Leading HR delivering competitive advantage_6

CHAPTER 9 UnderstandingtheValueofEngagement: BuildingBeliefinPerformance SHASHI BALAINANDPAULSPARROW 9.1. Introduction:Whyisemployeeengagementseenasimportant byorganizations? hapter 1 argued that the complexities of business model change often involve a change in “mindset” or an employee’s “mental model” of exactly what the organization’s business model is. There is an essential process of communication and involvement of the workforce in which the human resource (HR) Director plays a leading role, attempting to create this mental mobility in the attitudes held by the workforce. This becomes especially true when, as argued in Chapter 4, there are likely to be relatively few people – especially at the outset of a change – who have really grasped the nature of the change and have made the “mental” shift to a new model. The challenge for chief executive officers (CEOs) and HR Directors in periods of rapid change is to ask whether they can take their people with them. The aim of this chapter is to help us understand – and test – the assumptions that HR engagement strategies are based on. Understanding thevalue ofengagement Headlineissue: Isengagement afuture-proof HRstrategy? Strategicimperative: Construct anddevelop muchbetterinsightintohowitinfluences organizational performance –reverse engineer theperformance recipes thatmanagers haveinmind. Investigatethe“performance recipes” intheorganization withtransformation, capability, andoperational directorates. Helplinemanagers understand thecomplex business performance benchmarks thattheyreport to,andhow theseperformance 162 Shashi Balain and Paul Sparrow 163 outcomes arebest engineered through people management. Helpemployees understand thebenefits ofengaging withthatparticular viewofperformance. Designengagement surveysusingtheanalogy ofamedical diagnosis, including the complaint, history,examination ofthecondition, ancillary testsifneeded, diagnosis, treatment,and prognosis withandwithout treatment inasingleexamination. Dealwiththeissueofemployee identification withtheorganization –why should employees livetheorganization’s values ifitdoes notlivetheirs? Research how customersatisfactionaffectstherelationship between employee experiences and financial performance, and howemployee satisfactionisassociatedwith specific components oftheservicemodel. Stepintothevoidthatcurrently existsintheprediction oforganizational performance ontheback ofstrategicchange management projects. Workside-by-side withcorporate communications, internal andexternal marketing, andoperations expertsandshare respective models andinsights intohowemployees trulyimpact operational andstrategic performance Must-winbattle: The HRDirector“reverseengineer” thetypeofperformance thattheorganization istrying tocreate, andtounderstand thedepthtowhich –andthewaysinwhich –theorganization needs tofosterlinksandbonds withitsemployees. In examining the issues raised by this challenge, we argue that The keymessages thatemerge fromthischapter 1) Engagement isusedinpractice insideorganizations inthreedifferent ways:as internal marketing, as process improvement, and asbeingpredictive ofcorporate performance. Each makesvery differentassumptions about what needs tobe measured under thelabel “engagement,” what theconsequence ofpositiveor negativescores onsuchmeasurement willbe,and whatremedial actionbythe organization needs tobemadedependent onthatmeasurement. 2) WorkfromHarvardintroduced theconcept oftheService-profit chain andBalanced Scorecard andproved influential forHRDirectors inassuming thatbusiness performance has direct andlessdirect causes andthesecanbeputinacause-effect order. Employee factorsactas important antecedents. 3) Psychologistsbegged todifferinsomeoftheconclusions thatmightget drawn. They hadbeen workingonthetopicofengagement formanyyears, under theguiseof specificemployee constructs,suchasemployee jobsatisfaction,commitment,or burnout andonlysawintermediate performance effects,not alinktoorganizational performance. 4) Practitionerapproaches, ratherthanbeing drivenbytheory, havebeen more empirical.Itemsinthequestionnaire areameasure ofattitudinaloutcomes 164 Understanding the Value of Engagement The keymessages thatemerge fromthischapter: (Continued) (principally satisfaction,loyalty,pride,customer serviceintent,andintent tostaywith thecompany). Itlumps itemsthataresignificantly related toperformance together to formthecoreofwhat isthencalled engagement. 5) Engagement isbrought downto:belief intheorganization, adesire toworktomake thingsbetter, understanding ofbusiness context andthe“biggerpicture,” being respectfulof,andhelpfulto,colleagues, awillingness to“gotheextramile,”and keeping up-to-date withdevelopments inthefield.HRpractitioners makedifferent assumptions astohowthistypeofengagement isbestcreated. 6) There isariskthatorganizations are“asking”toomuch when theyexpect significant proportions oftheirpeople tobeso“engaged.” What isbeingmeasured atthemoment mayleadtomisdirected effort. 7) Psychological approaches eitherviewengagement asanattitude(havingthethree components ofcognition, affect,andbehavior) andistherefore similartotheconcept ofjobsatisfaction,orismoreakintomotivation(i.e.,isaheightened stateof goal-directed behavior as invigor). 8) Theideathatemployees areeitherengaged ornot,andthatonce engaged, theimpact onperformanceislinear(abitmoreengagementequalsjustthatbitmoreperformance) isofcourse absurd (yetmuch ofthepractitioner literaturepresents thispicture). 9) Manydefinitions confusethecondition ofengagement withtheoutcome thatitis supposed tocreate.Some ofthesedesired outcomes canbeseentoexistatthe individual oremployee level,whilstothers really exist(andarebestmanaged) ata group orcollective level. 10) Empirical evidence suggests thattheservice-profit chainisgenerally supported atthe businessunitlevel.Buttherehavebeenfewtestsofthewholechain,andthosecarried outprovide amore soberconclusion onthesizeofeffectbetween individual-level engagement andorganizational performance outcomes. Credit crunches and recessions have a habit of breaking acts of faith. Is engagement a future-proof HR strategy? We argue that it is, but we must be far more critical about the construct and develop much better insight into how it influences organizational performance. We have taken far too much on trust. There are three streams of management thinking that have all led to the importance of employee engagement as both an idea, and as a basis for HR strategy: 1. Engagement as internal marketing; 2. Engagement as process improvement; and 3. Engagement as predictive of service and corporate performance. In practice, organizations, or the people made responsible for managing engagement strategies, often see a little of each of these three purposes within their HR strategy. This is understandable, yet we argue also dangerous. The danger is Shashi Balain and Paul Sparrow 165 that each of the three purposes makes very different assumptions about what needs to be measured under the label “engagement,” what the consequence of positive or negative scores on such measurement will be, and what remedial action by the organization needs to be made dependent on that measurement. Given the general lack of development in employee communication mechanisms, the first type of engagement strategy used by many organizations, sees it as a process to help articulate and sell complex change and strategy to the workforce, with the intention of creating a sense of emotional attachment and identification to the goals of the change. Engagement asinternalmarketing 1. Goal istodevelop ashared mental model ofthechange orstrategy; 2. Employees askedto“engage with”something –abrand, aparticular strategy,avalue proposition; 3. Employee engagement process mustbepreceded byanimportant priorperiod of business engagement (education ofthelineand ofemployees about thestrategy); 4. Organization uses customerrelationship management (CRM)principles, toseehow employees (asinternal customers) feelabout theproposition; 5. Organization assesseswhether bothsidesdeliverthe“deal” thatisseenasnecessary, thatis,behaviors and emotions desired bytheorganization andtheemployee needfor internalsupport; 6. Internalmarketing isusedtotarget andshape communications inwaysthatresonate withkeyemployee communities; 7. Theengagement surveyrepresents anemployee feedback mechanism, and a management control device; 8. Periodic assessment isusedasabarometer toshowhowwelltheorganization seems tobedoingagainst thestrategy. The second strategy carries a performance expectation, but engagement is still seen as having an indirect contribution to performance. The assumption made by the organization is that motivated employees, when also encouraged to act as good citizens, will self-manage, thereby taking initiative to improve on processes. Engagement asprocess improvement 1. Engagement isseenaspart ofaquidproexchange relationship. Theorganization has tocreate a“blanket oftrust”before motivatedemployees willpay back the investmentsmade bytheorganization tomotivatethembytakingcare ofthe organization anditscustomers. 166 Understanding the Value of Engagement Engagement asprocess improvement: (Continued) 2. Seenas anecessary ingredient for–orprecursor of–subsequent performance but no claims aremadeby managers thatengagement necessarily improves bottom-line organizational performance. 3. Rather,senior managers believethatindirectly itmakestheexecution ofastrategic change smootherand easier, andthattheyarecapable ofputtinginplacemore complex andtestingchanges onceengagement scores arehigh. A third view comes from the customer services literature and draws upon models of what is called “emotional contagion” and “service climate.” This suggests that there is a direct and causal “service-profit chain.” HR practitioners have picked up on this and assumed that the message must be that more employee engagement means more business unit performance. Engagement predictiveofservice andcorporate performance 1. Assertsthatthere isanassociationbetween employee perceptions oftheorganization climate(especially itsfocus onservice) andsubsequent levels ofemployee satisfaction,andthenbetween employee satisfactionandcustomer satisfactionlevels. 2. Assertsthatthere isthenanassociationbetween customer satisfactionand customer behaviors, suchasintentiontopurchase, whichinturnhas animpact onfinancial performance. 3. HRpractitioners assumethewhole chain istriggered, suchthatmore employee engagement means morebusiness unit performance. 4. CertainHRMpractices thatcreateengagement mustalsohavethepower toinfluence employee behavior inadesired manner, sothatgood HRequals good engagement. This view developed out of the simple proposition by James Heskett and colleagues1 from Harvard University that organizational profitability can be influenced by chain of events starting with internal service quality proved to be a landmark paper for HRM. They argued that this chain involved strong and direct relationships between: ...profit; growth; customer loyalty; customer satisfaction; the value of goods and services delivered to customers; and employee capability, satisfaction, loyalty and productivity. Within this hypothesized causal sequence lie important employee variables such as employee satisfaction. These are considered vital to achieve important customer outcomes, which in turn directly influence profitability and revenue growth of a ... - tailieumienphi.vn