
IV
training/management
courses.
V EE-Performance
Playbook
Does not exist.
management

Where is your organisation currently…? 101

The ‘Play-Maker’
programme approach to
The first 100 days

VaLUENTiS has developed the ‘six-pillar
programme’ to help organisations to get
on/stay on the ‘Play-Maker’ approach. We call
it the ‘100 day EE bootcamp’ for organisations.

Want to try?

The Conference Board:
CEO Top Ten Challenges 2013 “Just
in”

2013 rank CHALLENGES 2013 2012 rank
N = 729 N = 776
1 Human capital 2
2 Operational excellence na1
3 Innovation 1
4 Customer relationships 7
5 Global political/economic risk 3
6 Government regulation 4
7 Global expansion 5
8 Corporate brand and reputation 9
9 Sustainability 8
10 Trust in business na2
Source: The Conference Board CEO Challenge 2013 (www.ceochallenge.org)
10
1Operational excellence replaced Cost optimisation; 2Trust in business replaced Investor relations 103
3

VaLUENTiS Employee Engagement WGUHWGUT HRDS JAN 2013 final dist copy

VaLUENTiS Employee Engagement WGUHWGUT HRDS JAN 2013 final dist copy

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