Who Controls Employee Engagement And Why Doesn't It Get Funded? It Needs A Seat At The Table

Posted by Allan Steinmetz on 7 April 2016

Tags: , , ,

There is never a week that we don’t receive a phone call from a prospective client who says “employee engagement is a high priority but we can’t seem to find the budget to address the issue”. In other calls we hear, “the organization is working in silos and we can’t seem to get everyone on the same page, but nobody seems to be willing to do anything about it, and we don’t have a budget to get it done”. I try to be encouraging but it takes more than that.

These calls, frankly, amaze me. Having been involved with internal change management, employee engagement and employee branding for the last 17 years, I don’t understand why senior management is not prepared to address these issues in the same way that they address M&A, strategic initiatives, technology, innovation, sales and P&L. If employee engagement is broken or not functioning properly; it should be fixed. The Conference Board in their annual survey of CEOs says employee engagement is one of the top three priorities, but less than half of the CEOs know what to do about it. Also, in fact, a recent study by Deloitte revealed that although 87% of the 3,300 participating world leaders said that lack of engagement is their top issue, only 60% said they have an adequate program to measure and improve engagement, and only 7% rate themselves as excellent at measuring, driving, and improving engagement. How could this be?

Everyone knows that the relationship employees have with their company and their customers is what makes up the brand experience. Yet most companies struggle with creating internal/external brand alignment and engagement and don’t set aside sufficient funding and identification of a senior person to manage employee engagement as if it were a process in and of itself. Employee engagement as a process should be repeatable, trainable and coachable and managed with a significant annual budget with the proper checks and balances to demonstrate that it is making a difference in earnings per share, shareholder value and return on investment.

Corporations always seem to find the budgets/monies when there is an urgency or crisis. This happens in a product recalls, government interventions, strategic investment opportunities, and settling union unrest or lawsuits. My colleague, Rick DeMarco who is one of our managing directors, always says that when he worked in industry if a manufacturing line went down causing wasted downtime and poor productivity, the company always found the money to make the repairs and get the line going again. No questions asked it got done. Well why should employee engagement, if thought of as a critical priority for CEOs, be any different?

The reasons CEOs don’t allocate funds and give explicit responsibilities to senior level executives are manifold. First, it’s taken for granted that their employees care and are passionate about their jobs and their companies and are already engaged. It’s an intangible. However, all the research suggests that over 73% of the US workforce population is presently not engaged with their work. They don’t get/understand how what they do in their individual jobs contributes to the bottom line and strategic imperative of the company. The statistic has been the same for the last 10 years according to Gallup. Another reason why it doesn’t get attention it deserves is the fact that no one within the company has explicit responsibility for employee engagement. Is it the responsibility of the CEO? HR? Culture/Diversity? Marketing/Branding? CFO? Organization Design/Training? All these functions have their own set of priorities and KPI’s and rarely is employee engagement one of them.

It’s time for employee engagement to become a functional responsibility onto itself as a strategic imperative that impacts performance, shareholder value, talent retention, positive customer experiences/satisfaction.

  • Employee engagement should have a seat at the proverbial executive table along with the CIO, CMO, CFO, CHRO, General Council, COO. Let’s call it CEEO (Chief Employee Engagement Officer). Don’t make it part of the responsibility of the CHRO or the CMO
  • Give them an operating budget that is on par with the advertising agency budget or trade show budgets. Let them hire outside engagement agencies like Inward to provide strategic insights, direction, create a creative program and manage it. Just like a CFO hires accounting firms for audits, CIO hires technology implementation firms, just like Strategy Officers hires McKinsey, and the General Council hires law firms.
  • Siphon off dollars from programs across the company that have no return on investment or accountability like recognition and reward premiums and clothing.
  • Adopt a zero budget approach to find the means, resources and talent to get the job done and make employee engagement a priority.
  • Monitor and measure employee engagement performance with KPI’s that are aligned with positive customer experiences
  • Create employee engagement councils at the corporate level, business unit level and local office/geography level with each group reporting issues/progress on a quarterly basis
  • Make employee engagement and annual board room agenda topic where management reports back to the board on employee engagement performance overall.
  • Prepare and distribute a public and celebrated annual report on employee engagement and share what the company is doing about it in the same way that they issue reports on social responsibility, sustainability, diversity and the environment.

It all starts with a clear shared vision by the board and the senior C-suite executives that employee engagement can indeed make the difference in overall performance.

I recently heard Matt Preschern, EVP - Chief Marketing Officer at HCL Technologies at a C-Suite Conference in Boston. He said, “HCL has grown over $1 billion in the last year as a direct result of having high employee-centric corporate culture and engagement." In his view employees are a core aspect of their growth, a core aspect of core values that they hold near and dear which are trust, transparency, flexibility and entrepreneurship. He cited employee engagement as the single most important factor in their most recent success with a "15% growth in revenue this year alone.”

If that doesn’t convince you that employee engagement is a corporate imperative and shouldn’t be ignored or under budgeted, I don’t know what will convince you. Listen to a recent interview with Matt Preschern for yourself that was recorded on CXO Talk on April 1, 2016