Employee Commitment and Engagement - Essay Example

Employee Commitment and Engagement Critically evaluate how people resourcing policies and practices can influence the level of employee commitment and engagement with in the workplace. Introduction Any company would like to keep individuals working for the company engaged and motivated in their work. However, the process of engaging individuals as well as providing the motivation to all concerned parties is not an easy one (Vance, 2006). It requires careful management, a view of the psychological contract, an understanding of what motivates certain individuals and understanding the work-life balance which prevents employees from burning out (Erdogan, 2005). There are several examples of companies employing effective policies and others where the policies may not be that effective and these can be discussed in the light of theoretical analysis to show how company policies can influence the level of employee commitment and engagement. Employee engagement is defined by Vance (2006) in plain business language and he says that, “Though different organizations define engagement differently, some common themes emerge. These themes include employees’ satisfaction with their work and pride in their employer, the extent to which people enjoy and believe in what they do for work and the perception that their employer values what they bring to the table (Vance, 2006, Pg. 2)”. This definition is very applicable in business terms since it allows companies not only to create a level of engagement based on the factors mentioned above but also gauge the level of engagement which employees have. Under this definition, those companies who are helping people enjoy their work, show commitment to the people working for the company and help them when they need to be motivated will eventually have employees who are more committed than others. The psychological contract also plays a role here since the individuals who are engaged with the company and are said to be committed are expected to believe in what they are working with and they need to have pride in their employer. The psychological contract itself is defined as the unwritten contract between the employer and the employee regarding the commitment which they both have to each other (Barnett et. al., 2004). To show the importance of employee commitment and engagement, two examples are used as pertinent cases. These are international companies who have shown how engaging and committing employees is possible through several different means and they also show the advantages which a company can gain if the employees working for the company are fully engaged with active psychological contracts. The examples also show what could happen if employees become disengaged from the company, particularly in the case of Apple computers where changes brought to the company were seen as breaches of the psychological contract for engagement. The Recruitment Process While certain companies such as GE believe that recruitment is the place where rewards for employees should be started to engage them within the company at large. Others such as Apple have been known to make the recruitment process more difficult to increase the level of commitment of those who are recruited or those who are retained with the company. In the case of GE, the observations with regard their employee management systems show that GE has a management concept which follows the Functionalist Paradigm. This paradigm suggests that human beings can largely be expected to act in ways which are rational. The supporters of this paradigm also say that organizational behaviour can be understood through experimental observation and hypothesis evaluations (Burrell, 1979). It is for this reason that the basic employee management principle of GE is to reward top performers and to remove the bottom most level from service (Welch, 2005). The CEO of Ogilvy & Mather, Shelly Lazarus, has been on the GE board since 2001. She says that the process of rewarding employees at GE begins as soon as the recruitment process is started. Even being offered a position at GE is a cause for celebration for a person since GE develops leaders who are groomed to take up positions at the head of the company (Colvin, 2006). I agree with this concept and the idea of evaluating employees for rewards as soon as they are recruited goes a long way towards establishing a psychological contract with them to work towards something big as soon as they arrive at the company. Of course, individual personality and personal opinions also factor into the creation of the psychological contract therefore an understanding of these issues is very important (Lee et. al., 2005). The Psychological Contract Robinson and Rousseau (1994) suggest that the psychological contract is important for all facets of management and those employees who are given employment with the company will hope to obtain more benefits from their employment in the future. As per the meaning of the term, psychological contract, it is the implicit contract of understandings between the organisation and the workers as they relate to both the expectations of the employees and the obligations of the employer (Emott, 2006). When employees are being selected at GE with reward for recruitment, the psychological contract is bound to be affected in a positive way since it shows that the company cares about them and this improves engagement with the company. Guest (2004) takes an even wider view of the contract in such situations where new bonds are being formed and firmly recommends that the full understanding of the psychological contract should incorporate fairness to both parties and mutual trust. This may be difficult to achieve in all cases since at the time of recruitment or early on in a career both parties may have very little time to create implicit bonds. As Hendry and Jenkins (1997) suggest, since the contract is implicit, it is difficult to judge how it will be impacted with changes in the future, but at the same time it is important to consider the psychological contract before any change is announced to the workers. The negative influence of breaking a psychological contract too suddenly was experienced by Apple when Steve Jobs came back to the company as the CEO. As soon as Steve returned, he made drastic changes within the company which badly affected the level of commitment and engagement for many employees. While the company was being run by previous CEOs, it had developed a leisurely atmosphere which was good for morale but it was hurting production and output. Deutschman (2000) describes the conditions before Steve’s return to the company and says: “Before Steves takeover, the campus had a leisurely atmosphere. Staffers loved to hang around smoking and chatting in the courtyard of the R&D complex, which always had ashtrays stocked at the outside and inside doors of all six of its buildings. Some employees seemed to spend most of their time throwing Frisbees to their dogs on the lawns (Deutschman, 2000, Pg. 3).” Steve changed that for the better with new rules that prohibited smoking anywhere on Apple property. Dogs were banned from the campus and it looked like, “Steve were pushing his own lifestyle on 10,000 others (Deutschman, 2000, Pg. 3).” These steps made quite a few employees unhappy since smoking in the courtyard allowed individuals of different departments to interact with each other and people who worked nights and weekends for Apple had hardly any time left to be with their pets (Deutschman, 2000). The long established psychological contact was being broken and it would seem that Steve’s decisions were wrong and could lead to disaster because such changes cause some individuals to pack up and leave the organisation. While these steps appear to go against the demands of maintaining the psychological contact for enhancing employee commitment, they worked at Apple due to the leadership skills of the management and very soon, the company began turning itself around. The record breaking profits, the sale figures and the brand value appreciation as Steve Jobs returned to Apple all show that his management style and organizational structuring have worked wonders (Deutschman, 2000). From behaving like members of a civil service that did what it wanted without paying attention to the CEO at the top, the company became proactive and employees began to interact with the boss at the top on a deeper level as discussed by Deutschman (2000) who says: “People started to realize that Steve could assert his authority over seemingly any aspect of the companys life. Apple was going to follow the vision of a single person, from the no-smoking rules to the editing of the TV advertisements. Steve was clearly in charge, and Steve was seemingly everywhere (Deutschman, 2000, Pg. 3)”. Thus, employee engagement and motivation were both enhanced but not before many individuals left the company citing personal differences with the policies initiated by their boss. The psychological contract can be broken by the breaking of this contact can also create negative emotions and resentment leading to individuals voting with their feet and leaving the company (Clarke and Robertson, 2005). To prevent this from happening, companies need to motivate individuals to engage them in their work and create a deeper level of commitment to the company. Motivation The Content theory of motivation which is related to ideas such as Maslow’s hierarchy of needs connects deeply with the idea of rationality. At GE, rewards are given for excellent performance and sub par performance causes a termination letter to be sent to the employee. Consequentially, rewards are an intrinsic part of the management system at GE and the rewards for individuals who gave outstanding performance are significant and are given as publicly announced rewards (Kerr, 1996). Welch (2005) reports that, “We publicly rewarded people who drove the mission and let go of people who couldn’t deal with it for whatever reason (Welch, 2005, Pg. 16)”. The idea of publicly rewarding top performers rationally ensures that those who see it happen know why those individuals are being rewarded. On a simple management level, the individuals who were rewarded would have a harder time in leaving the company and their commitment to the company would only be strengthened. Others who see the rewards being given will be motivated to work harder and get the same level of recognition and appreciation. Therefore, commitment and motivation go hand in hand at GE. GE gives a substantial bonus to their star employees to motivate them towards further achievements and greatness. Jack Welch (2005) discusses the case where a scientist working for GE won an award for his achievements in science. Mr. Welch asked that the GE board immediately connect the scientist’s achievements with a large cash bonus since even the Nobel peace prize comes with a significant dollar figure attached to it. Kerr (1996) is in complete agreement with this idea and states that variable compensation and bonus awards are unlikely to change a person’s behaviour permanently unless the sums are at least 10-12% higher than what their base salary would get them. This relationship is taken further as the reward system for GE evolves over the long term into a partnership between the employee and the company. Continual rewards and promotions only come to those individuals who perform for GE while others are phased out with time (Grote, 2002). In such a situation, a person could essentially rise to a position where s/he can have control over the company rather than the company having control over him/her. However, by the time that person is in such a position, the commitment level might be internalised to such a state that no harm could come to the company from that person. It can be assumed that an established and internalised power relationship could also help in reducing the negative influence e.g. corporate fraud, insider trading practices, etc. of those who are in a position to harm the company simply because they have risen to such positions. The review and evaluation process for the peers ensures that no person is rewarded for average performance and every high performer is adequately rewarded (Welch, 2005). This public nature of rewards and bonuses disclosure means that friends and worker groups are included in the management system since they have a collective connection to the company. Therefore, as recommended by Boxall and Purcell (2003) GE is using rewards and bonuses as tools for strategic management as well as motivation that keep the employees engaged with the company and committed towards ever better performance. Another key factor about the system of rewards at GE is the response time for the reward to come as a result of performance. The calendar is a useless tool for rewards at GE since a delayed reward loses its effects. Kerr (1996) uses the example of rewarding rats in a cage for pulling a lever and says that if a sugar cube comes nine months after the lever was pulled there would be little association between the two actions. In certain companies, the reward process is so far delayed that when an extra sum comes up in the employee’s salary deposit, they are not sure why it has happened. Good companies make their HR policies effective and practical as well as quick (Torrington & Hall, 1995). Kerr (1996) gives an inside view of what happens at GE where a program called “Quick Thanks!” is in place. This system allows employees to nominate other employees (even across departments) with a $25 gift certificate for certain stores and restaurants in appreciation of their work. In 1995, ten thousand such certificates were handed out by GE employees to their peers. Even though it may seem like a huge number, the rewards are only given for exemplary performance and the peers are not free with their recognition. They often have stricter personal criteria for giving these certificates and the receiver often gets the award from the person who nominated them (Kerr, 1996). It is to GE’s credit that their reward management system for creating motivation and engaging employees has been respected, tested and accepted by some of the biggest names in the world. This system for bonuses etc is used by Microsoft, Cisco, HP, Sun, Capital One, PepsiCo and Intel amongst many others. Sun exactly mirrors GE’s system to discriminate employees by saying that 20% are superior, 70% are “Sun Standard” and 10% are underperforming. On average a quarter of all the companies in the Fortune 500 list have established this practice of division as a reward management standard (Grote, 2002). Motivation itself and a continued positive psychological contract depend on organisational relationships and good managers would know how to use co-workers to motivate other individuals in a company (Hendry and Jenkins, 1997). At GE, any bonuses, stock options, increments or gifts given by the company to individuals working for the company are made public knowledge to the members of the department and as suggested by Morris & Colvin (2006), that helps to motivate other employees to emulate the success of winners and managers are careful not to let demoralisation set in. The QuickThanks Program as discussed by Kerr (1996), also supports the idea that employees can reward their peers for a job well done. Guest (2004) mentions issues of power, trust and fairness as the central forces in making the psychological contract and all these issues reflect positively with GE and their management system. The company displayed its trust in the employee by rewarding him/her; the employee who was publicly rewarded expected the trust to be shown and that employee can be further expected to act at a higher performance level than before. The employee can then be expected to show a greater amount of commitment to the company, be more satisfied with their new found respect and have a stronger intention of staying on with the company despite any changes which could be coming in the future. Conclusion As shown by the examples from GE and Apple, the psychological contract and motivation itself are not easy to maintain or establish but once they have been created in a positive manner by the management of a company, the benefits are enormous. The reward system at GE is intrinsically linked to the philosophy of the company to improve itself and the performance level of its employees using differentiation and that creates improvement commitment and increased levels of employee motivation. On the other hand, Apple managed to change the psychological contract of its employees simply due to the leadership skills of their CEO who was able to convince most of the players that he was not trying to destroy the company but rather to improve its condition. Overall, it is certainly true that the approach of the company to employee management and the policies used by the company can certainly affect the level of commitment and engagement of the employees. However, knowing how to change the level in a positive manner is essential for successful management since mismanagement in this regard can only lead to difficulties for the company as a whole. Works Cited Barnett, R. et. al. 2004, ‘Unintended consequences of job redesign’, Community, Work & Family, vol. 7 no. 2, pp227-246. Boxall P. and Purcell J. 2003, Strategy and Human Resource Management, Palgrave & Macmillan. Burrell, G. 1979, Sociological Paradigms and Organisational Analysis, Heinemann Educational Books. Clarke, S. and Robertson, I. 2005, ‘A meta-analytic review of the Big Five personality factors and accident involvement in occupational and non-occupational settings’, Journal of Occupational & Organizational Psychology, vol. 78, no. 3, pp. 355-376. Colvin, G. 2006, ‘What Makes GE Great?’, Fortune, vol. 153, no. 4, pp. 90-96. 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