Employee Engagement – For Change Managers

Employee Engagement continues to plummet.  It has hit an all time low at about 30%.  HR has been working hard at reversing this trend for almost a decade, but nothing seems to work.  Maybe it’s time that HR calls on Change Managers to design and implement a new paradigm for employee engagement?  

Let’s start at the beginning.  HR and managers have worked for years to destroy employee engagement.  This was not intentional or malicious; it was done in the name of eliminating “employee entitlement.”  Several decades ago the belief emerged that employers had provided such a strong economic safety net that employees were not hungry; they had lost their incentive to perform.  

Employees, it was believed, had become complacent because they could rely on: annual merit pay increases; employer paid benefits, particularly for health; and a defined benefit pension plan if they could just put in enough time to “meet the numbers.”  Comfort equaled sloth and that accumulated into a lack of business performance.

The simple answer to this initiating belief became the next belief.  According to the emerging paradigm: business needed to create a “performance culture” where those who performed to defined standards would be afforded commensurate rewards.  The employer was to give up vestiges of paternalism; it was time for employees to grow up and take responsibility for their careers.    

To implement these beliefs HR changed its role.  It took a lot of economic hygiene off the table and replaced it with: pay for performance topped up with metric driven bonuses; defined contribution pension plans where employees managed their investments for retirement; and paid-time-off plans along with cost sharing for health benefits.  The underlying philosophy, at the hygiene level, was clear: “we’re in this together, but you're on your own.”  This belief system was imbued into the depths of HR – as it transformed itself into a “strategic partner” with a seat at the executive table.

Unfortunately, what was perceived as “entitlement” had one major benefit.  It relieved employees of economic worry and let them focus on their work.  To the extent possible, “entitlement” let people bring themselves into their jobs.  It gave them the autonomy to find purpose in their work.  It let employees feel engaged.

Those days are gone.  Most businesses are not going to build the economic safety net back into their cost structures.  Employee disengagement is here to stay; we created it, now we have to manage it; and managing it means that HR will need to change its beliefs and build a new paradigm.

Here’s where Change Managers can help.

Reduce the Economic Worry:

Compensation is a big issue for HR to unlearn.  An industry has been built up around the performance pay experiment that hasn’t worked.  There are lessons in the past pointing to the value of solid base pay that is marked to the market and then topped up by sharing company profits. 

Performance appraisal is another sacred cow in HR’s performance belief system.  This monster was created by linking pay to performance.  Unfortunately we don’t have the social engineering skills to make it work.  Now the system is dreaded by all and serves no one.  Empirical evidence tells us that it’s time to unlink pay from performance – if we can get HR to go along.

We need to work with HR to create an abundance mindset that encourages employees to constantly look for and interview for new job opportunities.  One of two things will happen: employees will either learn how good they’ve got it, or the company will learn it’s under-valuing them.  Either way the employee moves to a new economic reality.

Finally, severance is a reality that many employees will face; they shouldn’t have to fear it.  We need to help HR enunciate and communicate severance policies that respects the employees’ contribution based on their job level, age, and time in the job.  Employees deserve that peace of mind.

Stratify Employee Engagement:

The 30% figure is an aggregate; we need to help HR focus where it matters.  

Veterans in the workforce are invested; whereas new entrants aren’t; however, recruits from the “social media generation” are going to be difficult to engage.  Most aren’t looking for a career; they’re looking for an experience.  Is low engagement a form of resistance to be conquered or is it a temporal condition that requires patience?  Change Managers know the difference and have the appropriate tools for either situation.  

Where Change Managers need to apply some new thinking and find new tools for HR is for that sliver of talent that understands the company’s DNA and wants to carry the gene forward.  We need to work with HR to learn what it takes to engage those who are interested in the company’s future.

Communicate Tough Love:

Employees offer their unique gifts when they have purpose at work; however, purpose comes from principles.  Get HR to write down the principles of the business?  How are employees expected to act?  How should employees treat each other and their customers?

HR needs to let employees know the rules of the game and know they will be held accountable.  Change Managers can help through their knowledge of two way communication and expertise in setting up accountability regimes.

Let Customers Drive Engagement:

Companies have eroded their commitment to employees, and employees know it.  HR needs to work with management to give employees a purpose that transcends the company.  Employees want to be valued and customers provide this.  

Linking employees to customers is a sweet spot for Change Managers.  We know how to create a short line of sight between employees and customers – and we also know how to show HR and managers how to get out of the way.

It's Just A Beginning
So, the above are thought starters on how Change Management can help HR build a new paradigm for employee engagement.  This is important work if we are to avoid a backlash.  For years HR have worked with their companies to become “kinder and gentler” in an attempt to increase employee engagement.  It hasn’t worked.  I dread that, out of exasperation, management will return to harsh models of command and control.  

We must avoid this.  We must help HR find a new paradigm for employee engagement as supported to by advocates such as Daniel Pink; however, our first task will be to help HR look beyond itself and its constraining orthodoxies.  

Employee Engagement – We Need A New Paradigm!

The New Face of Employment

Ok, recent surveys tell us that Employee Engagement is at an all time low at about 30%.  So what are we going to do about it?  Apparently what we have been doing isn’t working!

Firstly, what’s the source of such dissatisfaction?  Well, us.  Managers.  We have worked for decades to destroy engagement.  We said that we wanted to eliminate “employee entitlement” and replace it with “performance.”  We took a lot of hygiene off the table like: merit pay, defined benefit pension plans, and health benefits.  These were replaced with: pay for performance, defined contribution pension plans, and cost sharing for health benefits.

Unfortunately, what we perceived as “entitlement” had one major benefit.  It relieved employees of economic worry and let them focus on their work.  To the extent possible, “entitlement” let people bring themselves into their jobs.  It gave them the autonomy to find purpose in their work.  It let employees feel engaged.

Those days are gone.  Most businesses are not going to build the economic safety net back into their cost structures.  Employee disengagement is here to stay.  We created it, now we have to manage it.  Here are some things we should start thinking about if we are to build a new paradigm.

Reduce the Economic Worry:

Encourage people to constantly look for and interview for new job opportunities.  Support them in their search.  One of two things will happen: they will either learn how good they’ve got it with you, or you will learn that you are under-valuing them.

Rethink how you compensate.  Kill the performance pay experiment; it hasn’t worked.  Get back to solid pay that is marked to the market and then share profits. 

Delink performance appraisal from pay.  Use it for development only.

Stratify Employee Engagement:

Stop focusing on the 30% figure and focus where it matters.  

The veterans in your workforce are likely engaged; whereas new entrants aren’t.  Let’s be clear.  Recruits from the “social media generation” are going to be difficult to engage.  Most aren’t looking to be engaged in a career; they’re looking for an experience over a short time horizon.  Accommodate where you can, but don’t lose sleep if there is low engagement and high churn.

Your focus has to be on that sliver of talent that understands your company’s DNA and wants to carry the gene forward.  Learn what it takes to engage them.

Communicate Tough Love:

Employees offer their unique gifts when they have purpose at work; however, purpose comes from principles.  What are the principles of your business?  How do you expect employees to act?  How do you expect them to treat each other and their customers?

There are rules of the game.  People are judged when they are at work.  Employees have a responsibility to engage themselves.  Tell them what is expected, and hold them accountable until they accept the responsibility.

Enable Idea Generation:

Everyone has ideas, that's the nature of being human.  You need to create a culture of ideas; a place where everyone feels free to express their thoughts; and a place where thoughts can get filtered through the organization and implemented.

Not all ideas are good ideas; and not all good ideas get implemented; however, all ideas have value even though their time may not be right.

Let Customers Drive Engagement:

Companies have eroded their commitment to employees, and employees know it.  Employees don’t work for their company any more.  We need to give them a new purpose.  They want to be valued and customers provide it.  We need to create a short line of sight between employees and customers and then we need to get out of the way.

I have a concern that high employee disengagement will result in a backlash.  For years I have watched companies become “kinder and gentler” in an attempt to increase employee engagement.  It hasn’t worked.  I dread that, out of exasperation, management will return to harsher models of command and control.  

We must avoid this.  We must find a new paradigm for employee engagement.  We must start implementing what others, such as Daniel Pink are teaching.

The HR Lament

When will Human Resources (HR) leadership stand up for themselves and their team and demand a seat at the table?

Recently I’ve seen a resurgence of commentary about HR “not being a strategic partner.”  I’m getting tired and bored with the whining.  We’ve heard this lament for more than two decades.  There is a reason that HR has not been, and is not yet a strategic partner within most companies, and here it is:

HR DOES NOT HAVE A STRATEGIC VALUE PROPOSITION

Long ago HR cut its Faustian deal with management and now it’s living with the consequences.

I worked in HR consulting for over a decade and have a lot of good friends and clients who are still in the business.  I’ve been watching from other perspectives for many years but find that at the end of this day HR still has not been able to turn the strategic corner.

Here’s some of what went wrong.  Early in the 1990’s companies became more focused on profits and shareholder returns.  When growth and pricing couldn’t provide the desired results, management then looked to reducing the companies cost structure.  In many organizations PEOPLE were identified as the biggest variable in the cost structure that could offer up short-term returns.

Politically, however, in most companies it’s just not acceptable for executives to say they will convert people into profits.  So, organizations came up with a euphemism by saying: “we have to become a performance culture and to do this we must break the entitlement mentality of employees.”  And even this statement, as indirect as it was, could not be used outside the management committee meetings.  The “cut heads” strategy became a covert operation mentioned only in vague terms in public statements and employee communications.

Despite the fact that execs were desperate for an action plan – any action plan – to improve results, they used the “entitlement mentality” to make aggressive headcount whacks while allowing them to sleep at night.  The assumption was that employees don’t perform because they are comfortable.  They know that every day they work improves their pension, benefits, and pay.  Why should they perform when their welfare is secured?  (Unfortunately no one tested the assumption.)  

In the quest to become a business partner HR leadership took on the assignment of dismantling the entitlement mentality.  Defined benefit pension plans became defined contribution plans; employer paid health insurance was downloaded to employees; and merit pay became performance pay.  Brick by brick the employee entitlement mentality (and loyalty) was dismantled – and the compliant HR staff wielded the tools needed to “make it so”.

Did this make HR a strategic partner?  Hardly!  It made HR a servant responsible for the apathy we now see in the workforce.  I recently learned that studies indicate that non-business “web surfing” and social media use at work has tripled in less than a year; and that 25% of a corporations internet bandwidth goes to video streaming.  Is this our vision of a performance culture?

Well, HR might be able to save itself but it will take a huge transformation.  It starts with, but goes well beyond the simple wisdom that HR must get to know the business.  We’ve been looking under this rock for years.  It hasn’t worked.  We must look elsewhere. 

First HR has to accept that its principal mission is to contribute to the business by providing a “high performing work force.”  This is a long-term strategy that does not cater to the quarterly need to produce financial results.  We need to take some specific actions:

1. Reorganize HR:  Take all of HR’s transactional business and put it under a Director reporting to the CFO, and give it a new (old) name: “Personnel”.  Assign the strategic work of building the workforce to a VP HR who has the horsepower to sit at the executive table.
2. Dump Performance Evaluations:  Is there anything more bureaucratic and that adds less value to a business than performance management systems.  Decouple them from pay and simplify them.  Use them for development, not pay and promotion.
3. Dismantle Performance Pay:  It has never worked.  It’s an escape for managers who want to be protected by an excel spreadsheet.  Distribute discretionary pay from a profit pool.  If you want to reward high achievers more than the pool allows, go ahead.  Managers are paid to make tough decisions and stand by them.
4. Hire the Best Talent in HR:  Now lets be serious.  Where is the last place we put our top performers?  In HR, right.  And when we see a top performer in HR what do we do with them?  We raid them and put them in a meaningful business function, right?  Does this sound like a formula to build strategic HR partners?

My hypothesis is that HR is one of the toughest roles in a company.  Its job is often to get in the way of capricious line managers.  In its quest to help managers build a high performing work force HR often must say “no.”  When managers are faced with the trade-off between profits and people, they often make a sub-optimal decision that favors profit.  HR should be called on to save the long-term strategic interest of the business.  At the moment HR doesn’t have the vision, talent, or respect to do this.

It’s unlikely that HR will ever get an influential place at the table until it enunciates a value proposition that senior management recognizes and then delivers on the promise.  There is a huge opportunity today for an HR professional to step up to this challenge and show the world how it can be done.