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CEO and senior leaders are critical to employee satisfaction and engagement

01 Jun, 2020 Employee engagement, experience, satisfaction, Internal communication, Leadership role

This article was originally published in 2015 and has been completely updated in 2020.

Why is employee engagement important?

Why push for stronger employee engagement? Well, a whole range of benefits are generated from treating employee engagement as a priority, even the most important organizational priority. Some of the most important benefits are listed below, as discussed in an 2018 article by Quantum Workplace. Every benefit is backed up by research referred in the article:

  1. Increased employee safety
  2. Better employee health
  3. Happier employees
  4. Greater employee satisfaction
  5. Better home life
  6. Lower absenteeism
  7. Higher retention
  8. Greater employee loyalty
  9. Better customer service
  10. Better quality
  11. Greater productivity
  12. Higher sales
  13. Higher profitability
  14. Higher stock price

What’s more, when Gallup researchers conducted a meta-analysis in 2016 on the relationships between engagement at work and organizational outcomes in 230 organizations employing 1.8 million workers, they found consistently strong connection between results. Meta-analysis is a statistical technique that combines results of studies with seemingly unrelated findings, correcting for sampling, measurement error and variables to understand the true relationship with greater precision. The findings: “Business/work units scoring in the top half on employee engagement nearly double their odds of success compared with those in the bottom half.” This meant: “The relationship between engagement and performance at the business/work unit level is substantial and highly generalizable across organizations.”

Within the same study, Gallup conducted analysis across organizations with ‘similar outcome metric types.’ [Whatever that means. Who are they trying to impress with this jargon??] Anyhow, “Comparing top-quartile with bottom-quartile engagement business units resulted in median percentage differences of:

10% in customer loyalty/engagement
21% in profitability
20% in productivity — sales
17% in productivity — production records and evaluations
24% in turnover for high-turnover companies (those with more than 40% annualized turnover)
59% in turnover for low-turnover companies (those with 40% or lower annualized turnover)
70% in safety incidents
28% in shrinkage [employee stealing at work]
41% in absenteeism
58% in patient safety incidents
40% in quality (defects)”

CEOs must lead the way in addressing society’s challenges

Unfortunately, societal leaders are not trusted to address community-wide challenges. In the 2020 Edelman Trust Barometer survey, half (51%) of the 32,000 respondents agreed with the statement about CEOs that “I do not have confidence that our current leaders will be able to successfully address our country’s challenges.” Also, when the question, “How important is it to you that the CEO or head of the organization you work for speaks out publicly about each of the following issues?”, 92% of employed respondents agreed it is important, as shown in the image below. Comparatively few CEOs and senior leaders make the effort to seek the wider community’s trust. In addition, 73% of employed respondents said they expected a prospective employer to include them in organizational planning. On a more positive note, 76% of employed respondents said they trusted their employer, but only 58% said they trusted business in general.

Engagement behavior stems from the top

Employees also want to hear from divisional heads and other general managers relevant to them. In large organizations the divisional heads are like mini-CEOs. They are responsible for translating the CEO’s message to their staff for them to understand the context. Gallup research shows that employee engagement comes from leaders. People look to their leaders to set the tone and expectations. Senior employees often have the power to make decisions that will significantly impact the collective work experience of the people below them, but at the same time, they are removed from those people. This is largely because, as employees rise within their organization, their responsibilities shift from considering how their team feels to shaping organization-wide purpose. Doing what is right for their company and doing what will make their employees happiest are not always mutually exclusive, according to business consultant and author, Ron Carucci, in a 2019 Harvard Business Review article.

Chart: Gallup State of the American Manager report, 2015

In a study of 190 organizations, Gallup found that executive leaders influence frontline employee engagement indirectly and directly. Mainly indirectly through their influence on the people they directly manage, and directly through specific performance management elements, including clear expectations, discussions of progress and a mission or purpose that people can identify with.

CEOs should act as leaders, not managers

Too many CEOs act as managers, not leaders. They concentrate on technical things – planning, organizing, controlling and solving problems. Leaders should be role models, trendsetters, visionaries and voices for change. The CEO needs to:

  • communicate how the pressure of external events has forced the need for change
  • communicate their personal vision
  • report progress towards organizational goals
  • be proactive by focusing on the future
  • set the example by modeling desired behaviors and hence values
  • visit, seek out views, listen and talk with staff
  • manage communication as an ongoing process.

Direction from CEO and senior leaders

Gallup has identified best-practice actions and recommends that executives shape this strategic alignment, in this order:

  1. The CEO, board and executives must agree on a well-defined purpose and brand identity for their organization. That purpose will guide every subsequent decision and differentiate the brand to customers and employees. This step is vital. It takes time. Success depends on it.
  2. The same leaders must draft a strategic business plan that explicitly connects engagement to business issues — abstract concepts don’t get traction. For example, if the company is aiming at higher share price, note that companies with highly engaged employees have 147% greater earnings per share compared with their competition. Organic growth? Highly engaged companies create engaged customers who return customer ratings and share of wallet two to three times greater than merely satisfied customers. Safety? Highly engaged workers have 70% fewer safety incidents. Whatever the goal, executives will be more committed if they understand the financial effect of engagement.
  3. With those steps completed, executives will be better able to explain how engagement amplifies the purpose and brand of the organization and leads to desired business outcomes. Some leaders may need individualized coaching to effectively communicate the connection between strategy and employee action; such assistance is readily available. But only when engagement is understood as strategy can it be relayed into day-to-day activity.
  4. Finally, leaders must be the source and authority on engagement, connecting it to everyday work, embedding it into existing processes and systems — such as performance management systems, development programs and onboarding initiatives — and incorporating the strategy in corporate communications, meetings and key decisions. Only when leaders model attitudes, beliefs and behaviors can they create real change.

Leaders need to engage managers

Around 70% of the variance in team engagement is determined solely by the manager, according to Gallup research.Therefore, engagement should be a manager’s primary role responsibility. But, all too often, the very managers upon whom organizations depend to create better cultures are themselves unhappy and unmotivated at work. Management really isn’t a great experience for most people; managers report more stress and burnout, worse work-life balance, and worse physical well-being than the individual contributors on the teams they lead. Approximately two-thirds of managers are either not engaged or are actively disengaged in their work and workplace.

Organizations have a long way to go when it comes to developing managers, Gallup explains in this 2020 article:

  • Only slightly more than a third of managers strongly agree that they have had opportunities at work to learn and grow in the past year.
  • Thirty-six percent of managers don’t fully believe they have the skills they need to do their best work.
  • Sixty-five percent of managers don’t strongly agree that they understand how their performance affects their opportunities for promotion.

Jim Harter, Gallup Chief Scientist wrote in a 2019 Harvard Business Review article:

“Shifting how your company trains and supports managers, and repositioning them as coaches, is essential for helping managers to change culture. The transition from boss to coach means managers are expected to do a lot more than give orders and delegate assignments—a primary role is to develop stars through collaborative goal setting, future-oriented coaching, and achievement-oriented accountability. Moving your managers from boss to coach not only increases employee engagement and improves performance, but it’s also essential to changing your culture to align with the changing workforce – a workforce that no longer wants, nor responds to, the traditional ‘command and control,’ top-down boss.”

Managers need to engage their teams

For best results, team engagement should be part of a manager’s evaluation. Managers must be selected, trained and supported as exceptional developers of talent. And they should be evaluated on their ability to cultivate fresh talent, help employees develop new skills and improve their performance, and prepare employees for higher levels of leadership and achievement. If low engagement persists, it’s time for leaders to change their managers. Gallup says the desired process for CEOs to initiate is:

  1. Set clear expectations for leaders and managers that their job is to engage their teams — there is no meaningful mission or purpose without clear expectations, ongoing conversations and accountability.
  2. Establish a minimum standard for engagement, and take specific actions when a team does not meet the standard. Consequences — including changing managers — should exist for ongoing patterns of low team engagement.
  3. Communicate engagement goals and targets throughout the organization.
  4. Create systems of recognition and support for high-performing leaders, managers and teams, sending a strong message about what the organization values.
  5. Communicate expectations for engagement, and watch for outliers where engagement and performance metrics do not align.
  6. Create high-value career paths for individuals — no one should feel like their progress depends on getting promoted to manager.

The differences between employee engagement and employee experience

Employee engagement involves the basic psychological needs that must be met for employees to perform their specific roles well, on an everyday basis. Employee engagement remains crucial because engaged employees show up — physically, emotionally and cognitively. They are enthusiastic about what they have to do, and they naturally find ways to improve and excel. They generate most of the creativity, innovation and excellence in your organization. Engagement should be a pillar of every organization’s everyday management and employee experience strategy.

In the employee life cycle, engagement is at the center and it’s a critical component at each stage.

Furthermore, engagement involves the daily execution of one’s role, and increasing employee engagement is primarily the responsibility of managers. Gallup’s analysis shows that the manager alone accounts for 70% of the variance in team engagement. They are critical to engagement and to getting the employee experience right throughout the life cycle.

Engagement should be a pillar of every organization’s everyday management and employee experience strategy. Not a separate initiative or only thought of during one of the seven touch points on the employee life cycle.

Employee experience

Employee engagement is an ongoing part of the employee experience, according to Gallup. Employee experience has been an increasing focus in recent years because “the path to engagement is through employee experience,” in the view of corporate communicator, author and lecturer Aniisu Verghese in a 2020 IPR article. Also, business consultants believe it is a more tangible concept than employee engagement. Gallup simply defines the employee experience as “the journey an employee takes with your organization.” It is the sum of all interactions an employee has with an employer, from pre-recruitment to post-exit and everything in between. “It includes everything from major milestones and personal relationships to technology use and the physical work environment.”

The following are three key phases Gallup says every organization should consider when developing an employee experience strategy:

  1. Align your employee experience to purpose, brand and culture.
  2. Focus on the 7 essential stages of the employee life cycle (diagram below).
  3. Remember the core needs at the heart of every stage.

Out of all the interactions an employee has with their employer, Gallup identifies 7 critical stages that have the most influence on employees’ perceptions of their organization. An effective communication strategy is needed for all of these stages to make a fulfilling employee experience:

Image: Gallup employee engagement diagram, 2018

What do employees want?

Workers of today want:

  • participation in workplace decisions
  • better sharing of both good and bad news
  • managers who are sensitive and responsive
  • more of a partnership with managers than the old ‘command and control’ approach
  • freedom to balance life and work – less stress
  • the opportunity to work in self-managing teams
  • a chance to share in ownership

CEO communication

The CEO should communicate with employees to:

  • Discuss issues with frontline supervisors and managers
  • Hold small-group discussions and genuinely listening to staff
  • Hold ‘roadshows’ with ‘no holds barred’ questions
  • Use broadcast emails, texts, voicemails and social media on a regular basis and as required by circumstances
  • Explain face-to-face while using print communication to confirm details
  • Use external media to also reach employees

Measuring the CEO’s communication effectiveness:

  • Test supervisor and manager understanding of issues
  • Employee surveys, measuring CEO directly or upward appraisal on communication
  • Telephone follow-up to staff about CEO presentations
  • Email feedback response systems to assess the extent to which issues are understood and accepted by employees

The CEO has a symbolic communication role. Employees want him (it’s usually a male), to communicate the big picture, especially future plans and goals. They want to hear from the CEO about results, progress, achievements, downsizing and other big picture issues including the impact on their jobs – the self interest or “What’s in it for me?” factor. The CEO’s visibility is critical; the extent will vary according the size of the organization. Using electronic media is a poor substitute for a live appearance.

Why is the CEO so important? The CEO has the most influence over the entire organization and its culture and can usually make things happen. Research shows that CEO reputation is important to an organization’s success and is one of its most valuable and competitive assets. Weber Shandwick and KRC’s 2015 global online survey  found that on average 45% of a company’s reputation depended on the reputation of their CEO. Although the immediate supervisor or manager is the key person for day-to-day communication, the CEO is the decision maker at the top of the organizational structure.

Internal communicators can play a key role

As a communicator, you can play a key role in improving employee perceptions of your leaders through the interactions you arrange between employees and management. For instance, you can write articles with the by-line of the CEO and other senior managers, you can increase the number of employees who meet the CEO and senior management during site visits, ‘road shows’ and staff meetings. More than 70% of employees say these meetings provide the information they need or find useful for their job, according to Gray’s surveys.

PR staff can also translate corporate strategy into day-to-day terms for employees and explain decisions to them. It is important to avoid the common mistake of over-promising through being over-optimistic about corporate plans.

Significant corporate information should be shared quickly before the rumor mill starts working.

With ‘road shows’ and staff meetings it is important to find out ahead about hot local issues from local PR and HR staff. Topics of discussion should focus on what the employees say they want to hear from senior management. Information should be presented for 25% of the allocated time while the rest of the time should be used for two-way dialogue and questions.

About the author Kim Harrison

Kim Harrison loves sharing actionable ideas and information about professional communication and business management. He has wide experience as a corporate affairs manager, consultant, author, lecturer, and CEO of a non-profit organization. Kim is a Fellow and former national board member of the Public Relations Institute of Australia, and he ran his State’s professional development program for 7 years, helping many practitioners to strengthen their communication skills. People from 115 countries benefit from the practical knowledge shared in his monthly newsletter and in the eBooks available from cuttingedgepr.com.

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