The corporate agenda

As companies look to fight back against the downturn by increasing productivity, advisers should remind them of the fiscal benefits of employee engagement

Debi O’Donovan

Employee engagement is one of those buzz phrases that is gaining momentum in the business world. Boards of directors and FDs now readily accept that engaged employees are more productive.

The evidence is pretty compelling. A major study, Engaging for success: enhancing performance through employee engagement, commonly called the Macleod Review, was published a year ago. In it, authors David MacLeod and Nita Clarke demonstrated that lack of employee engagement could be costing British business up to £44 billion a year on lost productivity.

One might quibble about how exactly this figure was reached, but the supporting data from a wide range of sources is compelling. For example, the Hay Group found that engaged employees generate 43 per cent more revenue, while a Gallup poll demonstrated that 59 per cent of engaged employees said that “work brings out their most creative ideas” (just 3 per cent of disengaged staff agree).

Gallup research in 2007 also showed that companies with top quartile employee engagement have an earning per share growth 2.6 times higher than those with workforces with below average engagement.

The bottom line is that pay will not engage staff. It is what is known as a hygiene factor – get it wrong and people will complain or leave the job, get it right and no one will notice.

The bottom line is that pay will not engage staff

However, something like employee health and wellbeing can have an enormous impact. Many engagement surveys use the question ’Does the senior management at your workplace take an interest in employee wellbeing’. This covers a wide range of embedded actions that incorporate how staff are treated by their managers – simply having an onsite gym and free fruit is not going to do the job if the working environment is unpleasant.

But it is gratifying to see that the type of work that employers such as Unilever, Amey, Informa and Crawley Borough Council have done with staff health and wellbeing programmes do work to drive up staff engagement and productivity.

This will be important to bear in mind as we still cower under the long shadow of the recession and grievances over pay, work practices, stress and career development start to fester.

Employers that can engage rather than alienate will come through these tough times in stronger fiscal positions – those weak on engagement may well fall by the wayside. n

Debi O’Donovan is editor of Employee Benefits magazine

Jason Rayner

Employee benefits, as the name may suggest, are the benefits employers provide to reward their people for a job well done. But that doesn’t really tell the whole picture.

If an employers’ reward package really is aimed at ’benefiting’ employees, then there are a few fundamental boxes that have to be ticked.
Are the benefits really going to be considered a benefit? People have very different needs depending on all sorts of factors. If an employer doesn’t take this into account and tailor benefits to meet these needs, how valued will the package be?

Do the employees actually know what benefits exist? It might seem obvious, but unless an employee knows what their package consists of, and what the individual benefits actually do for them, how can they really appreciate them? For something so obvious, it is often overlooked. Can an employee make changes to their package as their needs change? As you move through life, priorities change. Employers need to be able to recognise this and allow employees to ensure their benefits are still relevant and valued.

With the instability that [recession] brings, attracting and retaining quality employees is critical

The key to success is engagement. Employers need to encourage employees to become involved with their benefits. Give them the opportunity to have input into the range of benefits on offer, what they all do, how they access them, when to change them. Unless employees truly understand what they have on offer, they will never engage and never fully value them.

So what’s in it for the employer, and why is it so important to encourage engagement? Well a good benefits package also rewards the employer.
It’s probably not escaped your notice that we have had a slight economic hiccup of late. With the instability that this brings, attracting and retaining quality employees is critical. A comprehensive benefits package can certainly help reward and motivate employees.

And importantly, there is an opportunity to manage costs through the provision of benefits. An employee wellbeing package can help keep staff fit, effective and in work, reducing absence and improving productivity. Through utilising salary exchange, an employer also has an opportunity to provide more tax efficient reward packages.

Of course, if the employees don’t value, understand or engage with the benefits, employers will never reap the full reward.

Jason Rayner is commercial manager at Jelf Group