The relationship between employee engagement and organizational performance

The purpose of this paper is to discuss the issue of employee engagement at work in relevance to organizational performance. Some scholars argue that employee engagement is necessary for organizational performance while others assert that there is no significant association, unless other factors are involved. Still, others criticize the whole concept of engagement at work arguing that it strips the individual of personal and family life. This is a review into scholarly literatures that discuss the subject. Relevant peer reviewed journals and books on the subject will be used as sources of data for this review. The following key areas will be discussed: First, the definition of employee engagement from the perspective of various employees; second, the characteristics and advantages of employee engagement in the organization; third, factors that drive employee engagement on work; and fourth, challenges and criticisms of employee engagement.

Literature Review

Definition of employee engagement

Scholars define employee engagement from various perspectives depending with the nature and findings of their studies. Halbelsen, Harvey, & Bolino (2009: 1452) give the definition of work engagement as defined by Schaufeli, et al. (2002) as a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption. Work engagement can therefore be termed as a pervasive state of emotional attachment and motivation toward work (Halbelsen, Harvey, & Bolino, 2009: 1452).

Haid and Sims (2009: 7) assert that engagement can be described from four major definitive factors and these involve commitment to the job and organization. Employee engagement can also be described as the pride in the job and in the organization, the willingness to advocate for the benefits and advantages of the job and organization, and satisfaction with the job and organization or the degree of employee-organization alignment (Bellon, Estevez-Cubilete, Rodriguez, & Dandy, 2010).

Characteristics and advantages of employee engagement

Work engagement is already described as a behavior of dedication, motivation, and attachment to work (Bellon, et al., 2010). Therefore, the aspect is linked to various benefits that result to organizational performance. The literature by Halbelsen, Harvey, & Bolino (2009: 1452) reviews the characteristics of employee engagement on two perspectives: enhancing positive traits and promoting higher performance in the organization. Employee engagement is often viewed as a consequence of positive traits such as positive affectivity; interesting work, for instance, in cases of challenging jobs; and inspiring leadership in which transformational leadership is associated with engagement. Additionally, employee engagement is also linked to higher performance in the organization and lowered intentions of turnover, that is, job satisfaction becomes higher. Therefore, engagement is seen to be a good thing for both the employer and employee. The employer gains a performing and stable workforce while the employee believes that the kind of working environment is perfect.

Evans and Redfern (2010: 265) also assert that there is an existing link between employee engagement and work performance and that organizations with higher employee engagement obtain a competitive edge against their competitors. An organization with a high number of highly engaged employees thus shows a higher productivity and performance. Performance can also be seen through the service-profit chain model in which improved links between employees, customers, and profits can lead to better overall performance.

Arguably, employers seek engaged employees because they are believed to deliver improved business performance (Evans and Redfern (2010: 266). Other benefits that relate to engagement include bringing the employees closer to the strategic decisions that are made by the senior management. Next, the employer can buy ideas in to strategic decision-making as a result of employee engagement. Next, high levels of engagement are associated with reduced levels of suspicion and unhealthy gossip within the organization. Continued improvement in employee satisfaction and building of trust occurs as a result of employee engagement. Employee engagement also creates a positive and credible employee voice in a culture in which employees can contribute and get involved.

Haid and Sims (2009: 8) also assert that there is a strong relationship between the level of employee engagement and organizational performance. This is arrived at from research findings of which employees who reported of their organization being one of the best performers also reported a double level of employee engagement. On the other hand, employees who reported average organizational performance had a lower level of engagement. Furthermore Haid and Sims (2009: 3) identify seven benefits that have been strongly linked to employee engagement. These include employee performance and efficiency, productivity, safety, attendance and retention, customer service and satisfaction, customer loyalty and retention, and profitability.

Barker (2009: 24) argues that employee engagement is the most critical metric for organizations in the current 21st century.

Factors that drive employee engagement

Leadership and management abilities are cited as the most ideal factors that drive employee engagement in most literatures. Evans and Redfern (2010: 265) through their study assess the main factors that encourage or prevent employee engagement in various branches of an organization. The methodology employed for the study was qualitative data assessment through attitudinal surveys, analyzing complete customer satisfaction scores and conducting telephone interviews with former employers. The finding revealed that overall; employees are fairly constant in how involved they are in their work and organizations. However, it is assumed that reactions to work fluctuate over a period of time. Evans and Redfern (2010: 265) further assert that the management plays a key role in enhancing work performance. However, the traditional top-down autocratic approach is not particularly suitable in promoting engagement.

Evans and Redfern (2010: 266) argue that change is not about driving the employees to work harder but about providing the environment in which the employees can work smarter and provide their opinions, ideas and solutions to the problems that they encounter. An engaging leadership predicts the productivity and performance of the organization. The way people are managed, employee attitudes, and business performance are shown to be interrelated. Nevertheless, the role of the line managers is to create conditions under which employees will offer discretionary behavior because employees should be recognized as people who have choices and can decide on the level of engagement to offer to the employer.

Halbelsen, Harvey, & Bolino (2009: 1452) argue that organizational citizenship behaviors (OCB) encourage employee engagement at the work place.

Medlin and Green (2009: 943) argue that to achieve higher levels of employee engagement, the management can utilize action planning at team level. Through the team in which both the leaders and workers are involved, there is likelihood of support and encouragement and this increases a common goal towards employee engagement. Furthermore, communication is an important factor that promotes engagement especially when it is carried out on a two-way communication. A two-way communication is a driver to employee communication because the employees are given a chance to participate in decisions concerning key work-related issues (Reidy & Vernier, 2010:21).

Paton and Karunaratne (2009: 280) argue that in order to successful manage an engaged workforce, then soft skills are required. There should also be the creation of an organizational culture that is based on mutual respect between the managers and the employees. Organizations should also be able to recognize and reward success at individual, team, and organizational level. Organizations can use leadership development programs and other support for the line managers in order to enhance engagement.

Haid and Sims (2009: 4) report on a global research which aimed to identify the factors that are closely associated with driving employee engagement. The study involved 28, 800 employees from 15 countries who revealed that the culture of the organization, its strategy execution, leadership ability, and its structure and processes are all interrelated with engagement levels. The failure to create an organization in which the business strategy can be aligned to sustenance, or promote high levels of employee engagement results in failure to execute the best average business results. Nevertheless, Haid and Sims (2009: 4) argue that there lacks a magic formula to achieve employee engagement and sustainable business results.

Factors of engagement are unique to a particular organization and include elements that work together, and mutually reinforce one another (Haid and Sims (2009: 4). However, some fundamental engagement factors such as a great customer experience and profitability work together to deliver (Bellon, et al., 2010). Organizational effectiveness should therefore be a fit for purpose structure, have a people systems and processes that drive the right behaviors and capable leadership. All of these can exist within one positive organizational culture.

Challenges and criticism of employee engagement

Considering that engagement requires a lot of commitment at work, critics argue that highly engaging employees expend a lot of energy at work such that they have none when they reach at home. Halbelsen, Harvey, & Bolino, (2009: 1452) recognize that a number of scholars view employee engagement as a favorable behavior at work. However Halbelsen, Harvey and Bolino (2009: 1453) argue that there is a potentially negative outcome to work engagement, and this is based on the finding of the study that the authors conducted. Multi-source data was examined and this was collected at multiple points in time from three diverse samples that totaled to 844. Their allegation is based upon conservation of resources theory in which the authors hypothesize that high engagement at work is linked to higher work interference with family because the resources engaged employees may expend when they engage in extra role work behavior. Extra role work behavior includes organizational citizenship behavior (OCB) in which the employee goes an extra mile of the required tasks. Halbelsen, Harvey, & Bolino (2009: 1454) further argue that conscientiousness, as a personal resource, works to buffer the association between OCB and work interference with the family. The findings of the study reveal that state engagement is associated with higher levels of work interference with the family and that the performance is mediated with OCB. Moreover, the engaged highly conscientious employees experience lower work interference levels with their family than engaged employees who are less conscientious.

Skiller (2010: 1) argues that high employee engagement levels do not lead to better overall performance in all areas of the organization. Therefore, employers should strive to recognize, only the areas that can benefit from employee engagement and thus contribute to the performance of the organization. Alternatively, employers or organizational researchers should strive to identify the optimal level of engagement for various kinds of works rather than stressing on a particular level of engagement for all situations. Several organizations are shown not to be able to link the actual levels of engagement with specific levels of performance (Reidy & Vernier, 2010:20).

The challenge for the business is to create an environment in which the employees understand and commit to the direction of the company, its strategy, and goals (Haid and Sims, 2009: 6). Employee engagement is seen as ideal for organizational performance but obtaining this is a challenge in most cases. The organization always need to put the following in check while aligning people: an organizational structure that is fit for purpose, a capable leadership, a people systems and processes the drive the right behaviors in the organization, and a positive work environment. Therefore, engagement is not created from a single initiative that can simultaneously create organizational effectiveness and a true performance structure and therefore excellence is required across the full range of organizational elements from which the competitive strength of the organization is built. Haid and Sims (2009: 3) argue that engagement plays a significant role in the current business environment in which significant shifts in the global economy accelerate the need for organizations to find innovative ways by which the new technological aspects, marketplace realities, and demographic issues can be addressed. These changes also cause the firms to reevaluate the costs associated with talent and thus necessitate a need to do more with less. Haid and Sims (2009: 3) argue that when the business needs to do more with less, engaged employees are the difference between surviving and thriving. However, as much as there is need to adopt new strategies and execute them in response to the changes, the organization is still expected to observe and maintain high workforce performance and organizational success. Economic disruptions keep occurring and these determine the ability of the business to survive or fade. Haid and Sims (2009: 3) argue that during times of turbulence and uncertainty, most organizations become less focused on how to manage their talent and engage the employees. Instead, the organizations spend most of the resources on cost reduction through cutting bonuses, salaries, rewards and development costs. Shortsighted leaders also begin to believe that engagement no longer matters because the employees have fewer options and may only stay because of their need for job security. On the other hand, smart leaders realize that while they need to find short term solutions to cut costs, they must also identify longer term talent management strategies in order to remain viable. A downward cycle may require leaders to look for immediate solutions to cut costs by reducing the workforce, but they may lose sight of the fact that engaged employees will serve as the difference between surviving and thriving (Haid and Sims (2009: 3).

Another challenge is the measurement of employee engagement which is difficult to perform (Haid and Sims, 2009: 7). Haid and Sims (2009: 7) argue that achieving a high level of satisfied employees could be easier to realize but it is much harder to engage them to work so that they actively participate inn realizing great results for the organization. Therefore, the drivers of engagement for the organization should be identified, and a solution to address the behaviors and practices that hinder engagement should be measured to determine the level of engagement (Paton & Karunaratne, 2009: 280).

Conclusion

Variety of literature confirms that engagement is a significant requirement that drives organizational performance. Engagement is generally described as a strong commitment to work with positive attitude and involvement in behaviors and practices that can lead to organizational performance. The characteristics of an organization that has high level of employee engagement include high profitability, high number of retained and loyal customers, high levels of job satisfaction and low rates of staff turnover, and high levels of productivity among others. These are also beneficial to the organization and thus advantages of employee engagement. Employee engagement does not just occur but there are factors that drive higher levels of employee engagement in the organization. Leadership style is identified as the most outstanding factor that drives employee engagement. The business needs of the 21st century demand increased innovation at the workplace and proper management of the available talent. Therefore transformational leadership is termed as the most ideal for engaging employees as opposed to authoritarian leadership. Nevertheless, creating and sustaining employee engagement is not an easy task and proves to be quite a challenge for many organizations. The economic turbulences at the work place sometimes makes leaders to lose focus in engaging employees and cost-cutting becomes the major agenda for the organization. Moreover, most organizations still practice the top-down management and one-way communication because they believe employees must be controlled to work. Findings from the review show that two-way communication and supportive management are necessary for employee engagement. Finally, employee engagement faces criticism in which organizations are accused of driving people away from their personal lives and family. Engaged employees spend most of their resources at work as opposed to their family.