The Year of Engagement?

The return of banking executive bonuses notwithstanding, a renewed emphasis on nonfinancial motivators is emerging as a priority focus for retaining key talent and optimizing productivity. A recent McKinsey Quarterly survey suggests that, whereas financial rewards such as cash bonuses and base pay increases can motivate workers in the short term, three noncash incentives in particular can be as effective if not more so for nurturing long-term employee engagement. They are: praise from an employee's immediate manager, attention from leadership (e.g., one-on-one conversations), and the opportunity to lead task forces or projects. The simple message these nonfinancial rewards convey are that employees are valued and their career growth and well-being are deemed important. And that's the kind of motivational news that is sorely needed.

Satisfaction woes. According to results of a 2009 survey released by The Conference Board in January 2010, only 45 percent of Americans are satisfied with their jobs-the lowest level recorded by this research group in 22 years and down from 49 percent in 2008. The survey notes that dissatisfaction, which has been on the rise for the past two decades, is attributable not only to incomes that have failed to keep pace with inflation or to increased health-insurance costs, but also to the fact that fewer workers find their jobs interesting. In 1987, the inaugural year of the survey, nearly 70 percent of respondents said they were interested in their work, compared to only 51 percent in 2009.

And that's not bad news for employees only. The Conference Board notes that workers are more likely to be innovative if they find their work of interest. Dissatisfied employees are less likely to take the kind of risks that help drive productivity, so employers also lose when employees are unhappy.

While these findings aren't surprising, one statistic in particular should be cause for concern. Roughly 64 percent of workers in the under-25 category said they weren't happy in their jobs, compared with 55 percent overall. This group of young workers—who arguably face among the fewest opportunities in this current job market—expressed the greatest level of dissatisfaction among all respondents. One question this raises is what impact this soured view of work may have long term on a population that typically enters the workforce energized and eager to learn. Engaging workers at the beginning of their careers is critical for keeping them on board and for maximizing their contributions to an organization.

Engaged and enabled. Last year, Hay Group Insight, the survey research division of global management consulting firm Hay Group (www.haygroup.com), compared the results of employee opinion surveys conducted in late 2008 and early 2009 at client organizations across industries (and representing more than 1 million employees worldwide) with results of surveys from these same clients prior to the downturn. Despite the bad economic conditions, more than 75 percent of these organizations saw improvements in opinion survey scores. Those that did had focused on increasing employee engagement and enhancing job satisfaction.

According to the research group, the tangible benefits to employers for their concerted efforts to keep employees happy and motivated included overall boosts in business performance, customer satisfaction, and employee retention. And yet, those organizations that outshone the rest went one important step beyond employee engagement to focus as well on employee enablement—making sure employees are not only effectively matched to positions based on their skills and abilities but are also provided with the essential tools and resources to do the work. For instance, with regard to business performance, those companies in the top quartile on employee engagement showed revenue growth 2.5 times that of companies in the bottom quartile. Yet, when factoring in those organizations in the top quartile of employee engagement and enablement, their revenue growth jumped to 4.5 times greater than those in the bottom quartile.

In terms of customer satisfaction, companies with high levels of employee engagement earned scores 22 percent higher than businesses with low levels of engagement, and organizations with high levels of both employee engagement and enablement demonstrated a 54 percent increase in customer satisfaction. Finally, with regard to employee retention, organizations with high levels of engagement posted turnover rates that were 40 percent lower than those with low levels of employee engagement, compared to reductions in voluntary turnover of 54 percent at businesses that both engage and enable their employees.

The takeaway: The key to survive and prosper in 2010 may hinge on making sure employees are happy, well-matched to positions that make full use of their talent, and equipped for tasks at hand.

Karla Hignite, principal of KH Communication, is editor of NACUBO's HR Horizons. E-mail: karlahignite@msn.com.