Thursday, 16 July 2009

The MacLeod Review

 

   David MacLeod’s review of employee engagement has also been published today.  157 pages this time and more required reading for HR! 

The report is introduced by Peter Mandelson who in typical fashion, oversells it by claiming that the report “sets out for the first time the evidence that underpins what we all know intuitively”.  Despite this, there is a lot in here, including useful stats comparing engagement levels reported from different survey providers, and lots of short case studies too.

Noting that engagement levels across the UK economy are low, the review goes on to suggest that:

“If employee engagement and the principles that lie behind it were more widely understood, if good practice was more widely shared, if the potential that resides in the country’s workforce was more fully unleashed, we could see a step change in workplace performance and in employee well-being, for the considerable benefit of the UK.”

 

Many of the conclusions made in the report will be underwhelming to anyone who knows much about this area, but I did find some of these quite interesting, including:

On correlation and causation

“Some have questioned which is the chicken and which the egg – does engagement lead to performance or is it the other way around? Marcus Buckingham, who has studied this area for many years, concludes from various longitudinal studies that it is engagement that leads to performance, and this is a four times stronger relationship than performance leading to engagement.  ISR, from different studies, have reached the same conclusion.”

 

On measurement and action

“We have also been struck by the number of people who told us of the equal importance of using instinct and judgment. It is also clear that simply doing a survey and publishing the results is not the same as an engagement strategy. Measuring engagement is simply a tool to allow you to find out how engaged your people are. Pfizer emphasised to us that engagement is a process not an event. Mark Mitcheson, Talent and Organisation Capability Lead at Pfizer, says: ‘We work hard to avoid falling into the trap that some other organisations make – assuming that doing a survey is doing engagement – it’s an important part of the process, but only part of it. There is a danger that you can spend too long looking at and analysing the figures, rather than engaging with staff on how to improve.’ As Andrew Templeman, of the Cabinet Office Capability Building Programme put it to us: ‘No one ever got a pig fat by weighing it’.”

 

On the personalisation of engagement

“There is an equally strong relationship between engagement and the drive in most organisations to ensure their workforce reflects the diversity of the UK’s people. Baroness Margaret Prosser, Vice-chair of the Equality and Human Rights Commission and Chair of the Women at Work Commission, believes that ensuring fairness and equal opportunities at work for all employees lies at the heart of engagement. ‘It’s hard to imagine an engaged workforce where one group felt that their voice was being ignored. Ensuring equal opportunities and fair treatment is an essential strand of an engagement strategy.’

Her view was echoed by Donna Miller, European HR director of Enterprise rent-a-car.  ‘Our view has long been that there shouldn’t be engagement differences among different sets of people[…]But we are changing this view now. We’re coming round to the idea that so much of engagement and management practice success is precisely how they deal with diversity, be it working with people of different ages, sex, ethnicity. As a business we must understand different types of people have different inclinations. It makes sense when you think about it. We’re about to pilot a management training project which specifically looks at how to build trust within teams that are made up of different people and ethnic backgrounds. Our focus is keeping the widest possible pool of talent available, and this now means looking at all types of employee.’ ”

 

On human AND social capital

Many people we spoke to also pointed to the limitations of an approach which regards the workforce en masse as ‘human resources’ leading to a monolithic and one-dimensional view of people. As Will Hutton, Executive Vice Chair of the Work Foundation told us: “We think of organisations as a network of transactions. They are of course also a social network.

 

Blockages to engagement

The report goes on to ask why, if employee engagement can deliver so many benefits, is the capture of this private and public value so often blocked.  It suggests:

“Firstly, there are still too many chief executives and senior managers who are unaware of employee engagement or are still to be convinced of its benefits. Some are put off by evidence that the benefits of investing in engagement approaches may take time to show through in performance. Others experience little external incentive: data from America shows that the stock market does not fully value intangibles such as employee engagement, even when they are made visible by a publicly available employee survey, even though higher employee satisfaction is associated with stronger company share price performance.

Accenture point out that under half of chief financial officers appear to understand the return on their investments in human capital.

And many people we spoke to pointed to the danger of engagement being written off as ‘soft and fluffy’ rather than as a bottom line issue; others listed reasons which enabled leaders to avoid dealing with the issue, particularly ‘it won’t work here’ and ‘I don’t have time’.”

 

The real problem

I don’t discount these reasons, but I’m not convinced that they are the main problems either.  Much more significant for me is the fact that:

“There persists a managerial mindset that ‘demeans human beings as human resources and human capital’ in the words of Henry Mintzberg, as opposed to creative and productive human beings – as one of many factors of production rather than as the wellspring of success. Behind this mindset lies a fear of losing control of the reins. And as one chief executive asserted to us: ‘Balance sheets don’t answer back. The risk of listening is that you may hear things you don’t want to hear.’

Poor leadership inexorably leads to poor management practice, where line managers fail to engage their staff. Where there is no pressure for engagement, poor line management can quickly douse enthusiasm. Poor management skills in dealing with people lie behind many of the factors of disengagement. As more than one person reminded us: people join organisations – but they leave managers. Mike Emmott of the CIPD pointed to the “seriously defective default assumptions” which he believes are still around, that managers get people to perform by telling them what to do – the traditional command and control model of management – or that the only thing that motivates people at work is pay.”

 

My conclusions and the role of the HR department

I agree with Mintzberg’s and Emmott’s perspectives (and I am, by the way, always careful to talk about people as providers of human capital, not the human capital itself).  So I’m not that impressed with the report’s main recommendations the government and that this should use its unique position to raise awareness of employee engagement benefits and techniques and to ensure its support is aligned and tailored to the needs of different organisations in different sectors of the economy seeking to enhance levels of employee engagement.

This is at least relatively simple to do of course.  Encouraging companies to shift from command and control to a more listening focused style of leadership is much harder to do, but this is where the real prize lies.  And this is also the main opportunity for HR. 

The report itself notes that:

“The evidence indicates that for it to be successful, leaders have to champion and line managers have to lead engagement. But the HR profession and HR practitioners have a vital role to play. As Jackie Orme, the Chief Executive of CIPD emphasised to us, a key challenge for the profession was to ensure that employee engagement ‘gets put on the table’ in companies and organisations.  ‘HR can’t manufacture engagement, but we have a key role in helping companies develop the kind of organisational culture where engagement can thrive, and ensuring that managers have the skills to make engagement a reality.’ ”

 

I’d go a shade further.  HR functions should take accountability for engagement levels and for ensuring they’re improved.  They may not be responsible for engaging individual employees, but they should ensure that leaders and motivated and capable of doing this for themselves.

There’s plenty in this report to enable HR teams to deliver these improvements.  And they may also find the following of help:

 

 

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  • jon  [dot] ingham [at] strategic [dash] hcm [dot] com

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