The Enhanced Organizational Performance - Assignment Example

The role of employee engagement for enhanced organizational performance Commissioned by: Executive Summary This paper is focused on the importance of employee engagement for an organization. Employee engagement is defined by the voluntary involvement of an employee in his job role and organizational welfare. Employee engagement can be triggered by several factors, but the most important ones are the organizational culture and the implementation of the transformational leadership style. The employees act in response to the organizational behaviour. They show loyalty and respect towards the organization when the organization also does the same for them, which gives rise to the concept of psychological contact. The psychological contract has been further explained in the light of the managerial roles. The managers expect that their subordinates will seek out for new challenges and foster loyalty towards the organization, at the same time the employees also expect that the organization will offer them sufficient work flexibility and growth opportunities. An employee will increase their individual output and responsibility if the organization gives more priority towards its staffs and offers them with perks and rewards. Thus it has been clearly stated that a proper leadership style along with a proper organizational culture will lead to increased employee engagement which as a result will improve the overall organizational performance. Table of Contents Terms of Reference 4 Procedure 5 Findings 5 Managing Human Resources 5 Employee Engagement 6 Psychological Contract 7 Role of Leaders and Managers 8 Organizational Commitment 9 Impact of Workplace culture on Employee engagement 9 Determinants of Employee Engagement 10 Real life case studies 11 Evolution of the Employee Engagement 13 Conclusion 14 Recommendation 14 Reference List 16 Terms of Reference This report is a part of the unit assignment for the full time students of the Manchester Metropolitan University. The report contains the discussion over the work engagement of an employee in his organization and how it has been affected by the organizational behaviour. It highlights the relationship between the organizational output and the employee engagement. The role of managers and supervisors has also been discussed, which acts as a major factor in improving the organizational output by increasing employee engagement. This report has been backed up by several relevant articles and theories in order to justify the findings. This paper will help managers to identify the organizational behaviour responsible for higher employee engagement and increased organizational output. The managers will be able to relate their organization to this study and make necessary amendments in the firm policies which will eventually lead to voluntary employee commitment. Procedure This business report has been prepared on secondary data collected from various journal articles and theories from relevant organizational management books. Several real life examples which are cited in the paper have been collected from the internet and from relevant books. The author has also taken help from senior professors to clearly understand the structure and format of the report. Findings Managing Human Resources The performance of an organization is highly dependent on the proper management of the human resources as they are the primary workforce of the firm (Torrington and Hall, 1998). Employee management involves personnel acquisition, training, financial consideration in return of their service, and creating a work environment and organizational structure which satisfies the employees’ needs and makes him engaged to his work (Graham, H.T. and Bennett, R., 1998). The human resource management (HRM) can be divided into two types of practices, Hard HRM and Soft HRM. The hard HRM is mostly calculative in nature which is solely focused on fulfilment of organizational goals. A strong performance management system controls the employees’ activities in a strict manner in order to yield competitive advantage. Soft HRM, on the other hand is more employees oriented rather than objective oriented. It takes care of the welfare of the staff and is based on the belief that employees will work with more commitment towards their activities, if they are more engaged to their organization. This as a result will not only improve organizational output, but it will also increase employee satisfaction and employee retention (Truss et al, 1997). Now-a-days managers have realized that the personnel oriented approach is more effective in motivating employees and resulting in “High Performance Work” (HPW). HPW has been defined as highly efficient employee output which results in organizational growth. HWP can be achieved by employing certain HR policies which is focused on employee autonomy. These policies must allow the staffs to participate in organizational decision making process. They also must support the employees by offering rewards and appreciation (CIPD, 2003). Internal knowledge sharing also plays a vital role in organizational output. Knowledge sharing helps the staff to make proper communication with their colleagues and other department. Efficient communication brings a sense of belongingness in the employees, which as a result motivates the employees to give more effort in their work (King, 2009). Employee Engagement Research by CIPD (2003) has highlighted that high performance working can be triggered among employees by increasing their engagement. Higher level of organizational engagement can be achieved by treating the employees a part of a big family, where every members are contributing for its overall welfare. According to Robinson, Perryman and Hayday (2004) the definition of “engagement” can vary in a wide range from being transactional in nature to voluntary contribution. However, irrespective of its definition, measuring employee engagement can be challenging as it involves the individual’s psychological profile. Assessing a psychological profile requires in-depth study of personality and qualitative judgement which at times can be biased (Macey and Schneider, 2008). Macey and Schneider (2008) also mentioned that the most common way of assessing employee engagement is by employing three measurement parameters, working condition of the employees, the behavioural outcome and the employees’ psychological presence. The working condition not only describes the physical environment defining the ergonomics of the work place, but it also defines the work load the employees are exposed to. The behavioural outcome involves the employees’ personal initiative, proactive behaviour and organizational spontaneity. According to Kahn (1992) an individual’s engagement to his job role is dependent on his psychological presence in his activities. The employees who are mentally drawn away from their work may seem to give more effort, but their output decreases due to lack of psychological presence. He also mentioned that employees are cognitively connected to the organization when they are able to express their feelings, easily communicate with higher authorities, and they perceive that their actions are bringing a positive change to the organization along with a chance to develop and improve one self. Being engaged in a job role requires two psychological factors, one is “attention” and the other is “absorption”. Attention is the intensity of focus an employee projects in his work. Highly attentive workers are rarely distracted and lead to higher output. Absorption defines the employees’ motivation towards a particular job role or activity (Rothbard, 2001). Psychological Contract The relationship between an organization and its employees can be described as a transaction where an employee offers his service and in return the organization pays him with financial consideration. As simple as it may seem, the employee-organization relationship is more complex than the mere financial transaction. In order to establish a relationship that supports long lasting employee retention and improved employee output, the leaders must nurture, support and motivate their subordinates (Birasnav, Rangnekar and Dalpati, 2011). This gives rise to the concept of Psychological Contract, which gives a more behaviour oriented approach to the relationship. The contact which binds an employee and organization together extends to the organizational behaviour, company’s policies and interaction of the employees with the supervisors. Apart from paying salaries, the organization should pay attention and devotion to the employees’ welfare, which in return will motivate employees and drive them to get voluntarily involved in the pursuit of organizational goals (Behery, Paton and Hussain, 2012). The obligations and promises associated with the relationship between the organization and its employees have been defined in terms of the psychological contract. Rousseau (2001) has divided the psychological contract into two types, Transactional contract and Relational contract. The transactional contract is based on the economic relation between the employer and employee, where the employer pays salary in return of the employee’s services. This type of contract comes with a very limited connectivity and narrow scope between the two parties. The tenure of the contact is often predefined and short. A transactional contract is characterized by clear description of job requirement and the individual employee’s goals are clearly stated. It allows the staff to assess their personal value to the organization and enables them to calibrate their output accordingly; this as a result leads to higher transparency in the organizational structure. The Relational contract describes the psychological contract in terms of non-economic approach. In this contact, the relation between the employer and employee is dependent on the socio economic exchange. It is characterized by variable interpretations and poorly defined employee goals and scopes (De Meuse, Bergman and Lester, 2001). It is mostly focused on the mutual trust and respect between the employer and the employee. It is noteworthy that the relational contract covers both financial considerations as well as emotional exchange, whereas the transactional contact is limited only to exchange of money and labour. A written contact between an employee and the employer may cover a series of polices and regulations, but it does not cover all the activities that an organization expects from its staffs. This includes loyalty, good behaviour and voluntary involvement in activities outside the predefined job role. The employees also expect the organization to return the favour by allowing them to have flexible work schedule, individual personal development, and better relationship with supervisors and occasional appreciations (Parzefall and Hakanen, 2010). Role of Leaders and Managers Bass and Avolio (1997) has described that the relationship between the employees and the organizational leader plays a vital role in the employee engagement. An effective leader’s behaviour puts a positive impact on the development of an employee’s efficiency, which is often termed as Transformational leadership. The concept of transformational leader ship came into being from the transformational effect of the leadership qualities on the employees. The transformational leader leads their followers or subordinates to have self belief in their abilities which is required to achieve organizational goal. Thus it can be stated that role or behaviour of a leader is quite important in developing an employee’s overall efficiency and level of output. Moreover, Singh and Krishnan (2008) has clearly stated that the organizational output is directly proportional to the transformational leadership style. He also mentioned that leaders with transformative qualities are capable of assessing their environment with more accuracy which allows them to make necessary amendments in the strategic goals, thus it allows the organization to develop flexible goals which in turn increases employees’ output. Thus followers of a transformational leader mostly show high involvement and commitment to their work and are willing to work harder. This enhanced commitment results in higher organizational output. Organizational Commitment The employee engagement can also be determined in terms of organizational commitment, which is defined by emotional bonding between the organization and it employees. Organizational commitment can be measured in terms of the staff’s likelihood of leaving the organization. Higher organizational commitment leads to low attrition rate, low absenteeism and high contribution to organizational welfare (Mowday, Steers and Porter, 1979). Khandelwal (2009) has described this commitment as a psychological attachment, which under the effect of a transformational leadership style, drives the employees to voluntarily work harder and add to organizational output. It also results in higher employee retention and loyalty towards the organization. Lockwood (2007) has mentioned that the level of employee engagement has led to competitive advantage for an organization. Due to the rise in competitiveness in the global business environment, the acquisition, retention and development of human talent has become increasingly important for the organizations. The changing outlook of employee management has lead to several changes in the organizational policy and structure. The relationship between the employee and employer has evolved to business partnership. The role of the HR managers has become increasingly important in promoting the linkage between the achievement of organizational goals and individual employee’s performance (Lockwood, 2007). In order to achieve this linkage the managers are more focused in retention of mission-critical resources. Statistical data provided by Lipman (2013) suggests that only 13% of the employees in the global business environment are actively engaged in their work. This number is alarmingly low, which suggests that the organizations worldwide are adopting innovative ways to increase employee engagement. Impact of Workplace culture on Employee engagement Lockwood (2007) further added that the workplace culture also influences the level of employee engagement in the organization. The managers need to design the workplace culture by making proper balance between the personnel orientation and achievement orientation. Too much personnel orientation can deviate the organization from its desired path, whereas too much achievement orientation will lead to employee dissatisfaction. Maintaining a proper balance make the employees engaged to their work and this will also lead to organizational success. The managers must make sure that the organization possesses a work culture which provides job enrichment and proper work role fit. The culture must also provide safety and sufficient resource availability for the employees. These factors in the organisational culture will eventually lead to more employee engagement. Purcell (2006) mentioned that an organization needs to earn the employee’s loyalty by addressing them with respect and integrity. This will eventually drive the employees to respect back the organization with enhanced effort and engagement. Organizations which practice proactive measures treat their employees with respect tend to retain more talents than others. King (2009) has discussed the concept of employee engagement from the point of view of organizational communication. Preciseness and clarity of organizational communication is also a major determinant of employee engagement. The HR managers must ensure that the organization promotes internal communication that encourages the employees to be a part of the organization. The communication strategies should be designed to promote a free flow of information though the hierarchical ladder. The proper information flow will allow the employees to engage in decision making processes and will transform them into a vital factor for organizational success. This as a result will create a perception of self importance among the employees, which will motivate them to contribute even more to the organization (Purcell, 2006). Thus it is evident that work place culture has proved to be a positive driving force for the organizational success. However, it can also pose as a barrier to employee engagement as well. Depending on how the workplace cultures are implemented, it can hinder the employees’ productivity by posing strict rules and lack of flexibility in the organizational policies. The company must realize the difference between the physical assets and the human assets, and should treat them accordingly. Treating an employee like a money making machine will eventually lead to lack of empathy and poor organizational behaviour, which in turn will degrade the workplace environment and will drastically reduce employee engagement (Vance, 2006). Determinants of Employee Engagement The factors determining the Employee Engagement have been described by MacLeod and Clarke (2009). They mentioned that although sufficient financial remuneration acts as an important factor to attract the employees’ attention, but this must be complemented by other hygiene factors. According to Herzberg (2003), the organizational hygiene factor describes that the factors responsible for employees’ job satisfaction are completely different and separate from the factors that causes job dissatisfaction. He clearly mentioned that contrary to popular belief the opposite of job satisfaction is not dissatisfaction; rather it is “no-satisfaction”. Thus, it can be stated that in order to make the employees satisfied and motivated, removing the elements of dissatisfaction is not enough; the organization must also incorporate the satisfying elements in the work environment as well. MacLeod and Clarke (2009) further mentioned that managers must ensure that the organizational policies are facilitating the employees so that they can empower themselves to commit to organizational success. A strong leadership narrative provides the employees with a shared vision of the organization, which is the backbone for employee engagement. The managers must clearly define the individual contribution of the employees that leads to organizational success. Employees are motivated to work under the supervision of a manager who himself project an engaging behaviour towards the organization. These managers offer appreciation, rewards, clarity of organizational goals and individual activity, proper guidance to achieve individual goals and positive feedback. Feedback and guidance is important in employee engagement. Studies of Rousseau (2001) have shown that employees who engage in extensive communication with their supervisors and receive more feedback are more engaged in their work than employees who have less communication with their managers. This is because the feedback helps to identify the strength and weakness of an employee. Thus an employee with clear knowledge of his strengths and weaknesses will feel more confident about his activities, which leads to higher level employee engagement. Real life case studies Philips is best known as a multinational consumer electronics firm, which holds the position of one of the best innovating companies. In 1980s, Philips faced a severe down turn in its business operations which led to financial crisis and failure to penetrate the growing consumer electronics market. In 1990, the situation became more critical as shareholders and creditors started losing interest and faith in the company (Freedman, 1996). Philips’ president Cor van den Klugt offered his resignation and was replaced by Jan Trimmer. Trimmer immediately started working to turn around the company’s fortune. He established a massive change management system called “Operations Centurion”. Centurion was implemented with the advice of Prof. C.K. Prahalad of Michigan University (Karsten, 2009). The Centurion model made drastic changes to the organization structure. It started to divest poorly performing areas to stop revenue leakage. However, apart from several other strategies implemented, the most important one was to develop a new organizational culture. Trimmer decided that in order to improve the organizations as a whole, changing its structure is not enough. The organization’s culture must trigger and complement an innovative mind set among the employees. He changed the existing organizational policies and norms. He also challenged the existing organizational behaviour pattern and eventually established an open culture where free flow of communication, mutual trust among employees and loyalty towards the organization is prevalent. This as a result allowed Trimmer to incorporate a new culture which lead to empowerment of the company’s human work force and made them more engaged to the organization (Karsten, 2009). Electrolux holds the leading position in the home appliance industry. The company believes that establishing a strong talent base that has the proper enthusiasm and attitude acts as a competitive advantage for a firm. Electrolux ensures that it has positioned the right talent in the right place, so that the company can easily seize any opportunity in the market. The company gives as much attention to its employees as it gives to its assets, which leads to higher level of devotion in talent management and skill development. Electrolux perceives career management as a two ways responsibility. The managers are responsible for the development of individual skills of the employees, and in turn the employees are responsible for actively managing their careers and voluntarily look out for new challenges which lead to organizational success. The company ensures that each employee is well taken care of and they are provided with sufficient development opportunities so that they develop a sense of gratefulness towards the organization, which in turn will lead to increased level of employee engagement (Oxford Brookes, 2004). Thus it can be stated from these two cases that organizational success is highly dependent on the way a firm treats its employees. On a closer inspection, it is evident that almost all successful companies which have sustained for a long period of time in the ever increasing competitive market, has prioritized in personnel development. Making the employees a part of the organizational asset allows the organization to give more attention and commitment towards them. This as a result leads to improved organizational output and long term sustainability. Evolution of the Employee Engagement The managers have recognised the growing importance of the employee engagement over the years. It acts as a vital factor for the success of an organization and developing competitive advantage. According to the studies of Goodman et al (2009) developing employee engagement has taken its place in the top three priorities of the firms. The concept of employee engagement has attracted a lot of attention in the last two decades. The practise of employee engagement as it today stands took a series of evolutionary step to take the current form. These evolutionary steps have been identified as four distinct “waves” which are, pre wave, wave 1, wave 2 and wave 3 (Welch, 2011). According to Welch (2011) the pre wave era is identified by the need of employee engagement and the lack of any personal involvement outside the allocated roles. The concept of engaging employees as a part of the organizational assets was absent, which in turn resulted in low job satisfaction and poor relationship between employer and employees. Wave 1 started during the early 1990s when several researches on employee engagement began. Within a period of a decade, the concept gained huge popularity and became the point of interest of a lot of researchers and practitioners. Kahn (1992) is considered as the parent of the employee engagement process; he initiated the research of employee management which was primarily focused on personal involvement in the organizational welfare. He also mentioned that in order for an employee to improve his job performance, it require three psychological conditions, which are meaningfulness, safety and availability. Buckingham and Coffman (1999) of Gallup has mentioned that the right individual allocated with the right job responsibilities, guided by the right managers, lead to higher levels of employee engagement. The duration of wave 2 has been identified to fall between 2000 and 2005. The practitioners made a clear statement that high performance of the employees is directly proportional to their level of engagement to the organization and to their job roles (Sorenson, 2013). This wave also led to the development of positive psychological factors like voluntary involvement which effectively replaced negative psychological factors like burn out. The wave 3 is demarcated from 2006 to 2010. This wave is characterized by the practical implementation of the concept of the employee engagement in several organizations. The rapid adoption of this concept has eventually changed the way employee management looked like few years before this wave. Organizations started to find new ways to increase employee engagement and have drastically improved their overall output and reputation of their organization culture. This as a result has led to high employee retention and development of an attractive work place which every potential employee desires. Conclusion From the perspective of organizational productivity, it can be stated that employee engagement has proven to be a major determinant of the output of a firm. The level of engagement an employee has with his employer organization is directly proportional to the organizational output. Thus the managers have started to adopt the concept of employee engagement at a rapid pace. An employee’s voluntary involvement in the organizational affairs can be achieved by treating the staff as a vital organizational asset. This as a result makes the employees to believe that they are a part of the organization and this sense of belongingness drive them to work harder and think about the organizational welfare. The supervisor’s role acts as an important element which triggers employee engagement. The proper leadership style causes a transformational effect on the follower and as a result makes them more involved to the organization. The higher level of employee engagement results in high levels of motivation, voluntary contribution and lets employee to seek out for new challenges. Thus enhancing the employee engagement leads to improved organizational performance. Recommendation The managers are recommended that they should realize the growing importance of employee engagement. They should stop treating their subordinates as external entities; rather the employees should be treated as a part of the organization. Treating them as an organisational asset will allow the firm to invest more on talent development and improvement of the existing employees. The managers should keep a perfect balance between employee orientation and achievement orientation. This will lead to development of proper work environment and at the same time it will keep the employees in line with the organizational goals. The managers must also ensure that there is a free flow of information in the hierarchical ladder, which will allow the employees to give and receive feedback to and from the management. An effective feedback system will allow the organization to easily address the problems and issues of the employees, which in turn will improve the overall human capital of the organization leading to improved organizational output. Reference List Bass, B.M. and Avolio, B.J., 1997. Full Range Leadership Development: Manual for the Multifactor Leadership Questionnaire. Palo Alto, CA: Mind Garden. Behery, M., Paton, R.A., and Hussain, R., 2012. Psychological contract and organizational commitment-The mediating effect of transformational leadership. Competitiveness Review: An International Business Journal, 22 (4), pp.299-319. Birasnav, M., Rangnekar, S. and Dalpati, A., 2011. Transformational leadership and human capital benefits: the role of knowledge management. 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