Managers at renewable energy company AGL Energy have come to appreciate the value of employee engagement. In 2007, alarm bells sounded when a survey of staff indicated very low engagement levels. The company had been through a major change program that had caused significant disruption. Lack of buy-in from staff was stunting growth and causing damage to the perception of the AGL Energy brand, both inside and outside the organisation.
"That survey in 2007 represented a critical stage for the business," says Leanne McDonald, head of Organisational Development and Diversity at AGL. "It was an eye-opener. Senior leaders said we had to put effort into the areas that our employees were saying were not meeting their expectations. We realised we were in a serious situation in which people weren't offering any discretionary effort. They were just doing the basics. Our people were most likely actively looking outside of the organisation for jobs and would not have been speaking positively about the business. That realisation really got the leadership team thinking in terms of accountability and visibility."
From that low point four years ago, AGL Energy's engagement scores have improved to the point where the company, with more than 2000 staff members, is hoping to be listed as an accredited Aon Hewitt Best Employer. To qualify as an Aon Hewitt Best Employer, companies must participate in a people-focussed program and meet required benchmarks. Since 2007, AGL's regularly tested engagement scores have risen to above 60%. "We've been on an upward trajectory for a couple of years now and that spurs people on," McDonald says. "But it has been challenging to get to that point across the organisation as we have a very diverse workforce."
An accurate reading of engagement is crucial to the success of such programs. Ensuring data properly represents an organisation's climate is vital, and this is where many companies fall down, says Julie Cogin, a management professor at the Australian School of Business. "Over the last decade, engagement surveys have been widely implemented and major changes [have been] made in the way leaders are rewarded and recognised for high engagement scores," she says. "This naturally leads to a questioning of the validity of such instruments as staff can be pressured to respond positively, irrespective of how they feel."
At one of Australia's largest corporations, there's a catchphrase among staff – "You've got to rate five to survive", reports Cogin. "They rate their business unit from one to five. If their business unit gets a five and the leader of that unit gets a five – the highest score – then the manager is rewarded, their manager loves their team and the great results continue to cascade down. So irrespective of how engaged they are, employees tick five to survive. This has become a cultural norm and one of the reasons I question the validity of these surveys. Further, some surveys only contain 10 or 12 questions, which provides questionable data, unlikely to give a company the kind of information needed."
Digging in Deep
Recognising such risks, AGL Energy developed a structured survey approach with inbuilt checks and balances. Rather than relying on a stand-alone annual questionnaire, McDonald convinced senior leaders of the importance of digging for in-depth data. "If you just ask six questions, you'll get an engagement score," she points out. "But you won't know why you've got that score, why it has changed from last year and what you can actually do about improving it. I like surveys that do a fair bit of sophisticated analysis. They allow you to discover what is driving your score. Is it career development? Is it the quality of leadership? Is it the way performance is managed? These things are different for every firm. If you don't get the full story then you could begin improving things that won't actually make an impact on staff engagement in your business. I think a survey should have at least 40 questions, and I know some have over 100. The more detail, the more information it gives you to improve on very specific areas."
AGL Energy's survey provider also does back-end analysis to identify patterns in the way people respond. "They can check if someone has simply scored five down the line, although obviously people cannot be identified as the surveys are completely confidential," McDonald says. "The provider will tell us the extent to which they feel people are trying to tamper with the results. We also follow up with a round of focus groups with employees to validate that the scores reflect how people are really feeling. This gives people a chance to add a little more colour and light."
Any employee engagement survey might be seen as better than none at all. However, experts believe a half-hearted attempt is more detrimental than not even bothering to gauge staff engagement levels. "Implementing employee engagement surveys, even if you are only asking staff to provide a rating from one to five, creates expectations amongst staff that something will be done," Cogin insists. "One of the most damaging issues for staff engagement is around career planning, or a lack of professional development. Unfortunately organisations often do engagement surveys, discover such issues and file the report away, doing nothing. Then they conduct another survey the next year. Employers have to be prepared to make improvements and then communicate these changes back to employees – 'This is what we have learnt, this is what we're going to do and this is what we're not going to do'."
McDonald also believes engagement surveys can be damaging. Companies get excited about measurement, because they love to see how the company is tracking, she says. "What they get less excited about is the harder job of actually doing something about the results – the action planning, putting programs in place, improving the skills of leaders. I've been in organisations where they get hyped up on the measurement, and they do it every year, but they do nothing about the results. That creates enduring criticism in the workforce and causes staff to become very cynical about the value of contributing to surveys. Over time the response rate begins to erode. People wonder what's the point of responding because there is never any action."
Let's Get Engaged
Employee engagement really boils down to the direct relationship between a staff member and their line manager, notes Stephanie Christopher, national director of SHL, a global organisation specialising in talent management. "We call it micro-engagement, the one-to-one level is where there's maximum impact in terms of engagement. That is all about closely managing the entire process from recruitment and on-boarding, and involving the line manager at every step of the way. Or for a line manager who has inherited an existing team, then it's about re-boarding, or re-engaging and re-motivating their team by developing an understanding of what really drives each individual."
When it comes to measuring engagement, Christopher says, great data collection can be distinguished from a 10-question survey by the useful information resulting from it. A basic questionnaire will give a surface impression of what's happening, but will not explain why, she says. But an in-depth survey will deliver information that clearly illustrates where problems exist, where opportunities lie and what should be done about them.
Open-ended questions, in which staff members write detailed answers rather than picking an answer from a pre-programmed list, are a vital inclusion in quality surveys, says Cogin. "You need to uncover information about the culture of the organisation and impediments to performance, not just the practices of a company," she says. "This requires qualitative and quantitative data. It is also about observation, for instance watching how teams interact and make decisions. One of the key drivers of staff engagement is whether every single employee in the organisation can see how what they do at work ties in with the organisation's outcomes and contributes to the success of the business. You can't measure this effectively through a survey."
The objective should be collecting very strong data about people, concurs Christopher. "This data will help an organisation to make decisions and will also help in succession planning, in identifying talent, in understanding who needs to be brought in to the organisation and who's leaving and why," she says. "Ultimately, it achieves business results. Really solid data will reveal the capability of managers and will even tell you if the current leadership is right for the organisation."
The point of engagement questionnaires, focus groups and other types of staff surveys, is to help tailor human resources strategies, including leadership development and style, AGL's McDonald says. "Most importantly, surveys should be about creating visible change and visible action through quality feedback. People must be shown they're being listened to, that their knowledge and opinions and responses are valuable. When this happens, next time the survey comes around they will make a serious effort to offer useful feedback as they know it will generate results."