Busting the Employee Engagement Bubble
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For years, HR leaders have been focusing a lot of time chasing employee engagement scores, and spending a lot of money on employee surveys and follow-up initiatives without demonstrating the bottom-line impact of their work. Is HR impacting their organization’s bottom line? Most likely. Are HR leaders demonstrating this and illustrating their value to executives? Hardly. This can change. Shifting the focus from typical HR outcomes of interest such as employee engagement, or job satisfaction, to business outcomes such as sales, customer satisfaction, financial performance, and employee performance is the first step. HR leaders need to go beyond slicing and dicing HR data and start demonstrating direct connections to business metrics that matter most to executives. In this white paper, IRI provides a comprehensive analysis across many organizations that illustrates the employee drivers that matter most for business outcomes. HR leaders can determine which of these drivers matter to their business outcomes within their respective organizations too. They can do this by using sound assessments, advanced analytics, and strategic focus when it comes to the initiatives (and investments) they undertake.
The Damage Caused by the Employee Engagement Fad
Back in the 1990s, a book was published called “First, Break All the Rules” from Gallup that introduced the concept of employee engagement to the world. Unfortunately, it was based on flawed research and purported to show that 12 magical things were all that any company - of any size, in any industry - needed to be successful. The research was flawed because companies that were already successful were examined and some common themes emerged. Discovering that companies that make a lot of money and are well-run also have happy employees is not surprising. The problem is that HR leaders (and Gallup) jumped to the conclusion that making people happy or engaged is what caused these companies to be successful. Wrong! The fact that those companies were successful is what made the employees engaged. IRI’s empirical research based on longitudinal studies using cause- effect statistical methodology bears that out and is reviewed below. Entirely too much money has been spent on employee engagement consultants who are selling pure snake oil. Bottom line: Employee engagement is not a business outcome and it is not a driver of business outcomes.
Meta-Analysis of Key Drivers of Business Outcomes
IRI took a statistical look back at data from 613,800 employees within 13,315 work units to determine which employee attitude drivers were most consistently related to business outcomes across various organizations and industries. The data showed that organizations can consistently connect employee survey data to business outcomes such as customer satisfaction, employee performance, financial performance, and safety. A few of the most impactful drivers of these outcomes were: accountability, career development, leadership, training, senior management, and work-life balance. Importantly, engagement was not a predictor of any business outcome, only turnover—and turnover can actually be a good thing. These findings underscore the need to look beyond engagement as the end-all be-all of employee attitudes, and focus on what you can truly connect to business results.
**Green check marks represent a key driver of business results that appeared in nearly all of the organizations in IRI’s meta-analysis study. Purple check marks represent key drivers that appeared in a significant number of the organizations.
What Real Analysis Actually Tells Us
When using advanced statistical analysis (structural equations modeling) and not relying on correlation analysis, the results paint a significantly different picture. That’s because correlation analysis can be very dangerous: shark attacks and ice cream sales are correlated but have nothing to do with each other.
For years, leaders have been told that employee engagement drives business results based on faulty and weak research. This data clearly shows that HR leaders should focus on using employee survey to find out what drives individual performance, organizational performance and actual business outcomes. Once they do that, their employees will find success and be more engaged in their jobs. Trying to get employees engaged with helping them succeed is a losing game—and real data with real analysis proves this.
Focus on What Matters Most
HR credibility suffers every day that employee engagement is talked about as a magic elixir. With this discussion of advanced analytics and demonstrating ROI, think back to an important finding from the meta-analysis. Engagement was not a predictor of any of the business outcomes examined. Yet, engagement is the most often sought after outcome for HR leaders. To be clear, engagement is not a business outcome nor a driver of business outcomes.
Many consulting firms have made it their sole business to sell surveys and services based around employee engagement. What are we spending all this money on if we haven’t shown whether engagement provides bottom-line impact?
Consider focusing on solid business outcomes (instead of the latest consultant’s fad) that can provide more actionable information and demonstrate greater impact in driving business results than employee engagement. How? Advanced analytics and strategically targeted HR initiatives.
If you want to be a real partner to your business, use your employee survey (and your other assessment tools) to drive actual business outcomes and not fads.
IRI Consultants partnered with SMD, the leader in predictive analytics for employee assessments, to form IRI Analytics. IRI Analytics is the only provider of patented analytics technology for healthcare organizations