Employee Engagement Part 2- Need for Engagement

Here is the link for part 1:
http://anvesh87.blogspot.in/2012/04/employee-engagement-part-1.html

so why had Employee Engagement became such a Buzz word with organizations, especially in the recent past . Infact the word "Employee Engagement" is formally coined only in 1990's ( now don't sue me if it is not accurate) .
So does it mean that employees are not Engaged towards their work before 1990's ?.
if they are , why can't the companies continue with they had been doing for ages instead of going for some thing fancy .
Is "Engagement" a new management fad which is gonna passover with time ?

Having put so many questions , lets see whether there are answers for these questions and also as one of my profs say "back every thing with numbers", will also see what is the research done with respect to Engagement (quite a few consulting companies had done research in the topic)

If we look at the careers of our parents , i mean those who are the Generation X (born in 60s) and baby boomers (those who were born after world war 2) , we can observe a trend that most people stick to the same organization for years . The mantra here is "Job security" . organizations offered job security , pension benefits , medical benefits etc which in other way of saying you work for us for long term and we will take care of u  and employees did reciprocated with sticking to the organization for a long time

The situation has changed now . With globalization and changed business scenario, no company can guarantee an employee of a life long employement but instead the focus shifted to offering careers . It is now accepted that there would be attrition , the challenge is to retain the top performers to work with the organization for a long term and to help them perform at their peak capabilities . This is where our "ENGAGEMENT" concept comes into picture .

Now lets look at some of the outcomes of research done on Engagement:

• Towersperrin research on 50 global companies over a one-year period, correlating employee engagement levels with financial results:
• Companies with high employee engagement had a 19% increase in operating income and almost a 28% growth in earnings per share
• Companies with low levels of engagement saw operating income drop more than 32% and earnings per share declining over 11%

• Hewitt's study on 1500 companies over 4 year period:
• Engagement Level                                              share holder return
• 60-100%                                                              20.2%
• 40-60%                                                                5.6%
• below 40%                                                           -9.6% 

so it can be clearly seen that when less than 40% employees are engaged , the share holders returns are negative

there are many other studies done correlating engagement with customer satisfaction, profitability etc. Even though there might be difference in the numbers , but all studies show Engaged employees are assets to the organization and a source of competitive advantage

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Employee Engagement Part 1

Most of the employees especially those in software companies might have heard of "Engagement"  and the immediate recollection associates the term with all the get togethers, games and mails from HR on Engagement activities ...

But what exactly is engagement and why companies are interested in investing resources ( financial and intellectual) in getting the employees engaged ?

lets start with the definition of Engagement , (According to Hewitt Associates)
Engagement is the state of emotional and intellectual commitment to an organization-the degree to which you have captured the hearts and minds of your employees

There are many other definitions of Employee Engagement but the essence remains the same - An engaged employee stays connected with the organization at both emotional and intellectual and gives his best for the success of the organization

This connection happens at three levels :
Heart (SAY): An engaged employee says good things about the organization . one of the metrics to measure success here is to check the success of the company referral program ( though referral success can also depend on other factors like compensation, security etc and hence cannot be attributed to engagement alone)

Head (STAY):An engaged employee stays with the organization for long time as he visualizes his growth with the growth of the organization over long term . A caution here is that disengaged employees and poor performers also tend to stay with the organization unless until they find better opportunity else where . hence we introduce the third level "strive"

Hands(Strive): An engaged employee goes beyond his job role and flexible for the overall success of the organization.These are the employees who can see the business logic in changed job roles or work environments

Every employee have unique drivers for him to be encouraged .some of these can be generalized based on culture, demographies (ex: Gen Y employees requires more challenging work roles , though it cannot be the case with every Gen Y employee, it gives a platform to understand the employee and engage them)

In the current competitive environment when competitors can easily copy the business model , having an engaged work force is sure going to be a differentiator between successful organizations and other companies

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