schneider engagement

7/29/2019 Schneider Engagement

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2008 Valtera Corporation. All Rights Reserved.

Better Organizations Through Better Science

Competitive Advantage

Through Employee

Engagement

Benjamin Schneider

San Diego I/O ProfessionalsMay 8, 2006


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2 2008 Valtera Corporation. All Rights Reserved.

Agenda

What is engagement?

What is the business case for engagement?

How do you foster and sustain engagement?


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Why Employee Engagement?

Everybody wants to have an engagedworkforce because it can forge a path to

competitive advantage.

Engagement is a human capitalapproach to competitive advantage

Yet ask five different people to define engagement and youlllikely get five different answers


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Some Definitions of Engagement

Engagement is

The individuals involvement and satisfaction with as well asenthusiasm for work

A result that is achieved by stimulating employees enthusiasm for

their work and directing it toward organizational success

Finding personal meaning and motivation in work and receiving

positive interpersonal support

The capability and willingness to help the company succeed, i.e.,

discretionary performance

A heightened emotional and intellectual connection that an

employee has for his/her job, organization, manager, or co-workersthat in turn influences him/her to apply additional discretionary

effort to his/her work


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Our Working Definition

Engagement is

Feelings

Feeling energized, absorbed, and involved in ones role in the

company

Behaviors

Persistent, proactive, and adaptive behavior aligned with

organizational goals and values


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Measures of Engagement

Most engagement measures are re-labeled job satisfaction or

employee opinion surveys that get at such issues as:

Overall job satisfaction

Satisfaction with pay and benefits

Organizational commitment

Role conflict and ambiguity

Pride in working fort he company

Intentions to stay

The measures lack a focus on engagement attitudes: feelings ofenergy and passion

The measures lack a focus on engagement behaviors: taking

initiative, being helpful, going beyond the norm and persistence


7/257 2008 Valtera Corporation. All Rights Reserved.

The Business Case for

Employee Engagement



Understanding Customer Satisfaction

Assess the relationship between engagement and the ACSI

American Customer Satisfaction Index (ACSI) - based oncustomer satisfaction ratings for hundreds of companies,

published by the University of Michigan (see TheACSI.org)

Assess Engagement across 32 U.S. companies and correlate

those data with the ACSI

Look at relationships between a measure of customer-focused

engagement behavior within specific service industries

Examine the relationship between customer-focused behavioral

engagement and Fortune reputational ratings of the quality of a

firms products and services



The ACSI and Market Value Added



How Engagement is Measured Matters

Top 25%Bottom 25%

60 65 70 75 80 85

Engagement Behavior

Conscientiousness

Engagement Behavior

Customer-Focused

ACSI Index



Engagement Behavior and Customer Satisfaction

Within Industry Analyses for ACSI

High

3.80 3.90 4.00 4.10 4.20 4.30

Customer-Focused Engagement Behavior

ACSIScore

Telecommunications

3.80 4.00 4.20 4.40 4.60

Customer-Focused Engagement Behavior

ACSIScore

Airlines

High

Low Low



Top 25%Bottom 25%

5.5Fortune Reputational Ratings of Quality

of Products and Services

6.0 6.5 7.0 7.55.0

Customer - Focused

Engagement Behavior

Engagement Behavior and Reputation



Predicting Company Financial Performance

Test the relationship between engagement and financial

performance in 65 U.S. companies, using the following financial

measures:

Return on assets

Profits as a percentage of revenues

Tobins Q

It represents the ratio of a firms market value to the replacement

cost of its assets

Because it includes market value, it is a forward looking measure

in that it incorporates the markets bet on its future performance

Unlike many other financial measures, it is equally applicable to all

industries



Bottom 25%**

Top 25%**

**of 65+ firms across diverse industries

*Q = the ratio of a firms marketvalue to the replacement

cost of its assets

Q*

Return on Assets

2%

7%

0

15%

Profitability

3%

8%

3

Shareholder Value

1.16

2.31

0

Engagement & Financial Performance

EngagementAttitudes

in the Firm



Bottom 25%**

Top 25% **

**of 65+ firms across diverse industries

Q*

Return on Assets

1%

8%

0

15%

Profitability

1%

10%

3

Shareholder Value

1.14

2.56

0

Engagement & Financial Performance cont.

*Q = the ratio of a firms marketvalue to the replacement

cost of its assets

Composite of

EngagementAttitudes and

Behavior



A Closer Look at Engagement.



Satisfaction Drivers

Driver analyses conducted on Valteras Best Companies

Benchmark data

Reveals which attitudes are the strongest drivers of satisfaction

on the one hand and attitudinal and behavioral engagement on

the other hand

Useful for taking action

Top 3 drivers of satisfaction* are:

Satisfaction with job security

Satisfaction with benefits

Opportunities for promotion

*Measured by satisfaction with company, intent to stay, and willingness to recommend ones company



Drivers of Feelings of Engagement

Top 3 drivers of feelings of engagement* are:

Feeling that there is full utilization of my skills and abilities

Feeling there is a link between my work and the objectives of the

company

Feeling of being encouraged to innovate

* Measured by items like I feel it is easy to maintain my focus on work, and The work I do makes me feel

good about myself.


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Behavioral Engagement Drivers

The unique drivers of behavioral engagement* include:

Cooperation/teamwork

Quality of relationships with coworkers

Trust and respect

Credibility of supervisor

* Measured by items like: The people I work with do more than they have to when the need arises and

The people I work with show flexibility in adapting to new ways of doing things


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Fostering and Sustaining Engagement


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Jobs Designed to Promote Engagement

Demand full use of skills and abilities

Allow for autonomy

Are a challenge

Provide for meaningfulness

Present specific difficult goals with feedback

Have rewards associated with accomplishment

Provide for personal growth and development


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Managers Promote Engagement

Managers create the climate for engagement

Treat people fairly and justly

Rewardspay, promotions, bonuses

Interpersonallyrespect, warmth

Procedurallykeep promises, involve people in decision-making

Pay attention to the seeming mundane

Training

Technology

Internal Support

These conditions lead to the feelings of trust and psychological

safety that are the foundations for attitudinal and behavioral

engagement


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Summary and Conclusions


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Does Engagement Guarantee Success?

Engagement does not fully compensate for poor strategic

decision making or downturns in the economy

Engagement may be more important when:

Products or services are highly customized

There is autonomy in designing ways to accomplish goals

Innovation is critical

Role boundaries are fluid

A new strategic direction is being introduced

But even in assembly line jobs, relative engagement can pay off

in suggestions for quality and productivity


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Why Employee Engagement?

There is corporate competitive advantage to employee engagement

Customer satisfaction

Financial rewards

Engagement is more actionable than satisfaction:

Job design: Skill utilization

Supervisory training: Fairness and trust

May be useful to assess strategic engagement

Customer focus

Innovation focus

Data from employees via surveys is more than just opinion; it is valid

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