The term “Employee Engagement” has taken on a new dimension within the Human Resource function and companies today are striving to develop ways within which their employees are “aligned” to the strategic mission of the firm. Alignment does lead to more motivated, higher performing, cohesive and engaged employees. The reason for this hype is that research evidence has shown that “engaged employees” display a superior sense of purpose, are able to focus their energies, display personal initiative and effort, are more persistent in problem solving, are sick less often and are constantly aware of corporate goals and therefore display goal oriented behaviour. They can also be contagious spreading their enthusiasm to their peers.
The advantage for leaders in having alignment is that they can see when people are underperforming and where improvements need to be made. It becomes much easier to identify challenges and successes.
This deep connection that employees display towards their company also translates into a workforce ready to go beyond what is expected out of them. Needless to say, one would therefore expect that all this positive behaviour translates into better performance for the individuals and collectively translated into the organisation’s performance. In fact this is one of the fundamental purposes of Performance Management. Aligning people to the organisational goals, leads to outcomes that maximise organisational performance.
According to research by Gallup and Towers Perrin the business case for employee engagement is clear. For example:
• Retention: Companies with a large amount of disengaged employees have 30 to 50% more turnover;
• Productivity: In the U.S. the cost of disengaged employees is more than $300 billion and includes 15% of the U.S. workforce;
• Profit: Companies with highly engaged employees have operating income increases up to 19% whereas companies with the lowest amount of engaged employees saw operating income fall by 33%.
“There is no doubt that a positive culture within an organisation fosters commitment and the development of more fulfilling work ” The Role Of Management
Management has a lot of work to do in order to create an environment where “employee Engagement” takes root. The organisation culture must be built on trust and fairness. Structures must be in place to ensure individual growth, empowerment, involvement, re- ward and motivation.
Setting goals within organisations can be viewed as a key building block in the performance management approach to leading organisations. Goals must be cascaded throughout the organisation starting from corporate goals, moving on to department goals and ending at individual goals. Only in this way can employees understand their individual contribution to- wards organisational performance and success. In the absence of clear leadership and goals, employees are uncertain about the direction. This leads to confusion and paralysis. Progress reviews, are therefore a consequence of having clear goals. These should be motivational sessions were achievements are discusses, improvements agreed upon and goal attainment re-emphasised at both individual and team levels. Goals, however, may also be set through a bottom-up approach. Individuals and teams could be given the opportunity to formulate their own goals within the frame- work provided by the strategic in- tent of the organisation. What is critical is the concept of having goals “agreed” rather than “set”.
Organisations that have Embraced clear transparent and open communication structures will manage to achieve this.
Performance evaluation identifies the strengths and weaknesses of employees with the ultimate aim of developing an improvement path through training or otherwise. The focus should be on the future development needs and not on the past and what has gone wrong.
Recognition & Feedback
Employee recognition and giving feedback have strong roots in motivational theories. Organisations should adopt employee recognition programmes through awards or otherwise to reinforce the behaviour that the company wants to encourage and reinforce. Once these programs are aligned within the performance management sys- tem they will have a bearing on the level of employee engagement.
There is no doubt that a positive culture within an organisation fosters commitment and the development of more fulfilling work. And once a clear performance management strategy is in place, employee alignment and hence engagement as well as individual and corporate performance can be measured.
The company needs to embark on a plan of continuous improvement where learning and development are planned in a way that skills are enhanced and processes improved.
“It is important that the culture within the organisation emphasises the development dimension rather than the reward work ” Practical Challenges
In practice, it is no easy task to ensure that a performance management system works to perfection. Many issues tend to build barriers to the smooth running of such a system. The most common barriers being:
• Managers often avoid regular performance appraisal interviews and only give attention to it at the last desperate moment, perceiving it as a burden rather than as a performance enhancer;
• Not all employees want to keep developing and learning. Some just want a leisurely job;
• Managers to not set realistic goals or fail to provide employees with the appropriate tools to be able to achieve such performance;
• Not all managers want to highlight poor performers especially if they perceive that it will cause problems in their relation with the individual;
• Flat organisations, where promotions and climbing the corporate ladder are non-existent find it much harder to train employees. They are not creative enough in developing horizontal job enrichment strategies. People feel stuck;
• A strong performance management system requires that managers lead by example and are excellent performers themselves, something which is not always the case, and when employees perceive their manager to be under performing, they do not pay much attention to the feedback which they receive.
The Way Forward
In order to overcome practical difficulties in Performance Management an organisation must ensure that it has a number of fundamental pillars in place.
1. Top management must display active support for the system for it to be effective
• To complement rather than hinder the system, management must engage wholeheartedly in the pro- cess as an integral part of how they approach their role as managers.
2. A clear strategy
• All aspects of the performance management pro- cess are aligned and covered by formal policy.
3. Ongoing feedback
• Managers must constantly give feedback to employees. Research clearly illustrates its linkage to performance management effectiveness.
4. Development Planning
• A realistic plan to develop individuals must be linked to performance appraisal systems. People must be appraised on their results and how they obtain them
5. Cultural fit
• Performance management processes must fit the culture of the organisation, its values and norms.
A controversial question in performance management systems will always be: “How does financial reward fit in?” When there is too much focus on the financial dimension as the main outcome of a performance management system, one creates the danger of perceiving performance management simply as a link rather than an approach to performance improvement and development. Of course companies should reward people according to their contribution or performance and hence, one has to attempt to measure that contribution, however it is important that the culture within the organisation emphasises the development dimension rather than the reward.
A High-Performing Workforce
Developing a high performance workforce through the introduction of talent management would be a step in the right direction for all organisations concerned about developing aligned and engaged employees. It is about attracting, developing, and retaining the best employees that are needed to meet current challenges and customer demands and at the same time are being prepared for the future through training and development programs. As we have shown above, ensuring alignment throughout the organisation establishes a strong link between these HR processes and business results.
Management Must Provide A Framework Where:
(1) Performance goals
(2) Development goals
(3) Appraisal systems are clearly defined in the organisation, and thus ensure that:
(i) Ongoing feedback and recognition is provided to employees; and
(ii) The culture promotes trust and empowerment. Conclusion
Yet for alignment to be meaningful the organisation has to develop a talent management set up that connects its overall strategic goals with worker performance management.
If leadership is unable to form a transparent roadmap which will be communicated and embraced throughout the organisation, it’ll be rather more troublesome to ascertain a high-performing company able to meet those goals. Alignment will be achieved by making certain robust leaders are selected and that they are capable of clear communication, especially the goals and expectations of the company and at the same time provide workers with in-progress learning opportunities to expand and enhance their ability sets.
Once these factors are in place the organisation will enjoy the benefits of having an optimised workforce that operates cohesively to overcome competitive challenges and bring home the required results and at the same time enjoy appropriate rewards for their efforts.
David J. Dingli is the managing consultant of Resource Productivity Consulting Services, a management consulting firm specializing in strategic planning, operational efficiency improvements and management development & training. (www.rpcsmalta.com). He is also an Assistant Professor with Maastricht School of Management, The Netherlands and has lectured at MBA level in 27 countries throughout Asia, Africa, South America and Europe.