After decades of corporate discourse about the war for talent, it appears that the battle is over, and talent has won. Employees today tend to have increased bargaining power, the job market is highly transparent, and attracting top-skilled workers is a highly competitive activity.
The balance of power has shifted from employer to employee, pushing business leaders to learn how to build an organization that engages employees as sensitive, passionate, creative contributors
Many companies are now investing in analytics tools to help figure out why people leave, and the topics of purpose, engagement, and culture seem to weigh on the minds of business leaders everywhere.
Recent research conducted by Bersin by Deloitte suggests that the issues of “retention and engagement” have risen to the number-two spot in the minds of many business leaders, second only to the challenge of building global leadership. Those concerns are grounded in disconcerting data:
- Gallup’s 2014 research shows that only 13% of employees surveyed worldwide are “highly engaged,” and 26% are “actively disengaged.”
- Glassdoor, a company that allows employees to rate their employers, reports that only 54% of employees using its site recommend their company as a place to work.
- In the high-technology industry, two-thirds of all workers surveyed believe they could find a better job in less than 60 days if they only took the time to look.
- Eighty percent of respondent organizations believe their employees are overwhelmed with information and activity at work (21% cite the issue as urgent), yet fewer than 8% have programs to deal with the issue.
- More than 70% of millennials surveyed expect their employers to focus on societal or mission-driven problems; 70% want to be creative at work; and more than two-thirds believe it is management’s job to provide them with accelerated development opportunities in order for them to stay.
In short, in many cases, the balance of power has shifted from employer to employee, pushing business leaders to learn how to build an organization that engages employees as sensitive, passionate, creative contributors. The shift taking place is moving from improving employee engagement to a focus on building an irresistible organization.
In this article, we’ll discuss how the traditional employee-work contract has changed and why companies should embrace the shift needed to become irresistible.
Time for a change
In a recent survey of 80 of the most advanced users of engagement surveys, only half believe their executives know how to build a culture of engagement. Among the broader population of companies, the percentage is far lower.
Consider the radical changes that have taken place at work: employees typically operate in a transparent job market where in-demand staff may find new positions in their inboxes. Organizations are often flattened, giving people less time with their direct managers. Younger employees have helped increase the demand for rapid job rotation, accelerated leadership, and continuous feedback.
Finally, the work environment is highly complex. Where employees may have once worked with a team in an office, they now work 24/7 with email, instant messages, conference calls, and mobile devices that have significantly reduced the barriers between work and personal lives.
These changes to the workplace have altered the engagement equation, causing many organizations to rethink it. For example, a well-known pharmaceutical company found that its executives and scientists in China were leaving the company at an alarming rate. The annual engagement survey provided no information to help diagnose this problem.
By running a statistical analysis on all the variables among these departing high-potential workers, the company realized that in China, compared with other parts of the world, their people were expecting very high rates of compensation increase every year. The job market there was highly competitive, so people were being poached based on salary progression alone.
Today, more and more companies are deploying analytics solutions to help predict retention and correlate factors such as compensation, travel schedule, manager, and demographics to understand why certain people are less engaged than others.
Still, the answers can be hard to find. High-technology companies, for example, often throw benefits at employees to see which ones stick— unlimited vacation, free food, health clubs, parties, stock options, and fun offices are common. Do these all result in high engagement? Most companies can’t really tell.
So what matters today? How can management create an organization in today’s work environment that is magnetic and attractive, creates a high level of performance and passion, and continuously monitors problems that need to be fixed?
Making work irresistible
The research suggests that organizations should rethink the problem. There are three typical issues to address:
- Companies should expand their thinking about what “engagement” means today, giving managers and leaders specific practices they can adopt, and holding line leaders accountable.
- Companies should use tools and methods that measure and capture employee feedback and sentiment on a real-time, local basis so they can continuously adjust management practices and the work environment at a local level. These tools include employee feedback systems as well as data-analytics systems that help identify and predict factors that may create low engagement and retention problems.
- Leaders in business and HR should raise employee engagement from an HR program to a core business strategy.
After two years of research and discussions with hundreds of companies, Bersin by Deloitte uncovered five major elements—and 20 underlying strategies—that can work together to help make organizations “irresistible.”
The simply irresistible organization®
Five elements drive engagement
These 20 factors fit together into a whole system of engagement in an organization, one that is held together through culture.
Element 1: Make work meaningful. Perhaps the most important part of employee engagement is job-person fit. We need to make sure jobs are meaningful, people have the right tools and autonomy to succeed, and that we select the right people for the right job.
Despite the rise of technology and pressures for increased productivity, research shows that when we enrich jobs, giving people more decision-making power, time, and support, the company tends to make more money.
Beyond that, research also shows that meaningful work often takes place in small teams—and engaged people need time to think, create, and rest.
Element 2: Foster great management. The word management is used here—not leadership—to refer to the daily, weekly, and monthly activity managers use to guide, support, and align their people.
Specifically, high- performing managers typically create simple goals, make sure they are clear and transparent, and revisit them regularly. In addition, a coaching culture is a practice that is highly correlated with business performance, employee engagement, and overall retention.
Generally, high-impact organizations also spend 1.5–3 times more on management development than do their low-impact peers. In addition, most recognize the need to simplify the annual performance review, given that it can sometimes be one of the most damaging and disheartening processes employees face each year.
Element 3: Establish a flexible, humane, inclusive workforce. Given the nature of work today, if leaders want employees to engage with their organizations, they should give them a flexible and supportive work environment.
In addition to benefits that help make work fit our lives and employee wellness programs, research also shows that open, flexible workspaces can have a major impact on engagement.
Another driver is the need for continuous and ongoing recognition. The key to effectiveness here is to create a social environment where recognition can flow from peer to peer, freeing managers from being the judge and jury of employee recognition.
Finally, highly engaged workplaces are typically inclusive and diverse. And the inclusion usually comes from the top: leaders should overcome their unconscious biases and make every effort to listen, create open forums for discussion, and promote people of varied backgrounds (gender, nationality, race, age) who embrace listening and inclusive values.
Element 4: Create ample opportunities for growth. First, there should be developmental opportunities, both formal and informal, that let people learn on the job, take developmental assignments, and find support when they need help.
Companies should also support and honor facilitated talent mobility. That means supporting internal mobility, giving people the freedom to try something new and move from a role where they are highly productive to one where they may be a trainee again.
Finally, organizations should look at their management and leadership behaviors to make sure they foster a learning culture. Most leaders are rewarded for “making the numbers.” While this is certainly important, leaders should also be rewarded for developing people, moving them into the most effective roles, and keeping retention high.
Element 5: Establish vision, purpose, and transparency in leadership. There are four leadership practices that we’ve found most directly impacts employee engagement.
The first is to develop and communicate a strong sense of purpose. Our research shows that “mission-driven” companies surveyed have 30% higher levels of innovation and 40% higher levels of retention, and they tend to be first or second in their market segment.
The second important element is transparency. In fact, new research shows that among millennials, transparency among leadership rates among the most important drivers of company loyalty.
Third, leaders should continually invest in people. Our research on “high-impact organizations,” conducted in 2005, 2008, and 2011, found that investing in people matters in good times and in bad.
Finally, our research shows that leaders should continually focus on inspiration. Through their words, communications, and actions, it is often the top executives who ultimately engage everyone in the organization.
Plotting the future
While 90% of executives surveyed in the Bersin by Deloitte study understand the importance of employee engagement, fewer than 50% understand how to address this issue.
Today’s technology-flooded world of work has become complex, demanding, and integrated into our lives. Even though 79% of respondent companies today find it daunting and difficult, they can still plot their path to the future and design organizations that will thrive with passion, performance, and engagement by focusing on the elements of irresistible organizations.
About the Author
This Deloitte CFO Insights article was developed with the guidance of Dr. Ajit Kambil, Global Research Director, CFO Program, Deloitte LLP and Lori Calabro, Senior Manager, CFO Education & Events, Deloitte LLP. For more information about Deloitte’s CFO Program, visit www.deloitte.com/us/cfocenter.
Copyright © 2015 Deloitte Development LLC. All rights reserved.
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