gm 591 final course project

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Can Job Engagement Remedy High Turnover In A

Company?

Solutions to Make You An Employer of Choice

Megan Wright

Keller Graduate School of Management

GM 591: Leadership and Organizational Behavior

Dr. Arnold Witchel

April 15, 2012

Can Job Engagement Remedy Turnover in A Company?A Review of the Literature

The organization that will be the topic of discussion in my final project is LP

APAC. Established in 1946, LP is one of the largest independent accounting and

business consulting firms in the region, with over 160 personnel employed.

As a full-service accounting and business consulting firm, LP continually

expands its core services to meet its clients’ changing needs. Their services include

accounting, audit and assurance, human resources consulting, estate and financial

planning, outsourced controllership, strategic planning, risk advisory consulting, tax

planning/compliance and profitability enhancement.

LP is recognized as a regional firm with national capabilities and also, it has

been voted “Best Places to Work “by its employees.

In December 2010, the company purchased a Houston based accounting firm

and the merger came complete with more than thirty staff members. Although

mergers have their pros they also have their cons such as dissatisfaction among

current staff as positions will be limited and management has to make decisions as

to which staff will hold what positions after the transaction is complete.

I joined LP in February 2011 and I was hired to be a Human Resources liaison

and Payroll Clerk in the Human Resources division of the company. When I came on

board we had roughly 220 employees, employee morale was really high, and it

Can Job Engagement Remedy Turnover? 2

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seemed that all employees were happy and the company was on its way. Since

February 2011 we have experienced high employee turnover and have lost 41

employees and of those 14 left for better employment opportunities in the

accounting industry.

Since the merger took place employee morale seems to have taken a major

turn and the once happy employees aren’t displaying the positive attitude anymore.

LP has many qualified hardworking professionals but these days it’s hard to

retain these employees. Employees with many years service and who have been

loyal to the company for years are making a decision to leave. Employee exit

interviews state every reason from trust to better job opportunities. Personally, I

feel LP is a wonderful company to work for and they do reward their employees

when it comes to performance reviews but I’m afraid it’s going to take more.

Preliminary Problem Statement

LP currently has a major problem of low retention and high turnover. The

employees are not feeling as if they are an asset to the company; instead they are

having trust issues. With the help of the human resources department and

directors we can turn this negative into a positive. First I think we can promote

internally and then think about filling lower level positions externally if needed.

Ultimately employee engagement is an issue and employee turnover is a problem.

Getting to the essence of the matter will increase productivity, morale, absenteeism

and also improve retention. If this problem is not addressed I’m afraid we are going

to continue to lose employees and the workload will only be greater as new

business continues to come through the doors.

I would like the topic of my research to be how to improve retention rates

that will have an impact on higher productivity and lower turnover. The TCO I will

address is given knowledge of group dynamics and decision making, apply

this knowledge to a case analysis to diagnose an organizational problem

and recommend solutions.

This literature review will consider whether job engagement is a promising

approach for solving high turnover in a company by responding to the following

questions:

1. What is employee engagement?

2. What are disengaged employees?

3. What can be done to make a company “an employer of choice”?

Possible Solutions

I would like to see my company attempt these possible approaches:

Create good working relationships between employees and

managers-Bad bosses are the number one reason some employees resign.

Good communication and providing encouragement for a job well done.

Good bosses acknowledge the work of others and genuinely care about their

employees

Providing career development-Better career development and greater

challenges

Flexible Work Environment- Employees want to decide when/where they

work in order to balance both their personal/professional lives.


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If today’s managers take ten minutes to talk with employees, tell them they are

doing good jobs, and explore their career interests; organizations will be closer to

securing future performance rather than pursuing new employees (Gordon & Lowe,

2002, p).

Analysis of Employee Engagement

What is employee engagement? Employee engagement is personified by the

passion and energy employees have to give of their best to the organization to

serve the customer. It is all about the willingness and ability of employees to give

sustained discretionary effort to help their organization succeed. (Cook, 2008, p. 3)

An employee should be totally committed to the organization believing in what it

stands for and being prepared to go above and beyond what is expected of them to

deliver outstanding service to the customer. When employees feel unappreciated

and disengaged this is when senior management along with human resources

should come in and develop an employee engagement strategy. Allow the

employees the chance to feed their views and opinions upwards are the most

important driver of engagement for an organization. (Cook, 2008, p. 211) A great

idea would be to do Upward Evaluations (in the form of performance evaluations)

and allow all staff to evaluate any employee on the manager, senior manager, or

vice president level. This gives the employee the opportunity to voice their opinions

on what they see needs to be changed in the company and even to sing the

company praises.

The number one complaint at my firm is being thrown into the job with no

formal training or no career shadowing. According to one survey 89 percent of

Figure 1-1. Why people leave: what managers believe vs. the reality.

Source: Saratoga Institute research, 2003.

89% of managers believe employees leave for more money. 11% of managers

believe employees leave for other reasons. 12% of employees leave for more

money. 88% of employees leave for reasons other than money.

managers said that they believe that employees leave and stay mostly for the

money. (Branham, 2005, p. 3) However employees leave

other reasons not geared toward money but to the work environment, the job, or

the manager. (Figure 1-1)

Disengaged EmployeesDisengaged employees aren't necessarily bad employees, but they just do

what's necessary to get their jobs done. They typically don't take part in offering

suggestions for improving the workplace. Disengaged workers employees are

destructive to morale and revenues for those are the employees who disrupt,

complain, have accidents, steal from the company, and occupy the time and

attention of managers that would be better spent dealing with other workers.

(Branham, 2005, p.4) It’s important for companies to remember that some turnover

for their respective companies is good turnover. It’s a very unwise idea to struggle

to reengage an actively disengaged worker. It’s more courageous to terminate

employment and cut your losses. The main cause for voluntary employee turnover

and disengagement in any company is an economic one. You’ll see higher profits,

better safety records, more success in lowering turnover, and much higher

customer ratings. Turnover is a serious problem for small or medium size

companies as certain employees carry broad responsibilities and have strong

personal relationships with key customers. This can sometimes mean losing big

clients because they want to follow that employee that left to their other employer.

Financial News, March 2001, as cited by Accord Management Systems (2004),

reveals that disengaged employees are more likely to cost their organization.

According to the report, Employees who are disengaged:

Miss an average of 3.5 more days per year


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Are less productive

Cost the economy $292 to $355 billion per year

Engaged Employees

Employee Engagement is first and foremost a management philosophy based

on the idea of including the right people in the right decisions at the right time in

the right way. (Smythe, 2007, p.5) At work it is not just up to the boss or supervisor

to engage their people in the decision making process. An employee needs to take

risks by participating and using their own creativity and ideas. It’s a two-way street

where both parties take risks to cross the boundary lines, but it’s the manager that

sets the stage to make it safe for workers to risk taking the initiative or contributing

their ideas.

Managers must do five things to create a highly engaged workforce. (Markos,

Sridevi, 2010, p.91) They are:

Align efforts with strategy

Empower

Promote and encourage teamwork and collaboration

Help employees grow and develop

Provide support and recognition where appropriate

The most engaged workers are: self-employed, bosses, artisans working their

own agenda, people in self-directed teams, employees with bosses who know when

to push and when to let people get on with it, taxi drivers, train engineers, and

pilots (Smythe, 2007, p.24)

Today what people want from work is the space to think things through for

themselves and add a little bit of their own creativity and their own insight to their

daily work, to the new brand, the customer experience, and to the continuous

change and major transformation processes (Smythe, 2007, p.14)

Job related burnout rose from 39 percent in 1993 to 53 percent in 1998. In 1998

absenteeism rates, an early warning sign of turnover hit a seven-year high, up a

whopping 25 percent from 1997. The reason cited: burnout and work-family

conflicts have increased the # of unscheduled absences. (Branham, 2000, p. 24)

The Employer of Choice

Now the question many employers are asking at this point is what it will take

to become an “employer of choice”. The first thing I think of when this comes to

mind is let’s research other companies in my industry and see what they are

offering or what they are doing differently. The correct answer would not be to

follow the blueprint of another company. The strategies of one company may or

may not fit the culture of your company.

What makes a company attractive is asking new applicants what they desire,

having a committee to track new hires through their first few weeks of work, fixing

small instances before they become big problems and last allowing managers to

figure out the best way to motivate their workers. As children learn differently

employees do as well. A teacher must address all three learning styles: tactile

(touch)/kinesthetic (movement), visual (seeing), and auditory (hearing) during a

lesson. A manager must be able to have different approaches to motivating their

employees. Motivation is the key to the employee’s happiness; being generous with

praise every chance you get counts.

“Are people a company’s most important asset?” There are companies that

treat their employees like family and with respect, with an attitude and philosophy

of nurturing and caring.


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Mort Meyerson, chairman and CEO of Dallas based Perot Systems; he wrote an

article for Fast Company magazine, “Everything I thought I knew about leadership is

wrong,” he confessed that he spent years at EDS bullying his people into eighty

hour workweeks, emphasizing profit-and-loss “to the exclusion of other values” and

creating a culture of “destructive contention”. (Branham, 2000, p.24) Some

companies see their employees as factors of production which entails costs:

salaries, benefits, and overhead instead of investments. Many companies become

successful industry leaders by investing time and also money into their people.

Employees ultimately want employability to grow, opportunities to participate in

decision which affect them or to which they add value, and last ethics and values

they can identify with.

What employers can do is invest in team building and interpersonal skill training

classes to help workers get along with each other. Offering a small monetary bonus

($15) for when teams receive compliments from clients (either verbally or written).

Another good idea if monetary bonuses are too cumbersome is to give a Starbucks

gift card, gas gift card, or even a half day off on the company certificate.

In my office every employee could use an ergonomic chair as all of our work is

conducted at the desk and more flex time and the option to telecommute might

make believers out of our staff.

Organizational Commitment

Organizational commitment is most commonly defined in terms of an individual’s

identification with the organization’s goals and values, willingness to exert effort for

the organization and desire to continue as part of the organization. (Roberts and

Davenport, 2002, p.21) Job engagement is closely related to organizational

commitment but they have important differences.

Those who are high in organizational commitment say that:

They would recommend the company to a close friend as a good place to

work;

They are proud to work for the company; and

They think the company is doing what it takes to be a leader in the industry.

In fact, in many organizations, job engagement and organizational commitment are

closely related often enough that it makes sense to talk about a more general

outcome-------organizational engagement------that combines key elements of job

engagement and organizational commitment. (Roberts and Davenport, 2002, p.22)

A company can also increase employee loyalty and decrease turnover through clear

and frequent communication. When a company’s employees know what is going

on, they feel more included and trusted.

Offering continuous training (CPEs) and tuition reimbursement is a big plus for any

company. Providing training is very important as it is an investment in employees,

which they see as money in the bank. When you invest in your workers, they are

more apt to invest in your company.

Loyalty to your company mission doesn't come easily. You must build it one

employee at a time. And building loyalty is much like building trust: It's easy to tear

down; the challenge is to build it up and keep it maintained. Determine your

company's higher purpose. Don't think of crunching numbers and completing audit

engagements; instead think of providing accuracy, reliability and peace of mind to

the clients. Once you understand your company's higher purpose, share it with


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employees and applicants. Post company values in your employee manual, vacancy

notices, brochures, and on intranet and Web sites.

Research/Results

As workload increases employee morale tends to go down. As employee morale

goes down, employee turnover goes up. The snowball effect (reinforcing loop) has

started rolling. Please see loop R1 (see Figure below). Anger, fear and anxiety

levels rise (Am I next?). This further reduces morale and leads to additional

turnover and increased workload for remaining employees (loops R2 and R3).

People voluntarily leaving the workforce the organization to start replacing

employees. Time and energy needs to be put into the hiring process and the

training of new employees. You ask why? Because the new employees did not

come in ready to work and will not be as productive as the employees that left. This

in turns gives more work to employees as the managers push their work to other

employees. Increasing workload and adding more momentum to the “snowball”

which may now resemble an avalanche (loop R4). As word gets around many

recruiters find organizations where this is happening and target the employees and

entice them to leave.

You can’t just ask employees to do more with less and expect morale to stay high.

The first key is to have a structured approach to improvement that will lead to

higher levels of performance. A second key that will help the organization is to

create a shared vision so people understand an organization’s direction and role in

the journey. (Gibbons, 2000, p. 22)

Summary and Conclusions

This final project began with an overview of some of the debates about the

nature and

effectiveness of employee engagement. It put forward the proposal that

there is a


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great deal of pessimism about the impact of job engagement because of the

varying degrees of success in implementing engagement initiatives in the

workplace. Some critics have raised questions about whether employee

engagement or employee loyalty is a matter for serious thought. Moreover,

some critics have argued that employee engagement initiatives do work and

it does in fact reduce turnover. Using data from several different sources,

this paper offered a thorough examination of the relationship between the

presence of employee engagement and organizational commitment in

business organizations and assessments the increase of employee

performance, employees being more productive, and willing to initiate

change.

These results from my findings suggest that even after taking other factors

into consideration, job engagement is associated with such positive

outcomes as enhanced business performance and greater customer service.

Such results go a long way toward dispelling the notion that job engagement

does not matter.

My findings in my paper shows that implementation of job engagement can

lead to very positive outcomes.

They may increase productivity because they bring diverse people together

who differ in

the talents that they bring to the workplace. Job engagement does enable

such employees

to work more effectively and productively. Training programs may also lead

employees to appreciate the efforts of their co-workers who make different

kinds of

contributions to the organization. Such efforts may also help employees

better

understand how and why various contributions to an organizational effort

such as employee engagement initiatives are to be rewarded and, therefore,

to have a better sense of how a more positive work environment in the

company will work and why they are very much needed and it will be a

positive for both the employees and the organization. Future research will

need to examine the dynamics that lead employee engagement programs to

generate such positive outcomes as enhanced employee performance and

greater customer service. New research will also need to explore other

outcomes that grow out of employee engagement initiatives.


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References

Branham, Leigh F. (2005). 7 Hidden Reasons Employees Leave: How to Recognize

the Subtle Signs and Act Before It’s Too Late

Branham, Leigh F. (2000). Keeping the People Who Keep You in the Business:

Twenty Four Ways to Hang on To Your Most Valuable Talent

Cook, Sarah (2008). Essential Guide to Employee Engagement: Better Business

Performance Through Staff Satisfaction

Gibbons, Steve. (2000, March/April). Down To A System: Keeping Employee Morale

and Retention High. The Journal for Quality and Participation, 23, 2, 20-22

Markos, Solomon and Sridevi, M. Sandhya (2010, December). Employee

Engagement: The Key To Improving Performance. International Journal of Business

and Management, 5, 12, 89-96

Roberts, Darryl and Davenport, Thomas O. (2002). Job Engagement: Why It Is

Important And How To Improve It. Employee Relations Today, 21-29

Sheridan, John E. (1992, December). Organizational Culture and Employee

Retention. Academy of Management Journal, 5, 1036-1056

Smythe, John (2007). CEO: Chief Engagement Officer: Turning Hierarchy Upside

Down to Drive Performance


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