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While there are a few success stories like these, there are many more examples of organizations that struggle with the concept of engagement, how to define it, how to understand it and what to do about it. Most importantly, these organizations have trouble developing and executing strategies for improving engagement in ways that actually lead to improved business performance. Recently, several major studies have been published on employee satisfaction and engagement, where statistical correlations were made to close-range outcomes, such as employee behavior and intent to stay, in addition to more distant outcomes, such as shareholder value.

These studies almost always fall short of making the connection between the real productivity and performance of people and of the organization as a whole. Most organizations make the same mistake.

The purpose of this article is to provide a clear and simple definition of engagement, describe a methodology for measuring it and share an approach for using engagement data to make workforce investments that ultimately increase productivity and drive business results. It draws on information collected as part of Sibson's 2006 Rewards of Work^SM (ROW) Study of over 1,200 American workers¹, and provides important insights into the drivers of engagement and how organizations might improve engagement levels in ways that bring a significant return on investment.

Defining Engagement

Over the past 20 years, business leaders and human resource professionals have inconsistently applied the term "engagement" when referring to attitudes, perceptions and behavior of employees at work. An example of these inconsistencies can be illustrated by the fact that we frequently hear business leaders discuss the level of "engagement" of their workforce, using this term to convey a perceived sense of satisfaction, trust, commitment or other employee attitude. Further, many organizations today use a wide variety of "engagement" surveys that have little to do with engagement and instead measure employee perceptions of specific elements of their work environment, benefits or compensation.

Sibson's definition of engagement was developed using both a qualitative and quantitative analytical approach that was focused on defining what "engagement" means in the context of performance and productivity. The qualitative approach consisted of numerous conversations with business leaders, employees and researchers over the course of the ROW Study. Two attributes of high-performing and productive employees emerged: (1) knowing what to do at work (e.g., understanding the organization's vision of success and how the employee can contribute to achieving that vision is an underlying factor of performance and productivity and (2) wanting to do the work (e.g., obtaining a sense of satisfaction from the job and work content and being inspired by the organization to perform the work.)

As the ROW study team sorted through the exploratory data, another interesting and common theme emerged. "Wanting to do the work" was not sufficient for driving productivity and performance. Both attributes were necessary to drive performance and productivity. As such, the Sibson team defined engagement along the two dimensions of knowing what to do at work and wanting to do the work. With this in mind, it is our strong view that engagement should always be defined and assessed in the context of productivity.

Sibson's Engagement Framework

To provide empirical support for this two-dimensional model, Sibson modified the ROW Study by adding questions about the dimensions of engagement and using existing questions to measure these constructs. Briefly, the ROW model (and study) focuses on five elements of rewards, which encompass both financial and non-financial aspects of rewards: affiliation, compensation, benefits, work content and career.

Analysis of the engagement questions in the ROW Study generated strong empirical evidence in support for the two-dimensional model of engagement, with both factor and reliability analyses yielding strong empirical support for the two factors.

To enhance its understanding of the two-dimensional model of engagement Sibson then developed the engagement characteristics matrix (ECM) to analyze the data collected from the national ROW Study. The ECM is a two-dimensional scatter plot of the combined scale scores for the two-factor engagement model. Scale scores represent the combined average of the multiple questions that make up each engagement dimension. The scale scores for each dimension are measured using a scale from "1" to "5." For example, in the case of wanting to do the work, a "1" indicates there is little or no desire to want to do the work and a "5" indicates that there is a very strong desire to do the work, "3" is considered a neutral rating.

The lines drawn on the x-axis and y-axis at the scale point of "4" define the quadrants of the matrix. The study team determined that using the scale point "4" as the criterion for defining each quadrant was appropriate because it filtered out neutral responses and captured only those respondents who provided favorable ratings for each engagement dimension (e.g., had a scale score of "4" or "5" on knowing what to do at work and wanting to do the work). The y-axis in the ECM presented below represents the scale score for the dimension of wanting to do the work and the x-axis represents the scale score for the dimension of knowing what to do at work. (See the diagram below.)

The Engagement Characteristics Matrix

Note: Scatter diagram data points may represent more than one respondent due to overlap.

As we analyzed the responses for each dimension using the Engagement Characteristics Matrix, employees were classified in each of the quadrants as follows (an analysis that provided fascinating results and somewhat discouraging news for employers):

• Engaged: Respondents in quadrant 1 (Upper Right) know what to do and want to do it. Fifty-two percent of respondents from the ROW sample fell into this category
  
  
• Renegades: Respondents in quadrant 2 (Lower Right) know what to do, but do not want to do it. Eleven percent of respondents of respondents from the ROW sample fell into this category
  
  
• Disengaged: Respondents in quadrant 3 (Lower Left) do not know what to do and they would not do it even if they did. Thirty-three percent of respondents from the ROW sample fell into this category
  
  
• Enthusiasts: Respondents in quadrant 4 (Upper Left) want to do their work, but do not know what to do. Five percent of respondents from the ROW sample fell into this category

The Impact of Engagement (or a Lack Thereof)

While the link between employee attitudes, perceptions and job performance has been mixed in past research, engagement, as defined here, has a stronger demonstrated relationship with important employee and organizational outcomes. This is because engagement is a work-specific attitude and is, therefore, likely to directly impact work-related activities and attitudes. The measurable impact of employee engagement depends, in part, on how it is defined. For example, the Corporate Leadership Council reports outcomes ranging from shareholder return to absenteeism to sales². Other researchers describe engagement as "involvement and satisfaction, as well as enthusiasm for work (Harter, Schmidt and Hayes, 2002)³.

Employee Turnover

Knowing what to do at work and wanting to do the work influence employee outcomes in sometimes surprising ways. For example, the link between engagement and turnover is well-documented in other research and is supported by the results of the ROW Study. The correlation between engagement and intention to leave is significant. The chart below illustrates that employees who report high engagement also report lower turnover intentions.

Employee Productivity

Other ways in which engagement can influence employee contribution are not reflected in turnover data. Those who remain may reflect a lack of engagement in their level of productivity. For example, the ROW Study found that employees who reported high levels of engagement also reported that they spent more than 75 percent of their time at work being productive. This is in stark contrast to those identified as Renegades, Disengaged or Enthusiasts. The chart below illustrates the distribution of productivity across the four quadrants. Note that a disproportionate number of observations for those reporting high productivity lie in the "engaged" quadrant.

While there is a less obvious relationship between engagement and self-reported performance, it is notable that employees who are not engaged report being less invested in the organization on a day-to-day basis. Whether this is a function of not knowing how one's role contributes to the larger mission or a lack of motivation, employees who are not engaged are not giving their all.

Organization Results

The impact of engagement on organization results can be described as both losses and unrealized gains. In the case of turnover, there are losses associated with filling a position as well as potential unrealized gains from not having the incumbent remain in the position. The impact of diminished productivity is an important employee outcome that can be measured as the percent of time that an employee spends at work. In Sibson's most recent ROW Study, as well as from other studies, such as the 2006 Conference Board report on engagement⁴, and through Sibson's ongoing qualitative data collection, outcomes such as customer satisfaction, speed, growth, and profitability are often closely linked to and driven by engagement. In these cases, employees with higher levels of engagement as defined by Sibson's two factors contribute disproportionately to business results relative to their less engaged peers. Their work has a greater direct impact on the organization.

Sibson has shown that defining and assessing the engagement of an organization's workforce can yield important insights into key individual outcomes, such as retention and productivity, and key organizational outcomes, such as speed and growth. Sibson has also shown through its national ROW Study that in some organizations close to half the employee population may be less than engaged, affecting the degree to which an organization can create value for its customers and owners.

Identifying an Engagement Problem

Diagnosing problems with employee engagement can be tricky. For example, in some circumstances disengaged employees may be more likely to turnover, but that is not always the case. Checking one or more of the boxes in the following list might indicate an engagement problem in your organization:

	The credibility of leadership is routinely questioned: "We've heard THIS one before."
	People often come to meetings and nod in agreement but limited to no progress is made.
	Employees are unclear about the priorities and expectations of leadership; "What's the direction of the business? How does MY role contribute?"
	Superior performance is often undefined, unrecognized and/or unrewarded.
	There is a lack of information sharing across business units, and a lack of collaboration toward common goals and results.
	Turnover among top performers is high while overall turnover remains flat.
	Rates of absenteeism and short-term disability are on the rise.
	Employees often arrive late and leave early.
	Training and development initiatives are poorly attended.
	Employees feel far removed from the results of the business and have little understanding of how they can contribute to the strategy.
	The work people do is often routine and uninteresting with limited challenge.
	There is a lack of a "higher cause" or "shared mission" with people simply doing their eight hours so they can go home.
	Performance assessment and development often feel like transactional activities that are done to the employee as opposed to being driven by the employee.
	There is a lack of passion for continuous improvement among employees.
	People feel disconnected from the organization's customers.

Improving Engagement in Your Organization

The first step in improving engagement and productivity is to adopt a definition and assess current levels of employee engagement and the linkages to employee and organizational outcomes. This should be done through a formal qualitative and quantitative approach similar to the one outlined in this article. As an organization develops a more compelling and distinctive Rewards of Work (ROW) strategy, the impact on engagement improvement can be measured. Improvements in employee attraction, retention and productivity will, ultimately, lead to organizational outcomes, such as business results and value creation.

In taking this journey, leaders in the organization should keep in mind several key principles:

• The definition and measurement of employee engagement should go beyond satisfaction, commitment and effort.
  
  
• Engagement should be defined and assessed using those factors that truly drive productivity: knowing what to do and wanting to do it. A comprehensive data-intensive and analytical approach -- for example, a tool like ROW -- is needed to create a fact base that enables an organization to do more than just increase satisfaction while managing cost (which may or may not improve business results).
  
  
• Solutions for improving engagement depend on the underlying causes and should be viewed as investments in the workforce that will bring a measurable return and create value for owners/shareholders.

As the three companies proved in the introduction, there is no single silver bullet to improving employee engagement and productivity. However, there are several types of interventions that over time have proven effective for improving engagement. These are consistent with Sibson's three mini-cases and include:

Clearly, each organization must define, understand, and make targeted investments in creating an engagement strategy for its workforce that addresses its unique challenges and supports the execution of its strategy. Sibson's research suggests, along with the experiences of leading organizations, that this approach can lead to significant improvements in the productivity of people and the performance of the enterprise.

Aaron Sorensen is a Consultant who also specializes in employee effectiveness. He can be reached at 312.456.8325 or asorensen@sibson.com.