That's the message of a new government report into employee engagement. Your bottom line depends on it
The Channel 4 programme I'm Running Sainsbury's may well turn into a useful public relations coup. Prime time exposure for the UK's oldest supermarket will no doubt play a part in boosting sales at a crucial time, but the documentary series, which features low-level employees being given the chance to pitch their own ideas to the board, also illustrates a discipline far more central to Sainsbury's recent performance than PR—employee engagement. Group CEO Justin King cites employee engagement as pivotal in the supermarket's attempts to claw back customer share from market leader Tesco.
When King joined Sainsbury's in 2004, staff morale was low. He ordered a review of the company's customer services capability, recognising that communicating and engaging with a workforce of almost 150,000 people, 60 per cent of whom worked part-time, would be vital in drastically improving those employees' relationships with the customer. The review, says King, enabled the supermarket "to motivate our colleagues to perform" better. A staff "talkback" survey was introduced to help employees air their grievances. Staff from all levels of the organisation were also encouraged to write to their CEO with any problems not covered by the survey. "Employees have reported feeling that the culture has improved," according to Helen Rendell, colleague insights manager at Sainsbury's.
The effect on the bottom line has been just as apparent. This year, like-for-like sales growth of 4.5 per cent has been achieved, says King, "in the teeth of a very substantial consumer downturn". Other factors are of course at play, but Sainsbury's part in Channel 4's documentary has provided visible evidence of the success of its employee engagement strategy. In one memorable episode, Barbara Bentley, a 55-year-old Sainsbury's PA announcer who, with the help of Channel 4's cameras, managed to persuade management to adopt her direct selling idea, was visibly moved that "little-old-me" even warranted any attention at all from her superiors. But the example of Sainsbury's, and other companies like it, will underpin a concerted effort by government to persuade all UK companies to address employee engagement, believing it to be essential for a speedy exit out of recession.
The newly formed Department for Business Innovation and Skills (BIS) will deliver a report on employee engagement this summer. The Macleod Review will recommend the sharing of ideas and best practice among companies of all sizes. BIS recognises that the UK has some way to go before its workforces are as engaged as the employees of some European organisations, but, says the report's principle author David Macleod, there is also plenty of good news to report, not least from retail chains such as Sainsbury's and banks such as First Direct and Standard Chartered.
Speaking at Resilience through Recession, an event sponsored by ACAS and the CIPD, Macleod offered an early insight into his finding. There are basic reasons, he says, why companies need to look at employee engagement, many of which will have fairly instantaneous effects on both staff morale and profitability. "Engaged employees take fewer sick days," he says. "They are less likely to leave. And engaged employees are much better advocates of their own companies." Research by Gallup has found that two thirds of engaged employees publicly advocate their employers, while only three per cent of unengaged employees manage to talk about their employer in a positive light.
But there are wider perspectives to consider, says Macleod. The recession will have a detrimental effect on resources, making it harder for companies to achieve their goals now and in the future. "How are we going to compete," asks Macleod, "how are we going to offer services with less resources when we're wasting all our potential? Employee engagement is about unlocking the potential of our people. It's about putting in place the conditions that allow people to perform at their best. We must enable the best of people if we're going to really prosper in the future."
Engagement is also about better internal communication. If employees can see where the company is headed, says Macleod, they are more likely to be able to help the business achieve its goals. Standard Chartered, he says is a perfect example of a company that has communicated its strategy effectively to its people. On one piece of paper, says Macleod, is the firm's entire strategy. It describes "the kind of organisation we want to be" and "the markets we want to be in". It then sets out "the behaviours we need in our organisation" to reach those targets and "the values we stand for. One of those values was, 'we only lend what we can afford to lend'."
The message is, unless your employees are sufficiently engaged in what the business stands for, you can't expect them to deliver your most valuable objectives. "People are at the heart of developing and honing strategy. People are at the heart of feeding back how that strategy is impacting in the marketplace," says Macleod. Or as Lord Young, minister for skills and apprenticeships, puts it, employers should be tapping their most valuable source of information, their employees. "I am fascinated by companies that employ external consultants. Why don't they listen to the consultants that they have there already, for free?"
It's clear, adds Macleod, that companies who engender an atmosphere of mutual respect between managers and employees are the companies that serve the customer well and that perform the best. He cites First Direct, a company well known for prioritising customer service. "Respect is at the heart of how they create that environment," he says. Employees who are treated like human beings will project that treatment onto customers. Sir Terry Leahy's light bulb moment was in realising the discrepancy between how much Tesco knows about its customers and how little it knows about its employees. Tesco managers are now expected to "know something personal about everyone two layers down," says Macleod.
Above all, says CIPD chief executive Jackie Orme, true engagement enables employees to put their trust in a leader. She points to a recent Edelman survey, the Trust Barometer, which indicated that fewer than 40 per cent of employees trusted their leaders. At the very least, she says, trust ensures longevity. "People join good organisations, but they leave bad bosses."
Posted 12 June 2009 : Director.co.uk
