As each year-end performance review cycle begins, executive teams across industries review their key performance indicators (KPIs) to determine the success of their organizations and to set new KPIs for the upcoming year. Targets are based on many factors, such as increased revenue; greater market share; expense management and innovation; and industry-specific goals. High on every executive’s list for the past two decades has been the elusive employee engagement score. The employee engagement KPI is often embedded in performance goals for, and impacts compensation of, all managers in the organization.
As you all know, this year has been exceptionally challenging for everyone. Across all industries, each of the factors mentioned above has been under stress. Perhaps the greatest stress has been on employee mental, physical, and financial well-being. Employee stress and uncertainty, as well as business disruption, and social, political, and economic challenges, have left employees vulnerable. Not a very good starting point for increased engagement.
Added to the challenges that businesses are facing in the COVID era are the new mobile workforce, distance and virtual work-life balance, and rapidly evolving sensibilities around quality of life and social consciousness. A highlight of the latter being the long-overdue focus on diversity, equity, and inclusion (DEI) and how it impacts how employees feel about their society and their employers.
What should we focus on when discussing employee engagement? Why, no matter how much attention is given to it in terms of organizational health “scores,” KPIs, and pulse surveys, does it never seem to rise above the critical level? Gallup released findings recently that show employee engagement in the U.S. at 36%. That represents an average for 2020, which at one point had reached an historic high (since Gallup began keeping records in 2000) at 38%! Taken another way, even at its high point reached in May of 2020, 62% of Americans were actively disengaged at work.
Companies around the world struggle to find the right mix to increase engagement while increasing their profitability, shareholder value, and market share. Many organizations rely on incentives to address engagement. The formula often used: higher pay + greater perks + (in many industries) bonuses (incentive compensation) = productivity and engagement. When all else fails, many companies (especially traditional incentive-based industries, like finance and banking) double down on compensation-based incentives (though this may prove difficult in 2020). Yet employee engagement scores (particularly for incentive-based industries) never seem to budge!
Perhaps the drivers we are using to address flagging engagement scores are wrong? Maybe we need to focus on initiative rather than incentive. In his work, The Fall of the Human Intellect, A. Parthasarathy makes a compelling case for appealing to workers’ ideals. He proposes that when workers pursue their ideals (What am I working for? Whose welfare am I addressing?) they develop an initiative to work, which creates more energy and enthusiasm than the momentary impact of incentives. As any Human Resources professional will tell you, the compensation process is long, arduous, and usually ends with most employees disappointed (even though billions are spent on incentive compensation each year). And those who are happy forget their happiness after a couple of weeks.
Energy and enthusiasm that derive from individual initiative exist when workers tap into their inner potential and engage their higher levels of consciousness and non-judgmental behavior. The concepts of ideal and initiative as human drivers are not entirely new. Abraham Maslow in, Hierarchy of Human Needs placed creativity, spontaneity, problem solving and lack of prejudice (non-judgment), all of which lead to purpose and meaning and realization of inner potential, at the top of his famous pyramid.
Perhaps we are going about engagement the wrong way when we employ old ideas like money and perks? Without a doubt, fair and equitable pay and perks are important. However, newer focuses like social consciousness, diverse, inclusive, and equitable workplaces, and an emphasis on human potential may help companies drive and sustain engagement.
There is no doubt that 2020 has revealed a new awareness and unleashed new passions for employees in all industries. Focusing on what is there in front of us, passion, ideals, creativity, a sense of the greater good, can not only increase employee satisfaction, happiness, and engagement. Which will lead to greater success for companies and well-being for employees – and society - as well.