Give staff freedom of expression or perish
The smart thing to do is to engage your employees, writes Michael Lund
By Michael Lund.
Here’s a tip for all employers. If you can engage your staff you can make more profit.
It’s as simple as that and yet David Croston is amazed at how many organisations just don’t get it.
He’s a managing director of workplace consultancy Inside Research, based in Sydney, and author of a book Employee Engagement.
The book is based on research he did on several companies that have seen benefits from getting its staff more involved in the way its business works.
It’s also based on his own experience of running a company where he tried to create a happy workplace. He paid staff above the average salary, and never worked them on nights or weekends.
"The clients were exceedingly happy, but the staff weren’t happy,” Croston says. "I could never get why that was.”
In the end he discovered he was the problem. He was too controlling over every aspect of the business that was about creating successful brands for other companies.
"Creative people wanted the freedom to express themselves but I was reluctant to give them that freedom,” he says. The result was staff who were not motivated and felt demoralised.
Croston learnt from this experience and the more he learnt about how important it was to engage staff, the more he discovered how it was also good for business.
Research by international human resources firm Hewitt Associates shows that an "engaged” employee can be worth an extra $5000 a year in profits.
The firm is currently running the seventh regular search for the best employers in Australia and New Zealand, with the results to be announced in Sydney this week.
Previous winners have reported high levels of employee engagement, between 70 and 80 per cent, compared with other entrants where scores were in the mid 50 per cent range.
When it comes to profits, best employer winners also report a revenue growth of 15 per cent – two percentage points above other entrants – and profit growth of 25 per cent – four percentage points above the others.
Hewitt Associates’ David Clarke heads up the Australian engagement program and says successful results can also have benefits for shareholders in a company.
"If you buy shares in that company then the evidence suggests that those shares will perform 29 per cent above the market average,” he says.
There will be exceptions he says but it’s still good news for any company looking to safeguard its share price at a time when the rest of the share market is wobbling.
Profits aside there is another reason why employers should be doing all they can to engage a workforce.
Research shows the number of people available for work in Australia is dropping with a shortage of skilled workers already causing problems.
It’s a problem that will get worse as the baby boomers begin to retire in 2010/11. Those employers who do little or nothing to engage workers will be the losers. And if you have a toxic workplace then no one will want to work for you.
"Companies that don’t change now will find it nigh on impossible to operate in the future. It won’t be that they can’t find customers, more they can’t find employees.”
During the past 10 years a number of Australian companies have spent millions of dollars on developing employee engagement programs, in particular the finance sector.
The people that are most doing this are the banks and I find that reassuring because I don’t think they would be doing this if it was not making them money,” Croston says.
With the current troubled times within the banking sector he believes those with the stronger engaged workforce could fare better.
The ANZ bank says its employee engagement figure for 2008 is 62 per cent, a drop of two points on the previous year, but above the 60 per cent benchmark average for financial institutions.
Croston notes in his book that ANZ has come a long way since 2000 when it started its engagement program and employees described the bank’s culture as a "bureaucracy”, "hierarchical”, "long hours” and "short-term focus”.
In 2007 the negative phrases had disappeared with the focus more on "customer satisfaction”, "teamwork”, "staff engagement” and "social responsibility”.
Despite this year’s drop in engagement the bank is still optimistic saying: "The results demonstrate our strong customer focus right across the organisation.”
So how does an employer go about trying to engage its employees?
Croston says it needs a lot more than just providing free yoga sessions at lunchtime. It starts at the top with the boss and senior management recognising that something needs to change.
Those organisations that do act need to carry out a survey of all staff to test how engaged they are at present and how involved they feel at work.
A 2006 study by polling organisation Gallup found one in four employees in the US were engaged in the job they were doing. By engaged it meant employees who had a passion for the job and a drive to see their organisation move forward.
The rest were either not engaged (59 per cent) or actively disengaged (14 per cent) in their job. The disengaged category is the most worrying as such employees can be destructive to an organisation, losing it valuable business.
Croston says such problem employees need to be dealt with quickly.
"People are being asked to leave because they are toxic in an office,” he says. "But before that happens they should be given a chance to change, they’ve obviously got some skills otherwise they wouldn’t have got where they are.”
A failure to deal with problem staff though can send out the wrong signals to others in a workforce. If they see management ignore the problem, they will lose all faith in management’s ability to take any further engagement reform seriously.
Croston is quick to add that dealing with problem staff does not mean management should take a hardline approach towards all employees. "You can’t be that boss that’s kicking or knocking heads together any more. It just doesn’t work,” he says.
Today’s leaders he says need to act more like coaches, developing teamwork and providing positive feedback.
It all sounds very cosy for the employees, giving them a degree of power over management, but Croston says it’s an approach that’s proving successful.
"If you have a management strategy that just dictates to your people what to do and not inspire them, then your days are numbered,” he says.
"People now want more than a pay packet; they want their work to provide them with a sense of achievement.”
Reform can take time and Croston warns against an organisation making too many changes in the early days. Typically it takes two to four years before engagement results start to grow and show any financial benefit.
It’s a model he admits is tailored to a very Western style of employment. He doesn’t get, nor expect many, sales of his book Employment Engagement from some developing countries.
"If you’re a large company then people want to work for you,” Croston says.
"If you’re a smaller business then you really need to have a good reason to attract the top talent to come and work for you.
"It doesn’t have to cost the earth and the results can turn out to be very rewarding.”
TIPS Hewitt Associates uses a three ‘S’ system to test staff engagement – Say, Stay and Strive.
Say – What do staff say about an employer, good and bad. Stay – What makes them stay with an employer, or make them consider moving on. Strive – What inspires them to do more for an employer.
David Croston, a consultant, warns against an employer letting consultants run any engagement program. By all means use them as part of the process but any leadership should come from within.
The central message in his book Employment Engagement is to keep a workforce informed and involved, with any change coming from the top down.
Employees should be encouraged to speak out on matters – good or bad – so they are able to make up their own mind on issues, and suggest ways of change themselves.