Employee engagement is a perennial imperative for any organisation, with the link between highly engaged employees and strong customer service and business performance well established.
In that sense, nothing has changed. However, given the shifting and uncertain landscape around us, I believe that effective engagement of staff has become more critical than ever. It’s an area that no business can afford to fall short on.
For that reason, our latest piece of breakthrough research – Engaging the Workforce of Tomorrow – is particularly timely. In it, we take a deep dive into the topic of engagement, gathering the views and perspectives of executives (including emerging leaders), employees and customers.
We find that there are five key trends influencing employee engagement which employers need to recognise and shape their approach around. These are:
- Digitalisation – This is changing the way that employees work and interact with each other and customers, raising the need for new skills and also creating worries in some instances about opportunities and challenges in the future.
- Hybrid working – This has generated both benefits and drawbacks: bringing greater flexibility for staff but also influencing the degree of connectedness that they feel to their team and the business.
- Inclusivity and well-being – These factors have risen up the agenda significantly in recent times and have become vital ingredients to employee engagement. Staff need to see that their employer is human-centred and really cares.
- Changing customer behaviours – Customers are becoming more demanding, with higher service expectations. Many organisations have seen an increase in challenging customer behaviours as a result. This connects back to the well-being issue – businesses need to properly support their staff and equip them for the challenges of their role.
- State of the economy – Cost of living pressures are still very real. Rising costs have had an especially acute impact on employees with financial commitments and those on relatively low rates of pay, putting an additional spotlight on the pay and benefits proposition.
Top factors influencing engagement
Given these factors, what do we find in our research from the employee perspective? Amongst the 500 customer-facing staff we surveyed, the three factors rated most important to their engagement were: level of pay and reward (36%), relationship with colleagues (33%) and care for my well-being (27%). These were closely followed by opportunities to progress/learn and recognition for outstanding performance.
These findings are interesting in several ways. It’s not a surprise to see pay as the top factor, particularly given the economic conditions we are living in. But relationship with colleagues coming as the second highest factor really stands out: it’s a reminder of how much people value human connections and friendships at work. For many, work is one of their main sources of friendship and socialisation. In our increasingly technology-driven and remote working age, it’s something that employers forget at their peril. Many staff really want to retain the opportunity to connect with others at work – and hybrid models need to take account of this. Indeed, there are signs that this is especially true of younger generations. Despite their love of social media and digitalisation, they also want a sense of belonging.
Engagement changes views, attitudes and perceptions
When we analyse the results at a more detailed level, an even more interesting picture emerges: the factors that matter most to highly engaged staff are very different to those with low engagement. For highly engaged staff, pay and reward actually comes below a number of other factors. The highest item for them is relationship with colleagues (35%), with care for well-being second (31%). Other issues like opportunities to progress, the organisation’s values and purpose, and the quality of the organisation’s customer service rank more highly than pay and reward (24%).
For disengaged employees, meanwhile, pay and reward is by far the biggest factor (46%). Care for their well-being is second (35%) while it is notable that relationship with their manager also features prominently (33%).
Disengaged staff are most concerned with functional things that affect them directly – while highly engaged staff place a greater emphasis on more values-based issues. There is a stark difference between the two groups on the importance of the organisation’s values and purpose (14% vs 26%) and the quality of customer service (11% vs 26%).
Of course, these two groups are outliers. The bulk of staff sit in the middle – what we term ‘passively engaged’ employees in the research – with their responses generally falling in between those of the other two cohorts.
The challenge for organisations, therefore, is to find ways of moving more staff up the engagement curve to become highly engaged. After all, amongst staff with high engagement, we find that over 90% feel empowered to act in a way that improves customer service.
The customer factor
This really matters – because we also find that it matters to customers. Ninety-five percent of those who had an excellent service experience agreed that the person they dealt with was highly engaged with their job. Nearly six in ten of these are likely to use the organisation again or recommend it to others. Meanwhile, a quarter of consumers say they have been put off buying from an organisation because they have heard about unfavourable treatment of staff.
In fact, our wider research at The Institute finds there is a direct correlation between employee engagement and customer satisfaction: for every 1% improvement in employee engagement, there is a 0.41 point increase in their Customer Satisfaction Index (CSI) score.
Take a holistic approach to reap the benefits
There are multiple learning points for organisations here. Needless to say, pay and reward are key so it’s essential to ensure that this is fair and competitive – with some degree of linkage, wherever possible, to performance. But it goes far beyond numbers. Engagement revolves around good leadership, responsive and connected line managers, clear communication, and visible demonstration of care and support for staff’s well-being in their roles. Values and purpose also matter, with increasing numbers of staff wanting opportunities to help create positive social impacts. Career development opportunities and training are also lynchpins, together with the ability for staff to manage their working lives in flexible ways whilst retaining a sense of connectedness to colleagues and the business.
It’s a big and complex area – but those who manage it best will reap huge advantages over their peers. I hope our research will stimulate your thinking, strategy and meaningful action to help engage your employees of today and tomorrow.
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