I once consulted with a company whose senior leadership was genuinely perplexed about the organization’s overwhelming levels of employee disengagement. Their company’s remuneration packages were well above industry standards, and the company offered several perks that simply weren’t offered by competitors.
But, despite all of the material benefits it offered employees, quarter after quarter, year after year, the company’s employee engagement scores were embarrassingly low.
Why? Because the company’s leadership didn’t understand that employee engagement is something that must be earned by the organization—not something that can be bought with salaries, bonuses, or perks.
The impact of financial rewards on engagement
To understand why employee engagement needs to be earned, not bought, business leaders need to understand what employee engagement actually is. One of the most vibrant and easy-to-understand descriptions of employee engagement I’ve come across comes from DecisionWise, an employee feedback platform. According to DecisionWise:
“Employee Engagement is an emotional state where employees feel passionate, energetic, and committed to their work. Engaged employees invest their best selves—their hearts, spirits, minds, and hands—in the work they do. Engaged employees go beyond the minimum, contributing their hearts, spirits, minds, and hands to their work.”
When engaged employees give their all—their hearts, spirits, minds and hands— the organization they work for benefits tremendously.
Multiple bodies of research show that having highly engaged employees on the payroll can significantly improve performance, productivity and profitability. While financial compensation such as salary, bonuses and perks certainly are important benefits for employees, interestingly, research shows that financial rewards are not in and of themselves drivers of employee engagement.
For instance, research by Deloitte shows that pay is what the researchers refer to as a “hygiene factor” but not an “engagement factor.” This means that if compensation is not high enough, employees will leave, but increasing compensation does not guarantee increased engagement.
A separate study conducted by McKinsey found that up to 55% of employee engagement is driven by nonfinancial factors. And Gallup found that employee engagement cannot be created by financial incentives alone. While Gallup found that pay can be used as a tool for attracting employees, it doesn’t foster psychological ownership of one’s work—a critical characteristic of engaged employees.
Developing transformational employee experiences
Research conducted by Stanford Social Innovation Review uncovered five organizational factors (which the researchers refer to as “engagement drivers”) that employers can use as a starting point to influence employees to get engaged. These factors include feeling the organization cares for employees, having confidence in the leadership, believing employee well-being is a priority, feeling that there is open two-way communication, and feeling you belong at the organization.
There is no shortage of ways to integrate these drivers into the organization so as to drive employee engagement. Here are just a few that you can start with to get your feet wet in the engagement space, grouped under the categories identified by Stanford Social Innovation Review.
Care for employees
Employees are far more likely to be engaged if they feel that the organization they work for cares for them as individuals and doesn’t see them as mere units of production or replaceable cogs in the machine. If you want to show care for your employees, a great place to start is by looking for opportune times to thank them.
Consider sending hand-written notes for employees’ birthdays, work anniversaries and other related occasions, thanking them for their commitment to the organization. You don’t even have to wait for a special occasion to express gratitude. A simple “thank you” or other expression of appreciation for a job well done can go a long way to let people know you care about them. If your workplace environment is more tech-oriented, consider using platforms such as Kudos with built-in functionality that makes celebrating employees a breeze.
You can also show care for employees by demonstrating empathy for their personal challenges such as health issues, family issues, and other “out-of-office” factors that may have an impact on their professional lives.
Confidence in the leadership
Confidence in an organization’s leadership is earned when leaders demonstrate competence in their roles and integrity in their behaviors. When employees have confidence in their leaders, they are more willing to go the extra mile for the organization, embrace change, give leaders the benefit of the doubt when mistakes are made, and invest discretionary effort. Deloitte describes building trust as “your single greatest opportunity to create competitive advantage,” noting that trusted companies outperform their peers by up to 400% and that 79% of employees who trust their employer are more motivated to work (and less likely to leave).
Not sure how to build that type of trust? Ashley Reichheld and Amedia Dunlop, authors of the book The Four Factors of Trust, boil down organizational trust to four factors: humanity, capability, transparency, and reliability. Master these four and you’ll be well on your way to inspiring confidence in your organization’s leadership.
Employee well-being
If you want to flip the switch on this engagement driver, make sure to address any potential threats to workplace wellness. Workloads, goals and key performance indicators (KPIs) should be challenging enough for employees to fully apply their skill sets and push the company forward, but not so intense that they could harm employees’ well-being.
Aside from setting responsible workloads, you can help ensure employee well-being by providing resources that bolster physical, emotional and mental well-being—such as subsidized (or free) access to gyms, health checkups, and confidential access to mental health therapists and specialists. You can also consider offering employees flextime and/or a reasonable number of paid mental health days that allow them to stay away from the office and recharge their batteries.
Two-way communication
Communicating with employees will always result in higher engagement than communicating to employees. Employees want to stay informed, but what they truly value is being heard. If you want to reap the benefits of higher employee engagement, you need to go a step beyond top-down communications such as emails from the CEO and company memos.
Set up systems and structures that nurture a culture where employees can provide senior leadership with feedback, recommendations, and ideas for improvement and yes, even register their concerns and complaints. If your company is relatively small, regular departmental meetings or all-hands town halls may work perfectly. If you want a more tech-savvy option, there are many platforms, such as Achievers.com, that allow you to facilitate two-way digital communication.
Sense of belonging
“Belonging” in the workplace refers to the state of feeling connected, supported, accepted, valued, and perhaps most importantly, feeling able to bring your authentic self to work. A sense of belonging doesn’t happen by chance. It has to be nurtured. You can kindle a sense of belonging—what some refer to as psychological safety—by encouraging employees to speak up without fear of embarrassment or negative consequences, truly listening to and acting on their suggestions, and publicly recognizing them for their contributions.
Some companies develop formal systems to create a workplace where employees feel they belong. Deloitte, for instance, offers networking, mentorship, and learning and development opportunities for all of its professionals.
Is all this effort to foster a sense of belonging worth it? Definitely! Research from the digital coaching company BetterUp indicates that workplace belonging leads to a 56% increase in job performance, a 50% reduction in turnover risk, and a 75% decrease in sick days.
Remember, you can’t buy employee engagement with salaries, bonuses, or perks. But, you can earn employees’ respect by developing a workplace environment that provides the nutrients for engagement to bloom.