Why Sustainable Companies Have More Engaged Employees
Labor Day has come and gone. Â Many of us will reluctantly turn our attention away from summer diversions and will approach our work with renewed focus. As we head into autumn with its relentless schedule of deadlines, meetings, and other challenges, I suggest that we all take some time to reflect on what it means to be truly engaged in oneâ€™s work. After all, we spend so many of our waking hours on the job. In addition to a paycheck, do we have anything to show for our time? Many of us would like to think that our customers are better off, our companies are more successful and our world is a better place as a result of our efforts. I challenge you, as leaders of your companies, to consider the following questions:
1. What is the value of engagement in work? (Defined as the degree to which individuals are attentive and absorbed in the performance of their roles to one another, the company and the broader community.)
2. How can we create the conditions in our own companies for worker engagement to flourish and to make a difference in our communities and our world?
3. What is the impact of our commitment to the creation of sustainable companies â€“defined as the company’s ability to sustain competitive advantage over the long-term through: 1) strong financial performance, 2) industry positioning, and 3) integrating environmental, social and governance (ESG) factors into the core of the companyâ€™s strategy and its operation.
Value of Engagement in Work
First consider the relationship between engagement in work and the behaviors and emotional states of individuals. A headline in a recent edition of the New York Times claims that â€śHappier People Work Harder.â€ť Teresa Amabile, a professor at the Harvard Business School, and her coauthor, Steve Kramer, studied the psychological state of workers in real time by asking them to record their feelings in a journal at various points throughout their workday. Not surprisingly, the researchers concluded that workers perform better when they are happily engaged in what they are doing. They found that â€śinner work life has a profound impact on workers’ creativity, productivity, commitment and collegiality.â€ť
Recently, the Gallup organization reported that American workers who are â€śactively disengagedâ€ť – – emotionally disconnected from their work and workplaceÂ — rate their lives more poorly than do unemployed persons. At the other end of the spectrum are thriving, “engaged” employees — American workers enthusiastically involved in their work. Pollsters Tom Rath and Jim Harter have recently written a book about individual well-being. They tell us that actively disengaged employees are twice as likely to be diagnosed with depression over the next year, as are those who are engaged in their work.
The evidence for the value of work engagement to the workersâ€™ companies is even stronger. In an article in Business Week, the Corporate Executive Board reported that employees who are most committed to their organizations put forth 57 percent more effort and are 87 percent less likely to leave their company than employees who consider themselves disengaged. The article concluded that employee engagement is a critical factor in an organizationâ€™s overall financial success. In fact, in the latest Trends in Global Employee Engagement report, Aon Hewitt shows a strong correlation between employee engagement and financial performance, even in these turbulent financial times. Organizations with high levels of engagement continued to outperform the total stock market index and posted total shareholder returns 22% higher than average in 2010. On the other hand, companies with low engagement had a total shareholder return that was 28% lower than the average.
Of course these studies are correlational only. The results do not prove that work engagement causes an increase in well-being or that an engaged workforce drives better financial performance â€“ only that the factors are related. Nevertheless these relationships are worth noting.
Creating the Conditions for Engagement
Alarmingly, a recent Gallup poll indicated that people feel disengaged from their work to a greater degree than ever before. They estimated that this â€śdisengagement crisisâ€ť is costing American businesses $300 billion annually in lost productivity. The critical question for company leaders is how to tackle this crisis. Perhaps the answer lies in creating the conditions that allow people to experience their work as meaningful. Indeed, in their worker happiness study, Amabile and Kramer found that the most significant determinant of feeling engaged at work is the perception that oneâ€™s work is important. They stated, â€śAs long as workers experience their labor as meaningful, progress is often followed by joy and excitement about the work.â€ť
What is it that provides meaning to oneâ€™s work? For most of us, real meaning wonâ€™t automatically flow from those pervasive and useful, but uninspiring, tools such as P&L statements or strategic scorecards. Amabile and Kramer indicated that meaning comes from several factors including autonomy and time to reflect and solve problems. Perhaps an even greater, more impactful sense of meaning comes to employees when their companies commit to sustainability and clarify how each employee contributes to it. Employees want to see the connections between what they do and the companyâ€™s results. If they can clearly see how their work contributes to the well being of the larger community, they are likely to experience an even more powerful sense of significance.
Engaging Employees through Sustainability
Our own research indicates that companies have a long way to go to enable their employees to clearly engage with their sustainability strategies. In 2010, we conducted an unscientific survey through social media such as LinkedIn and Facebook. A large percentage of the 100 plus people who responded to our survey indicated that they did not have a clear picture of their companyâ€™s specific sustainability goals and how they could contribute. One of the respondents stated that while his companyâ€™s general approach incorporates sustainability, it does not integrate it into its application to everyday business.
Only half of the respondents agreed that their company does have a clear strategy for engaging employees in the companyâ€™s sustainabilitystrategy.Â Â Less than half were highly engaged and passionate about their companiesâ€™ sustainability efforts even though almost all respond that they believed that sustainability is good for the business and should be considered as decisions are made.
Subsequent to our social media-conducted survey, we carried out another research project in which we looked at perceptions and practices within companies known for their commitment to sustainability, as compared to other less committed companies. We administered the SCALAâ„˘ (Sustainability Culture and Leadership Assessment) instrument to companies in both categories. Our study showed that those companies in the committed category were much more likely to have a clear strategy for engaging employees in the organizationâ€™s sustainability work. The committed companies were also more likely to have mechanisms in place for incorporating employeesâ€™ knowledge and ideas into company efforts toward sustainability. Unfortunately, neither the committed nor the less committed companies tended to provide feedback to employees pertaining to their contributions to the companiesâ€™ sustainability goals. The lack of feedback may lead employees to doubt the significance of their contribution.
Most employers claim that employee engagement is critical for executing a companyâ€™s sustainability strategy. For example, in a recent article, Â Anna Clark argued, â€śBecause sustainability programs are essentially about change management, engagement is a key ingredient to success.â€ťÂ While the case for this connection is compelling, I would suggest that the reverse also might be true. While employee engagement may well facilitate the execution of long-term sustainability strategy, perhaps, at the same time, clarity in companiesâ€™ commitments to sustainability might lead to increased employee engagement. When employees understand how their labors contribute to the competitive advantage of their companies and to the betterment of their worlds, they are more likely to feel that their work is meaningful. As their work becomes more meaningful to them, they are more likely to increase their engagement in it. Thus, engaged workers are more likely to experience a sense of well-being and their companies are more likely to succeed.
Dr. Kathleen Miller Perkins is a psychologist and is the CEO and owner of Miller Consultants , a firm specializing in organizational development, executive coaching and change managementÂ founded in 1980.Â In addition to managing the company, she continues to remain active in assisting client organizations in assessing and addressing the organizational culture and leadership requirements for executing sustainability strategy.Â She has delivered services to over 100 public and private sector companies. Dr. Millerâ€™s client list includes organizations such as IBM, Toyota, BC Hydro, Brown -Forman, General Electric, Ashland Chemical, Ernst and Young, Bristol Myers Squibb and Kindred Health Care.
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