“Performance and Retention” Through Employee Engagement

International Journal of Scientific and Research Publications, Volume 5, Issue 8, August 2015 1 ISSN 2250-3153

Enhancing “Performance and Retention” through Employee Engagement

B.SARATH SIMHA, M.B.A, (M.PHIL) *, B.VISHNU VARDHAN., M.COM (M.PHIL) **

* Asst.Professor, School of Management Studies, Qis College of Engg. & Technology: Ongole ** Research Scoller, Dept. Of Commerce&Business Admistration, Acharya Nagarjuna University, Guntur

Abstract- Employee engagement is integral to driving successful techniques of operation. As sophistication of technologies organizations. Employee engagement is a vast construct that continues to evolve, they pose more challenges for managers touches almost all parts of human resource management. because organizations will have to need more number of ‘Employee engagement is the emotional commitment the employees with increased technical and professional skills. These employee has to the organization and its goals’. Engaged knowledge workers cannot be managed with old styles of employees are emotionally attached to their organization and management. They expect operational autonomy, job satisfaction highly involved in their job with a great enthusiasm for the and status. It is because of these facts that attention of managers success of their employer, going extra mile beyond the is shifting towards employees’ side of organizations. At that time employment contractual agreement. The paper focuses on how concepts like employee commitment and Organizational employee engagement is extracting the best of employee and Citizenship Behavior (OCB) started to appear on the ground that retain as long as possible. Employee engagement has a direct efficiency and productivity lie within the employees’ ability and impact on the Employee’s productivity. The global recession has commitment. Managers’ eye is on how to keep employees taken its toll on employees as pay freezes, benefit cuts, and engaged in their job. layoffs permeate the workforce, making it more difficult to Employers now realize that by focusing on employee maintain high levels of engagement. Against this backdrop, it is engagement, they can create more efficient and productive more important than ever for employers to develop and maintain workforce. Any initiatives of improvement which are taken by a highly engaged workforce. The main causes for a higher management cannot be fruitful without willful involvement and engagement were found to be as – the impression that the firm engagement of employees. cares for and values the employees, free and frank Employee engagement is a newer concept that has been communication with immediate supervisor, empathetic attitude adopted by HR professionals within the past decade as global of the latter towards the former, recognition of one’s competition skyrocketed, “lifetime employment” faded into contributions towards the organizational goals, and freedom to oblivion, and organizations looked to more directly align participate in the decision making process. Many organizations employee performance with business goals. Engagement refers to believe that engagement is a dominant source of employee employees’ commitment and connection to work as measured by retention... And it has demonstrated there may be a strong link the amount of discretionary effort they are willing to expend on between engagement, employee performance and business behalf of their employer. Highly engaged employees go above outcomes. Striving to maintain a higher level of employee and beyond the core responsibilities outlined in their job engagement not only contributes toward short-term survival descriptions, innovating and thinking outside the box to move during economic volatility, but is also a key factor for longer- their organizations forward, and willing to go the extra mile for term business performance and better positioning when market their employer unless they are fundamentally happy in their job. conditions become favorable. Engaged employees are satisfied And feel a sense of attachment to their job and employer. They promote the very best in the Index Terms- Employee engagement, high performance, organization to their friends and family and work towards its employee retention. success. Engagement is about establishing mutual respect in the workplace for what people can do and be, given the right context, which serves us all, as individual employees, as companies and I. INTRODUCTION organizations and as consumers of public services. It is our firm he concept of engagement has naturally evolved from past belief that it can be a triple win: for the individual at work, the T research on high involvement, empowerment, job enterprise or service, and for the country as a whole. In uncertain motivation, organizational commitment, and trust. Obviously, all times, organizations need to focus on harnessing the organizations want their employees to be engaged in their work. discretionary effort that engaged employee. This makes a Managers unequivocally agree that this century demands more difference in how companies are affected during the economic efficiency and productivity than any other times in history. downturn, how quickly they emerge from it, and how strong they Businesses are striving to increase their performance. Managers are in the future after the downturn passes. Employee have been grappling with many challenges to succeed putting engagement initiative has a direct impact on the organization’s their company ahead of competitors. Thanks to technology, productivity Also employee engagement is directly influenced by nowadays business companies are making use of advanced growth of the organization, value addition experienced by employees and employee perception of the organization. When

www.ijsrp.org International Journal of Scientific and Research Publications, Volume 5, Issue 8, August 2015 2 ISSN 2250-3153 managers become disengaged, employees are 37% more likely to a profound connection to their company” and “drive innovation be frustrated with company systems, processes, and procedures. and move the organization forward” Employee engagement has become a hot topic in recent years. Engaged Employees lead to…higher service, quality, and Many organizations believe that engagement is a dominant productivity, which leads to…higher customer satisfaction, source of competitive advantage. However, recent research in which leads to…increased sales (repeat business and referrals), countries shows that there are more disengaged employees than which leads to higher levels of profit, which leads to higher there are engaged employees in today’s organizations. Employee shareholder returns. engagement can and has been found to make a difference. Importance of Engagement: Engagement is important for managers to cultivate given that II. OBJECTIVES disengagement or alienation is central to the problem of workers’ 1. To understand the employee engagement lack of commitment and motivation. Meaningless work is often 2. To assess the relation between employee engagement associated with apathy and detachment from ones works. In such and performance. conditions, individuals are thought to be estranged from their 3. To analyze the strategies used to retain the employee. selves .Other Research using a different resource of engagement 4. To offer the conclusions has linked it to such variables as employee turnover, customer satisfaction – loyalty, safety and to a lesser degree, productivity Employee Engagement: Definitions and Profitability criteria . Employee engagement does not mean employee An organization’s capacity to manage employee engagement happiness. Someone might be happy at work, but that doesn’t is closely related to its ability to achieve high performance levels necessarily mean they are working hard, productively on behalf and superior business results. of the organization. While company game rooms, free massages and Friday keg parties are fun–and may be beneficial for other Some of the advantages of Engaged employees are: reasons–making employees happy is different from making them 1. It builds passion, commitment and alignment with the engaged. organization’s strategies and goals Employee engagement doesn’t mean employee 2. Increases employees’ trust in the organization satisfaction. Many companies have “employee satisfaction” 3. Engaged employees will stay with the company, be an surveys and executives talk about “employee satisfaction”, but advocate of the company and its products and services, the bar is set too low. A satisfied employee might show up for and contribute to bottom line business success. her daily 9-to-5 without complaint. But that same “satisfied” 4. Makes the employees effective brand ambassadors for employee might not go the extra effort on her own, and she’ll the company probably take the headhunter’s call luring her away with a 10% 5. Creates a sense of loyalty in a competitive environment bump in pay. Satisfied isn’t enough. 6. They will normally perform better and are more Definition: Employee engagement is the emotional motivated. commitment the employee has to the organization and its 7. .They form an emotional connection with the company. goals. This impacts their attitude towards the Company’s This emotional commitment means engaged employees clients, and thereby improves customer satisfaction and actually care about their work and their company. They don’t service levels work just for a paycheck, or just for the next promotion, but work 8. Provides a high-energy working environment on behalf of the organization’s goals. 9. Boosts business growth The International Survey Research (ISR) defines 10. There is a significant link between employee employee engagement as, “a process by which an organization engagement and profitability increases commitment and continuation of its employees to the achievement of superior results.” A highly engaged employee will consistently deliver beyond Kieron Shaw (2005), highlights multiple definitions of expectations. Thus employee engagement is critical to any employee engagement. For the purposes of his research, Shaw organization that seeks to retain valued employees. The many (2005) also created a definition of employee engagement, which companies have believed that there is an intrinsic link between is, “translating employee potential into employee performance employee engagement, better performance, and retention. As and business success” organizations globalize and become more dependent on William H. Kahn (1990) completed some of the earliest technology in a virtual working environment, there is a greater work on engagement and defined engagement as, “the need to connect and engage with employees to provide them with harnessing of organization members' selves to their work roles; an organizational ‘identity.’ in engagement, people employ and express themselves physically, cognitively, and emotionally during role Employee engagement and performance: performances.” Employee engagement is interwoven significantly with The Gallup Organization, potentially the most widely important business outcomes. In this part we will see how recognized name associated with employee engagement due to employee engagement impacts organizational performance in the their bestselling book, “First, Break All the Rules,” defines light of various research works done. Studies have found positive engaged employees as those who, “work with a passion and feel relationship between employee engagement and organizational

www.ijsrp.org International Journal of Scientific and Research Publications, Volume 5, Issue 8, August 2015 3 ISSN 2250-3153 performance outcomes: employee retention, productivity, predictor of desirable organizational outcomes, such as customer profitability, customer loyalty and safety. Researches also satisfaction, retention, productivity and profitability. It was found indicate that the more engaged employees are, the more likely that employees scoring high on engagement (top 25%) performed their employer is to exceed the industry average in its revenue better in the areas of sales, customer complaints & turnover in growth. Employee engagement is found to be higher in double- comparison to the employees scoring low on engagement score digit growth companies. Research also indicates that engagement (bottom 25%) (The Gallup Organization, 2004).The Corporate is positively related to customer satisfaction (Coffman, 2000; Leadership Council (CLC) survey revealed that employee Ellis and Sorensen, 2007;Towers Perrin Talent Report, 2003; engagement leads to 57% improvement in discretionary efforts Hewitt Associates, 2004; Heintzman and Marson, 2005; Coffman (Corporate Leadership Council,2004). The CLC contends that andGonzalez-Molina, 2002). emotional engagement has four times the power to affect Employee engagement has been shown to impact on performance as compared to rational commitment. The business performance. Research by Gallup has found low to employers attempt to convert as many employees to true moderate correlations between employee engagement and a believers as they can. (Buchanan,2004).Low engagement among range of outcome measures, including customer satisfaction, employees translates in economic loss for the organization. profit, productivity, turnover and safety Since then, there has Gallup estimates that in the United Kingdom, unengaged workers been a growing body of research on the links between employee cost their companies $64.8billion a year. In Japan, where only engagement and key business metrics. This relationship is most 9% of the workforce is engaged, the lost productivity is noticeable when comparing units within one organization; $232billion (The Gallup Organization, 2004). Engaged however it can be reliably generalized across companies and employees within an organization provide a competitive industries Indeed, business units and organizations are almost advantage to organizations (Joo & Mclean, 2006). Employee twice as likely to be successful if they are above average in engagement has a substantial impact on employee productivity employee engagement .Employees who are engaged with their and talent retention (Lado & Wilson, 1994). Martel(2003) is of job and employer are more productive because they are the opinion that, “in order to obtain high performance in motivated beyond personal factors. They are more focused and postindustrial, intangible work that demands innovation, more motivated than their disengaged counterparts. This means flexibility, and speed, employers need to engage their employees they work more efficiently and with the success of the Engaging employees – especially by giving them participation, organization in mind.. In fact, it has been found that employees freedom, and trust – is the most comprehensive response to the that are highly engaged are twice as likely to be top performers ascendant postindustrial values of self realization and self .In 2009, Harter et al. conducted a meta-analysis encompassing actualization”. Employee engagement has also been found to 199 research studies across 152organisations in 44 industries and bring benefits at the individual level. A research was done by 26 countries. They statistically calculated the available data on Britt, Adler and Bartone (2001). From this study it has been business/work unit level relationship between employee found that engagement in meaningful work can yield benefit engagement and performance outcomes within in each study. from work. In a recent study it is explored that over the past 6 The studies covered 32,394 business/work units and 955,905 years, where the level of engagement had increased, absenteeism employees Their findings quantified significant differences had decreased among employees (The Gallup Organization, between business units ranking in the top and bottom 25% on 2004). In a comprehensive review of literature on employee engagement. They found an 18% drop in productivity between engagement, Stairs et al. (2006) point out that employee the top and bottom performers. Additionally, there was a 60% engagement has also been linked with higher employee retention drop in quality (measured by defects in products). In a similar (DDI, 2005; Harter, Schmidt and Keyes, 2003;Wright & study into Fortune 100 companies, it was found that there was a McMahan, 1992), greater employee effort and productivity dramatic 1,000 percent increase in errors among disengaged (Corporate Leadership Council, 2004), increased sales versus engaged employee populations (HayGroup, 2001), greater income and turnover (Maitland, A recent SHRM( Society for Human Resource Management) 2005;ISR, 2006; Harter et al.2003), greater profitability (Harter new global employee engagement study in 2006 surveyed et al.2003), and faster business growth and higher likelihood of 664,000 employees from around the world and found almost a business success (Hewitt Associates, 2004). 52% gap in the yearly performance improvement in operating income between organizations with highly engaged employees Employee engagement and retention: and organizations having employees with low engagement Simply stated, engaged employees are less likely to leave scores. Again, a recent meta analysis of over 7939 business units their job. If an employee has no emotional Commitment to their in 38 companies revealed the relationship between employee job, there is a greater chance that they will leave to pursue a job satisfaction engagement and the business unit outcomes of that offers, for Example, higher remuneration or more flexible customer satisfaction, profit, productivity, employee turnover work conditions. Engagement lowers employees’ intention to and accidents (Nowack, 2006).Employee engagement has been leave. The Corporate Leadership Council found that the most linked to superior performance and higher levels of engaged employees are 87% less likely to leave their organizational commitment by a number of researchers organization. The same study found that the 100 best places to (Woodruffe, 2006; Lockwood, 2006). Engaged employees leads work (according to their research) had an average voluntary to engaged customers, and this, in turn converts into long term turnover rate of 13% as compared with the average of 28.5% of profitability .Luthans and Peterson (2002) state that Gallup has other businesses in the same industries. What’s more, other large empirically determined employee engagement to be a significant scale research has found that 12% of disengaged employees have

www.ijsrp.org International Journal of Scientific and Research Publications, Volume 5, Issue 8, August 2015 4 ISSN 2250-3153 no intention to leave, while that proportion rises to 66% in Be as transparent with your people as you can be, in engaged employees. Similarly, over half of disengaged terms of providing information on how the company employees would consider leaving their current job for another makes and loses money, letting them in on any opportunity, while only 25%of highly engaged employees would strategies you may have and explaining to them their consider leaving. Considering that replacing an employee can role in the big picture. When your employees cost one and a half times their salary, retention has a significant understand the overall plan, they will view themselves impact on an organization’s bottom line. Not only can the costs as an important, vital piece of the puzzle. of replacing employees be a drain on resources, but once new 4. Provide Feedback on Performance employees are in place they can take several years to generate the Regularly set aside time to tell your people what they same revenue. are doing right and point out any areas for improvement. If performance is not up to par, work with them to Employee engagement activities – Examples: develop ideas on how to improve. It’s important that 1. Induction programme for new employees employees feel they are supported by you and the 2. Social activities like family gathering, celebration of organization, rather than being left behind because of an festivals occasional mistake or bad call. 3. A daily column, written by CEO, on the intranet with 5. Keep Promises company announcements /Programs. Never make a promise you can’t keep, and when you do 4. Employee suggestion systems / quick responses. make a promise -- no matter how small it might be -- be 5. Internal magazine/ newsletter on intranet sure to follow through with it. Even if you think your 6. CEO spending time in face to face communication with employees don’t care about it, you can be sure that they staff are keeping score. If you aren’t certain that you will be 7. CEO based FAQ questions on company business. able to follow through on a promise, then don’t make it. 8. ONLINE “ask the CEO” mailbox. 6. Create a Productive Work Environment 9. Monthly staff awards A workplace that is trusting, open and fun will be the 10. Annual staff awards most productive and successful. Be open to new ideas 11. Weekly blog related to serious business issues and staff and suggestions that come from your employees, and to read / comments. show them that their voices are being heard. Regularly 12. Appointment of disaster management team set time aside for team-building exercises and meetings, 13. Appointment of emergency management team and make them fun so your employees actually look 14. Problem solving committee forward to participating rather than looking for reasons 15. Leadership development activities to ditch them. 16. Team building activities 7. Managing performance 17. Conducting soft skills training program as well as Effective performance management answers the required training programs question, “Whatshould employees engage in?” Further, 18. Online real-time tracking of progress. Employees can performance management is the mechanism that view company progress Towards targets /goals. translates business performance objectives into set, 19. Provide long term strategic vision for business growth focused individual objectives that enable true employee 20. Indoor Games as well as Outdoor games, like Chess, effectiveness. Organizations with high employee Cricket, Badminton etc. engagement scores, but low performance management 21. Celebration of Employees Birthday effectiveness. 22. Picnic at regular intervals 8. Encourage open communication You can get insight into what things are important to the Strategies of Employee Engagement: employee by using surveys, suggestion boxes and team 1. Create a Partnership meetings. Be open-minded and encourage them to The best way to encourage your people to consistently express their ideas and perspectives without criticism. give their very best on the job is to create a partnership. This means putting into practice everything you have Treat each employee as a valuable member of your learned about effective listening. Address their concerns team, and give them the autonomy to make decisions in the best way you can. and do their work as they see fit, so long as they meet 9. Trust their performance standards. Employees need to trust each other as well as their 2. Involve Your Employees leadership. Employees are constantly watching Involve employees more deeply in your organization by leadership to see how their decisions affect the strategic inviting them to join cross-functional teams that draw direction of the organization and if their behaviors on the expertise and talent of people from different parts reflect what they say. of the organization. Let each team have the authority 10. Support employees in their work and growth they need to make decisions on their own -- especially How many of you have responded to a subordinate’s when the decisions directly affect them. idea as brilliant or even good. Success begets success. 3. Let Your Team in on the Plan You can support employee growth by providing education and learning opportunities, cross training,

www.ijsrp.org International Journal of Scientific and Research Publications, Volume 5, Issue 8, August 2015 5 ISSN 2250-3153

coaching, and any other interactions that support Organizations with high levels of engagement provide employees employees’ personal development. with opportunities to develop their abilities, learn new skills, 11. Career opportunities: acquire new knowledge and realize their potential. When Engagement continues to be first and foremost about companies plan for the career paths of their employees and invest employees’ career paths. This has been Challenging in them in this way their people invest in them. for many organizations that have seen delayed retirements and lower turnover (Stagnant career 2. Career Development – Effective Management of advancement). Nonetheless, companies have significant Talent opportunity to communicate a clear career path, Career development influences engagement for employees and prepare employees for the next role, and provide lateral retaining the most talented employees and providing growth opportunities for key employees. It is important opportunities for personal development to note that the line manager is typically the owner of this critical engagement driver. 3. Empowerment 12. Pay: Employees want to be involved in decisions that affect their Although pay does not show up as the top engagement work. The leaders of high engagementWorkplaces create a driver, its prevalence in our study indicates that many trustful and challenging environment, in which employees are organizations are struggling with getting this encouraged to dissent from the prevailing orthodoxy and to input fundamental component of the employment contract and innovate to move the organization forward. right. With pay freezes and a tightening economic environment, employees may be increasingly engaged 4. Image by securing basic pay needs in addition to showing How much employees are prepared to endorse the products and decreased appetite for pay at risk. services which their company provides its customers depends 13. Give employees’ appropriate training: largely on their perceptions of the quality of those goods and Help employees update themselves increasing their services. High levels of employee engagement are inextricably knowledge and skills through giving appropriate linked with high levels of customer engagement. trainings. Generally it is understood that when employees get to know more about their job, their 5. Equal Opportunities and Fair Treatment confidence increases there by being able to work The employee engagement levels would be high if their bosses without much supervision from their immediate (superiors) provide equal opportunities for growth and managers which in turn builds their self-efficacy and advancement to all the employees commitment. 14. Build a distinctive corporate culture: 6. Performance appraisal Companies should promote a strong work culture in Fair evaluation of an employee’s performance is an important which the Goals and values of managers are aligned criterion for determining the level of employee engagement. The across all work sections. Companies that build a culture company which follows an appropriate performance appraisal of Mutual respects by keeping success stories alive will technique (which is transparent and not biased) will have high not only keep their existing employees engaged but also levels of employee engagement. they baptize the new incoming employees with this contagious spirit of work culture. 7. Pay and Benefits 15. Celebrate both financial and non financial The company should have a proper pay system so that the achievements employees are motivated to work in the organization. In order to Employees need to feel validated and that they are a boost his engagement levels the employees should also be valued part of the organization. Leadership needs to provided with certain benefits and compensations. show how much they care for their employees and show recognition for efforts: “If you want something to 8. Health and Safety grow, pour champagne on it“. Research indicates that the engagement levels are low if the employee does not feel secure while working. Therefore every 16. Thank Them A sincere thank-you for a job well done can be a organization should adopt appropriate methods and systems for powerful motivator for continued success and is an the health and safety of their employees. essential tool for every manager. Thank your employees personally and promptly when you catch them doing 9. Job Satisfaction something right by writing a quick thank-you email or Only a satisfied employee can become an engaged employee. text message, or by dropping by their office to tell them Therefore it is very essential for an organization to see to it that in person. the job given to the employee matches his career goals which will make him enjoy his work and he would ultimately be Factors Leading to Employee Engagement: satisfied with his job.

10. Communication 1. Career Development- Opportunities for Personal Development

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The company should follow the open door policy. There should [3] Coffman C. (2000). Is Your Company Bleeding Talent? How to become a be both upward and downward communication with the use of true “employer of choice”. The Gallup Management Journal, 2000. The Gallup Organization, Princeton, NJ appropriate communication channels in the organization. If the [4] Robinson, D., Perryman, S. and Heyday, S. (2004) The Drivers of employee is given a say in the decision making and has the right Employee Engagement. Brighton, Institute for Employment Studies. to be heard by his boss than the engagement levels are likely to [5] Welbourne, Ts.M. (2007) ‘Employee engagement: Beyond the fad and into be high. the executive suite’, Leader to Leader, spring, pp45- 51. [6] Nowack, K. (2006). Employee engagement, job satisfaction, retention and 11. Family Friendliness stress. Retrieved from: www.envisialearning.com, accessed during April A person’s family life influences his wok life. When an 2011. [7] Bassi, L, & McMurrer, D. (2007). Maximizing Your Return on People. employee realizes that the organization is considering his Harvard Business Review, March: pp 115 – 23. family’s benefits also, he will have an emotional attachment with [8] Baumruk, R., Gorman, B. Jr, Gorman, R. E., & Ingham, J. (2006), Why the organization which leads to engagement managers are crucial to increasing engagement, Strategic HR Review, 5 (2), pp 247. 12. Co-operation [9] Bhatnagar, J. (2007). Talent management strategy of employee engagement If the entire organization works together by helping each other in Indian ITES employees: key to retention, Employee Relations, 29 (6), pp 640663. i.e. all the employees as well as the supervisors co-ordinate well [10] Archie Thomas, CMA, and Ann MacDi anmid – Encouraging Employee than the employees will be engaged. Engagement –CMA Management, Jun/Jul 2004. [11] Ashok Mukherjee – Engagement for the mind body, and soul – Human Capital, Aug.2005. III. CONCLUSION [12] Understanding what drives employee engagement.(2003). The 2003 Towers Perrin Talent Report. Employee engagement drives performance by improving [13] Vu, U. (2006). Misfiring on the rules of engagement. Canadian HR retention, customer loyalty, productivity, safety, and ultimately, Reporter. May 8,2006. 19 (9): pp. 1 & 6. profitability. Engaged employees care about their organization [14] Brewster, C., Higgs, M., Holley, N. and McBain, R. (2007) Employee and work to contribute towards its success. Such employees are engagement – report from HR Centre of Excellence Research and members less likely to leave for another job, or take unauthorized leave. meeting, Henley. They are more likely to work better, faster and more safely. [15] Brown, D. and Reilly, P. (2008) Employee Engagement: what is the relationship with reward management? World at Work Journal vol 17, no 4. Importantly, they are also more focused on the customer 140 experience, ensuring that customers are happy and profits are maximized. In today’s world of economic uncertainty, engaging employees is critical to ensuring an organizational longevity and AUTHORS profitability. First Author – B.SARATH SIMHA, M.B.A, (M.PHIL) ASST.PROFESSOR, SCHOOL OF MANAGEMENT STUDIES REFERENCES QIS COLLEGE OF ENGG. & TECHNOLOGY: ONGOLE, PH: [1] Chartered Institute of Personnel and Development. (2006). Reflections on 8125926126, 8520821691, EMAIL:[email protected] employee Second Author – B.VISHNU VARDHAN., M.COM (M.PHIL), Engagement:Changeagenda.CIPD:London.[Online]Available:http://www.ci RESEARCH SCOLLER, DEPT.OF COMMERCE&BUSINESS pd.co.uk/changeagendas(November10, 2008) ADMISTRATION, ACHARYA NAGARJUNA UNIVERSITY, [2] Clifton, James K. (2008). Engaging your employees: Six keys to GUNTUR, EMAIL:[email protected] understanding the new workplace. 2002 SHRM Foundation Thought Leaders Remarks. Society for Human Resource Management