Employee Engagement and Organizational Performance - Research Paper Example

?Running Head: HUMAN RESOURCE MANAGEMENT Employee Engagement and Organizational Performance of the of the Table of Contents Introduction 3 Employee Engagement and Organizational Performance 3 Generating Engagement 5 Employee perceptions of job importance 6 Employee clarity of job expectations 6 Career development opportunities 6 Feedback 7 Relationship with peers 7 Rewards 8 Issues in Contemporary HRM 8 Multi-Generational and diversity issues in Workplace 9 Technological Advances and Workplace 10 Changing nature of HRM function 10 Job description and clarity 11 Gender Equality 11 Conclusion 12 Employee Engagement and Organizational Performance Introduction Employee engagement is one of the most important issues in HR. It plays a significant role in enhancing the overall performance of the employee and thus the productivity of the organization. It gives an individual a sense of importance and belongingness to the organization. Any absence of employee engagement could lead to stress on the part of employee. In this paper, we will discuss the importance of employee engagement and its impact on organizational performance as it has become one of the most important concerns for the HR of an organization. Employee Engagement and Organizational Performance When employees are fully engaged and dedicated towards their work and organization, we say that employees are engaged. Employee’s engagement is usually a measurable form of concept, which assesses the positive and negative attachment of employee with job and organization. Engagement is a step forward than simple employee’s motivation and satisfaction as it also specifies the amount of involvement in organization tasks and decision making (Slotte, Tynjala, Hytonen, 2004, pp. 481-500). Schmidt in 1993 described employee engagement as a modernized version of job satisfaction and commitment with work. Various studies found employee engagement as a very important tool that could trigger positive outcomes for an organization (Schmit, Kihm, Robie, 2000, pp. 153–93). Employee retention is the most important benefit of employee engagement as it significantly reduces the cost of the organization and improves the productivity. Organizations do not have to spend time and money to train new employees as old employee stay dedicated towards the work. In turn, it brings good results for organization and enhances the job performance of employees too. For example, such employees tries to give their extra input, spend extra time at work, resulting in increased customer satisfaction and improved services. This concept was initiated during the World War II, when the impact of unity between the army men was assessed. Studies were conducted in the world war to find the importance of motivation and engagement as scores were given to different attributes. In today’s world it has now become a major HR issue as the cost of replacing an old employee is very high (Arndt, 2000, pp. 44–48). According to the study conducted by Society of Human Resource Management, replacing an employee could cost $3500 at least, making it difficult for the organization to hire a new employee. As a result, organizations are trying to pay attention on this important issue so they could enhance organizational performance (Potosky, Bobko, 2004, pp. 1003–34). Towers Perrin conducted a study in 2007-08 on 90,000 employees working in 18 different countries to gauge the importance of employee engagement. The study found that engaged employee had a 19% probability of increasing the operating income of the company. On the other hand, employee with lowest engagement had a 32% probability of reducing the operating income of the company. Tony Schwartz stated that more than 100 studies have proved strong relationship between employee engagement and organizational performance. Studies also show that out of the total workforce, only 20% of them are fully (Caruth, 2007, pp. 150-167). These studies show the importance of generating employee engagement that could result in successful organizational performance (Mankin, 2009, pp. 54). Solomon Markos and M. Sandhya Sridevi in 2010 studied the impact of employee engagement on organizational performance. They studied several literatures regarding this issue to find out that organizational performance is significantly dependent upon on employee engagement. Employee engagement helped companies to retain employees in the organization, which not only reduced their hiring and training cost, but also improved the overall productivity of the organization. They also found out that employee engagement also boosted employee commitment and it resulted in reduced absenteeism. The improved attendance not only enhanced employee’s own performance, but it also led to improved organizational performance (Markos & Sridevi, 2010m pp. 13-20). Nugroho Adi found out that certain factors that enhance employee engagement such as satisfaction, job involvement, commitment and trust lead to improved organizational performance. These are the most important factors for an organization that helps them to retain employees for a longer time period. When employees trust their employer that it will take care of the employee needs and will compensate them, they are fully satisfied giving their best at work (Nugroho Adi, 2012, pp. 25-40). Adjoa Amanfu studied the relationship between employee engagement and organizational performance in context with Ghana. The study found out that factors like motivation and reward (that boost employee engagement), drive organizational performance of the companies. The employees of the studied companies were disengaged, and it was reflected by their performance. The companies failed to realize the importance of their workforce and due to financial problems did not device adequate reward system (Adjoa Amanfu, 2011, pp. 33-60). Generating Engagement Commitment or motivation theories create circumstances and conditions in which employees are compelled to work for their organization; however engagement theories bring an intrinsic desire in the employee to work for the betterment of organization, showing extra commitment towards work (Ashkenus, DeMonaco, Francis, 2000, pp. 165–178). There are several important factors with which employers can work on to improve the employee engagement in an organization. These factors include recognition, communication, feedback, performance clarity, relationship with managers and peers, growth and participation in decision making to a certain extent. Employee perceptions of job importance Gerard Seijts and Dan Crim found that employees attitude towards importance of job and company have a profound effect on employee loyalty and customer satisfaction than all other factors involved. Employee clarity of job expectations Most employees face this issue of job clarity as they are not sure about their actual tasks. They are bombarded with different kinds of tasks with no objective or goal. This factor leads to dissatisfaction, as employee start looking for other options and do not stay loyal towards work and the company. It is also possible that an organization fails to provide the necessary environment and tools to the employee necessary for job. It develops negative emotions among the employees as they start thinking about surviving in the company instead of giving their input on various decisions. They usually stop thinking about improving the efficiency level of their work and improvement in overall organizational processes. Career development opportunities When employees are given incentives and organizations device excellent career opportunities, than employees try to think out of the box and present ideas that could reduce per unit cost of production or the overall cost for an organization. Such steps would not only lead to employee’s engagement, but would also bring improved performances on the part of an organization. Feedback Feedback is one of the most important things, HR of an organization must consider, however many organization fails to do so. They only speak up when something wrong has happened or employee has failed to live up with the expectations (Caruth, 2007, pp. 150-167). It is the responsibility of the employer to give employees feedback about each and every task completed by the employee. It keeps them on the right track, bring efficiency in their work and ultimately they get engaged with the organization. Relationship with peers Good relationship with peers and managers also play an important role in employee engagement. When the relationship between peers and other managers are not good than employees are not fully engaged. They do not feel motivated towards work, which is reflected through their work. Organizations must focus on creating good environment in the company so employees feel comfortable in talking to their peers and bosses. It provides a great level of satisfaction and leads to increased engagement (Kamoche, 2006, pp. 213-234). Alongside strong relationship, effective communication is also necessary in the organization so employees are aware of what is going on in the company. It is important for the company to communicate messages and policies in such a way that intended message reaches the target audience. Multinationals having offices in different parts of the world often face this issue as information from Headquarters fails to reach employees on time or there is some lack of information that disturbs employee and keep them unaware. Hence, communication in the desired manner is also necessary in generating employee engagement. Rewards Rewards are one of the most excellent ways to spur employee motivation. Rewards are the mean of acknowledging the good efforts put in by the employees for the welfare of the organization. It acts as an incentive for employees to work hard and stay local to the company. It is also important to understand that there is no hard and fast rule of giving rewards in a certain way. Companies can offer rewards according to its objectives and limitations. Companies can set a range of tactics to offer incentives to the employees like setting sales goals, achieving improved productivity etc (Huselid, 2009, pp. 287-301). These rewards go a long way in creating motivation and dedication among employees that help develop the concept of employee engagement with the company. Rewards could include both monetary awards and promotion awards. Monetary awards could offer incentives through money, while promotion awards present incentives through role promotion and growth of the employee within an organization to appreciate his or her services (Jones, 2003, pp. 15–20). Issues in Contemporary HRM We have discussed how human resource managers must work in order to keep their employees engaged towards their work and organization. However, there are far many contemporary HRM issues that still need to be discussed. We will discuss these challenges in following paragraphs. Multi-Generational and diversity issues in Workplace Multi generation has become of the most important issues in recent past as organizations have started to employ people with different age groups. Companies now hire from a range of fresh graduates to experienced professionals. This multi generation may post challenge for organization as these generations belong to different set of values and work style. Lee found out that 60% of the employees face intergenerational conflicts (Witt, Ferris, 2003, pp. 809–20. These conflicts are usually related to work style. For example, the young generation is more adapted to the technology than the old people, plus they are more willing to adopt changes in an organization than old people. This creates conflicts when management takes any policy decision regarding the company. However, it is also important to note that studies shows that multigenerational has somehow helped companies to enhance productivity so organizations cannot opt out of adopting multigenerational policy (Evans, Pucik, Barsoux, 2002, pp. 52-63). They would have to find a middle way that solves this issue of conflict. Companies can listen to suggestions of all employees and treat them accordingly. If they provide training to the new employees, they may not provide training to the old and experienced employees as they are well experienced in their respective professions. Alongside the multigenerational problem, employees belonging to different cultures also post challenges for the HR of an organization. Globalization has created room for people from different backgrounds to work in a single organization, but it is not easy to handle. People from different culture have different lifestyle. They have different way of working and communication with other people which must be kept in mind. Employer must train their employees to be aware of other employee’s culture, so they can act accordingly. Technological Advances and Workplace Today we live in a world of technology, which is fast changing. Latest technological devices have improved the overall productivity level of the employees. However, we often hear from the employees that they feel stressed at continuously adopting new technologies and changes within an organization. It is important for HR managers to create consent among employees and management about the use of particular technology or bringing a change in the organization. It would reduce stress level of the employees and would also keep them motivated towards their work (Wright, Gardner, Moynihan, 2005, pp. 409–46). Many companies have provided the option of working from their home with the use of technology; however some employees do not feel motivated to work from home. They are not able to concentrate working at home as much as they do when they work from office. If they work from home, their productivity level would be very low. Hence, adopting a technological change may not benefit the entire employee and may not result in improved performances which organizations must take care of. They must create solutions that are acceptable to a majority of people working in the organization (Gubman, 2004, pp. 13–23). Changing nature of HRM function HRM has emerged as a very comprehensive function covering many aspects associated with the human resource of the company in recent past. Gone are the days when the sole role of HR managers was to hire or fire people. Now it covers a number of areas like employee motivation, compensation, recruitment, training, diversity management, conflict resolution, strategic human resource etc. These tasks require thorough understanding of organization culture and policies to make effective decisions which is never easy. It requires effort, knowledge and experience of working in an organization. HR functions and objectives must be developed in such a way that it is line with company’s strategies and objectives. Hence, the HR team of the organization has to develop policies keeping in view the objectives, strengths and weaknesses of the organization, which is not an easy task to handle (Gerhart, 2006, pp. 779-802). Job description and clarity In this fast moving world of technology, organizations are more inclined to hire people having expertise in different fields. They require employees to carry out several tasks, which make it difficult for the HR managers to define a certain set of job description as at the time of hiring they may not be sure about the exact role and responsibilities an employee would be assigned (Apfelthaler, Muller, Rehder, 2002, pp. 108–118). This aspect sometimes also annoys employees who demand a clear job description stating their role in the company. Hence, HR managers have to devise the job description program in such a way that it covers all areas in which a particular employee is asked to work for. For the purpose, HR must consult with the respective department and their heads to develop Job description and define role of employees. Gender Equality In some parts of the world, males dominate most of the labor workforce. Even in developed countries, top managerial positions are mostly held by man. Regulatory body requires organizations to maintain a certain balance between men and women when hiring new employees, which HR managers must also consider while recruiting new employees. They cannot just hire people according to their own preferences; they have to encourage female workers working in the organization too not only for the betterment of the organization, but also to meet international standards (Caruth, 2007, pp. 150-167). Conclusion Among all the major HR issues discussed, retaining employees in an organization is the most difficult task for any organization. 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