What Really Drives Employee Engagement?
January 24 2013 by Punit Renjen
Exceptional organizations have a two-sided ledger that not only strikes a balance between strategy and culture, but also connects them. Deloitte’s Core Beliefs and Culture survey, which polled approximately 300 executives and 1,000 employees from companies nationwide1, found that 94% of executives and 88% of employees believe a distinct workplace culture is important to business success.
However, there’s more work to be done to close the gaps on other business priorities. The study indicates executives tend to prioritize a clearly defined business strategy (76%) above clearly defined and communicated core values and beliefs (62%), whereas employees value them equally (57% and 55%, respectively). Also, 70% of employees who agreed that their companies had performed well financially said their boss speaks to them often about culture. But only 19% of executives and 15% of employees believe strongly that their organization’s culture is widely upheld.
Consider those businesses known for exceptional customer service. Often, their culture is their strategy. Nordstrom and Zappos.com embed their cultures into their service delivery strategies by trusting their people implicitly, encouraging them to use their judgment, and empowering them to take action that will delight their customers.
Examples? For many years, Nordstrom employees were given a small grey card with the company’s rules. Rule #1 said: “Use best judgment in all situations. There will be no additional rules.” Such guidance becomes real, for example, when a Nordstrom employee decides to split two pairs of shoes to fit a man with different-sized feet. At Zappos.com, it’s inherent in how the company describes itself – as a service company that just happens to sell shoes.
To create an exceptional culture:
- Define the basis of your organization’s culture – its core beliefs and values.
- Communicate them vigorously.
- Embed them in everything you do. At Deloitte, ours are woven throughout the performance plans and appraisals of our partners and directors.
Goals and engagement
Another important seam supporting exceptional organizations joins executive goals with employee willingness to achieve them. Many businesses, however, are apparently struggling to stitch the two together. According to Gallup, 70% of American workers considered themselves disengaged during the first half of 2012.
This may be in part due to differing views regarding what drives employee engagement. The Core Beliefs and Culture survey found a consensus (83% of executives and 84% of employees) that having engaged and motivated employees is a top factor substantially contributing to company success. However, executives ranked tangible elements such as financial performance (65%) and competitive compensation (62%) most highly as drivers of employee engagement, while employees rated more highly the intangible elements of regular and candid communications (50%) and access to management/leadership (49%).
Millennials might have the keenest insight on this disconnect. Not shy about speaking up, they’ve voiced an urgent need for their work to have meaning beyond just making a profit. Interestingly, companies that put purpose before profit can inspire employee and shareholder confidence.
Look at Johnson & Johnson. Its credo distinctly states its higher calling: “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.” Or, think of those exceptional organizations built upon innovation and you’ll find the bellwethers of their industries – companies like Apple, IBM and Microsoft. They’ve created a culture that unites passionate people with the unknown, the unexplored, and the unlikely. What follows can lead to dramatic breakthroughs and competitive advantage.
To create an exceptional culture:
- Define your organization’s purpose and higher calling.
- Recognize that profit is not purpose. Profit is an outcome of purpose.
- Help everyone understand how their work contributes to organizational success.
Values and actions
If there’s one seam that most shapes a business, it’s the one that links actions with values. Employees continually watch their leaders for cues about how to act. But when leaders say one thing and do another, a dispiriting process sets in, with confusion and uncertainty eventually leading to lost motivation and trust.
Deloitte’s survey indicated a significant gap between executive belief and employee perception, often punctuated by executive overstatement. For instance, 84% of executives believe senior leadership regularly communicates their company’s core values and beliefs. Only 67% of employees feel that is true. In terms of “practicing what one preaches,” 81% of executives compared to 69% of employees believe senior leadership acts in accordance with the company’s core values and beliefs. Finally, 45% of executives said social media had a positive impact on workplace culture; only 27% of employees agreed.
Employees notice when leaders exemplify the culture they so proudly proclaim – and sometimes they even follow suit. Many years ago, Starbucks lost three employees during a robbery at one of its stores. Rather than send condolences from afar, its CEO flew cross-country to spend an entire week with employees and their families in the area. Some years later, a Starbucks barista offered one of her customers much more than a free refill. Knowing that her longtime customer desperately needed a kidney transplant and had no suitable donor, she took a blood test. A few days later, she told her astonished customer that she was a match. Whether it was culture, individual compassion, or both, the connection of values and actions sets examples for others to follow.
To create an exceptional culture:
- Make culture real by living core values and beliefs for everyone to see.
- Build culture directly through such time-honored norms as mentoring, face-to-face interaction, and robust, specific feedback.
- Align values with actions to foster an even greater alignment – the ability of executives and employees to connect, relate, and act as one.
Leaders who want to hold the fabric of their business together can begin by connecting strategy with culture, goals with engagement, and values with actions. It can mean the crucial difference between an organization becoming exceptional – or coming apart at the seams.
Mr. Renjen is chairman of the board, Deloitte LLP.
1 The study was conducted in March 2012 by Harris Interactive on behalf of Deloitte. It surveyed a nationwide sample of 1,005 U.S. residents, 18 years or older, employed full time at companies with 100 employees or more, and 303 corporate executives from companies with revenue of $1B or more on a number of questions related to culture in the workplace.