What makes employees happy?
Remuneration is not the main factor in driving employee engagement
The United Arab Emirates has a government minister devoted to happiness, while the Indian states of Madhya Pradesh and Andhra Pradesh have set up departments for it.
In Germany, there’s a Ministerium fur Gluck und Wohlbefinden interactive art project. It may sound like George Orwell’s 1984 with its four dystopian ministries of truth (propaganda), peace (war), plenty (rationing) and love (law and order and political torture).
Yet, 35 years after the supposed actuality of that nightmarish vision, the well-being and engagement of citizens, employees and customers are becoming key points of differentiation for countries, governments, and companies.
With shareholder value derided as an all-justifying measure of corporate success following the 2008 financial crisis, engagement with a wider set of stakeholders is regarded as healthy corporate governance and reputation management. Yet this is much more difficult than simply setting up a ministry or department.
Key decisions must be made, notably about whose happiness organisations should be primarily targeting.Does engagement start with the customers providing the revenues or the staff servicing their needs?
This is an evolving debate which flows naturally into the metrics and measurements, and it is taking time to hone engagement measurements that can be quantified as neatly as dividends and total shareholder returns. However, the employee engagement lobby seems to be gaining traction over adherents of a customer-first engagement approach.
Lord Mark Price, the former Waitrose managing director and UK government minister for trade and investment who now runs employee engagement surveys firm Engaging Works, says: ‘You have to start with your employees feeling engaged, happy and committed. If you have happy employees, they stay longer, work harder and give more. As a consequence of that, your customers get better service and, as a consequence of that, you have a more sustainable and profitable business over the long-term.
‘Over the last 20 years, the narrative has changed from it all being about maximising shareholder value at any cost to a centricity of the customer. Now, more enlightened organisations are moving past that to understanding that the basis of customer centricity is having people who can deliver it. To have great customer service, you have to have great staff engagement.’
Matt Brittin, Google’s president of Europe, the Middle East and Africa, agrees that the 17,000 staff he oversees are his priority. ‘Employee engagement is hugely important for us,’ he says. ‘We have a very open culture, with online meetings every week where any employee in the company can ask a question of the founders and leaders.
The most efficient organisations are those that have the greatest input from their people in constantly looking for easy ways to innovate and improve
‘We try to be really transparent, and employees are active in reporting concerns. On issues such as behaviour at work, everyone has a point of view and every employee has a role in making the working environment better.
‘On some other matters, such as what Google is doing in China, everybody will still have a point of view but ultimately that will be a decision for a smaller number of people. It’s good to be challenged and good ideas can come from everywhere.’
Price believes that prioritising staff and customer engagement drives not only shareholder value but also innovation, efficiency, sustainability and corporate social responsibility.
‘The most efficient organisations are those that have the greatest input from their people in constantly looking for easy ways to innovate and improve,’ he says. ‘If you just leave it to a small number of managers sitting in an office, you’re never going to achieve as much.’
Adherents of the primacy of customers do still exist. One is Ro Monnington, managing partner of The Future Customer, a customer loyalty agency that has worked with clients such as telecoms group 3, supermarket chain Sainsbury’s and The Daily Mail newspaper and has recently been acquired by marketing and communications group ICF Next.
He believes that ‘strengthening the bond between brands and the customers who define their future has never mattered more’.
Andrew Kelly, ICF Next’s sales and marketing partner, adds: ‘From a commercial perspective and through the lens of loyalty, customers are the number one asset for any organisation, carrying the brand forward, advocating, promoting and purchasing, with the power to do the opposite as well.
‘Long-term loyalty with the brand, one in which this sense of loyalty is more of an outcome rather than a scheme per se, is absolutely fundamental to long-term sustainability and success from a customer perspective.
‘However, employees play a crucial role in this as well. In fact, they shape the customer experience in ways that have can have resonating impact with a consumer long after an interaction. In that sense, both employees and customers are invaluable, and are not mutually exclusive. Instead, they co-exist and thrive together.’
Some leaders go further, finding it tempting to group all stakeholders together in an inclusive, politically-correct approach. Dan Labbad, chief executive for Europe at Lend Lease, the Australian property developer rejuvenating London’s Elephant & Castle estate and the office and housing blocks above Euston station, does not see this as a cop-out.
‘We work for all stakeholders, as opposed to shareholders in isolation,’ he insists. ‘Our view is that if you work to find a common interest, you will end up increasing and maximising value for everybody. Shareholder value is ultimately at the centre of what we do in the private sector, but you have to look at what informs shareholder value and there has been a devolution of power that’s been driven by technology.’
Labbad sees the increased importance of reputation playing to a broad definition of ‘customer’ as anyone who interacts with an organisation is some way, shape or form, including governments, communities and the general environment in which a company operates.
He adds: ‘It’s the same with employees. We produce very complex buildings, working with a multitude of stakeholders on large-scale regeneration projects around the world. You need an empowered workforce to do that. But I think you’ve got to look at all stakeholders as equally important.’
They are not all equally measured, however, especially when it comes to Price’s bête noire while at Waitrose: the annual employee satisfaction survey.
‘I found this one of the greatest frustrations of my time at the John Lewis Partnership,’ he admits. ‘There was no context about the macroeconomic retail world, so I started to find it completely pointless. Year after year, we would have employee engagement tests. They would cost an awful lot of money, take months to get the results and then would typically just report some marginal movement.
‘It’s the same at lots of companies. Employees spend about 40 minutes filling in a survey but hear nothing until three months later management announces that it is going to install a pool table, which is completely unconnected with what they put in the survey and makes employees feel even more disconnected.’
Engaging Works aims to change this by giving employees who fill in five-minute surveys workplace happiness scores based on what it sees as the six principal contributors to employee engagement: fair and appropriate pay and recognition, information to help people do their jobs well, trust, empowerment, employee well-being and job satisfaction.
The system allows employees to compare their results with happiness scores in other industries and countries, as well as offering advice on how the score could be improved.
There’s also an offer for companies that Price says gives faster results and provides much more comparable data than conventional employee engagement surveys.
At Google, Brittin admits to still using an annual survey to measure employee engagement, saying the results are ‘overwhelmingly positive,’ but adds that the survey also allows staff to highlight areas where the company can improve.
Employee engagement tests cost an awful lot of money, take months to get the results and then typically just report some marginal movement
He claims this input has led directly to initiatives such as the company’s programme to foster greater digital skills on Britain’s high streets and its work helping women to build careers in science, technology, engineering and mathematics.
‘We find that employees feel positive about companies with a purpose,’ says Brittin. ‘Organising the world’s information and making it accessible and useful for everyone is something that people want to get out of bed for.’
At Land Lease, Labbad says the company’s employee engagement led to Be Onsite, a not-for-profit organisation working to retrain ex-offenders, and The Loneliness Lab, an 18-month project to help make London a less lonely city to live in.
‘Be Onsite was developed by people in the business,’ he says. ‘They saw the opportunity and the need and developed the partnerships on the ground to run it. We’ve just put our 623rd apprentice through the scheme.’
The Loneliness Lab, meanwhile, was set up by a group of Lend Lease employees concerned about social isolation in the communities where the company operates. Workers suggested ten ideas to alleviate the problem.
One scheme encourages Elephant & Castle residents to attach coloured sticky notes to their letterboxes to denote how they were feeling and whether help is needed.Whether through surveys or other means, technology is often seen as a cost-effective facilitator of employee engagement, enabling quick and regular communication and rapid feedback across large unwieldy organisations.
However, some communicators are concerned that technology-based methods could commoditise engagement activities, rather than produce the required levels of commitment and energy.
London-based consultancy Engage for Change teamed up with Carlo Communications in Australia to explore this issue in 2017 but managing director John Smythe admits that more work is needed. ‘We found that too much tech is dropped into the workplace without clearly thought-through-commercial or cultural purpose, governance and training,’ he says.
We find that employees feel positive about companies with a purpose
‘In addition, Baby Boomers and Generation X leaders are reported as providing poor digital role models. It could be time to re-evaluate the founding presumptions of employee engagement.’
One issue identified by the research is that younger workforces at technology companies tend to have a flatter perception of corporate hierarchy than those in stiffer, traditional sectors, such as financial services.
This provides scope for a team-based communications narrative, using the collective pronoun ‘us’ rather than the confrontational language of ‘managers’ trying to engage workers.
‘The message becomes more inclusive, with the final glory shared with everyone,’ says Smythe. ‘And communicating it online allows people to reach down and up, across, inside and outside the hierarchy, diffusing power and re-arranging new spheres of influence.’
Engaging Works adds that its own research found that employee happiness is not driven primarily by pay, but that being listened to and feeling a respected part of an organisation often make a greater contribution.
This suggests that business owners, directors and communication heads should be less worried that ‘engaging’ with employees will simply result in ear-bashing with anti-management moans.
Price adds: ‘Of course there are commercial pressures and it’s a leap of faith to go from paying people the bare minimum you think you can get away with to being committed to genuinely rewarding excellent performance.
‘It’s also a big decision to share information with your staff so they can be better engaged, rather than withhold it for yourself because you are a manager.’
He is adamant that academic research overwhelmingly suggests that organisations with highly-engaged workforces have higher profits higher and lower staff turnover than those that don’t get this issue right.
It is perhaps ironic that John Lewis, the corporate epitome of this approach, is experiencing one of the most difficult periods in its history just as the prominence it gives to employees is gaining a wider following. As it celebrates the centenary of its partnership next year, its contribution to the corporate pursuit of employee happiness may be its greatest legacy. However, corporate fashions change almost as quickly as those in the firm’s stores. This engagement story has a lot further to run.