Employee engagement key to sound businesses

The bottom line is that engaged employees improve a company’s bottom line, and an organization possessing an entire workforce that is collectively engaged will exhibit higher levels of motivation. That’s according to research by a team of professors and graduate students from Mays Business School’s Department of Management, who determined that higher levels of collective engagement in an organization lead to higher level of motivation.

In a study of 83 small to mid-sized U.S. credit unions, the researchers concluded that engagement—defined as investing one’s cognitive, emotional and physical self into work performances, i.e., putting one’s head, heart and hands into work—leads to improved return on assets, a common financial indicator of organizational success.

“The word ‘engagement’ is sometimes used as a pop term,” said Stephen Courtright, an assistant professor of management who participated as a researcher in the project. “There is a lot of discussion anecdotally that engagement impacts organizational effectiveness, but we set out to test in an objective, scientific way whether an organization full of employees who see themselves and other organizational members as engaged improves the bottom line,” he said. “We concluded that yes, employee engagement impacts an organization and helps drive its competitive advantage. That means collective engagement matters for organizational effectiveness in a real and measurable way.”

However, beyond just showing the bottom-line impact of collective employee engagement, the researchers also sought to answer a question naturally brought up by organizational leaders and stakeholders: “What can organizations do to get their workforce engaged?” While some research has analyzed what immediate bosses can do to help a small group of employees become more engaged, what organizations can do from a strategic standpoint to influence their workforce to be collectively engaged as a whole is a deeper question.

Management Professor Murray Barrick, Courtright and graduate students Gary Thurgood and Troy Smith tested this question on the same sample of credit unions. Using this sample of similarly-sized organizations from the same industry helped to produce purer results.

To get a collective workforce engaged, “it starts at the top,” Courtright said. Specifically, the researchers found that the strongest predictor of collective employee engagement was the CEO’s “transformational leadership,” a leadership style in which the CEO (1) articulates a compelling vision that challenges the status quo, (2) serves as an inspirational and charismatic role model and (3) shows care and concern for members of the organization.

Next, the team found that company leaders need to establish and implement performance management systems that serve to identify and track high performers, reward high performers and then make high performers feel secure in their job.

Finally, companies can better facilitate collective employee engagement by designing jobs within the organization to be more motivating for their employees. This includes giving employees greater autonomy and ownership over tasks, allowing them to use a variety of skills on the job and helping them to see how their jobs make a significant difference to the company’s overall success.

According to the researchers, these three organizational-level factors, in combination, maximize the three underlying psychological conditions for full engagement from employees—psychological availability, safety and meaningfulness. “CEO transformational leadership helps employees be more willing to be engaged at work; effective performance management helps employees feel that they are rewarded for being engaged; and motivating job design helps employees sense that impact of their engagement on the organization,” said Courtright.

—— “Collective Organizational Engagement: Linking Motivational Antecedents, Strategic Implementation, and Firm Level Performance” was accepted for publication in the Academy of Management Journal” February 2014. Researchers are Murray R. Barrick, Stephen H. Courtright, Gary R. Thurgood and Troy A. Smith.