enabling, engaging, and rewarding employees

Enabling, Engaging, and Rewarding Employees

Performance Development International, LLC.1038 W. Loyola Avenue #1

Chicago, IL 60626-5206312.915.6597 www.pdii.net

for

Dow Scott, Ph.D.Professor of Human ResourcesLoyola University Chicago

Performance Development International, LLC.

Why or why not?

How engaged are your employees?

Very engaged

Engaged

Neither engaged nor disengaged

Disengaged

Very Disengaged

If so, why? In not, why not?

What does it mean for employees to be engaged?


“Employee engagement”

The commitment employees feel toward their organization and work team.

Employees’ discretionary effort…their willingness to go the extra mile for the organization


Engagement is important

Increasing importance of engagement is a function of:

Knowledge-based economy

Focus on lean operations and ROI

Fast-changing environments

Employee emphasis on personal fulfillment


Work environments must transform motivation into productivity

Str

ateg

ic in

tent

Bus

ines

s re

sults

Enablement

Engagement

Employee effectiveness


The business case for engaging and enabling employees

Increase in employees above

performance expectations

Reduction in turnover rates

Customer satisfaction rates

Revenue growth

Employee retention

Employee performance

Customer satisfaction

Financial success

10% -40% 71% x2.5High engagement only

50% -54% 89% x4.5High

engagement & high enablement


Value of engagement

I believe our efforts to engage employees have:% Strongly agree / agree

72

72

67

69

82

84

85

94

83

94

0 20 40 60 80 100

Most Admired Peer Group

Reduced turnover

Created a competitive advantage

Reduced complaints about pay fairness and equity

Strengthened customer relationships

Reduced employee performance problems


“MAC” engage employees

% Favorable

Most Admired Peer Group

Our company has a specific definition of employee engagement

Our company has developed an explicit employer brand

Line managers own engagement initiatives

HR staff across our company have a good understanding of what

employee engagement is


W@W on rewards and engagement


Research Methodology


Research objectives Identify reward practices impacting

employee engagement

Identify what works and what can be improved in the reward space in engaging employees

Identify reward and engagement attributes and activities that enhance organization performance


Survey overviewOver 650 WorldatWork members participated

Methods of analysis:

• Descriptive analysis (e.g., means and frequencies)

• Content analysis, factor analysis, and reliability analysis to create meaningful variables

• Correlation analysis to identify relationships


Research Findings


ROI on engagement efforts

Efforts to engage employees through reward programs have:

Increased organization innovation

Created a competitive advantage

Resulted in better relationships with

customers

Increased organization’s financial performance

35%

40%

40%

38%

46%

44%

49%

39%

18%

16%

11%

23%

0% 20% 40% 60% 80% 100%

% Agree % Neither % Disagree


ROI on engagement efforts

Efforts to engage employees through reward programs have:

Reduced employee performance problems

Reduced complaints on pay fairness

Reduced turnover

Reduced absenteeism

46%

53%

26%

23%

39%

36%

41%

32%

49%

54%

39%

40%

14%

15%

25%

23%

22%

24%

0% 20% 40% 60% 80% 100%


Created a more positive work culture

Resulted in better collaboration and relationships


Retention as a key priority

I am very confident in my organization’s ability to retain key talent as the

economic outlook improves

53% 22% 24%

0% 20% 40% 60% 80% 100%



Defining engagement and ensuring accountability

Employee engagement performance metrics are built

into variable pay programs

Our organization has a specific definition of

‘employee engagement’

Employee engagement is explicitly included in our

organization strategy

44%

53%

60%

17%

16%

15%

39%

31%

25%

0% 20% 40% 60% 80% 100%



Measurement and monitoring

Most organizations conduct surveys every one to two years (59 percent); Only 20 percent indicate that they do not use surveys

Most view surveys as effective in generating action and change (60%)

Conducting surveys was related to perceived effectiveness in fostering engagement (r = .22), but taking action is more important (r = .54)


Reward professionals believe:

Intangible rewards and leadership have more impact on engagement than base-pay, benefits, and incentives

Short term incentives are the tangible rewards that have the most impact on engagement

Quality of work, work environment, career development, and senior leadership are the intangible rewards that have the most impact


Impact of rewards on engagement

Short-term or bonus programs

Base salary level

Base salary increase

Benefits and perquisites programs

32%

32%

54%

48%

42%

41%

50%

44%

30%

37%

39%

44%

18%

24%

16%

14%

20%

15%

0% 20% 40% 60% 80% 100%

% High % Neither % Low

Long-term or bonus programs

Financial recognition programs


Impact of intangible rewards on engagement

Career development opportunities

Work environment or organizational climate

Work-life balance

The nature of the job or quality of the work

37%

55%

59%

61%

69%

47%

31%

29%

28%

26%

16%

14%

11%

10%

5%

0% 20% 40% 60% 80% 100%


Non-financial recognition


Impact of leadership on engagement

Organizational objectives

Manager’s assessment of employee performance

Coaching from managers or supervisors

Quality of senior leadership 49%

53%

55%

65%

37%

34%

36%

25%

14%

13%

9%

9%

0% 20% 40% 60% 80% 100%



3%

4%

4%

18%

17%

16%

39%

42%

40%

40%

37%

40%

0% 20% 40% 60% 80% 100%

% Always % Often % Seldom % Never

Employee involvement in reward programs

Design

Implementation

Evaluation


6%

12%

8%

27%

31%

29%

37%

35%

40%

39%

22%

23%

0% 20% 40% 60% 80% 100%

% Always % Often % Seldom % Never

Manager involvement in reward programs

Design

Implementation

Evaluation


Involvement in reward design on engagement

Conventional thinking and research suggests that participation in program design builds ownership and commitment.

This study found reward program involvement is linked to more positive views of effectiveness of reward strategies in engaging employees (r ≥ .35)

We found very low levels of employee and manager involvement in reward program design, implementation, and evaluation.


Why or why not?

Why is employee and management involvement in reward decisions so low?

What role does your reward function play in employee engagement in your organization?

What should the reward function do to enhance employee engagement?

Some more questions


Recommendations


Engagement and Rewards

• Base-Pay

• Benefits

• Incentives (i.e., financial and non-financial)

• Development and career advancement opportunities

• Work environment


High performance work environment requires

Performance Development International, Inc.

Employee have:

• Opportunity to participate

• Information to participate intelligently

• Good reason to participate

“The average worker knows his job better than anyone else.” –

Joe Scanlon


Our top ten list

Organizational Priorities1. Make a business case for

engaging employees

2. Measure and monitor engagement

3. Take action on survey results

4. Make everyone responsible for engagement

5. Connect people with the future

Reward Priorities6. Go beyond comp & benefits to a

total rewards mindset

7. Include employees & managers in reward design and launch

8. Tailor total rewards to workforce segmentation

9. Use engagement metrics in performance criteria

10.Communicate the value of what you have


1. Make a business case for engaging employees

Identify connections between engagement and business outcomes

• Use internal business & engagement measures if you have them

• Otherwise, begin a dialogue with your leaders around external norms and internal opportunity

Involve managers in initiatives to promote employee engagement


2. Measure and monitor engagement

Employee opinion surveys are important tools for monitoring and managing employee engagement

Surveys are two-way communication tools

• What is measured sends important signals to employees about values and priorities.

• Sharing results and a plan for action demonstrates respect for employee input


3. Take action on survey results

The best companies make more frequent use of surveys than their peers and they use the input more effectively

• They indicate employee surveys are more effective in generating action and change

• They report doing more to link employee survey results to performance outcomes, such as customer satisfaction

• They say their best managers are more likely to take action


4. Make everyone responsible for employee engagement

Senior Leaders

• Share engagement index scores across functions

• Communicate expectations about engagement to management team

• Model engaging leadership behaviors

• Hold engagement conversations with top talent

• Incorporate engagement into performance evaluations

People Managers

• Understand and align with functional leaders’ expectations

• Examine personal engagement

• Build skill in management behaviors that impact employee engagement

• Hold engagement conversations with top talent

Human Resources

• Align employer branding to key engagement drivers

• Measure engagement levels and consult on key actions

• Coach and support people managers in engaging their teams

Employees

• Discuss individual engagement factors with manager

• Participate in the employee survey and other feedback opportunities

• Provide feedback to managers about the effectiveness of engagement efforts


5. Connect people with the future

To maintain high levels of engagement requires connecting people with jobs and organizations and helping them to see a positive future for themselves and their organizations.

Focus areas should include:

• Confidence in leadership

• Clear and promising direction

• Development opportunities

• Strategic rewards


6. Go beyond compensation and benefits to a total reward mindset

Help leaders and managers understand that rewards go far beyond compensation and benefits

Build the core organization messages (employment value proposition) around what is meant by total rewards

Develop tools for managers so they can effectively reward employees beyond the confines of compensation and benefits

Develop and reinforce communications around total rewards


7. Include employees and managers in reward design and launch

Benefits Long term incentives

Intangible reward

Annual variable

Guaranteed cash

“We do employee surveys every two years and make action plans based upon the survey results. One key finding is that we need

to do a better job at communicating the total value of

reward to our employees.”

Heineken

“The real power is when you actually start talking with your employees. We design

our reward programs, invest in new programs, and beef up current programs

based upon the feedback we receive from our employees.”

McDonalds


8. Tailor total rewards to workforce segmentation

Identify the most meaningful and valued ‘rewards’ in the organization: Do reward values vary across the organization and work units?

Recognize that different employees value different rewards: What do your boomers, generation X and Ys value?

Build the manager’s reward tool kit based on how can they use

» career development

» organization and job design

» non-financial recognition programs

» organizational work climate

… to reward employees?


9. Use engagement metrics in performance criteria

The Most Admired Companies have more balance performance scorecards

• Balances timeframes, measurement level and measurement types

• MACs using human capital measures are double their peer groups

Recognition that financial performance is driven by engagement

Establish baseline measures so you can monitor trends Financial

Non-financial

Corporate

Individual

Short term

Long term

Financial

Non-financial

Corporate

Individual

Short term

Long termNon-financialNon-financial

FinancialFinancialCorporateCorporate

IndividualIndividual

Short term Short term

Long termLong term

CustomerHuman Capital OperationalSocial

Responsibility


10. Communicate the value of what you offer

‘Best’ practices and sophisticated designs fail if they are not properly rolled out.

Clarify and focus on a few direct messages and tools

Use total reward statements

Help line managers understand and use their tool kit to communicate reward value


Employee are engaged because . . .

Performance Development International, Inc.

They believe the organization is doing something important and they are making a meaningful contribution

They believe they are doing something important and will be recognized for the contribution

Management believes that employees are assets to be developed and not a cost to be reduced

Management treats employees fairly for the contribution they make.


Questions - Comments


Dow Scott, Ph.D. is a Professor of Human Resources in the School of Business Administration at Loyola University Chicago and President of Performance Development International, LLC, a human resource consulting firm.

Dr. Scott’s practical approaches to teaching, research, and consulting focus on helping business leaders create more productive and satisfying work environments. He has over 100 publications which includes his recent book Incentive Pay: Creating a Competitive Advantage.

He consults with diverse organizations on pay and other human resources issues including AT&T, Groendyke Transport, Landstar Systems, Sara Lee Corporation, HNI Risk, Marsh, Inc., Xaloy, Hay Group, and USG. He often is called upon by organizations to evaluate compensation programs and other human resources programs.

Dow Scott, Ph.D.

312.915.6597 or [email protected]

enabling, engaging, and rewarding employees

Documents

engagement effortsefforts

engagement attributes

high engagement only50

employee engagementidentify

reward programs

reliability analysis

descriptive analysis

frequenciescontent analysis