What is employee engagement? Why's it essential, and how do you measure it?

You may have heard of the term “engaged employees”. Perhaps you’ve read how pivotal employee engagement is for success. Or the importance of attracting and retaining engaged employees so you can build a high-performing team.

But how do you recognise an engaged employee? Why are they essential for your business? And how do you measure how many you have??

There’s also a surprising truth about engaged employees. One that will change how you think about your team and help you achieve better results in all areas of your business.?

Let’s start with some definitions …

What is an engaged employee?

If you type “what is an engaged employee” into Dr. Google, you’ll get 352 million results. You could refine it by asking for a “definition of an engaged employee”, but that still returns 145 million suggestions (when I searched last year, there 295 million and 117 million answers - seems like employee engagement has got a lot of attention during lockdown!)

The answers vary hugely. Wikipedia, unhelpfully, defines it as “Employee engagement is a fundamental concept in the effort to understand and describe, both qualitatively and quantitatively, the nature of the relationship between an organization and its employees”.

I prefer a simpler definition for everyday use:

“An engaged employee is involved with, committed to, and enthusiastic about their work”.

You know the sort of person … nothing’s too much trouble, they go above and beyond, they’re upbeat, they deliver great service. They’re the type of people we love having on our team.

But what’s the opposite? What’s a “dis-engaged employee”? My definition is:

“A disengaged employee is someone who’s quit but is still on your payroll”

They often arrive late / leave early, do the bare minimum to get by, often complain, and don’t give a … about the business or the customers. At the very extreme of the actively dis-engaged, you get the organisational terrorist: disruptive, complaining, acting maliciously, trying to bring others down. These are not people you want in your organisation.

And there’s a category in between, sometimes referred to as the “not-engaged”. I classify these as the people who turn up on time, do their job, go home. Whilst they seldom let you or your customers down, they’ve no real passion for the role or the company.

So why are some people engaged, and some not?

The surprising truth about employee engagement

Imagine admiring an exotic plant at the garden centre. One with healthy foliage and abundant flower buds ready to burst into bloom.

The experienced gardener will only choose a plant suited to their garden. One which can survive in their soil conditions and tolerate the amount of sunlight it will receive each day.

Once planted, they water, feed, and care for it all year round to keep it healthy and growing.

They know if they don’t give it the care and conditions it needs, it will slowly wither and die. All that wonderful promise, gone.

It’s the same with our employees.

If we recruit great people and put them in the equivalent of infertile soil and ignore them, they’ll become not-engaged (at best), or dis-engaged (at worst).

The surprising truth about engaged employees is that they’re an outcome of how you run your business. Not an input.

My research, and experiences, have shown me that an individual’s engagement comes down to how good you, their leader, are at the CRAFT of Leading?:

If you lead and manage your business in this way, your people are much more likely to be self-motivated (or intrinsically motivated in the jargon). They'll become involved with, committed to, and enthusiastic about their work.

Employee engagement is a measure of how effectively you’re leading and running your business, but is there any correlation between an engaged employee and profits?

What results do engaged employees deliver?

Gallup has been analysing the link between employee engagement and business results since 1998.

Their studies have consistently shown that businesses with high numbers of engaged employees achieve better results.

For example, a 2017 study showed that compared with business units in the bottom quartile of engagement, those in the top quartile realised the following improvements:

Those results have been replicated by different research studies from different bodies over the years.

• Engaged employees are 2.5 times more likely to exceed performance expectations than their “disengaged” colleagues (Hay Group)
• Engaged employees are 87% less likely to quit (Towers Perrin)
• Four times better financial performance for organisations with engaged employees than those with “dis-satisfied” employees (Watson Wyatt)
• Engaged employees are 3 times as productive as dis-engaged employees (Engagient)

That all sounds great, but how do you know how many engaged or dis-engaged employees you have in your business?

How do you measure employee engagement?

I developed a series of questions to test how competent people felt, how much autonomy they had, how they related to the business, etc. Whilst they gave useful results, they didn't give me a meaningful benchmark. I couldn't tell if those questions (and the answers) had any relationship to business results!

What’s needed were questions that directly correlate to performance.

In 2013, when looking to introduce this to the business I led, I researched various methods, and finally settled on the Gallup 12 questions. (Read Marcus Buckingham’s excellent book: “First Break All the Rules” for the background story to the Gallup questions and how managers and your leadership management system make a huge difference to employee engagement).

Why the Gallup12?

Well, they started their research in 1998, asking 105,000 employees from 2,500 business units of 24 companies in 12 industries these twelve questions:

1. Do I know what is expected of me at work?
2. Do I have the materials and equipment I need to do my work right?
3. Do I have the opportunity to do what I do best every day?
4. In the last seven days, have I received recognition or praise for good work?
5. Does my supervisor, or someone at work, seem to care about me as a person?
6. Is there someone at work who encourages my development?
7. At work, do my opinions seem to count?
8. Does the mission / purpose of my company make me feel my job is important?
9. Are my co-workers committed to doing quality work?
10. Do I have a best friend at work?
11. In the last six months, has someone at work talked to me about my progress?
12. This last year, have I had opportunities at work to learn and grow?

Gallup analysed the results against four measures: customer service, staff retention, productivity, and profitability. (For the numbers geeks, they used statistical meta-analysis to compensate for how the different business units measured results and get a comparable benchmark).

That research showed a strong correlation between the questions and the outcomes. And their research since has continued to demonstrate this link.

As well as the high statistical confidence in the results, what also appealed was how the questions are explicitly related to Competence, Relatedness and Autonomy, whilst Fairness and Trust are implicit. (Probably a case of confirmation bias on my part, but we’re all human!)

Less obvious, but more importantly, those questions are assessing how well your leadership system is being implemented by your managers.

Let’s see know how you use them to make a difference in your business.

How do I use the Gallup 12 in my business?

You can ask Gallup to complete the survey on your behalf. They charge (as of October 2020) $15 per survey respondent. They’ll be able to provide a deeper analysis of the results than you will, and they’re able (I understand) to give you benchmarks against your industry sector.

Alternatively, you can do it yourself. The simplest approach is to turn the questions into statements, and ask your employees if they strongly agree, agree, neither agree or disagree, disagree, or strongly disagree with each statement.

Engaged employees agree or strongly agree with all twelve statements.

Yes, you read that right. Engaged employees agree with all … twelve … statements. Rather a high threshold isn’t it!

Disengaged employees disagree or strongly disagree with all twelve statements.

The remainder of your employees are ‘un-engaged’.

The scores give you a starting point for assessing how well you’re doing across the business. You can identify improvements by analysing the scores for each question and focus effort accordingly.

However, simply measuring employee engagement isn’t going to get you better results. That’s like taking your temperature to cure your fever.

Finding ways of improving the scores on an individual question will help but won’t necessarily improve your engagement levels.

How can I improve employee engagement in my business?

Employee engagement comes from the way you run your business (your leadership management system if you will) and the people you have in it. You need to be clear on where you’re going and how you’re going to get there. You need to have the right people in the right seats and hold them to account for doing the right things.

If you’ve a leadership management system in place, then the scores provide a feedback loop. You use them to tweak your system, measure the results, then tweak again to get better results.

For example, in 2013 we scored poorly throughout the business on question 4: “In the last seven days, have I received recognition or praise for good work?”.

We reviewed our systems and overhauled how we recognised good work. We added the question “Who do we need to recognise this week?” as a standing agenda item in our weekly focus meetings and monthly get togethers. Managers were regularly asked to identify good performance in their team (and not knowing was a black mark!).

Sometimes we praised publicly, sometimes privately. Sometimes that came from me as the CEO, sometimes from a line manager or a colleague. It took time, but we slowly built a culture of recognition, which improved our engagement and results.

Now let me summarise all that for you…

To Wrap Up

Engaged employees are those wonderful people who are “committed to, involved with, and enthusiastic about their work”.

You want them in your organisation because they deliver better outcomes: higher productivity, better customer service, higher levels of retention, and greater profits. Oh, and from a selfish point of view, they make your life as the leader much easier. You have less stress, hassle, and drama!

The Gallup 12 questions are a robust measure of employee engagement and are directly correlated to business results.

However, being engaged isn’t a state of mind or a personality the employee brings to work. It is an outcome of the system in which they operate. And a poor manager can quickly dis-engage a high-performer!

Use the insights you gain from the survey to refine how you lead and run your business. Your focus is to create the conditions for more people to become engaged. That will deliver better outcomes for you, your people and your customers, and your shareholders.?

Ultimately, acquirers love companies with highly engaged employees. They'll pay you a premium and they'll be less likely to want you to stay around for an earnout and prove that they're not buying a dud.

Warmly, Richard

PS:?Can I ask a tiny favour, please? If you found this article useful and/or enjoyable, please subscribe to get notified of future articles, then add a comment (or ask a question, I always reply) and share it with your network. Every little helps ??

PPS:?For information, this article first appeared on https://aurelius-advisory.com/how-to-grow-and-scale-your-company/what-is-employee-engagement/ . It's just one of many articles on my website about how to build a sellable, valuable business.