Employee Engagement & Relations
Scenario Ulrich and Smallwood
In 2003, Ulrich and Smallwood questioned why two companies in the same industry with similar earnings could have vastly different market values. Ulrich and Smallwood also found a correlation between employee engagement and customer satisfaction, identifying that for every one percent increase in employee engagement, customer satisfaction increased by 0.05%.
Research of the effect of employee engagement on business outcomes has been undertaken by International Survey Research (ISR). The results showed that in one year, companies with high employee engagement levels improved their operating income by 19.2% while companies with low employee engagement levels declined by 32.7%. Companies with high levels of employee engagement also ‘demonstrated a 27.8% improvement in earnings per share (EPS), while companies with low employee engagement reported an 11.2% decline in EPS over the same period.’
Literature on employee engagement also highlights the increasing importance of intangible factors in determining the market value of companies. Factors such as the quality of leadership, the quality of team work and the learning and knowledge sharing systems in the company, (sometimes referred to as the social capital of the organisation), are estimated in some studies to account for up to 50% of its market value, particularly in direct customer service organisations.
Task 1
Critically discuss the importance of employee engagement and relations in the light of organisational contexts described in the above scenario.
Task 2
Critically discuss the main factors driving the need for employee engagement and relations strategy for improving earnings per share (EPS) within an organization.
Task 3
Identify and critically analyse the challenges of managing employee engagement and relations within an organisation.
Task 4
Propose employee engagement and relations strategies designed to improve the long-term business performance and productivity of an organisation which currently has low levels of employee engagement within the given scenario. Provide adequate rationale for your proposal.
Introduction
Every organisation needs effective employee engagement strategies to create a good impact on productivity and overall business performance. In the contemporary business world, organisations intend to shape effective employee engagement strategies to change the behaviour of employees and increase their assertiveness to contribute to success. Employee engagement can boost earnings per share, enhance productivity and improve different business outcomes. Recent studies have shown a strong relationship between employee engagement and financial stability or growth of the company. In this comprehensive analysis, various factors, which are associated with employee engagement and business benefits, will be discussed. Apart from it, challenges in maintaining employee engagement in an organisation will also be elaborated along with some key insights. Some employee engagement strategies will be proposed at the end to derive expected business benefits. Usually, it has been perceived that employee engagement only improves employee performance in the internal business environment. However, modern studies tell that it also enhances financial performance. The International Survey Research has shown some remarkable results regarding employee engagement. By showing the difference between the two firms, results have been highlighted. This analysis is a further investigation, which covers critical drivers, challenges, and practical strategies. Tesco, one of the largest retailers in the United Kingdom, will be analysed in several tasks.
Task 1: Importance of Employee Engagement & Relation
In both large and small organisations, employee engagement represents the level of enthusiasm. Employee engagement is a process of engaging employees in different work activities to meet the goals and objectives of an organisation. It is based on trust and integrity. Management engages employees by creating or establishing working conditions, which can help them to increase their capacity and potential to work for the company effectively. Employee engagement seems a participative approach in the company which increases the assertiveness regarding decision making, teamwork, and overall work improvements. Better employee engagement leads to better employee relations. The principal output of employee engagement is motivation, and it is also a key driver of better employee relations and retention (Abadi and Chegini, 2013).
· Importance of Employee Engagement & Relation
Employee engagement and relations are essential for an organisation. The case scenario streamlines some critical benefits for the business. One of the most prominent benefits of employee engagement is productivity. It has been revealed that employees who are invested in their roles are more productive compared to other employees. Employee engagement is vital because it streamlines more challenges and responsibilities for employees. It seems a delegation and participation, which motivates a group of employees to work for the organisation effectively. Along with productivity, employee retention can be gained. On the other hand, one of the most prominent benefits for the company is a possible increase in earnings per share. The importance of employee engagement can be justified by increasing the operating income. As mentioned in the scenario, the operating profit can be improved by 19.2% after implementing effective employee engagement strategies. Thus, the importance of employee engagement and relations can also be justified by increasing profitability. However, critically, employee engagement is associated with effective leadership, teamwork, and learning and knowledge sharing systems. If an organisation does not contain these aspects in the internal environment, employee engagement objectives cannot be attained. Quality of leadership, team building, and knowledge management systems are drivers of employee engagement, and through perfect combination, the difference can be made. In modern organisations, management enables employee engagement to build durable and long-term relationships with employees. Thus, strengthening the financial position and building strong employee relationships is possible through active employee engagement. The main priority of an organisation is to improve the business outputs (Kaliannana and Adjovub, 2015).
Task 2: Factors driving the need for Employee Engagement & Relations (Tesco)
In Tesco, a prominent grocery chain in the United Kingdom, many factors are driving the need for employee engagement and relation. For Instance, one of the most prominent drivers is a career development opportunity for employees. It has been revealed that an organisation has to create appropriate opportunities for employees to motivate them and ensure employee retention. Engaging employees in every business activity may need some promotions in the departments. Thus, it seems a better way to implement the employee engagement strategy. Another factor driving the need for employee engagement is the learning curve. In the contemporary business era, the company has to adopt the learning curve. If the company uses a participative approach to meet goals and objectives, it can work with employees to learn modern skills and further job requirements. Learning leads to improvements in the internal business environment, and it seems a significant factor, as far as the success of the company is concerned. Cultural diversity is another factor, which drives the need for employee engagement and relation (Robinson, Perryman and Hayday, 2004). For Instance, Tesco usually hires people, who contain different norms, culture, religion, and face. However, to gather them to work on the same agenda, it seems necessary to engage employees and build better relations. Providing opportunities for every employee in the department or organisation to contribute to the company’s success is key, which can reduce the negative aspect of cultural diversity or a diverse workforce (Leea and Michael, 2015).
· The concept of Earnings per Share (EPS)
Earnings per Share are a portion of profit, which is to be allocated to each share of the common stock. It seems a net income regarding each stock of the company. An increase in the earnings per share indicates the increasing profitability of Tesco. Interestingly, an increase or decrease in earnings per share can depict the increase or decrease in profitability respectively. It can be improved through effective employee engagement and relation strategies (Leea and Michael, 2015)
· Improving EPS in the Organization
As mentioned, employee engagement and relation strategies can improve employee performance, productivity, and overall business outcomes. Each common stock of the company can be created through different business segments and divisions. In every business segment or division, employees are to be engaged to participate, learn and improve, and ultimately, it creates a positive impact on earnings per share. Productivity and improvement in an organisation are interrelated with positive financial output and positive or improving earnings per share is an example of it (Zwick, 2004).
Task 3: Challenges of Managing Employee Engagement and Relations
Employee engagement is always a better option for the management of the company to improve performance and accelerate overall business outputs. Critically, communication, leadership, and management are some critical challenges in this regard. The elaboration of these challenges along with some insights is as below.
· Communication
Unfortunately, current communication vehicles cannot work in the employee engagement process, especially in Tesco. In this organisation, it has been revealed that top-down communication is not only a single solution to employee engagement and relationship. For Instance, top-down communication does not empower employees to share ideas, thoughts, and reservations actively. Communication seems traditional in many organisations, which creates a negative impact on the employee engagement process. However, technology can play a vital role in maintaining effectiveness. Critically, if the company intends to invest in communication technology, it may increase the cost of employee engagement as well, and ultimately, an increase in earnings per share cannot be justified. Thus, implementation of employee engagement and relation strategies needs a robust internal communication system. The purpose of the communication system, both top-down and down-top, is mandatory to support commitment and relationship (Park, 2012).
· Leadership
Leadership has become a significant challenge in the employee engagement process. In an organisation, a leader has to create a great workplace. However, critically, different styles or philosophies or leadership can create an impact on this process. For Instance, the appropriate leadership style to ensure employee engagement is participative or democratic. However, an organisation, which is triggered by mass production, may not have time to spend time or alter the work structure. When a leader in the company comes without a clear vision, it cannot motivate employees. Thus, it is the most significant challenge, which is to be overcome to get expected results.
· Management
Managing employee engagement and relations is a big challenge in the contemporary era. For Instance, the Tesco has to identify employees or pool of employees, which are to be engaged. Prioritising relationships and engagements are tough for management. The management has to ensure that employees are willing to work in different teams (Song et al., 2014). Active engagement and relationship are possible through tailoring actions plans for each need. Identifying the needs of employees or groups is one of the prominent challenges. However, tackling the problem and coming up with related action plans seems imperative. The organisation must become aware of these challenges to implementing strategies successfully (Song et al., 2014).
Task 4: Employee Engagement and Relations Strategies to Improve Performance and Productivity
· Bottom-Up Approach
Depending on different challenges regarding employee engagement and relations, the management can shape several strategies to improve performance and productivity. In a retail business, one of the prominent strategies is the “Bottom-Up” approach. It seems pertinent to the communication challenge as well. Instead of using the top-down approach, observing or gauging employee’s opinions, feelings or thoughts are a right path. It can motivate employees and make them more responsible for different work activities. Supporting the bottom-line of the company is an excellent move to streamline organic growth, which is associated with profitability and productivity (Zwick, 2004)
· Learning Culture & Strategies
Enabling effective group learning is a key to employee engagement and relation. For Instance, management can create a unique culture, which supports the learning process of employees. Instead of streamlining traditional training practices, the company has to go the extra miles. Putting employees or teams out of their comfort zones and challenging them to learn something new and meet goals can work for the company (Shaheen and Farooqi, 2014).
· Employee Empowerment in Change
Employee motivation is a crucial driver of employee engagement and relation. However, it can be done in different ways. For Instance, in the change process, it is essential to engage employees from the bottom-line to streamline different ideas. The most important thing is to empower employees at the bottom line. It will create value and enhance the visibility of motivation. Good ideas can come from anywhere within the organisation, and the company must be aware of it.
Measuring the level of Engagement
Measuring the level of engagement is mandatory to justify these strategies. The most appropriate measure for the company is an increase in earnings per share. If the income level is improved after improving production and performance, employee engagement will be successful. On the other hand, if operating income remains the same or lower than before, the company has to execute alternatives. The simplest measure that this organisation can use is the level of employee turnover. If employees are engaged well, the turnover will be low. However, if engagement and relations are poor, results can be different. The firm may change these measures when changing employee engagement strategies.
Conclusion
In the end, it is to conclude that an organisation must create a flexible culture, which can absorb any change or new strategies regarding employee engagement and relations. Different businesses can shape different employee engagement strategies to create a good impact on the work process. Engagement level can be modified in different workplaces as well. The study has shown a positive relationship between employee engagement and business performance. Employee’s performance, work productivity, financial growth, and flexible work culture are top outcomes of the employee engagement process. The study highlighted the main factors driving the need for employee engagement in an organisation. Some key challenges such as management, leadership, and communication process have also been illustrated along with a positive impact. Finally, some key strategies to engage employees in the internal business environment are described along with an effect on performance and productivity. Measuring employee engagement is one of the salient tasks of a leadership team or management to make some changes. Trends of doing business are changing, and employee engagement is the modern trend to be relevant and lucrative in the competitive landscape. Both internal and external, business benefits can be gained through the successful execution of these strategies.
References
Abadi, M.V.N.A. and Chegini, M.G. (2013) ‘Process Of Employee Empowerment (Concepts and Dimensions)’, Kuwait Chapter of Arabian Journal of Business and Management Review, vol. 2, no. 11, pp. 76-81.
Kaliannana, M. and Adjovub, S.N. (2015) ‘Effective employee engagement and organizational success: a case study’, Social and Behavioral Sciences, vol. 172, no. 27, pp. 161-168.
Leea, J. and Michael, C. (2015) ‘Drivers of work engagement: An examination of core self-evaluations and psychological climate among hotel employees’, International Journal of Hospitality Management, vol. 44, p. 84–98.
Park, R. (2012) ‘Cognitive and affective approaches to employee participation: Integration of the two approaches’, Journal of World Business, vol. 47, no. 3, p. 450–458.
Robinson, D., Perryman, S. and Hayday, S. (2004) The Drivers of Employee Engagement, Institute for Employee Studies.
Shaheen, A. and Farooqi, Y.A. (2014) ‘Relationship among Employee Motivation, Employee Commitment, Job Involvement, Employee Engagement: A Case Study of University of Gujrat, Pakistan’, International Journal Of Multidisciplinary Sciences And Engineering, vol. 5, no. 9, pp. 12-15.
Song, J.H., Lim, D.H., Kang, I.G. and Kim, W. (2014) ‘Team performance in learning organizations: mediating effect of employee engagement’, The Learning Organization, vol. 21, no. 5, pp. 290-309.
Zwick, T. (2004) ‘Employee participation and productivity’, Labour Economics, vol. 11, no. 6, pp. 715-740.
