Blog

Do CEOs still not see the connection between employee engagement and the bottom line?

According to research published this week by Ashridge Business School some CEOs are still struggling to “engage with engagement”. This despite the fact that the UK clearly has an employee engagement problem.  Survey after survey in recent years shows that only about a third of UK workers consider themselves engaged – a figure which leaves the UK ranked ninth for engagement levels amongst the world’s twelve largest economies as ranked by GDP (Kenexa 2009). In November last year Dr Bruce Rayton, from the School of Management at the University of Bath, co-author of another report entitled ‘The Evidence’ – concurred with this figure and suggested this effectively means that two thirds of UK workers (20 million people!), feel they have “more to offer” at work, that they’re not performing to their full capability and potential. Incidentally, I still hear discussions about whether the business case for employee engagement is proven!  Well if it’s not common sense that workers not performing to their capability isn’t good for any organisation, ‘The Evidence’ report also concluded that the total cost to the UK economy of poor levels of engagement is £26 billion.   And Dr Rayton said: “Engagement predicts future performance better than performance predicts future engagement. In particular, engagement predicts performance several years into the future. “Engagement occupies a central role in “service profit chains”, with employee engagement leading to improved customer satisfaction, customer loyalty and customer advocacy which in turn drives future sales, operating profits and other financial outcomes”, he added. And just in case there’s still any doubt, according to Hay “94% of the world’s most admired companies believe that their efforts to engage their employees have created a competitive advantage”. Back to the latest Ashridge research, entitled ‘Engagement through CEO eyes’.  The research explored the topic of engagement during a year long study with 16 UK CEOs.  It sought to find out how leaders define engagement, what stops them from leading in an engaging way and why engagement is not happening more in the UK. It indicated that CEOs define engagement as an “organisational climate in which people choose to give the very best of themselves at work”.  No surprise there.  The CEOs concluded that “being an engaging leader is hard and requires special skills and attributes” and that there is no single ‘right way’ to lead to achieve engagement, although a ‘command and control’ leadership style has declining relevance in a leaders job.  The report suggested that some leaders feel the difficult economic conditions of recent times is being used as an excuse for poor leadership behaviours. One CEO said that “It is very easy when companies or countries are in crisis to have command and control and a belief that it needs a hero leader who is telling people what to do to actually get the thing moving forward”.  And several indicated that the challenges of the economy make it easier to ignore engagement, suggesting that it’s tempting to ‘;do what you’ve always done and wait for things to get better rather than do something different, and perhaps uncomfortable. In terms of the things that stop leaders from leading engagement, the culture and system of UK business was seen as one of the main challenges.  CEOs believed that organisational hierarchy and a focus on short-term* results are diametrically opposed to creating engagement.  Some leaders clearly still don’t see (or perhaps believe) the connection between engagement and the bottom line. Other barriers identified in the report were shortcomings in leadership capability, for example poor self-awareness and having limited “emotional connections”, such as being open to feedback and sharing power.  Also traits like ‘leader pride’ may lead to behaviours inconsistent with creating engagement.  One CEO said: “There’s a whole set of worries that goes on with people, most of us like to be popular and actually you can’t.” However, the good news is that some of the CEOs talked about how the future of leadership needs to have engagement at its core, particularly given the differing expectations of a multi-generational workforce.  One said: “I think big corporations have got a massive challenge if they think they’re going to retain talented people through command and control and not including them into decision-making and creative processes early on.”
The report concludes that engagement is the better way to release the full capabilities and potential of people at work and in so doing to enable organisational growth and ultimately economic growth for the UK. I agree – but more CEOs need to ‘get it’ first.

.