Wednesday, February 02, 2005

Engagement - it's not all about resignations

We're living in an era of engagement - well that is what you might think if you spend too long around HR managers these days.

Engaged employees are more productive, happier and are less likely to be active job seekers. But how do you measure engagement? Well the answer is not all in the resignation figures.

As I've explained before people change jobs for a variety of reasons. Understanding what drives people is important, but the answer isn't all about your firm.

Employee opinion surveys usually measure two categories - those who aren't engaged but are unlikely to do anything about it and those who do expect to enter the labour market. What differentiates the two? Well it has a lot to do with three factors - their expectations, the costs of changing and their attitude to risk. Let's consider the three.

Expectations


People are constantly making choices about their work, and those choices are usually based on their expectations of how work will be in the future. In this way expectations and engagement are linked, but not in such a way that engagement is the sole determinent of the desire to change jobs.

When people are looking at how they expect the job to perform they are measuring what economists call utility, that is how much they expect to get out of performing the job. Whilst this obviously includes their salary it is far more complex than that.

Utility includes such things as how they feel their marketability will improve (through training, doing that project, having another year at X on their CV), the enjoyment that the get from being with the colleagues, how easy their commute is.... a whole range of things.

When someone is looking at their life they try to maximise this utility given a fixed amount of their resource, in this case their time. They compare all choices they know about and look at creating an ideal mix. Do they expect that working for X will give them more utility than working for Y? Would working for X 60% of the time and having more leisure increase their utility (given that X might want to pay them 60% of their salary).

For someone to be engaged they are feeling that working for X gives them more utility that working for anyone else, or any other option. They can however be disengaged but still working for you. How?

Costs of changing.

One factor is costs associated with changing. These could include cost of relocation, cost of leaving that wonderful pension scheme, cost of leaving their stock options. We see lots of reasons that suggests that people believe that the grass is greener on the other side in the future but they have too much invested in X. These people are likely to stay, disengaged but taking strategies to ensure that they get future benefits of these 'ties'. Think of the resignations the day after bonuses are paid or the people who 'keep their heads down' in the years before retirement and you can see this in action.

Ultimately if you add these sort of factors to your high performers you are more likely to keep them. Unfortunately so are your average performers - you might create an army of disengaged attendees.

There is also a cost associated with the job search it terms of emotional strains, time associated to searching when you could be doing more enjoyable things. The longer you expect the job search to take the more cost you expect.

Risk

How you view the future utility of working at X is relatively certain. The utility associated with working for Y is less certain and the way you view it will depend on your attitude to risk. Put simply if you're more willing to take calculated risks you're more likely to change.

This will also include your confidence in your value in the market. If you think that you have a strong market value you will feel more confident entering the market - after all, if you enter the market, go somewhere else and the reality isn't what you expect you can always re-enter the market.

So why aren't resignations great indicators of engagement? Because engagement only looks at the internal reasons for changing roles. Let's consider a few examples.

X is the biggest employer in the area. However 10 miles away Y opens a new office, and wants similar skills. This gives your employees new opportunities and they will think what working for Y could offer them. Maybe it's a shorter commute. You would expect your resignations to increase even if your people were equally engaged.

The economy changes and your staff see their are more (or less) job opportunities. Their expectation of their worth on the market changes and at the same time their willingness to risk a change or invest the time in their job search changes. You could find staff less engaged but few resign if the employment market is cooling at the same time.

Ultimately resignations will only be a good indicator of engagement if you can 'freeze' your external environment. Few of us can do that.