Source-http://www.cipd.co.uk/hr-resources/factsheets/employee-engagement.aspx

What is employee engagement? Employee engagement is a concept that has become increasingly mainstreamed into management thought over the last decade. It is generally seen as an internal state of being both physical, mental and emotional that brings together earlier concepts of work effort, organizational commitment, job satisfaction and flow (or optimal experience). Typical phrases used in employee engagement writing include discretionary effort, going the extra mile, feeling valued and passion for work.In its work with the Kingston Engagement Consortium, the CIPD has defined employee engagement as being positively present during the performance of work by willingly contributing intellectual effort, experiencing positive emotions and meaningful connections to other.This definition gives three dimensions to employee engagement: Intellectual engagement thinking hard about the job and how to do it better Affective engagement feeling positively about doing a good job Social engagement actively taking opportunities to discuss work-related improvements with others at work. Go to our Creating an engaged workforce reportHowever, it is worth noting that numerous definitions of employee engagement exist, each with their different emphases. For example, one of the most enduring is that from the Utrecht University group of occupational psychologists1. This sees engagement as having three elements, which overlap with the CIPD definition (above): vigour (energy, resilience and effort) dedication (for example, enthusiasm, inspiration and pride) absorption (concentration and being engrossed in ones work).Another element of employee engagement that is often considered essential is being aware of business context2, or understanding the line of sight between ones own job role and the purpose and objectives of the organisation3.Indeed, it is helpful to think about what aspects of their work employees are engaged with. Our report, The locus of engagement: understanding what employees connect with at work highlights that in particular, employee engagement can be directed towards: the role job itself; relationships with colleagues; the organisation as a whole; and in many cases, people outside the organisation. Building on this, our research into transactional and emotional engagement explores the different degrees to which employees can be engaged. Go to our locus of engagement report Go to our report Emotional or transactional engagement - does it matter?What are the benefits of employee engagement? Employers want engaged employees because, as well as being happier, healthier and more fulfilled, they deliver improved business performance. Research has repeatedly demonstrated a relationship between how people are managed, employee attitudes and business performance. There are nuances in the drivers and outcomes of employee engagement, but this basic link holds true across different sectors and job roles. Positive relationships are evidenced with profit, revenue growth, customer satisfaction, productivity, innovation, staff retention, efficiency and health and safety performance. A good summary of the performance link with employee engagement has been published by the government-sponsored Engage for Success4 movement.Organisations also increasingly recognise the importance of their brand and reputation. Engaged employees will be stronger advocates of their organisations and help protect the employer from the reputational risks associated with poor service levels or product quality.Conversely, having a disengaged workforce brings huge risks. As well as productivity losses, organisations may lose their best people and face huge difficulties when embedding organisational change if employees are not on board. Disengagement also threatens effective collaboration, innovation and human capital management, as employees will not be inclined to use their tacit knowledge and skills for the good of the organisation. Go to our factsheet on human capital Go to our factsheet on change managementHow to build an engaged workforce Leadership, alignment and support

The drive for an engaged workforce builds on good people management and learning and development practices. Successful employee engagement strategies need the active support of senior leaders and line managers and will also be holistic, aligning organisational purpose, vision and values with job roles, communications, management systems and team building or cross-organisational events. A minority of employees may not want to be engaged; recruitment practices and performance management are thus important engagement tools. There is no shortcut to building and maintaining employee engagement.Understanding some fundamentals

A great deal can be learnt from existing research on what drives employee engagement. For example, the 2009 MacLeod Review5 summarised four enablers that should be fundamentals of any employee engagement strategy: Leadership that gives a strong strategic narrative about the organisation, where its come from and where its going. Line managers who motivate, empower and support their employees. Employee voice throughout the organisation, to challenge or reinforce the status quo and involve employees in decision making. Go to our factsheet on employee voice Organisational integrity: stated values are embedded into organisational culture; what we say is what we do.The last of these, integrity, closely relates to the sense of fairness and trust in the organisation and the psychological contract, which depend on employers delivering on their commitments and fulfilling employees expectations6. Go to our factsheet on the Psychological contractAs well as these drivers, employee well-being (including work-life balance and manageable levels of pressure) is often considered a crucial hygiene factor for employee engagement, in that its absence is a serious impediment. Our research report Managing for sustainable employee engagement, explains how engagement and wellbeing can be brought together for a people strategy. Go to the report Go to our factsheet on Health and well-being at workAssessing employee engagement in your organisation

Beyond these general truths, employee engagement has to be seen as something organisation specific. What makes people tick, what gripes they have, the challenges to and opportunities for fostering employee engagement will all vary with an organisations culture (and that of the wider sector), the history of its development and the structures and leadership that shape it today.So a first practical step in fostering employee engagement is to assess and in large organisations, preferably measure employee attitudes in your organisation. Most large employers in both private and public sectors now conduct regular employee attitude surveys, often alongside focus groups or other forums. The results typically show what employees feel about dimensions of their work such as pay and benefits, communications, learning and development, line management and work-life balance. Composite employee engagement measures are also common. Employee survey and focus group data can be used to identify areas in need of improvement and understand the particular drivers of employee engagement in your organisation.Surveys are still the mainstay of employee insight, but some organisations have started to move away from them to what are considered more engaging methods. In particular, social media platforms are being used in this way. Social media potentially marks a major shift from the traditional survey approach, in particular because employees interact with each other as well as management. This means they can read and comment on their colleagues opinions in real time and before senior management or HR have digested them. It also makes gathering employee insight a more active process, closely linking it to collaboration. Go to our report on Social media and employee voiceAction planning

Once you have identified issues, it is important to develop and communicate a meaningful action plan. Being seen to do nothing response to employee views will seriously erode trust.Action plans will of course be specific to the employee engagement challenges the organisation faces, but there are certain areas that invariably benefit from attention. One of these is the ongoing opportunities for employee voice, which includes not only the processes in place, but the culture that supports them or makes it difficult for employees to use them properly. Voice should not be limited to a survey or to areas like terms and conditions. It should be embedded within our daily work along with empowerment, so that employees take greater responsibility for their work, innovate and hold each other to account.Another area commonly in need of attention is line management. Our report Management competencies for enhancing employee engagement identifies specific behaviours and explores the differences between first-level line management and more senior-level management. Building on this and the research mentioned above on engagement and well-being, we have also published guidance on developing a behavioural framework for managers for sustainable employee engagement. Go to the report Go to the guidanceThe engagement levels of British employees Our research with the Kingston Engagement Consortium, Creating an engaged workforce (see link above) found just under a third of employees were actively engaged according to our engagement index. Levels of affective engagement are the highest, of social engagement the lowest, with intellectual engagement in between. Over the last couple of years, and in line with most other research, our regular Employee Outlook survey has found employee engagement levels to be stable in the UK (between 35% and 39% of employees indicating positive engagement).Other key results from the research are: more women than men are engaged with their work younger workers are less engaged than older workers managers are more engaged than non-managers those on flexible contracts are more engaged than those who are not public sector employees show higher levels of social and intellectual engagement whereas private sector employees are more engaged affectively.The MacLeod Review and Engage for Success

The 2009 MacLeod Review5was a UK government sponsored review of the benefits and drivers of employee engagement chaired by David MacLeod and Nita Clarke. To help put this into action, the prime minister launched a new industry-led task force in 2011. The task force has developed a website Engage for Success (see Useful contacts below) and set up two groups: A Practitioner group which welcomes participation from any organisations or individuals looking to embed practices that foster employee engagement. A parallel Guru group of academics and consultants, which works to further develop understanding of employee engagement.CIPD viewpointEmployee engagement is not an entirely new concept and debates continue over its precise nature, drivers and impacts. Nonetheless, as an area of both study and practice, it has been hugely instrumental in putting good people management practices firmly on organisations agendas. It powerfully brings together a focus on employee satisfaction and well-being with a focus on performance to work for the good of the employee and the good of the organisation, in tandem.Leaders and mangers in all functions and at all levels should pay close attention to building employee engagement. HR is the most natural function to lead on this, using its employee advocacy role to benefit organisational performance.Successfully fostering employee engagement requires working with all areas of the business. Employers should especially pay attention to: giving employees meaningful voice: facilitating upwards feedback, having respectful, adult-to-adult conversations and responding to employee views effective communications that keep employees well informed and reinforce the organisations purpose role modelling: employees need to see that managers are committed to the organisation and uphold the values of employee engagement in how they act fair and just management processes for dealing with problems and supporting employee well-being.Useful contacts Engage for Success

@Fact sheet on human capital

What is human capital? The term human capital is widely used in HR to describe people at work and their collective knowledge, skills, abilities and capacity to develop and innovate. Human capital reporting aims to provide quantitative, as well as qualitative, data on a range of measures (such as labour turnover or employee engagement levels) to help identify which sort of HR or management interventions will drive business performance.It is now commonly accepted that the value of organisations is drawn from a mixture of tangible assets in the form of equipment, money, land or other physical objects together with intangibles in the form of brand, reputation, knowledge and, of course, people critically important in an increasingly knowledge-based economy.However, the evaluation of human capital remains difficult for most companies. There are a number of reasons for this: The contribution of people is difficult to isolate from other factors such as the economic situation, market forces and customer or social trends. The value of people is often expressed in qualitative rather than quantitative terms that make it difficult to represent in traditional accountancy models. HR data has traditionally been collected for administrative rather than evaluation purposes. HR people do not always have the skills or resources to interpret or explain data to evaluate the contribution of people to business performance. Senior leaders or stakeholders do not recognise human capital as a performance measure and therefore do not demand human capital information.These difficulties have been further compounded by the varying definitions of human capital developed over the years.Intellectual capital

In our CIPD research work, we have found it helpful to describe human capital as one of three elements that make up intellectual capital. Intellectual capital encompasses: Human capital the knowledge, skills, abilities and capacity to develop and innovate possessed by people in an organisation Social capital the structures, networks and procedures that enable those people to acquire and develop intellectual capital, represented by the stocks and flows of knowledge derived from relationships within and outside the organisation Organisational capital the institutionalised knowledge possessed by an organisation which is stored in databases and manuals, includingthe HR policies and processes used to manage people.Human capital management

While some commentators argue that there is little difference between the concept of human capital and that of human resources, perhaps the key distinction is the focus of human capital on the value of employees, and how this may be measured, rather than on the HR function itself.CIPD members may view our online tool Human capital management: introducing and operating human capital management processes. Visit the human capital management online toolTypes of human capital data

There are many different types of data that can be useful in measuring and evaluating human capital. Generally these fall under the following headings: demographic data: information on workforce composition including age, gender and ethnicity recruitment and retention: number of resignations/vacancies/applications, length of service learning anddevelopment: levels of expenditure on training, types of training provided, length of time to reach competence levels, data on training needs performance: performance management results, productivity and profitability data, targets set and met, levels of customer satisfaction, customer loyalty engagement and opinion: findings from employee attitude surveys reward and pay: overall wage bill costs, distribution of individual performance-related pay awards, level of total reward package.Wherever possible, it is important to distinguish between measures of outputs and measures of inputs. For example, figures for expenditure on specialist training provision is an input, the output might be higher levels of customer sales or higher levels of employee skill and capability.Measuring human capital The CIPD has been undertaking work in the field of human capital since 2000 around the time the subject emerged as a key issue for the HR profession. Much of our research in this area since then suggests that there is no single measure or set of measures that can uniformly provide a value for human capital.This conclusion was confirmed by the 2003 report1 of the Task Force on Human Capital Management, which was set up by the government under the chair of Denise Kingsmill to address the lack of reporting on human capital in business - as this was felt to be inhibiting competitiveness.Measurement difficulties

Measurement is notoriously difficult, in part because the factors that human capital is likely to influence (such as customer satisfaction, innovation and service delivery) are at the mercy of numerous other contextual factors. Whereas it can be relatively easy to collect data to describe the workforce and the prevalence of certain practices, particularly where sophisticated human resource information systems (HRIS) exist (such as absence and attendance data) it is more difficult to develop credible and reliable new measures and assess how such data may be interpreted.For example, CIPD research has found that engaged employees are more likely to perform better and hence contribute to bottom line performance, meaning that this is a key measure impacting on business success. However, engagement levels are extremely difficult to quantify as much of the data pertaining to engagement is actually measuring elements of it, such as satisfaction or commitment. To find our more about engagement, see our factsheet on that topic. Go to our factsheet on employee engagementFocus on business context

Organisations will, in addition, wish to measure the aspects of human capital that are relevant to their own business strategy (for example the need for a particular type of employee competency). As a result of this consideration, together with the other factors identified here, the emphasis of measurement has shifted away from absolute measures towards understanding of context to make an informed decision.Differing levels of data collection

At the most basic level, human capital data can be collected for simple monitoring purposes, such as controlling absence or monitoring retention difficulties. At the highest level data can be used to identify performance drivers: by correlating different types of data with performance data organisations can begin to understand what the real benefits are of improving levels of motivation or retention.The table below summarises the different levels of data collection that might take place and the likely outcomes of data collection.Basic levelIntermediate levelHigher level

ActionCollect basic input measures such as absence data, turnover dataIdentify useful data already available, such as data from pay reviews, performance management, job evaluation, training, the recruitment processUse this data to communicate essential information to managers about absence, turnover or accident levels, compared by departmentLook for trends or patterns in the data and investigate their causesDesign data collection for specific human capital needs. For example, conduct an employee attitude survey to measure satisfaction, or follow up on training activity to monitor implementation and useLook for correlations between data for example, whether high levels of job satisfaction occur when certain HR practices are in place, such as performance management, career management or flexible workingIdentify specific actions to improve people managementIdentify key performance indicators relating to the business strategy, and design data collection processes to measure against themProvide managers with indicators on a range of measures designed to inform them on performance and progress in their departmentAccompany this with specific actions to be taken informed by the resulting human capital dataCommunicate data in ways that are meaningful to differing audiences

OutcomeBasic information for managers on headcount and make-up of the workforceIdentification of any action that might be needed as a result of these measures for example, to reduce accident rates, to improve the diversity profile of the workforce or to reduce absenceInformation to help design the HR model most likely to contribute to performanceCommunication to managers not just on how to implement processes, but with accompanying information on why they are important and what they can achieveIdentification of the drivers of business performanceInformation that will enable better-informed decision-making both internally on the management of people and externally on the progress with regard to strategy

Reporting human capital Different types of information will be of value to different audiences within the business: Shareholders seek information on the employee attributes or behaviours that are likely to influence short- or long-term financial performance. Customers wish to know if they will get good service and after sales support. Employees want to know their jobs are secure and how they can develop themselves and their skills. Managers require information on which actions they can take to improve the performance of their business units.External reportingRegulatory backgroundThe extent of external reporting on human capital remains limited. There are two main sections where such data may be published within companies annual reports: Business review - quoted companies are required to include information on employees (as well as other issues) within the business review section of the annual report. Operating and financial review - with the growth of interest in the idea of human capital reporting during the early years of this century, culminating in the publication of the Kingsmill report (mentioned above), government proposals were developed to introduce mandatory compliance with best practice principles on narrative reporting in the operating and financial review section of annual reports. However, these plans for compulsion were abandoned in 2005, although some companies follow such principles on a voluntary basis, though only among in a minority of cases, according to the latest analysis of the content of annual reports from Deloitte2.A detailed consideration of the highly complex regulatory background is beyond the scope of this factsheet. However, recent years have seen a renewed interest in the issue of company reporting as a result of perceived deficiencies in companies reporting procedures in the wake of the global financial crisis. More information can be found in our factsheet on corporate governance. Go to our corporate governance factsheetIn 2010, the Department for Business Innovation and Skills launched a consultation on the future of narrative reporting (sometimes known as the front half of company reports)3. Information on the CIPDs position is available in our response to that consultation. As yet no firm proposals or reporting have been forthcoming. Visit CIPD responsePublished human capital dataMore information on the extent of human capital reporting that is included within annual reports is available in our reportHuman capital management: an analysis of disclosure in UK reports setting out an analysis of disclosure levels produced in conjunction with professional accountants body ACCA. Visit the reportAdditionally, our latest research into the ways in which human capital reporting can inform investment decisions has found that stakeholders would particularly value information that is comparable, explained in context and related to business outcomes, whilst also finding that a focus on risk in human capital reporting would be particularly relevant to the business community.Find out more in our report View from the City: how can human capital reporting inform investment decisions? Go to the reportInternal reporting

Internal reporting is far more prevalent than external reporting, as this is important in the evaluation of the effectiveness of HR interventions and guiding future HR strategy, while also protecting business confidentiality where desired. It takes a number of forms.Generally any human capital data reported internally should be: reliable and open to scrutiny accompanied by adequate explanation presented in a manner that is easily understandable for the audience related to business needs enable managers to identify appropriate actions that will improve business performance.Identifying business drivers

Because the evaluation of human capital is context-dependent, the key to identifying business drivers lies in developing a better understanding of the people element of the business and what policies and practices to manage teams or individuals are likely to achieve results.There are a number of good examples of organisations that have successfully correlated human capital data with performance data to identify which interventions are likely to produce results. Many of these are reported in our guide on internal human capital reporting Human capital reporting: an internal perspective. Go to our guideCIPD viewpointThere is a great deal of evidence that the contribution of people is the largest driver of organisational performance. Systematically collecting, analysing and communicating information on the value of this contribution is vital and will assist in the design and implementation of HR policies and practices to maximise the impact on business performance. However, all our research to date indicates that the evaluation of human capital is highly contextual and therefore no single measure or set of measures can adequately convey its value. Organisations need to decide which measures are relevant to them and will give them to information they need to effectively communicate the value and contribution of human capital both internally and externally. They will then need to interpret these measure in context to inform their relevance to key business performance indicators.

@Factsheet on change management

Why organisations need to change Many things cause organisational change. These include: challenges of growth, especially global markets challenge of economic downturns and tougher trading conditions changes in strategy technological changes competitive pressures, including mergers and acquisitions customer pressure, particularly shifting markets to learn new organisation behaviours and skills government legislation/initiatives.All organisations are in flux: changing their focus, expanding or contracting their activities and rethinking their products and services. Most organisations more than ten years old look nothing like they did even five years ago. And it is likely that in the next year or two organisations will not look as they do today.In this context managers have to be able to introduce and manage change to ensure the organisational objectives of change are met, andthat they gain the commitment of their people, both during and after implementation. Often, at the same time, they also have to ensure that business continues as usual.For practical advice, frameworks and diagnostics, CIPD members can access our interactive tool Approaches to change: building capability and confidence. Go to thetoolWhy the management of change is important Change management matters because, although change is taking place at an ever-increasing pace, there is evidence that suggests that most change initiatives fail. For example, CIPD research suggests that less than 60% of re-organisations met their stated objectives which are usually bottom line improvement. This is consistent with other published research.The impact of failures to introduce effective change can also be high: loss of market position, removal of senior management, loss of stakeholder credibility, loss of key employees, and reduction in engagement see our factsheet on engagement for more on this issue. Go to our employee engagement factsheetOne organisational response to change is that organisational forms are themselves evolving. Therefore, the change management response will have to be adaptive. For example, the increased competitive challenges and the need to be responsive to the changing environment are resulting in emerging organisational models. Traditional organisational models following functional or matrix lines are being supplemented by new models that rely on project teams, on networks and on virtual structures.

In theory,some of these newer models, for example virtual and project-based structures, allow increased flexibility to respond to change. However such models are not always introduced uniformly, and in practice often introduce other issues that also impact upon change management, for example ability to share knowledge and to operate efficiently. These may also impact effectiveness of communication or employee commitment, which themselves have implications for change effectiveness.

Our research report Managing across boundaries: human resource management beyond the firmhighlights how the move towards network-based organisations means that HR managers must now consider issues that exist across and outside the boundaries of the firm: they need to address the concerns of cross-boundary human resource management. This requires the development of a series of boundary spanning HRM practices which involve the extension of practices which are traditionally used only for employees (that is, individuals contracted to the organisation) to these important people who are outside the boundaries of the organisation (that is, individuals contracted to a different organisation or self-employed but who deliver services within the organisation). Find out more about the reportIssues in the change management process A large number of issues have been identified as having negative impact on effective change management. Some of the key themes are identified below.Organisational issues

Individual change initiatives are not always undertaken as part of a wider coherent change plan, for example through considering linkages between strategy, structure and systems issues. Therefore a change that considers a new structure but fails to establish the need to introduce new systems or processes to support such a structure is less likely to succeed.Lack of effective project management and programme management disciplines can lead to slippages in timings, in achievement of desired outcomes andin ensuring that the projects do deliver as planned. Insufficient relevant training, for example in project management, change management skills andleadership skills can impact negatively on the effectiveness of any change initiative.Poor communication has been linked to issues surrounding the effectiveness of change management in achieving effective change in various ways. For example, imposed change can lead to greater employee resistance (see section below also).Change initiatives can also be over-managed, with too much energy spent on project management and too little on enacting change.Finally, lack of effective leadership has been identified as an inhibitor of effective change.Individual/group resistance to change

Resistance to change can be defined as an individual or group engaging in acts to block or disrupt an attempt to introduce change. Resistance is not necessarily negative, as it may be a clear signal that the change initiative requires rethinking or reframing. Resistance itself can take many different forms from subtle undermining of change initiatives, withholding of information to active resistance, for instance through strikes.Two broad types of resistance can be considered: Resistance to the content of change - for example to a specific change in technology orto the introduction of a particular reward system. Resistance to the process of change. This concerns the way a change is introduced rather than the object of change per se, for example, management re-structure jobs without prior consultation of affected employees.Management need to be aware of these different criteria to ensure they respond appropriately.Suggested reasons for resistance include: loss of control, shock of the new, uncertainty, inconvenience, threat to status andcompetence fears. It is important to try to diagnose the cause of employee resistance as this will help determine the focus of effort in trying to address the issue.Making change management more effective From the issues raised in the section above it can be seen that change is complex and there is no single solution. However, a number of key areas of focus emerge.Effective leadership is a key enabler as it provides the vision and the rationale for change. Different styles of leadership have been identified, for example coercive, directive, consultative and collaborative. These different styles may each be appropriate depending on the type and scale of change being undertaken. For example, when there is a large-scale organisation-wide change a directive style has been identified as most effective.Appropriate and timely training is frequently identified as key to effective change. Examples of learning and development requirements might include: project and programme management skills to ensure change initiatives are completed both on time and to budget change management skills, including communication and facilitation leadership coaching.Organisational development is one approach or intervention used when trying to bring about change orientated to improving organisational effectiveness - see ourfactsheet on organisation development for more information. Go to our OD factsheetTwo-way communication with employees and their active involvement in implementation has also been identified as a key enabler of change. Active participation is one suggested means of overcoming resistance to change. Ourresearch on mergers and acquisitions highlights the importance of senior leaders devoting attention to communication with employees during a time of transformation for the organisation. See our factsheets on the psychological contract and employee communication for more information on these topics, and our research report The impact of mergers and acquisitions on employer brands. Go to ourpsychological contract factsheet Go to our employee communication factsheet Go to our research reportCIPD members can find practical frameworks, checklists and advice on employee communication in our interactive tool HR: taking employee communication seriously. Go tothe toolFinally, linking all the change agendas within an organisation coherently, rather than completing changes in isolation, is vital to ensure that change effectiveness is maximised. CIPD research with Said Business School has identified seven areas of activity that make successful change happen - 'the seven c's of change': choosing a team crafting the vision and the path connecting organisation-wide change consulting stakeholders communicating coping with change capturing learning. Find out more about our HR: making change happen reportHR and L&Ds role in change management People management and development professionals have a significant role to play in any change management process.CIPD research has also identified that HR and L&D's involvement in various aspects of change can make the difference between successful and less successful projects by, for example, their: involvement at the initial stage in the project team advising project leaders in skills available within the organisation identifying any skills gaps, training needs, new posts, new working practices etc balancing out the narrow/short-term goals with broader strategic needs assessing the impact of change in one area/department/site on another part of the organisation1 being used to negotiating and engaging across various stakeholders understanding stakeholder concerns to anticipate problems understanding the appropriate medium of communication to reach various groups helping people cope with change, performance management and motivation.CIPD viewpointOrganisational change is increasingly the norm, yet the high levels of failure indicate that effective management of these changes is an issue. There is no single model of change and no single solution to effective management, but, as HR and L&D professionals are recognising, they need to ensure they have the skill, knowledge and credibility within the organisation to act as champions of change. HR has a clear role and responsibility to ensure that issues like organisation (re)design, due process, employee voice, access to clear communications and so on are appropriately and effectively addressed as part of change management. L&D professionals also have a critical role to play in ensuring the long term sustainability of a change, through effective design and delivery of learning initiatives. The key for HR and L&D is to build credible relationships throughout the organisation which enable them to anticipate change, and be involved from the beginning.

@factsheet on employment voice

What is employee voice?Employee voice is the two way communication between employer and employee. It is the process of the employer communicating to the employee as well as receiving and listening to communication from the employee.

The factsheet should be read in conjunction with our factsheet on employee communication, which goes into greater detail on particular techniques of communication, both downward and two-way. Go to our factsheet on Employee communicationThe two subjects clearly have a lot in common. However the concept of employee voice focuses more on opportunities for employees to be involved in decisions collectively, whether through trade unions or by other means. It appeals both to those seeking greater business efficiency and to those looking for employee rights. In the last two decades, organisations have increasingly focused on initiatives that directly involve employees, moving away from representative participation

CIPD research1 suggests that organisations that seek to promote voice are those that believe that employees want to contribute to the business and that for employees to have an effective voice, the important part of the communication process is not what the employer puts out but what it gets back. Good managers recognise that much of the knowledge required for businesses to be competitive is actually in employees heads. Voice is defined most typically in terms of two-way communications, an exchange of information between managers and employees or having a say' about what goes on in the organisation.

Some managers see voice as enabling all employees to represent their views to managers, and for those views to be taken into account. Other managers take the more limited view that voice is not so much a dialogue or two-way exchange of ideas as a mechanism for employees to transmit ideas to managers in order to improve organisational performance.A brief history of employee involvement in decisions at work Workers control

With the growth of the factory system came the rise of trade unions. In some cases, this was accompanied by a desire for workers in the shape of trade union members to have a say in decision-making at work.Co-determination

In continental Europe there is more emphasis on employee having some role in the management of companies. Germany has a system whereby employees in large companies elect representatives to a supervisory board in which they have one third of the seats. The employees also elect a worker director, who has a seat on the main board but can only vote on matters concerning employees. Smaller German companies have a single tier board with a worker representative.This model has spread to other European countries, with variations. Sweden, for example, has a one-tier board system with co-determination. Because of its widespread nature on mainland Europe, co-determination has also had an impact on the thinking of the European Commission.

In the UK co-determination has not developed as elsewhere in Europe. A controversial report2 proposed radical changes in UK company law to bring about so-called industrial democracy with union representatives on company main boards. However, this was never implemented and the Thatcher years saw interest in employee involvement of any kind disappear from the agenda, at least as far as public policy was concerned.The United Kingdom: collective bargaining and joint regulation

Throughout the twentieth century collective bargaining was the most significant means of regulating relationships in the UK between employers and employees via trade union-led negotiations. Collective bargaining is largely seen to focus on pay negotiations, but its role in setting other working conditions is equally important. Collective bargaining necessarily contains an element of negotiation, which distinguishes it from consultation, and the academic Allan Flanders defined it as a process of rule-making leading to joint regulation3.

Collective bargaining has been seen as necessary to give employees a say in decision making (in unionised organisations), and emphasis has been on managing the conflict between employees and employer. As union membership has declined so has collective bargaining, although it remains influential, particularly in the public sector.Joint consultation

Joint Consultation Committees (JCCs) exist in organisations to address issues not covered by collective bargaining issues from the trivial to strategic. JCCs consist of management and employee representatives. In unionised organisations the employee representatives are typically union representatives. JCCs do still exist in many organisations, but have declined as organisations have moved their emphasis to direct communication.Recent legislation

The legislative changes of the 1980s had left British workers with fewer rights in terms of workplace consultation than their counterparts in other EU member states, and before 2005, the only requirements on British organisations to inform and consult employees related to specific issues such as health and safety, collective redundancies and pensions. The Information and Consultation of Employees Regulations 2004 (SI 2004/3426), based on an EU Directive, now place wider obligations on employers, though their impact has been limited4.In addition, European Works Councils which bring together senior managers and employee representatives from a numbers of sites across Europe have introduced international consultation in British-based multi-nationals.More recent initiatives

In the 1980s and 1990s, organisations became aware that those that involved and engaged with their employees were likely to benefit from increased motivation and commitment. Initiatives on working in teams and quality, which involved employees directly and often originating from Japanese manufacturing practices, grew and were seen to succeed.Our Research Insight Voice and engagement: how does collective consultation contribute? reports on evidence from a number of ways in which collective forms of employee voice can potentially support employee engagement. Go to the Research InsightIt is increasingly recognised that whistleblowing can be an effective means for employees to communicate important messages to employers. It is important for organisations to recognise its value and support its use. See our factsheet for more information. Go to our whistleblowing factsheetMechanisms of employee voice There is a range of different and often complementary mechanisms for employee voice. The CIPD research referred to above put them into two broad categories: upward problem-solving and representative participation.Upward problem-solving

Upward problem-solving refers to any technique that managers use to tap into employee ideas and opinions, either through two-way communications channels or through specific systems that are set up for employees to express their voicethe structures are management-initiated and operate directly between managers and employees rather than through employee representatives.Techniques include: Electronic media disseminating, sharing and seeking of ideas via electronic means as opposed to face-to-face; for example, by using e-mail to raise questions that have to be answered by a senior manager. Two-way communications - disseminating, sharing and seeking of ideas face-to-face between managers and staff for whom they have responsibility; for example, by regular meetings every few weeks. Suggestion schemes under which employees put ideas to management, who then reward those whose ideas are implemented. Attitude surveys questionnaire surveys (electronically or paper-based), designed to discover staffs levels of satisfaction with particular aspects of work. Project teams groups of individual employees brought together on a regular or ad hoc basis to discuss (for example) quality or work organisation.Representative participation

Representative participation refers to schemes under which employee representatives meet managers on a regular basis in the case of scheduled committees, or through more ad hoc arrangements. The essential characteristic is that participation is not direct between individual employees and their managers but is mediated through representatives. Approaches include: Partnership schemes here the emphasis is on mutual gains and tackling issues in a spirit of co-operation rather than through traditional adversarial relationships. It includes a high commitment to information-sharing. European Works Councils see above. Joint consultation - to consider issues that are deemed to be of common interest or of key importance to the parties and existing at non-union as well as unionised workplaces. Collective representation negotiations leading to joint regulation of pay and other conditions of employment between employer and employee representatives, usually but not exclusively union representatives. Episodic in the case of pay, but continuous and ad hoc in the case of other matters, for example grievances. Employee forums groups of non-union or mixed groups of union/non-union employees meeting with management for consultation and information sharing.All these mechanisms are formal. But informal mechanisms (typically more important in smaller organisations) can be a very effective form of voice. Organisations are increasingly making use of social media to provide employees with opportunities of conducting informal conversations with each other and contributing their opinions. See more in our Social media and employee voice reportBenefits and success factors Benefits for employers

In high performance workplaces (see our factsheet on sustainable organisation performance for more information), knowledge and skills are developed and better used, leading to high-value enterprises and an increasingly knowledge-based economy. Go to our factsheet onSustainable organisation performanceWith a greater voice for employees: employees skills and knowledge can be better used, leading to higher productivity employees feel more valued, so they are more likely to stay and to contribute more the organisation gains a positive reputation, making it easier to recruit good employees conflict is reduced and co-operation between employer and employee is based on interdependence. Go to our factsheet on employee engagementBenefits for employees

Employees benefit from: having more influence over their work higher job satisfaction more opportunity to develop skills more job security if their employer is more successful as a result of voice initiatives.Success factors

The factors that make for success are: Leadership: without active commitment from the top, initiatives will not succeed. Further down, managers also need to lead by example, while employee representatives (whether union officials or others) must also be effective leaders of those they represent. Go to our factsheet on Leadership Training:middle managers brought up in a top-down tradition of communication may find it difficult to adapt to a more open way of doing things and may need to be trained in communication skills. Similarly, employee representatives may need training. Trust and openness: initiatives will not succeed without honesty in communications, even when messages may not be palatable.The potential barriers are the reverse of the success factors. Absence of leadership and lack of commitment from middle managers are cited as reasons for failure. There is also an issue of employee reaction not all might want a voice.In the past, union opposition might have been an obstacle, but with unions today having greater interest in business issues, union support can give added credibility to management messages.

A study by Bryson5, found that perceptions of management were no better amongst employees with voice than amongst those without voice. However, Bryson concludes that the use of particular types of direct voice notably regular meetings between senior management and the workforce and problem-solving groups tended to increase significantly perceptions of managerial responsiveness, while team briefings did notdirect voice was particularly effective in a union setting'.CIPD viewpointMeasurement of the effectiveness of employee voice is difficult because it is hard to separate the impact of voice mechanisms from that of other factors. A range of mechanisms needs to be used; such mechanisms will tend to blur into one another, and will evolve over time. Success may be limited unless there is leadership at all levels (including employees), and openness and honesty exist as part of the organisational culture. Nevertheless, effective two-way dialogue, and particularly employees ability to feed views upwards, is clearly crucial to a healthy employee relations climate and the MacLeod review of employee engagement has identified voice as one of the four key drivers of an engaged workforce.Effective machinery for joint consultation requires commitment and trust on both sides. The Workplace Employee Realtions Survey (WERS)2004 suggests that trust is higher between employers and non-union representatives than between employers and union representatives. There is no evidence that the Information and Consultation of Employees Regulations haveled to any reversal of the trend for employers to rely more heavily on direct and less on indirect (representative

@factsheet on psychological contract

What is the psychological contract? The term 'psychological contract' was first used in the early 1960s but became more popular following the economic downturn in the early 1990s. It has been defined as 'the perceptions of the two parties, employee and employer, of what their mutual obligations are towards each other'1. These obligations will often be informal and imprecise: they may be inferred from actions or from what has happened in the past, as well as from statements made by the employer, for example during the recruitment process or in performance appraisals. Some obligations may be seen as 'promises' and others as 'expectations'. The important thing is that they are believed by the employee to be part of the relationship with the employer.

The psychological contract can be distinguished from the legal contract of employment. The latter will, in many cases, offer only a limited and uncertain representation of the reality of the employment relationship. The employee may have contributed little to its terms beyond accepting them.

The psychological contract on the other hand looks at the reality of the situation as perceived by the parties, and may be more influential than the formal contract in affecting how employees behave from day to day. It is the psychological contract that effectively tells employees what they are required to do in order to meet their side of the bargain and what they can expect from their job. It may not - indeed in general it will not - be strictly enforceable, though courts may be influenced by a view of the underlying relationship between employer and employee, for example in interpreting the common law duty to show mutual trust and confidence.Guest1 identifies the following key points: : the extent to which employers adopt people management practices will influence the state of the psychological contract the contract is based on employees' sense of fairness and trust and their belief that the employer is honouring the 'deal' between them where the psychological contract is positive, increased employee commitment and satisfaction will have a positive impact on business performance.What happens if the contract is broken? If the psychological contract is broken there are a number of impacts: a negative impact on job satisfaction a negative impact on the commitment of the employee a negative impact on employee engagement.Managers need to remember: Employment relationships may deteriorate despite managements best efforts: nevertheless it is managers job to take responsibility for maintaining them. Preventing breach in the first place is better than trying to repair the damage afterwards. Where breach cannot be avoided it may be better to spend time negotiating or renegotiating the deal, rather than focusing too much on delivery.What has persuaded people to take the psychological contract seriously? Changes currently affecting the workplace include: more employees on part-time and flexible work. organisations downsizing and delayering, meaning remaining employees have to do more. markets, technology and products constantly changing. technology and finance becoming less important than human resources as sources of competitive advantage. traditional organisational structures becoming more fluid.The effect of these changes is that employees are increasingly recognised as the key business drivers. The ability of the business to add value rests on its front-line employees or 'human capital'. Organisations that wish to succeed have to get the most out of this resource. In order to do this employers have to know what employees expect from their work. The psychological contract offers a framework for monitoring employee attitudes and priorities on those dimensions which can be shown to influence performance.Employer brand

Employees in large organisations do not identify any single person as the 'employer'. The line manager is important in making day-to-day decisions but employees are also affected by decisions taken by senior management and HR. Employees may have little idea who, if anyone, is personally responsible for decisions affecting their welfare or the future of the business. Unsurprisingly surveys confirm that employees tend to feel more confidence in their line manager, whom they see on a regular basis, than in members of senior management.In order to display commitment employees have to feel that they are being treated with fairness and respect. Many organisations have concluded that they need to create a corporate personality or identity with a set of corporate values or a stated mission - an employee value proposition or employer brand' which employees will recognise and relate to. In practice the employer brand can be seen as an attempt by the employer to define the psychological contract with employees so as to help in recruiting and retaining talent. For more information see our factsheet on employer branding. Go to our employer brand factsheetThe changing employment relationship

The traditional psychological contract is generally described as an offer of commitment by the employee in return for job security provided by the employer - or in some cases the legendary 'job for life'. The recession of the early 1990s and the continuing impact of globalisation are alleged to have destroyed the basis of this traditional deal since job security is no longer on offer. The new deal is said to rest on an offer of fair pay and treatment by the employer plus opportunities for training and development. On this analysis,an employer can no longer offer security andthis has undermined the basis of employee commitment.Research suggests that in many ways the 'old' psychological contract is in fact still alive. Employees still want security: interestingly labour market data suggest that there has been little reduction in the length of time for which people stay in individual jobs. They are still prepared to offer loyalty, though they may feel less committed to the organisation as a whole than to their workgroup. In general they remain satisfied with their job.The kinds of commitment employers and employees might make to one another and reflect in an employment proposition are:Employees promise to:Employers promise to provide:

Work hardPay commensurate with performance

Uphold company reputationOpportunities for training and development

Maintain high levels of attendance and punctualityOpportunities for promotion

Show loyalty to the organisationRecognition for innovation or new idea

Work extra hours when requiredFeedback on performance

Develop new skills and update old onesInteresting tasks

Be flexible, for example by taking on a colleagues workAn attractive benefits package

Be courteous to clients and colleaguesRespectful treatment

Be honestReasonable job security

Come up with new ideasA pleasant and safe working environment

Many employers recognise employee concerns about security and indicate that compulsory redundancy will be used only as a last resort. However employers know they are unable to offer absolute security and employees do not necessarily expect it.Indeed many younger people are not interested in the concept of a job for life, being more likely to movebetween jobs and change careers.The state of the psychological contract Research suggests that while organisations have been de-layering and reducing the number of middle management posts many continue to offer careers and that most employees have adjusted their career expectations of individual employers downwards. Many will be satisfied if they believe that their employer is handling issues about promotion fairly. They may also benefit from the opportunity to negotiate alternative career options.The recession has had an increasingly negative impact on employee attitudes, including in relation to job satisfaction and security. This suggests that managersface a serious challenge to restore and maintain employees commitment in both private and public sectors.Current statistics ontopics including job satisfaction, trust and fairness can be found in our quarterly Employee outlook surveys. Go to our latest Employee outlookApositive psychological contract typicallysupports a high level of employee engagement. However the concept of engagement goes beyond employees attitudes and underlines the need for managers to draw out employees' discretionary behaviour. Go to our factsheet on Employee engagementThe importantance ofcommunication

CIPD research into employee 'voice'demonstrates the importance of communication and specifically of dialogue in which managers are prepared to listen to employees' opinions. See our factsheet on employee voice and employee communicationfor more information. Go to our factsheet on Employee voice Go to our factsheet on Employee communicationManagers need to manage expectations, for example through systems of performance management which provide for regular employee appraisals. HR practices also communicate important messages about what the organisation seeks to offer its employers. But employee commitment and 'buy-in' come primarily not from telling but from listening.

Employee attitude surveys can also be an effective tool for exploring how employees think and feel on a range of issues affecting the workplace. In times of rapid change managers and employees frequently hold contrasting opinions about what is going on. Two-way communication,formal and informal, is essential as a form of reality check and a basis for building mutual trust. Our research report Where has all the trust gone? re-examines the issue of trust, exploring why it matters and what can be done to repair it. Visit the research reportStrategic implications of the psychological contract The psychological contract may have implications for organisational strategy in a number of areas, for example: Process fairness: people want to know that their interests will be taken into account when important decisions are made; they would like to be treated with respect; they are more likely to be satisfied with their job if they are consulted about change. Communications: an effective two-way dialogue between employer and employees is a necessary means of giving expression to employee 'voice'. Management style: in many organisations managers can no longer control the business 'top down' - they have to adopt a more 'bottom up' style. Crucial information, which management need, is known by employees from their interactions with customers and suppliers. Managing expectations:employers need to make clear to new recruits what they can expect from the job. Managing expectations, particularly when bad news is anticipated, will increase the chances of establishing a realistic psychological contract. Measuring employee attitudes: employers should monitor employee attitudes on a regular basis as a means of identifying where action may be needed in order toimprove performance.Breach of the psychological contract can seriously damage the employment relationship. It is not always possible to avoid a breach but damage is less likely if managers are open with employees about the issues that need to be addressed.CIPD viewpointPublic interest in the psychological contract has been stimulated by fears about job insecurity. Employers shouldensure that trust remains: this means clarifying what is on offer, meeting commitments, or if necessary explaining what has gone wrong, and monitoring employee attitudes on a regular basis. Employee engagement strategies can provide a useful framework for this purpose.

The psychological contract does not supply a detailed model of employee relations but it offers important clues about how to maintain employee commitment. With the decline in collective bargaining, attention is more clearly focused on relations between the organisation and the individual employee. The psychological contract reinforces the need for managers to become more effective in communication and consultation, which will help in adjusting expectations and if necessary renegotiating the deal.

The psychological contract provides a convincing rationale for 'soft HRM' or behaving as a good employer. It offers a perspective based on insights from psychology and organisational behaviour rather than economics. It emphasises that employment is a relationship in which the mutual obligations of employer and employees may be imprecise but have nevertheless to be respected. The price of failing to fulfil or manage expectations may be serious damage to the relationship and to the organisation.