1. Let’s Get Engaged Capturing Employees’ Hearts and Minds 2006 WI State SHRM Conference October 12, 2006

2. Agenda What is engagement? What is engagement? Why is it significant? Why is it significant? What are the primary drivers? What are the primary drivers? How do we measure engagement? How do we measure engagement? How do we promote and foster it? How do we promote and foster it? Best practice ideas – Case studies Best practice ideas – Case studies

3. What is Engagement?

4. Engagement is defined as employees’ willingness and ability to contribute to company success, which ultimately comes down to people’s desire to invest that extra level of discretionary effort that separates outstanding performers from the rest of the pack.

5. What is Engagement? Rational Understanding how the unit/department contributes to company success Understanding how the unit/department contributes to company success Understanding how their role relates to company goals and objectives Understanding how their role relates to company goals and objectives Being personally motivated to help the company succeed Being personally motivated to help the company succeed Being willing to put in a great deal of effort beyond what is normally expected Being willing to put in a great deal of effort beyond what is normally expectedEmotional Really caring about the future of the company Really caring about the future of the company Being proud to work for the company Being proud to work for the company Having a sense of personal accomplishment from the job Having a sense of personal accomplishment from the job Saying that the company is a good place to work Saying that the company is a good place to work Saying that the company inspires them to do their best work Saying that the company inspires them to do their best work

6. What is Engagement? The three types of employees Engaged – work with passion and feel a profound connection to their company. They drive innovation and move the organization forward. Engaged – work with passion and feel a profound connection to their company. They drive innovation and move the organization forward. Not-engaged – “checked out.” They’re sleepwalking through their workday, putting time – but not energy or passion – into their work. Not-engaged – “checked out.” They’re sleepwalking through their workday, putting time – but not energy or passion – into their work. Actively disengaged – aren’t just unhappy at work; they’re busy acting out their unhappiness. Every day, these workers undermine what their engaged co-workers accomplish. Actively disengaged – aren’t just unhappy at work; they’re busy acting out their unhappiness. Every day, these workers undermine what their engaged co-workers accomplish.

7. Engagement Not Improving According to a 2005 Gallup Poll: 29% of the US workforce is engaged, 29% of the US workforce is engaged, 55% not engaged 55% not engaged 16% actively disengaged. 16% actively disengaged.

8. Engagement Not Improving According to Gallup’s research by the time employees have been with an organization for six months, less than 40% are engaged. According to Gallup’s research by the time employees have been with an organization for six months, less than 40% are engaged. The longer an employee stays with an organization the lower their engagement gets, until only 20% are engaged after 10 years of service. The longer an employee stays with an organization the lower their engagement gets, until only 20% are engaged after 10 years of service.

9. Engagement Not Improving Slightly more than three-quarters of currently employed respondents reported either active or passive job searching. Slightly more than three-quarters of currently employed respondents reported either active or passive job searching. A recent Gallup report in USA Today states that only 49% of senior executives are engaged. A recent Gallup report in USA Today states that only 49% of senior executives are engaged.

10. Engagement Not Improving What is most damaging to the organization is those who quit and stay, emotionally switched off, or not-engaged. What is most damaging to the organization is those who quit and stay, emotionally switched off, or not-engaged.

11. Significance of Engagement

12. Significance of Engagement on Organizational Performance Morale Morale Productivity Productivity Bottom Line Bottom Line

13. Significance of Engagement A recent survey of business executives found that 72% of these leaders consider employee engagement to be critically important to the competitive success of their companies. A recent survey of business executives found that 72% of these leaders consider employee engagement to be critically important to the competitive success of their companies.

14. Significance of Engagement A satisfied workforce... is productive is productive has low rates of absenteeism and turnover has low rates of absenteeism and turnover is committed to the organization and their role is committed to the organization and their role expends discretionary effort, expends discretionary effort, is emotionally connected to the organization is emotionally connected to the organization accepts accountability accepts accountability

15. Significance of Engagement The more highly engaged employees are the more likely they will: Care about customer satisfaction Care about customer satisfaction Have the ability to meet customer needs Have the ability to meet customer needs Build customer loyalty and retention Build customer loyalty and retention Adapt to market changes Adapt to market changes Strengthen business relationships Strengthen business relationships

16. Significance of Engagement In banking, a 5% increase in customer loyalty could produce profitability increases from 25% to 85%. In banking, a 5% increase in customer loyalty could produce profitability increases from 25% to 85%. Taco Bell observed that the 20% of stores with the highest employee retention rates enjoyed double the sales and 55% higher profits than the 20% of stores with the lowest employee retention rates. Taco Bell observed that the 20% of stores with the highest employee retention rates enjoyed double the sales and 55% higher profits than the 20% of stores with the lowest employee retention rates.

17. Significance of Engagement One-third of the workforce is actively looking or prepared to move to another job. One-third of the workforce is actively looking or prepared to move to another job. 41% are not actively looking, but would listen if someone contacted them 41% are not actively looking, but would listen if someone contacted them 25% are not actively looking and would not consider changing jobs. 25% are not actively looking and would not consider changing jobs. 75% of employees may leave given the chance!

18. Significance of Engagement Gallup’s 2005 Q3 survey found that, of all U.S. workers 18 or older, about 23.3 million – or roughly 17% – are actively disengaged. Gallup’s 2005 Q3 survey found that, of all U.S. workers 18 or older, about 23.3 million – or roughly 17% – are actively disengaged. Gallup estimates that the lower productivity of actively disengaged workers costs the U.S. economy about $370 billion annually. Gallup estimates that the lower productivity of actively disengaged workers costs the U.S. economy about $370 billion annually.

19. Significance of Engagement Companies with engagement levels above their industry sector’s average outperform their peer group, on aggregate, by 17 percent in terms of operating margin. Companies with engagement levels above their industry sector’s average outperform their peer group, on aggregate, by 17 percent in terms of operating margin. In 2004, share prices of organizations with highly engaged employees rose by an average of 16% compared with an industry average of 6%. In 2004, share prices of organizations with highly engaged employees rose by an average of 16% compared with an industry average of 6%.

20. Drivers of Engagement

21. Group Activity Reflect back to a time when you had a great boss. What behaviors or attributes did you see? What behaviors or attributes did you see? How did they make you feel? How did they make you feel? What was your level of engagement? What was your level of engagement?

22. Drivers of Engagement Three key goals of people at work: Three key goals of people at work: 1. Equity 2. Achievement 3. Camaraderie

23. Drivers of Engagement According to Towers Perrin, six workplace elements for engagement include: 1. Strong leadership 2. Personal accountability 3. Autonomy 4. Sense of control over one’s environment 5. Sense of shared destiny 6. Opportunities for development and advancement

24. Drivers of Engagement According to Mercer, the key drivers to engagement include: 1. Employee confidence 2. Degree of teamwork 3. Type of work 4. Challenges 5. Commitment to quality 6. Continuous learning

25. Drivers of Engagement “I don’t have opportunities to grow or advance” “I don’t have opportunities to grow or advance” “I don’t like my work and it doesn’t make the most of my talents” “I don’t like my work and it doesn’t make the most of my talents” “I don’t like working for my manager” “I don’t like working for my manager” (Blessing White)

26. Drivers of Engagement FactorPercent Actively Looking Opportunity for Advancement 41% Relationship with Manager 37% Training36% Fair Salary 34% Work-life Balance 33% Benefits31%

27. Drivers of Engagement What would most improve your job satisfaction? What would most improve your job satisfaction? More opportunities to do what I do best More opportunities to do what I do best Career development opportunities Career development opportunities Greater clarity about what the organization needs me to do – and why Greater clarity about what the organization needs me to do – and why More challenging work More challenging work

28. Drivers of Engagement “Recognizes my talent and encourages me to use them as much as possible: “Recognizes my talent and encourages me to use them as much as possible: Staying: 67%, Staying: 67%, Might stay: 33%, Might stay: 33%, Definitely leaving: 9% Definitely leaving: 9% Doesn’t know what I do well” Doesn’t know what I do well” Staying: 3%, Might stay: 15%, Definitely leaving: 43% According to BlessingWhite, a majority of employees feel that their managers recognize and encourage them to use their talents.

29. What Can Managers Do? Build a strong partnership with each team member Build a strong partnership with each team member Recognize the power of intrinsic motivators Recognize the power of intrinsic motivators Put conversation above communication Put conversation above communication Remember that feedback is a gift Remember that feedback is a gift Be wary of demographic trends Be wary of demographic trends

30. Recognizing, Measuring, and Understanding Engagement

31. Assessing the engagement of a worker, or a workforce, requires measuring five important characteristics: 1. Satisfaction 2. Understanding 3. Contribution 4. Alignment 5. Retention

32. Recognizing, Measuring, and Understanding Engagement Strong indicators of an engaged employee include: Assuming responsibility beyond their role Assuming responsibility beyond their role Helping team members work towards a common goal Helping team members work towards a common goal Generating new ideas Generating new ideas Speaking positively about the organization and its products/services Speaking positively about the organization and its products/services Accepting accountability for actions, behaviors and performance level Accepting accountability for actions, behaviors and performance level

33. Recognizing, Measuring, and Understanding Engagement Engaged employees have been shown to be higher performers and more loyal to the organization through behaviors that revolve around: An effort to be innovative and creative An effort to be innovative and creative A personal responsibility to make things happen A personal responsibility to make things happen A desire to contribute to the success of the company A desire to contribute to the success of the company An emotional bond to the organization, its mission and vision. An emotional bond to the organization, its mission and vision.

34. Fostering & Growing Engagement

35. Group Activity Describe some best practices within your own organization that helps foster or drive employee engagement

36. Case Studies Harley Davison Harley Davison Harrah’s Harrah’s New Century Financial Corp. New Century Financial Corp.

37. Harley-Davidson

38. Harrah’s

39. New Century Financial

40. Fostering & Growing Engagement What should employers do?

41. Fostering & Growing Engagement Top Ten Ways to Positively Influence Employee Engagement 1. Rewards and recognition 2. Human capital infrastructure 3. Learning management 4. Knowledge management 5. Performance appraisal 6. Workplace design 7. Employee relations 8. Career development 9. Human capital strategy 10. Recruiting

42. 10 Ways to Demotivate Employees 1. Don’t provide a vision 2. Saying things once 3. Don’t hold employees accountable 4. Try to improve people’s weaknesses 5. Don’t give employees enough room or give them too much room. 6. Change goals and direction informally, and never make it official. 7. Reward the wrong things, and don’t reward the right things. 8. Ignore two laws of nature – The 80/20 Rule and the Law of Focus 9. Keep people in the wrong jobs. 10. Don’t spend enough one-on-one time with employees

43. Fostering & Growing Engagement Management’s sins are mainly acts of omission what management does not do – rather than commission, such as abuse. But indifferent treatment, such as failing to recognize and reward employees for jobs well done, has an enormous impact on how employees feel, and employers’ ability to retain them.

44. A Carrot a Day Research showing that 88% of North American workers cite lack of acknowledgement as their top work issue, while 79% leave due to a lack of appreciation.

45. A Carrot a Day While a fair compensation and benefits package is absolutely essential to getting employees through the door, it’s recognition and appreciation that get them engaged. And engaged, appreciated workers are more productive.

46. Fostering & Growing Engagement There is likely to be further customization of benefits to meet the diverse needs of the changing workforce. There is likely to be further customization of benefits to meet the diverse needs of the changing workforce. Employee engagement strategies will be critical to making employees feel part of the decision-making process, particularly in work redesign. Employee engagement strategies will be critical to making employees feel part of the decision-making process, particularly in work redesign. Increasing the awareness of the link between employees’ performance and an organization’s business goals will positively impact employee engagement. Increasing the awareness of the link between employees’ performance and an organization’s business goals will positively impact employee engagement.

47. Presenter Information Belinda Weber, SPHR, CCP – bwebe2@amfam.com bwebe2@amfam.com Organization Effectiveness Consultant American Family Insurance 6000 American Parkway Madison, WI 53783 (608) 242-4100 ext 30574 Kevin Peternel, SPHR – kpeternel@hrgroup.com kpeternel@hrgroup.com Vice President and Principal Human Resources Group, Inc. 2912 Marketplace Drive, Suite 105 Madison, WI 53719 (608) 233-5491 www.hrgroup.com

48. Thank You for Attending