Literature Review On Defining Employee Engagement

The purpose of this review is to present the definitions of engagement found in the literature and list the drivers of engagement that have been identified by many authors. The Sunday Times “100 Best companies to Work For” survey’s eight engagement factors will also be explained in detail along with their link to engagement. Subsequently, authors’ views on the factors that turned out to be more sensitive for Addleshaw Goddard will be reported along with authors’ recommendations on how to leverage them in order to boost employee engagement.

Introduction

“In the midst of economic crisis and with its unavoidable negative effect on employee morale and motivation, it is important that organisations take steps to maintain, if not increase, employee engagement” [IDS report, April 2009, Vol. 892, pp2]

Most studies conducted around the topic shows its link to company performance and sustainability, as Bates et al. claimed that employee engagement predicts employee outcome, organisational success and financial performance [Bates, 2004; Baumruk, 2004; Harter et al, 2002; Richman, 2006].

Lockwood [2007], in her report pointed out that it is a key business driver for organisational success and that high levels of engagement in firms promote retention of talent, foster customer loyalty and improve organisational performance and stakeholder value. The importance of engagement is that it has an effect of what people do and how they behave in their jobs and what makes them act in ways that further both, the organisational objectives and their personal goals.

Defining Employee Engagement

Employee engagement is growing as a concept within the business world due to evidence and research that points out that an engaged workforce performs better and hence creates a strong ’employer brand’ [Leigh and Roper, 2009]. This promotes organisations as ‘good employers’ hence recruiting and retaining key talent becomes less problematic, as evident from the IDS report [2009], where they state, “…effective employer branding captures the essence of an organisation and sells it to the labour market and employees. A strong employer brand embraces an organisation’s vision, values and working culture.” [IDS Report, April 2009]

On the subject of engagement, the Chartered Institute of Personnel Development (CIPD) says that Employee Engagement, or ‘passion for work’, involves employees feeling positive about their job, as well as being prepared to go the extra mile [CIPD, 2010].

Macey et al. [2008] argues that engagement has been used to refer to a psychological state (e.g., involvement, commitment, attachment), performance (e.g., either effort or observable behaviour), character (e.g., positive affect), or a combination of the above. For example, Wellins and Concelman [2005] suggested that engagement is “an amalgamation of commitment, loyalty, productivity and ownership.” It is personified by the passion and energy employees have to give to the organisation. It is all about the willingness and ability of the employees to give constant discretionary effort to help their organisation succeed [Cook, 2008].

Furthermore, Towers Perrin Talent Report [2003] which is a study that tracks views and attitudes of employees to understand the elements of the work experience that drive attraction, retention and engagement has defined engagement as a factor that involves both emotional and rational factors relating to work and overall work experience, where the emotional factors are linked to people’s personal satisfaction and the sense of inspiration and affirmation they get from their work and from being part of their organisation. Engagement can be seen as a combination of commitment to the organisation and its values plus a willingness to help out and support colleagues (i.e. team work)

Improvements in engagement can be made in many areas and the key concepts are trust, listening, flexible working and the avoidance of the long hour culture.

However, this is not in itself a new concept, and highlighting this, Rankin [2008] refers to engagement as:

‘…embracing the older concepts of job satisfaction, motivation and attachment that describes individual employee’s attitudes to their employer, but goes beyond them to provide a complete model of the psychological relationship between individuals and organisations.’ Rankin [2008]

This suggests that employee engagement is inextricably linked to the ‘Psychological’, or unwritten contract which exists and concerns discretionary effort, having many positive effects. For example Leigh and Roper [2010] highlighted that psychological contract is a subjective behaviour where employers and employees have their own perception of what is expected of each other. Hence, it is obvious that engagement is something that employees have to offer and that it is impossible to require engagement as part of the employment contract. It is rather an emotional link to the organisation, its purpose and its people.

When an organisation delivers on its commitments (when by their actions they fulfil employees’ expectations), this reinforces employees’ sense of fairness and trust in the organisation and generates a positive psychological contract between employers and employee.

There are many reported examples of employers who have executed strategies to improve employee engagement through business transformation, which in turn improved employee morale, retention and ultimately business performance. Rankin [2008] suggests that management are more likely to embrace initiatives to drive employee engagement, rather than simple retention strategies, owing to the extra benefits of such strategies, such as improved business performance, profitability, focus on customer service and organisational efficiency, of which retention is a positive ‘by-product’.

What are the Key Levers of Employee Engagement?

Defining engagement is crucial but the real value is in determining what creates engagement. Therefore, where studies have been conducted on engagement, there has also be reports on the key enablers of engagement. There is a range of opinions on what the key drivers or enablers are, for example the findings of the UK Government’s MacLeod Review into employee engagement have underlined the critical role played by an engaged workforce [MacLeod and Clarke 2009] in both organisational success and individual well-being. As an example, ibid. [2009] suggested in their study that Leadership, Employee Voice, Engaging Managers and Integrity were strong levers in engaging workforce. In other words, without these factors, organisations would have disengaged staff which would lead to poor performance.

Furthermore, Lockwood [2007] also underlines that engagement is influenced by many factors, from workplace culture, organisational communication and managerial styles to trust and respect, leadership and company reputation. For today’s different generations, access to training and career opportunities, work-life balance and empowerment to make decisions have also become imperative.

According to Towers Perrin report [2003] the factors that drive engagement are a combination of Macleod et al. [2008] and Lockwood’s [2007] study such as, (a) Senior management’s interest in employees’ well-being (b) Challenging work, (c) Decision-making authority (d) Career-development opportunities (e) The company’s reputation as a good employer (f) Collaborative work environment and (g) Clear vision from senior management about future success, to name a few. [1] 

There is no definitive list of engagement ‘drivers’. However, CIPD’s [2010] research into employee attitudes found that the main drivers of employee engagement were communication and leadership, along with pay and benefits, learning and development, line management and work-life balance – as key factors of measuring employee attitudes which can determine how engaged a workforce is.

An alternative model of engagement comes from the ‘burnout’ literature, which describes job engagement as the positive contrast of burnout, underlining that burnout involves the erosion of engagement with one’s job [Maslach et al 2001]. According to Maslach et al, six areas of work-life lead to engagement: workload, control, rewards and recognition, community and social support, perceived fairness and values. They argue that job engagement is associated with a sustainable workload, feelings of choice and control, appropriate recognition and reward, a supportive work community, fairness and justice, and meaningful and valued work. Like burnout, engagement is expected to intercede the link between these six work-life factors and various work outcomes. May et al’s [2004] findings support Maslach et al’s [2001] notion of meaningful and valued work being associated with engagement, and therefore it is important to consider the concept of ‘meaning’.

The development of survey tools and questionnaires such as Gallup’s Q12 [2] and The Best Company Survey allow levels of ‘engagement’ within an organisation to be measured.

Most of the studies mentioned above have some common theme. Similarly, while Purcell et al [2003] found a number of factors to be strongly associated with high levels of employee engagement, the one thing all of these factors had in common was that they were connected with an employee’s involvement in a practice related to their work. The Best Companies Survey has also done their share of research linking it to some of the existing researches and categorised the measurements of engagement into eight factors as mentioned earlier in Chapter 1.

Critics of Employee Engagement

Even though Employee Engagement has become such a commonly used term within the organisational scene, as it is seen as a lever for business success [Wiley, 2010] some studies have shown that organisations fail to understand the true meaning of engagement as quoted by Macey et al.[2008] “numerous definitions of engagement can be derived from practice and research driven literatures but the literal meaning is still not clear among practitioners and academics” [Macey and Schneider, 2008: pp4]

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An example of this could be seen from the study Cunningham et al. [1996] did on Empowerment. After the 1990’s when empowerment was introduced in the business world, there was a hype about it for years where organisations wanted to ‘Empower their people’, without considering the true meaning of the word. While empowerment only represented ‘the most recent manifestation of employee involvement practice’ [Cunnigham et al., 1996: pp143]. Also argued by Wilkinson [1997] that the term ’empowerment’ when first introduced was ‘very loosely used’ [Wilkinson, 1998: p40]. Likewise, engagement is seen and known widely as beneficial for organisations yet engagement in the UK is said to be critically low as employers are said to be ‘barking up the wrong tree’, as Holmes [2010] reports on personnel today. Also as witnessed in Wiley’s [2010] report he found that UK engagement results lag behind compared to the global results.

This is mainly because of the lack of understanding the term as a whole. Hence the concept of employee engagement could be viewed as being faddish and might fade away in a few years when another concept is introduced in the business world.

Employee Involvement versus Employee Participation

According to CIPD [2010X]:

Employee involvement is ‘a range of processes designed to engage the support, understanding and optimum contribution of all employees in an organisation and their commitment to its objectives’. Whereas. Employee participation is defined as ‘a process of employee involvement designed to provide employees with the opportunity to influence and where appropriate, take part in decision making on matters which affect them’.

Farnham [1997] defines Employee Participation as one of four choices for managing the employment relationship. Cited in Rose [2008, p335] Farnham states:

‘…an employee has the right to question and influence organization decision making…. this may involve representative workplace democracy.’

The other policy choices Farnham identifies are worker subordination via managerial prerogative, union incorporation via collective bargaining and employee commitment via employee involvement.

It is clear then that there are differences between employee participation and employee involvement. The literature suggests that employee participation is a pluralist/collective approach with a range for employees from ‘no involvement’ to ‘full control’ [Blyton & Turnbull, 1998]. Hence, it may involve processes and mechanisms such as:

Collective bargaining Employee share schemes

Works councils Worker directors

Joint Consultative Committees European Works Councils

Whereas, Employee involvement, is more of an individualistic and unitarist approach which aims to harness commitment to organisational objectives.

Defining Leadership

Leadership is about the ability to influence people by personal attributes and behaviours [CIPD, 2010a]. Leaders need to act out and communicate organisational values otherwise this endangers trust in organisations leading to poor performance. Hence, the Best Company measures how people feel about the head of the organisation, the senior management team, and organisational values.

Rayner and Adam-Smith [2007] have pointed out that leaders are key players in devising and implementing organisational strategies. And high level of engagement depends in the way employees are led and managed, as quoted by Armstrong [2009]:

“…degree to which jobs encourage engagement and positive discretionary behaviour depends upon the ways in which job holders are led and managed on any formal process of job design.” [Armstrong, 2009:140]

There is considerable evidence from prior research that perceptions of managerial processes impact on engagement [Wildermuth and Pauken, 2008]. Evidence suggests that employees’ level of engagement and other work responses are affected by their perceptions of management or leadership style. For example, opportunities for upward feedback increase engagement through greater participation, which, in turn, relates to better understanding of broader organisational issues as well as personal involvement [Robinson et al 2004].

3.4.1 Role of leaders in engagement

In Macleod’s engagement report [2009] he stressed that leadership provides a strong strategic narrative which has widespread ownership and commitment from managers and employees at all levels.

However, it has been proven through Hays Group research findings [2010] that 56 per cent of leaders were disengaging the staff that they led; and only 26 per cent of the leaders achieved in creating an engaging environment that encouraged high performance. In order for employees to be engaged, it is crucial that leaders themselves be engaged; they need to work and succeed in both their core and non-core job roles [reference]

Management from the top to the bottom of the organisation should be ‘committed leaders’ and key role of the immediate line manager/supervisor is recognised as one of the most important channel to achieving effective employee engagement.

Leadership plays a vital role in influencing levels of employee engagement. Goal clarity and direction are identified as factors that can influence an employee’s level of engagement [Rayner and Adam-Smith, 2007]. Staff perform well when they are clear about their goals and objectives, and know how to go about achieving them, an example could be Latham and Locke’s Goal-Setting Theory [1979] where they suggest that by establishing goals individuals are motivated to take action to achieve those goals. As a result, employees tend to be motivated and committed to it. Hence, communication of clear goals and direction from the leader becomes crucial. Leaders also help employees develop personal accountability for their goals and help achieve them. Setting performance expectations and instilling personal responsibility among employees are critical for getting results. The biggest challenges which leaders face is how to effectively motivate, initiate change, and sustain improved performance among employees i.e. Employee engagement has emerged as a critical leadership challenge [Molinari and Weiss, 2005]. Leaders should provide challenging work with opportunities for career growth. Good leaders challenge employees but at the same time they should create confidence that the challenges can be met [Seijts and Crim, 2006].

3.4.2 Dealing with Professionals/Leaders – reluctance from leaders to learn

As mentioned above, leaders play a vital role in communicating the firm’s strategy, values and culture. Leadership style and support are also said to be crucial for encouraging employee engagement. Years of occupational health psychology research have revealed that a ”transformational leadership” style is effective for this task [Barling, 2007], where leaders lead to positive changes in those who follow. However, Leadership development proves to be a big challenge for HR professionals. HR professionals continue to wrestle with understanding the best ways to retain talent and develop leaders for future succession planning. Increasingly recognised as becoming strategic business partners within their organizations, HR professionals are expected to provide the essential frameworks, processes, tools, and points of view needed for the selection and development of future leaders. Across the globe leadership development has been identified as a critical strategic initiative in ensuring that the right employees are retained, that the culture of the organization supports performance from within to gain market position, and that managers are equipped to take on leadership roles of the future so that the organisation is feasible in the long term.

Even though they play such an important role in engagement and instilling HR policies, research has shown that senior managers can be a challenge and be reluctant to their responsibilities as HR mediators. As Pech [2009] quoted in his research that “what may be good for the organisation may not be perceived to be quite as good to the organisation’s senior managers.” Research in Europe emphasises the negative impact these defensive managerial behaviours have on organisations and performance in general. The Towers Perrin consulting group’s survey showed that 42 percent of employees felt that their senior managers don’t have a sincere interest in their well-being and another 37 per cent believed that their senior managers fail to lead by example in demonstrating company values [Towers Perrin Report, 2004].

My Manager

Engaged managers are at the heart of this organisational culture as Macleod [2009] said: “…they facilitate and empower rather than control or restrict their staff; they treat their staff with appreciation and respect and show commitment to developing, increasing and rewarding the capabilities of those they manage.”

Role of Managers in engagement

As Lowe [1992, cited in Blyton and Turnbull:148], highlighted that “a consistent theme of the HRM literature is about the responsibility given to line managers for the management of the human resource.” While Poole [1990] emphasises that HRM involves all managerial personnel especially general managers. All the studies on motivation and retention of talent identify the critical role of line managers and the quality of the relationship with the “boss” as a key factor. According to Gallup Management Journal study, line-managers play a critical role in employees’ well-being and engagement. Macleod [2010] also points out that having able managers is critical as ‘engaged managers lead to an engaged workforce’ [Macleod, 2010] as there is a positive impact on managers treating people as individuals. Managers are critical of the quality of management training they receive from their company.

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Senior management need to have a sincere interest in employee’s well being [Towers and Perrin, 2006] whereas line managers play the vital roles in terms of employee engagement as they are responsible for the most of the front line employees and the day-to-day activities [Cook, 2008]. Line managers are also responsible for bringing reward policies to life, organisational commitment and job satisfaction [Purcell, CIPD, 2007]. The line manager clearly has a very important role in fostering employees’ sense of involvement and value [Robinson et al. 2004]. Employee engagement is seen as a direct reflection of how employees feel about their relationship with the boss [Seijts and Crim, 2006].

One of the biggest challenges for HR is to support line managers in their role of managing and developing people. A majority of line managers seem to be failing in many or most of the basic elements of good management – including providing regular feedback or offering to help improve individuals’ employment [CIPD, 2010].

Importance of Internal Communication

“True Communication builds a bridge between two people or within a group via which real understanding and contact occur.” [Leary-Joyce 2004:pp53].

Internal communication is known as the most obvious method of generating and maintaining engaged employees. Punjaisri et al. [2008], in his research identified that employees mentioned training and internal communications as the major methods of internal branding. The authors also quoted: “…although training and internal communication can help employees to fulfil brand promise, the strength of their relationship with the brand is predominantly down to employee attitude.”

The discovered that brand identification, commitment and loyalty were all partial indicators between internal communication and employee brand performance. [ibid., 2008]

Whenever there has been research on engagement, communication has always been a big part of it. It has been long-established that communicating with employees effectively is important in making them feel valued – and this is particularly the case in the current economic climate when staff may feel more uncertain and require some additional reassurance [IDS, April 2009]. It is also said to be a mechnism for enabling every aspect of a great company culture [Leary-joyce, 2004]

What is Employee Voice?

The concept of employee voice focuses on opportunities for employees to be involved in decisions collectively, whether through trade unions or by other means. Gradually this process of two-way communication became known as ’employee voice’. It appeals both to those seeking greater business efficiency and to those looking for employee rights.

CIPD research 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.’

However, there are differences in interpretation. 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.

Mechanisms for 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 which 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 voice…the structures are management-initiated and operate directly between managers and employees rather than through employee representatives.’ Techniques include Electronic media, Two-way communications, Suggestion schemes, Attitude surveys, etc.

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.’ Partnership schemes, Joint consultation, Collective representation are known as a few techniques

All these mechanisms are formal. But informal mechanisms – in effect, simply having a word about a problem to a manager who listens and takes action if necessary – can be a very effective form of voice. Informal mechanisms may be relatively more important in smaller organisations where fewer formal structures are needed.

2.5.3.1 Two-way communications

IDS Report, [2009] has highlighted the fact that while it is important to keep employees well-informed, an organisation seeking to engage employees should also encourage upward communication. For example, carrying out surveys or holding discussion groups as a way of encouraging employees to provide feedback which would involve employees’ in a dialogue with the company. The very act of carrying out research on engagement within the organisation can be engaging – particularly where employees are directly involved in discussions. [IDS, Apr 2009]

Encouraging people to have their say and this emphasised as a core value of the organisation that management at all levels must be prepared to listen and respond to any contributions their people make. Employee involvement and participation are (EIP) are regarded by Marchington and Wilkinson [2008] as a key feature of high-commitment HRM.

Excellent leadership and management are built of effective communication and is a source of creativity and innovation.

2.5.4 Trust

Important determinants for achieving trust are demonstrations of managerial passion for the work and managerial concern for employee welfare, hiring the right employees in the first instance, and then providing them with a sense of control over their lives. Employees will ask for trust and a sense of control in order to be engaged in their work [Pech 2009] (See Figure 2).

Managerial passion for the work

Employee sense of trust and control

=

Employee Engagement

Managerial concern for employee welfare

Effective recruitment

Source: Pech, J. [2009]

Fig. 2 Determinants for establishing and sustaining employee engagement

Well-Being

In the Best company survey well-being is used to measure stress, pressure, the balance between work and home life and the impact of these factors on personal health and performance.

It has been reported that employee engagement is more likely to be sustainable when employee well-being is also high [Robertson and Cooper, 2009]. CIPD

Flexible working

“…perceived flexibility and supportive work-life policies were related to greater employee engagement and longer than expected retention.” [Richman, et al., 2008]

Guest[1987], in his model of flexibility, underlined that the three components of flexibility are: (a) related to the organisational design, (b) job design and (c) employee attitudes and motivations. [cited in Legge, 2005].

Flexible work practices have been viewed by employees as valuable workplace tools to facilitate work-life management. Employees report that workplace flexibility influences decisions to join an employer, satisfaction with their jobs, and plans to stay with their employers. Recently, some employers have come to recognise that workplace flexibility positively influences valued business outcomes such as attracting, motivating, and retaining key talent in competitive labour markets, increasing employee satisfaction and engagement, as well as improving efficiency and effectiveness. However, although several studies have examined the role of organizational characteristics and work experiences as antecedents of engagement and retention [Burud & Tumolo, 2004; Gibbons, 2006; Meyer, Stanley, Herscovitch, & Topolnytsky, 2002], few have investigated the influence of workplace flexibility in particular.

Work Life Balance

Employee-focused initiatives such as implementing work-life balance initiatives are important in order to connect with employees [Seijts and Crim, 2006].

Employers seek to promote work-life balance by introducing policies that fall within three broad categories: flexible working, including reduced and compressed hours; time off and special leave; and staff support, such as employee well-being programmes and childcare provision [IDS, April 2009].

The mere existence of work-life policies and is associated with positive outcomes for the individual and the organisation. Employees who worked for organisations that had family-friendly policies in place, had higher levels of commitment towards the organisation and lower intentions to leave [Richman et al. 2008]

Organisations are better able to portray an image of being a ‘caring employer’ if they show an obligation and importance to work-life balance. Work-life balance initiatives should seek to improve employees’ working lives together with their personal lives – to the mutual benefit of both employees and employers. Employees should have greater flexibility to pursue their interests outside work and to fulfil any caring responsibilities at home. In the workplace, they are likely to be more in control of their workload and, as a result, feel a greater sense of well-being. In turn, employers may benefit from greater employee engagement. [IDS, Apr 2009]

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Stress at work

Stress has been moving steadily up the workplace agenda in recent years. Any stress can reduce employee well-being and excessive or sustained work pressure can lead to stress [CIPD, 2010]. Hence, it is important to develop a culture that encourages positive attitudes to work, reducing stress and promoting interest and excitement in their jobs (role of top and line managers and leaders). Also communication, involvement, work-life balance are key feature of high-commitment HRM [Marchington and Wilkinson 2008].

Personal Growth

Learning is a satisfying and rewarding experience that makes a significant contribution to intrinsic motivation. Alderfer [1972] as cited in Armstrong [2008] emphasised the importance of giving employees the opportunity to grow and develop as it is said to be a motivating factor that directly impacts on engagement when it is an intrinsic element of the work [Armstrong, 2008]. IDS report points out that designing roles that are challenging and giving employees varied responsibilities can help make work more intrinsically engaging [IDS, 2009].

3.7.1 Career Progression

Providing clear and transparent career paths can be vital to engaging employees. Some companies have sought to achieve this by introducing job family structures to clarify both vertical and horizontal routes for progression. Succession planning and leadership development schemes can also help to engage and retain high-potential staff. Demonstrating that there are opportunities for progression and promotion lets employees know that if they work hard and add value they have the potential for a rewarding future at the company. Sainsbury’s has found statistical support for this concept. By ensuring that employees have a clear perception of their career progression has a high impact on employee engagement. Employers need to be sure that they can help employees to progress by offering appropriate training and coaching from line managers. Failing to do so could lead to disengagement. [IDS, Apr 2009].

2.7.2 Learning and Development

Supporting employees’ development by offering training is often identified as a key driver of engagement. If employees feel that they are being provided with the knowledge and skills necessary to progress, and that their potential is being valued and realised, they are more likely to exert discretionary effort [IDS, Apr 2009]. Learning culture encourages employees to commit to a range of positive discretionary behaviours, including learning [Reynolds 2004]. This culture includes: empowerment not supervision, self-managed learning not instruction and long-term focus. It will encourage discretionary learning. In order to encourage people to grow in their roles, HR policies should be designed that focus on role flexibility (people can develop their role), talent management for every employee and career development opportunities.

Fair Deal

Fair deal is not just based on the pay itself but employees’ perception on pay. Studies show that pay and conditions are important in attracting people to organisations, but consequently act as more of a ‘hygiene’ factor. In other words, if handled badly or if perceived as unfair, they will act as demotivators. As Herzberg [2003] pointed out:

“…the factors involved in producing job satisfaction (and motivation) are separate and distinct from the factors that lead to job dissatisfaction…these two feelings are not opposites of each other. The opposite of job satisfaction is not job dissatisfaction but rather, no job satisfaction; and similarly, the opposite of job dissatisfaction is not job satisfaction, but no job dissatisfaction.”

Fair reward structures and employee recognition are both essential in order to ensure staff are well motivated and satisfied with their employment. Rose [2001] outlines the distinction between reward and recognition as ‘rewards’ being linked to salary, increments, bonuses and promotions, whereas ‘recognition’ is non-financial in nature, but nonetheless just as important. According to Armstrong [2002] recognition is one of the most powerful motivators, because ‘people need to know not only how well they have achieved their objective or done their work, but also that their achievements are appreciated.’ [2002:364]

This link to the motivation theory of Hertzberg, where recognition can either be local and immediate, i.e. a thank you from a line manager or supervisor or formal and high profile, such as a recognised scheme, awards ceremony, etc. [Rose, 2001].

However, as mentioned above, employees’ perception of their salary package plays an important part in salary satisfaction. Research by Mercer [IRS, 2004] found that many employees did not appreciate the total value of their benefits package which can be up to fifty per cent of their salary. This suggests that communicating this to employees via a ‘total reward statement’ can have positive effects on employee satisfaction and in turn on retention [ibid.]. Armstrong [2008] points to external salary comparisons and the need for employees to perceive their package as being in line with market rates. He states that these external comparisons are the ones which most strongly influence employee satisfaction, but also that they are unlikely to move for salary alone unless the uplift is significant. Employees will determine whether they believe their salary increases are determined fairly, their package is in line with their ability, contribution and value, but importantly whether they are satisfied with other aspects of their employment such as career development opportunities and management relations [ibid.]

There is also a body of research regarding the suitability of benefits offered and whether they are perceived to be of value to employees. With changing lifestyles and demographics, ‘traditional’ fixed packages including pensions and medical insurance are seen as immaterial to employees. And in order to fight this, employers are offering ‘flexible benefits’ packages. These are ‘formalised systems allowing employees to vary their pay and benefits package to satisfy their personal requirements’ [Richards, 2008]. Although the set-up costs can be high for such schemes, advantages to employers can benefit from fixing their spend on benefits per employee, be viewed as more diverse and improve perception by employees of the total value of their reward package. Employee recognition also has a significant impact on engagement [IDS, Apr 2009]. Kahn [1990] reported that people vary in their engagement as a function of their perceptions of the benefits they receive from a role. Furthermore, a sense of return on investments can come from external rewards and recognition in addition to meaningful work. Therefore, one might expect that employees’ will be more likely to engage themselves at work to the extent that they perceive a greater amount of rewards and recognition for their role performances. Maslach et al. [2001] has highlighted that a lack of fairness can cause burnout while positive perception of fairness can improve engagement.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) and environmentally-friendly business practices have had a significant influence on employee engagement and business outcomes new research reveals [Woods, 2010]. According to Herman [2010], ‘Corporate responsibility activities increase the overall job satisfaction of employees…”. This is because the effective delivery of corporate social and environmental responsibility initiatives is dependent upon employee responsiveness [Collier and Esteban, 2007]. According to Armstrong [2008], CSR is exercised by organisations when they conduct their business in an ethical way taking into consideration of the social, environmental and economic impact of how they operate and going beyond compliance [ibid, 2008].

According to Gray et al. [1996], “CSR’ expresses more than simply the requirement that business should be conducted ethically – it refers to the notion of responsibility for the impact of corporate activity on the wider body of stakeholders, and it is this attribution of responsibility that underpins the willingness of society to legitimate business.”

However, some academics as De Pelsmacker et al. [2007] have disputed about how public relations can be used to enhance the image of brands as well as to strengthen marketing objectives. More concisely, Lewis [2003] has argued that CSR should be used to enhance the image of brands. Therefore, many CSR initiatives have attracted criticisms about being mere disguised publicity stunt. Yet Lantos [2001] and Luck [2006] have argued that if CSR is used properly, CSR can indeed be an important tool for employee engagement and enhance company growth.

Summary of Literature Review

To sum up, it can be seen that the most important elements or the key drivers of engagement are not only competitive salary packages but it is the ‘soft-dollars’ elements in the work environment, such as learning and career development opportunities, job design features that give employees more autonomy and control, a company’s reputation in the community and company leaders who are sincerely interested in employees’ well-being. [Towers Watson report, cited in Giancola, 2010]. Hence it is important to (a) define and benchmark the current situation within the Company and (b) Assess the reasons for dissatisfaction.

Once these issues have been identified, strategies to overcome them can be devised. No single method of engagement will be suitable for all businesses or divisions and a number of them have been discussed. As with the business strategy, these should be aligned with the organisation’s overall strategy and be relevant to the organisation and the divisions in question.

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