The Link Between Employee Engagement and Innovation

To create a more innovative workforce that can tackle the challenges of the future, an organization needs to understand the proven link between employee engagement and innovation

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In thinking about the future of work, most business leaders now recognize that the ability to innovate (at both the firm and the individual level) will be a crucial factor in staying competitive in the decades ahead. But in my experience, many managers still express confusion about how to foster workforce innovation, given the subject's complexity and the challenges involved in turning innovative ideas into products or processes that actually create value for a firm. Thankfully, there is one secret ingredient that management researchers have isolated as perhaps the most important component in creating a more innovative workforce: employee engagement.

Management scholars use a variety of terms to refer to what most practitioners would consider engagement. An employee might be "tethered" to her role, or "embedded" in her job. But ultimately, it all comes down to engagement - how involved and dedicated an individual is to the job they hold. And to be clear, there is now an extensive body of academic research that has demonstrated a clear link between high levels of employee engagement and the frequency with which individuals engage in on-the-job innovation. Put another way, a workforce that is engaged is one which is more innovative.

But the fact that this correlation has been empirically demonstrated across numerous studies does not necessarily mean that its application in a managerial context is easy. Like all problems that involve the often messy work of managing people, fostering an engaged and innovative workforce is a complex and multilayered task, and it requires that organizational leaders fully grasp and understand this complexity before they can start to address it. 

Measuring Embeddedness

Study after study - across different cultures, industries, and geographies - has indicated that employees become “embedded” within their jobs and their organizations based on how they perceive three different but interrelated dimensions: links, fit, and sacrifice. In basic terms, this relates to a simple cause-and-effect scenario: if an employee perceives that one of these dimensions is broken or seriously eroded, research has shown that there is a higher likelihood that this employee will become at-risk for leaving the organization, while also becoming prone to problematic on-the-job behaviours such as a lack of motivation, increased interpersonal issues in the workplace, and a lack of focus and ability to execute projects. Conversely, employees who perceive these three dimensions in a positive light will be more likely to demonstrate desirable behaviours, such as a higher level of organizational citizenship, an interest in and willingness to collaborate, and, of course, a greater ability to engage in behaviour that leads directly or indirectly to workplace innovation.

Like all problems that involve the often messy work of managing people, fostering an engaged and innovative workforce is a complex and multilayered task.

The Dimensions of Engagement

But before exploring the correlation between engagement and innovation, it is vital to understand the details of the three dimensions mentioned above. Understanding these areas not only allows managers to better address engagement; it also allows them to consider the ways in which these dimensions are linked intrinsically to positive workplace behaviours such as the ability and willingness to innovate.

1. Links: Also described as socio-professional networks, links relate to the relationships an employee has with others both inside and outside of the organization. Links can occur across multiple levels of an organization, from close friendships to positive (or negative) relationships between direct reports and supervisors.
2. Fit: Any hiring manager is intimately familiar with this concept, which is a catch-all phrase for the complex web of variables that determine how well an employee fits within her role. Importantly, it involves the perception not just of how an organization views fit, but how the individual employee does as well. 
3. Sacrifice: Leaving one job for another one usually involves some level of sacrifice. It might involve taking a smaller compensation package or perhaps a lesser title resulting in a reduction in professional prestige. In this regard, an embedded employee is one who believes that leaving her current position simply involves giving up too much.

Linking Engagement to Innovation

Unfortunately for managers and HR professionals, there is no easy way of quantifying employee engagement. An individual might enjoy deep and positive links within her organization while also perceiving a high degree of sacrifice involved in leaving her job (both of which would likely lead to a higher level of engagement). However, if she also feels that the fit between her and the job itself is fundamentally wrong, then it is likely that this individual will become a flight risk. Put another way, the three dimensions that define engagement are a "package deal" - it's hard to have one without the other two.

In the same sense, the extent to which an employee demonstrates innovative workplace behaviour is the result of a variety of forces, including the skill of managers to create a culture of learning and sharing, the ability of a firm to create open information network flows throughout the organization, and the fluidity and flexibility of employee roles. In most cases, "being innovative" is not a specific requirement for a job, but rather what is considered by management scholars to be an example of "extra-role behaviour". More importantly, innovation in the context of on-the-job behaviour is not simply the existence of creativity, but the ability to take a creative idea and filter it into an actionable product or process.

In one of the landmark studies on the subject of innovation, the authors identified three stages involved in the process of organizational innovation: recognizing a problem and generating an idea or a solution; seeking organizational sponsorship for that idea and building a coalition of supporters; and working towards implementing the idea by finding ways to overcome roadblocks or boundaries (Scott & Bruce, 1994). Another landmark study encapsulates this concept by offering four simple stages of firm-level innovation: idea exploration; idea generation; idea championing; and idea implementation (de Jong & Hartog, 2010).

It is hopefully clear to any manager the links between these last four stages of innovation and the three dimensions of employee engagement. To explore and generate ideas, an individual must be a fit within her job while also enjoying a high level of linkages across the organization. Being able to champion an idea likely comes from the same place. Implementing the idea draws on fit and organizational links, in addition to a variety of other positive factors, including the extent to which an employee is "tethered" to her job and her organization (trying to implement an innovative idea or solution in an organization with high employee turnover is no easy task). Perhaps most interestingly, research has also shown that an employee who associates leaving a job with a high level of sacrifice is most likely motivated by a desire to enact innovative workplace behaviours in order to ensure the long-term viability of their role and their firm, a process which creates a positive and virtuous cycle of mutual reinforcement.

In most cases, "being innovative" is not a specific requirement for a job, but rather what is considered by management scholars to be an example of "extra-role behaviour".

The Bottom Line

Accepting the connection between engagement and innovation is crucial for managers who wish to help their teams adapt to the future world of work. Although the topic is complex, it is clear that any strategy that serve to positively reinforce one of the three dimensions of engagement - fit, links, and perceived sacrifice - will help to strengthen the innovative capacity of individuals and teams. In terms of improving overall fit, this might include paying particular attention to ensuring that the right people are matched to the right jobs, or experimenting with innovative recruitment processes to ensure a strong fit. In the area of linkages, managers can help to foster positive working relationships while championing concepts that reinforce these relationships, such as a commitment to collaborative and supportive team environments. And in the area of sacrifice, ensuring an organization possesses a best-in-class total rewards system will help to strengthen the extent to which employees perceive a high level of sacrifice in leaving the organization. While none of these strategies are necessarily easy, they are at least relatively straightforward, and in most cases will already be part of a well-run organization.

There is no clear way of forecasting what the future of work will look like. But it seems likely that the ability to innovate will be central to the success of any organization. Managers and organizations therefore need to find new ways of fostering innovation, and one empirically tested method is to focus on the building blocks that foster innovative workplace behaviour. An engaged workforce has been empirically shown to be one of these elemental building blocks, and an organization that can foster engagement will be well-positioned to leverage this advantage into a greater capacity for individual and firm-level innovation.