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									    Enhancing performance
through employee engagement
   The MacLeod Review and
Presentation to Employee Benefits
     Summit, Monaco 2010

    Nita Clarke, Director IPA
    Vice-chair of the Review
The MacLeod Review
          A report to

          About engagement
           across the UK

          About engagement
           for performance
 Why timely
   –   Enduring reasons
   –   Current economic climate
   –   Globalisation and competition
   –   New world at work

 After eight months work, reported 16 July

 Final sign-off for stage 2 on 23 March

 New Government‟s views awaited!
           What we did…
 What is employee engagement?

 Does it matter?

 What enables it – and what stops it?

 How should government promote it?

 Meetings with leaders, practitioners,
  companies, unions, academics; >30
  consultation events around UK and all
  sectors of the economy; >300 online
          We believe…
„Engagement, going to the heart of the
workplace relationship between
employee and employer, can be a key
to unlocking productivity and to
transforming the working lives of many
people for whom Monday morning is an
especially low part of the week.‟

                      para 4 introduction
 50+ definitions

 “You know it when you see it”

 “it‟s how we do things around here”

 Unlocking people‟s potential at work

 Respect for people at its heart
 It‟s a way of running and managing a
  company or delivering a service
  which maximises the input,
  commitment and voice of employees
  to maximise the effectiveness, quality
  and performance of the organisation
What it isn‟t…
Or this…
           Does it matter?
 Employee engagement levels correlate with:
   –   better financial performance
   –   better outcomes in the public sector

 Other benefits include:
   –   higher levels of innovation
   –   more employees advocating their
   –   lower rates of absenteeism
   –   employee well-being
   –   better retention
   –   Fewer accidents
 Engaged employees generate 43% more
  revenue (Hay Group)
 Engaged employees: 2.7 sick days per year
  Disengaged employees: 6.2 (Gallup)
 Engaged employees are 87% less likely to leave
  (Corporate Leadership Council)
 67% of engaged advocate their organisations;
  only 3% of the disengaged do (Gallup)
 9 out of 10 of key barriers to successful change,
  people related (PWC)
 59% of EE say “work brings out their most
  creative ideas” – only 3% of disengaged agree
 Disengaged workers cost the UK £44 billion
  a year in lost productivity

 Stock market performance of Sunday Times
  100 best companies was ten times higher
  between 2000 and 2005 than for FTSE 100

 Gallup 2007 research showed that public
  companies in the top quartile of employee
  engagement had EPS growth 2.6 times
  higher than those below average
„If I could wave a magic wand, the one
thing I would do is to improve the
relationship between line managers
and employees…good line
management can promote better health
and wellbeing and improved

 Dame Carol Black, Working for a Healthier Tomorrow
„Work is the grand cure of all the
maladies and miseries that ever
beset mankind.‟

                       Thomas Carlyle
      So what‟s the problem…
 Engagement high on HR agenda – but IPA
  study shows less than half of
  organisations know how to implement it

 Recent research from Kingston University
  found only 35 per cent of employees
  actively engaged – main factors in
  disengagement included the way
  organisation was managed, recognition
  for good work, attention paid to
  suggestions, opportunity to use abilities –
  pay a hygiene factor
                    What matters to employees –
                     and what they actually feel
  Senior management interest in employee wellbeing           30%                  25%                    45%

Improved my skills and capabilities over the past year                       72%                             16%         12%

                     Reputation of the organisation as a
                                                                   46%                         33%                  21%
                                         good employer

         Input into decision making in my department                       63%                        18%            19%

  In combination with government programs, benefit
                                                                40%                           37%                  23%
                 programs generally meet my needs

        Organisation focuses on customer satisfaction                       69%                              19%         12%

            My manager inspires enthusiasm for work            37%                      29%                    34%

                   Salary criteria are fair and consistent   28%                  27%                    45%

         Opportunities to learn and develop new skills               52%                        22%                26%

                          Employees understand how to
                                                                           63%                          25%              12%
                                     satisfy customers

                                                              Favourable    Mixed             Unfavourable
  *Drivers are shown in descending order of importance.

 Source: Tower Perrin
      Our four key enablers
 Leadership provides a strong strategic
  narrative giving a line of sight between the job
  and the organisation‟s vision and alignment

 Engaging Managers, who offer clarity and
  training, who treat people as individuals, who
  listen and encourage and who ensure work is
  organised efficiently

 There is employee voice in the organisation, for
  reinforcing and challenging views; between
  functions and externally

 There is organisational integrity: espoused
  values are reflected in behavioural norms
                 Level 1 & Level 2 Engagement
      LEVEL 1 – TRANSACTIONAL; We act on employee feedback through survey
        Compartmentalised Thinking

                                                             EMPLOYEE / HR STRATEGY
                               STRATEGY FOR:                      Survey & act on it
Territory, Market Sector
                                IT; ESTATES;                  eg Performance management,
                                CAPITAL ETC                   communications, listened to etc

NB:                CIPD: 75% of Employee Engagement focused as above
                     Reactive engagement. About discretionary effort

                              LEVEL 2 – TRANSFORMATIONAL
 It is a way of running and doing business

                                “ONE PAGE”: Market Sectors, CA,
                                                                                People at heart of
                                Country, Positioning Strategy AND
                                                                               delivery and at heart
                                  Values/Behaviours to deliver it
  WE TRACK                                                                          of strategy
 PROGRESS OF                               TWO-WAY
  STRATEGY                                                                  People help         People give
                                   WE MEASURE: Concerns,                      shape              continual
                                    commitment, feedback                     strategy             VOICE

NB:                CIPD: 25% of Employee Engagement focused as above
                             About proactive engagement
The challenge of recession

„A leader‟s focus on engagement is
even more important during difficult
times, to motivate, engage and
ultimately retain your people.‟

     Paul Drechsler, CEO Wates Group
 In recession, your people are your best, if not
  only, competitive advantage

 Staff know how to cut costs, how to work
  smarter and more productively

 Companies need to engage all their employees
  and all their employees‟ understanding, effort
  and commitment to get through

 Engagement provides a means of doing just that

 The companies that come out of the recession
  best will be those who endorse and embed it

 But don‟t take advantage!
       This recession has
        been different…
 Attempt by many companies to engage
  with employees over strategies to cope
  with recession – short term working,
  part-time, flexibility, pay freezes, etc

 Shift away from compulsory

 Unemployment increase less than
     But the effects have
      still been severe
 Major Engineering Employers
  Federation report showed:
  – reduction in training and development

  – 38 per cent reporting increase in stress

  – 36 per cent reporting increase in
    employment relations problems
       Recession casts a
         long shadow
 EEF expects continued increase in
  grievances related to bullying,
  harassment and relations with senior
  or line managers

 Also more grievances around pay,
  work practices, stress and career
     But it‟s not an excuse
 Companies that handle difficulties well
  can increase engagement: it‟s how you
  do it that counts

 Sheffield research: no overall decrease
  in wellbeing after downsizing if done
  with changes in work organisation and
  change management strategies

 Case studies from JCB, KPMG, Lloyds
  Pharmacy in MacLeod Report
          Going forward
 Staff absence and turnover
  decreased during 2009 – but this may
  be mixed blessing

 Growth in the „I‟m out of here once it
  gets better‟ syndrome

 Growth in presenteeism
 Don‟t take advantage of your staffs‟
  goodwill and assistance in getting
  through difficult times

 Employers‟ organisations expect
  employee relations to get more
  difficult – what‟s the pay off for us?
  It‟s not just the recession
 Global competition on the march - growth in
  India nearly 7 per cent last year; 3 million
  graduates p/a in India and China

 Generation Y want more out of work than
  just a job

 Decline in deference and trust

 People still treated as „human resources‟
  not human beings

 Command and control dead as a dodo – but
  it won‟t lie down
 The most pressing task…
 CBI survey shows UK employers
  believe more than two-thirds of
  employers believe that achieving
  high levels of employee
  engagement is top of their list –
  more than containing labour costs
  (48 per cent), recruiting to key
  vacancies and retaining staff (42
  per cent) and retaining staff
         Challenge for HR
 66 per cent of CEOs believe their HR
  department and practices are not
  equipped adequately to deal with new

 But HR key to implementing engagement

 Vital to align employee/industrial relations
  strategies with engagement

 Championing of engagement – making
  sure CEOs „get it‟ may be way back to the
  top table
       Not rocket science
 Engagement is a win-win for organisations
  and equally for their workforce - business
  case equalled by people case

 It‟s the best problem solving mechanism for
  companies and services in the workplace –
  from strategic decisions to small ones

 Best way of meeting ever present challenge
  of constant change

 Try making change without taking your
  workforce with you – UK public sector 1997

 Global competition – UK high end
  manufacturing and services need engaged
         We concluded…

 Exemplar organisations exist – over
  50 case studies in the report. We just
  need more of them

 It‟s not about:
  – regulations and targets
  – just doing a survey

 It needs:
  – culture change in organisations
  – leaders interpreting it for their context
 National awareness campaign, encourage
  sharing of good practice – studies/polls
  show engagement now No 1 issue

 Practical „how to‟ tools now available at

 Task for other stakeholders in employment
  field – TUC, CBI, CIPD, CIM
               About the IPA
 Not-for-profit, registered charity supporting
  companies and organisations with employee
  involvement, participation and engagement

 Provides employee and industrial relations advice and
  support and training and support on workplace
  consultation, partnership and representation

 Extensive client list and good practice networks

 Provides guidance to Government on Information &
  Consultation and partnership issues

 Nita Clarke, former political adviser to PM Tony Blair,
  senior union official, and co-author of MacLeod


 Macleod Review download:

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