Employee Engagement and Strategic Management: A Case Study from Palestine
Yara A'sad and Andrew R. Thomas
Employee engagement as a strategic management tool is the focus of this chapter. In addition to some discussion about the importance employee engagement plays in achieving the strategic goals of the organization— through the creation of a healthy working environment, where everyone can be influential and active in fulfilling bigger objectives—we will discuss a Palestinian firm that recently implemented this approach and succeeded.
This case might fly in the face of recent reports that consistently detail how employees are increasingly disengaged from their jobs. For example, a report by Towers Perrin HR Services titled "Winning Strategies for a Global Workforce" stated that only 14 percent of global workers are highly engaged in their jobs and that managers are mostly at fault for the lack of more significant employee engagement.1
We recognize that this level of dissatisfaction may very well be due to the current economic downturn, when companies of all sizes and shapes shed employees in huge numbers after the onset of the global financial and economic crises of late 2008 and early 2009. The employees who remained were often faced with longer hours, more responsibilities, and reduced levels of compensation.
The concept of employee engagement is far more prevalent on the applied side than in the academic literature. The business press and consulting firms have been widely reporting the move across industries that encourage managers to engage their employees beyond the most basic levels of their employment. The belief is simple: more engaged employees are happier, and this translates into greater organizational productivity and a stronger corporate culture. Although this intuitively sounds good, there is not a lot of empirical research to back this up. Nevertheless, as numerous studies consistently report, there is very little doubt that employees around the world are more dissatisfied than satisfied with their current jobs.
"Employee engagement" has emerged in the past decade as a viable strategy for dealing with the unavoidable change and upheaval companies' face. The Gallup Organization's "Q12" survey has become the foundation for seemingly any firm trying to find out the degree of engagement, or lack thereof, that its employees possess.2 Gallup identified a strong link between levels of employee engagement, leadership effectiveness, and organizational success. An extensive multiyear study involving more than 100,000 employees, in 2,500 functions, and 12 industries revealed a number of specific workplace conditions that provide a direct link to organizational and employee success. Gallup has labeled these factors the "Q12." When present at high levels, these factors are the hallmark of an environment where employees can develop and grow. From this research, Gallup identified the concept of the "engaged workforce." Not surprising, organizations reporting high performance levels also had high levels of employee engagement.
The 12 questions Gallup asks are:
• Do I know what is expected of me at work?
• Do I have the materials and equipment I need to do my work right?
• At work, do I have the opportunity to do what I do best every day?
• In the last seven days, have I received recognition or praise for good work?
• Does my supervisor, or someone at work, seem to care about me as a person?
• Is there someone at work who encourages my development?
• At work, do my opinions seem to count?
• Does the mission/purpose of my organization make me feel like my work is important?
• Are my coworkers committed to doing quality work?
• Do I have a close friend at work?
• In the last six months, have I talked with someone about my progress?
• At work, have I had opportunities to learn and grow?
What is an "engaged worker"? According to Gallup, engaged workers are really the top or "best in class" performers in the organization. They are the employees who contribute, perform, and take a keen interest in doing their best. The impact highly engaged workers can have on an organization is dramatic. Gallup found the following results in organizations with high levels of employee engagement versus those organizations that reported low levels of engagement:
• 50 percent higher levels of employee retention,
• Levels of customer loyalty 56 percent higher than average,
• Reported 38 percent above the average productivity ratings, and
• Returned 27 percent higher profitability than organizations where employees were not highly engaged.3
When employees join an organization, they're usually enthusiastic, committed, and ready to be advocates for their new employer. Simply put, they're likely to be highly engaged. But often, that first year on the job is their best. Gallup's research reveals that the longer an employee stays with a company, the less engaged he or she becomes. Yet, although the idea of getting employees to be more engaged is a sound one, the implementation of the notion oftentimes comes up short, as the company's culture is simply not ready.
Evan Smith, vice president and general manager of Hypertherm, a New Hampshire-based designer and manufacturer of advanced metal cutting products, has spoken about how his company keeps employees engaged. Hypertherm is consistently selected as one of the best companies in America to work for. Founded in 1968 in a two-car garage, the company has its roots in building long-term relationships with its 1,000 "associates." Although 32 percent of the firm is employee owned through an ESOP, and profit sharing annually averages 10 to 15 percent, Mr. Smith attributes the strong level of highly engaged employees to a culture that goes beyond compensation. Throughout its four-plus decades, the company has never had a layoff. Although peaks and troughs have inevitably occurred,
Hypertherm has consciously pursued the strategy of reorienting its existing associates to new opportunities. In the spring of 2009, when the company, like so many others, was experiencing a massive slowdown—almost 50 percent from the peak just a year before—Hypertherm ramped up its R&D spending and dedicated substantially more resources to workforce development. In short, Hypertherm has aligned employee engagement with its longstanding corporate culture.4