Employee Engagement in Manufacturing Sector

(Group 1)

Table of Contents

1. Objective of Study...............................................................................................................................3

2. Overview of Study Procedure..............................................................................................................3

3. Background about Employee Engagement..........................................................................................4

4. Factors impacting Employee Engagement and Relative Weights........................................................8

5. Measuring the Scores for each Factor.................................................................................................9

6. Finding from Employee Engagement survey.....................................................................................11

7. Analysis of Engagement Index Results...............................................................................................18

References -:..............................................................................................................................................20

Appendix:..................................................................................................................................................20

1. Objective of Study

This study focuses on measuring the employee engagement and interpreting the individual factors that impact employee engagement in India. It intends to measure the commitment, involvement, satisfaction and enthusiasm of employees in manufacturing sector towards their work and organization.

2. Overview of Study Procedure

The study is based on field work done with the help of two questionnaires. Please refer to Appendix A and B for the complete questionnaires. The questionnaires serve following purpose respectively:

Questionnaire A: Determine the relative weights of different factors impacting employee engagement. The method we have used to determine the relative weights for different factors is described in detail in the later part of the report.

Questionnaire B: To measure the score for each question that corresponds to one factor identified in questionnaire A.

Finally, using responses to Questionnaires A & B the Employee engagement index was calculated for the Manufacturing Sector in India. Further, the study also ascertains the Employee engagement index across different categories based on

1) Demographic characteristics2) Experience in the Industry3) Experience in the Organization

3. Background about Employee Engagement

Employee engagement is the level of commitment, involvement, satisfaction & enthusiasm, an employee has towards their work, organization and its values. An engaged employee is aware of business context, and works with colleagues to improve performance within the job for the benefit of the organization by utilizing their natural talents.

The concept of ‘employee engagement’ (EE) is rapidly gaining popularity, use and importance in the workplace. Research and consultancy firms, led by the high-profile Gallup organization, are focusing their efforts increasingly on surveys of employee engagement that aim to improve levels of engagement. This is because corporate results have reportedly demonstrated a strong link between some conceptualizations of engagement, worker performance and business outcomes

While there is much interest in engagement, there is also much confusion. There is no consistency in definition, and engagement has been operationalised and measured in many diverse ways. Engagement may be a global construct as it appears to be a combination of job satisfaction, organizational commitment and intention to stay. Indeed, some argue that engagement is a multidimensional consruct, in that employees could be emotionally, cognitively or physically engaged

However, despite this confusion in the literature, many companies and research firms see engagement as a powerful source of competitive advantage. Corporate results have demonstrated a strong link between some conceptualizations of engagement, worker performance and business outcomes. This is because corporate results have reportedly demonstrated a strong link between some conceptualizations of engagement, worker performance, job satisfaction, employee turnover and business outcomes

Great organizations win business by engaging the complex emotions of employees and customers. EE is ‘the psychology of how each employee connects with customers and with the organization, it is ‘an instant, and constant, competitive edge.

Gallup defines EE as a significant predictor of desirable organizational outcomes such as customer satisfaction, retention, and profitability some of the management literature defines EE as ‘a positive, two-way relationship between employee and their organization’ where ‘both parties are aware of their own and the other’s needs, and support each other to fulfill these needs. Engaged employees and organizations go the extra mile, and both reap mutual benefits.

The organization must work to develop and nurture engagement, which requires a two-way relationship between employer and employee.’ thus employee engagement is a barometer that determines the association of a person with the organization. Thus it is largely the organization’s

responsibility to create an environment and culture conducive to this partnership, and a win-win equation.

The business world’s use of employee engagement

The Gallup organization, an international organizational research and consultancy firm with over 70 years’ experience, conducts the most influential business survey of EE and brought EE to the notice of industry. Gallup’s EE scale is based on studies from 1985, and in 1988 gallop patented its 12- item measure of EE, the q12 scale. The international business world’s wide use of Gallup’s EE survey is a major testament to the value that corporations are placing on EE.

Other major research firms have followed Gallup in investigations of EE. ISR, another major international employee research and consulting firm, with over 30 years experience, has also conducted a large scale international EE study.

Developmental dimensions international inc (DDI), another major human resources consultancy, is also conducting engagement surveys. Kenexa, a provider of hr solutions was retained by starwood hotels & resorts worldwide to administer a global employee engagement survey.

Many more international research and consultancy firms are focusing increasingly on conducting engagement surveys. Hewitt associates, the hay group, achieve global and mckinsey & company all conduct EE surveys. Local consultancies are also heavily involved in EE surveys. Australian and New Zealand firms include: corporate vision, employee engagement human synergistic and change drivers. Clearly, the business world is interested in and finding a benefit to the use of EE research and development.

Consultancy firms and corporations have found significant benefits in EE for performance and profit. The Gallup organization found critical links between EE, customer loyalty, business growth and profitability. The Gallup organization cites countless examples in its literature of such results of increased corporate profitability due to increased EE, and is helping a great many companies worldwide to improve their performance through improvement in EE.

The ISR research firm also cites many examples of increased profit after increasing EE for companies. ISR examined the relationship between different levels of EE and corporate financial performance, measured by changes in operating margins and changes in net profit margins. Comparing high-engagement to low-engagement companies over a three-year period, the financial differences were substantial employee engagement ISR has found convincing evidence that organizations can only reach their full potential by emotionally engaging employees and customers

Categories of employee engagement

There are three different type of people in organization based on their level of commitment, involvement & satisfaction.

Engaged--"engaged" employees are builders. They want to know the desired expectations for their role so they can meet and exceed them. They're naturally curious about their company and their place in it. They work with passion and they drive innovation and move their organization forward by performing at high levels.

Not engaged--“not-engaged” employees tend to concentrate on tasks rather than the goals and outcomes they are expected to accomplish. They want to be told what to do just so they can do it and say they have finished. They focus on accomplishing tasks versus achieving an outcome.

Actively disengaged--the "actively disengaged" employees are the "cave dwellers."

They're "consistently against virtually everything." they're not just unhappy at work;

They’re busy acting out their unhappiness. They sow seeds of negativity at every Opportunity.

Importance and advantages of Engaged employees

A highly engaged employee will consistently deliver beyond expectations in the workplace Engaged employees will stay with the company, be an advocate of the company and its products and services, and contribute to bottom line business success. They will normally perform better and are more motivated. There is a significant link between employee engagement and profitability. They form an emotional connection with the company. This impacts their attitude towards the company’s clients, and thereby improves customer satisfaction and service levels it builds passion, commitment and alignment with the organization’s strategies and goals Increases employees’ trust in the organization Creates a sense of loyalty in a competitive environment. A high-energy working environment Boosts business growth makes the employees effective brand ambassadors for the company. Highly engaged employee will consistently deliver beyond expectations. Thus employee engagement is critical to any organization that seeks to retain valued employees. The Watson Wyatt

consulting companies has been proved that there is an intrinsic link between employee engagement, customer loyalty, and profitability. As organizations globalize and become more dependent on technology in a virtual working environment, there is a greater need to connect and engage with employees to provide them with an organizational ‘identity.’ These are all good things that prove that engaging and involving employees make good business sense and building shareholder value.

In contrast organizations with least engaged employees are much more likely to have high employee turnover, low customer loyalty, less productivity and earnings. Negative workplace relationships may be a big part of why so many employees are not engaged with their jobs.

Employee engagement also affects the mindset of people. Engaged employees believe that they can make a difference in the organizations they work for. Confidence in the knowledge, skills, and abilities that people possess – in both themselves and others – is a powerful predictor of behavior and subsequent performance. Thus, consider some of the results of the Towers Perrin survey cited earlier:

• Eighty-four percent of highly engaged employees believe they can positively impact the quality of their organization’s products, compared with only 31 percent of the disengaged.

• Seventy-two percent of highly engaged employees believe they can positively affect customer service, versus 27 percent of the disengaged.

• Sixty-eight percent of highly engaged employees believe they can positively impact costs in their job or unit, compared with just 19 percent of the disengaged

Given these data, it is not difficult to understand that companies that do a better job of engaging their employees do outperform their competition. Employee engagement can not only make a real difference, it can set the great organizations apart from the merely good ones.

4. Factors impacting Employee Engagement and Relative Weights

Employee engagement is a result of Job Satisfaction, Job Involvement, Perceived Organization Support and Organization Commitment. Based on this we felt the below factors could be important Employee Engagement.

1) Work Profile2) Recognition, Praise and Growth3) Conducive Work Environment4) Mentoring and Guidance5) Empowerment6) Responsibility7) Alignment with Organization goals and values

The Questionnaire A is intended to measure the relative weights of above 7 factors. The employees were asked to rank each of these in ascending order of importance from one to seven i.e. a rating of 1 was assigned to most important factor and 7 was assigned to least important factor.

Calculation of Relative Weights

Once the ranking is obtained, the rankings are reversed to obtain to help in calculation i.e. a rank of 1 is assigned a value of 7 and one with a rank of 2 is assigned a value of 6.

Weight for each factor = Summation of ranking given to the factor / Sum of rating given to all the factors

If n is the number of respondents then,

Sum of ratings given to all the factors = (1+2+3+4+5+6+7) X n = 28n

Therefore,

Weight for each factor = Sum of ratings for the factor / 28n

5. Measuring the Scores for each Factor

The Questionnaire-B is intended to measure the scores for each question which in turn corresponds to one of the above 7 factors. Thus by multiplying the scores from the survey responses in Questionnaire-B with the weights calculated in Questionnaire-A, we found out the index for each of the 7 factors and also the cumulative Employee Engagement Index.

The assignment of each of the 12 questions to 7 factors is given below:

Factor in Questionnaire A Questions Assigned from Questionnaire B

Work Profile At work, do you have the opportunity to do what you do best every day?

Recognition, Praise and Growth In the last 1month, have you received recognition or praise for doing good work?

In the last year, have you had opportunities at work to learn and grow?

Conducive Work Environment Does your manager, or someone at work, seems to care about you as a person?

At work, do your opinions seem to count?

Are your associates (fellow employees) committed to doing quality work?

Do you have a best friend at work?

Mentoring and Guidance Is there someone at work who encourages your development?

In the last six months, has someone at work talked to you about your progress?

Empowerment Do you have the resources you need to do your work right?

Responsibility Do you know what is expected of you at work?

Alignment with Organization goals and values Does the mission/purpose of your company make you feel your job is important?

Employee Engagement is calculated at the following subset levels

1) Demography - We divided the employees into two age groupsa. Between 20 and 30b. Greater than 30

2) Experience in the Industry a. Less than 4b. Between 4 and 10c. Greater than 10

3) Experience in the Organizationa. Less than 4b. Between 4 and 15c. Greater than 15

From the Employee Engagement indices found in each of these categories, the study aims to identify the factors where the industry is performing poorly and which could be worked on.

6. Finding from Employee Engagement survey

Employee Engagement – Age wise

Factors Age<30 Age>30Responsibility 25.54 23.88Empowerment 14.61 14.61Work Profile 16.78 22.65Recognition, Praise and Growth 14.98 12.86Conducive Work Environment 11.17 10.18Mentoring and Guidance 9.68 8.82Alignment with Organization goals and values

7.24 7.01

Total Employee Engagement 62.51 72.80

Employee Engagement – Industry Experience wise

Factors Industry <=4

Industry 4-10

Industry 11+

Responsibility 25.10 24.72 24.69Empowerment 14.16 14.82 14.05Work Profile 15.29 20.89 22.78Recognition, Praise and Growth 17.57 10.80 13.76Conducive Work Environment 10.48 11.73 9.89Mentoring and Guidance 10.98 8.69 8.24Alignment with Organization goals and values

6.42 8.35 6.58

Total Employee Engagement 60.52 69.28 73.23

Employee Engagement – Current Company Experience wise

FactorsCompany <= 4 yrs

Company 5-14 yrs

Company 15+

Responsibility 24.95 24.19 26.43Empowerment 14.88 13.59 15.20Work Profile 17.38 19.38 26.28Recognition, Praise and Growth 15.22 13.67 9.91Conducive Work Environment 10.99 11.02 9.85Mentoring and Guidance 9.60 10.35 5.63Alignment with Organization goals and values

6.97 7.80 6.71

Total Employee Engagement 63.42 74.42 63.88

Employee Engagement – Position wise

Factors Engineer ManagersResponsibility 24.87 24.98Empowerment 15.02 14.22Work Profile 17.77 20.07Recognition, Praise and Growth 14.98 13.45Conducive Work Environment 11.00 10.63Mentoring and Guidance 9.26 9.46Alignment with Organization goals and values

7.10 7.21

Total Employee Engagement 63.16 68.86

7. Analysis of Engagement Index Results

Analysis of engagement index by total experience in industry establishes a rising trend in engagement with rise in experience. The index rose from 62.4 for people with less than 4 years of work experience to 71.9 for 4-11 years work experience. It further rises to 75.79 for 11+ years work experience. This rise can be attributed to following reasons.

(A) Higher level of autonomy at work

In the initial years of work the responsibility and authority assigned to individual is usually limited. That may lead to lower level of engagement at job. With rise in time on job he gets more authority and freedom to take decision, which usually leads to high engagement.

(B) Rise in compensation

Salary and wages usually rise with years of experience. Even for doing for similar work, a person with long service life gets higher salary than his juniors. It lead to motivation and individual may like to put more effort in his work which led to higher job engagement.

(C) More risk averse

At the starting years of career, people have higher risk taking ability. Hence they constantly look for better opportunities around them and this lead to lower engagement level. With rise in age, priorities changes. People get into a family life and from there onwards the security becomes more important to them. They usually avoid switching jobs frequently and try to engage in their present job only. This has lead to higher engagement index.

(D) Perfection at what you do

With more years at work, a person gets more familiar with work. He is able to handle the problems at work more effectively and this perfection lead to higher recognition at work. This leads to increase in engagement.

However we found some very interesting results for people who are in same organization for more than 15 years. And to our surprise the engagement index again drops after 15 years in a job. We tried to find out the reasons by personally asking some senior people do they really feel less engaged in their job and we came out with following reasons.

(A) Pyramid structures of organizations

Most of the Indian organizations follow pyramid structure (rather than Flat structure in some western organization). In such pyramid structure, the career growth shrinks as one rises in a pyramid. Because organization have less positions at top level rather than middle level. This has lead to saturation of career growth at middle management level after 15 years. This has lead to decrease in engagement.

(B) In pursuit of self actualization!

By the time person completes 15 and more years in organization, his most of his fundamental security needs and esteem needs gets satisfied. At that juncture many people leave interest in doing monotonous job and again start looking around something which can satisfy their self actualization needs.

What Organizations can do to keep engagement level high?

From our research, it is evident that for majority of employees engagement level is low at beginning of career .It rises subsequently and reaches to maximum at middle of the career and then again starts to go down after 15 years.

Organizations can utilize this information to frame HR policies so to avoid this phenomenon. Our group suggest following HR initiatives.

A. Policy to assign individual projects to young executives which stimulate them and keep engaged.

B. Avoid giving tasks which are sub-standard in nature and can be done by lower qualified employee too.

C. Attractive salary and performance based incentives at all levels in organization.

D. Avoid job misfit. Do personality analysis of employee beforehand to ascertain the areas where he can do his best.

E. Preference to flat organization structure rather than pyramid one .

F. Organize some activities like sports , musical events , contests etc from time to time where employee get opportunity to display their hidden qualities ( which are not exposed in their routine job) and recognize employees for their such qualities .It make them feel better about their organization .

References -:

Organization Behavior, Robbins, Judge, Sanghi Employee engagement .SIES College of management studies, working paper series Engage the Employee, HR Special Survey, Business World, 5th of May 2008 Workplace Loyalties Change, but the Value of Mentoring Doesn't, May 16, 2007 in

Knowledge@Wharton Gallup: http://www.gallup.com “Measuring Employee Engagement” from “thePoint” for Credit Union Research and

Advice “ First, Break All The Rules “, Marcus Buckingham and Curt Coffman ,Simon & Schuster,

May 1999 ‘Employee engagement’: does it exist, and if so, how does it relate to performance, other

constructs and individual differences? , Amanda Ferguson ,Macquarie University “Employee Engagement: Doing It vs. Measuring”, Theresa Welbourne, What engages employees the most or, The Ten C’s of employee engagement,

By Gerard H. Seijts and Dan Crim, March/April 2006 Measuring employee engagement, Paul r. Bernthal, caber, ddi

Appendix:1) Download of the Employee Engagement survey findings