systematicHR

Watson Wyatt – Insider again pushes out a nice article tying together the correlation between effective HR program design and financial performance. First off, here’s a nice diagram of what we’ve beem blogging about for a while:

Retrieved from http://www.watsonwyatt.com on February 20, 2006.

Jeff at Talentism particularly pointed out the tie between HR strategy and financial performance here, and we’ve talked about the obvious linkages between employee engagement and financial performance at systematicHR as well. As usual however, I’ll take the path that you can read the article yourself. Instead, I have a few interesting ideas of my own.

Back on February 20th, Jeff and I both posited theories on why the younger generations of the workforce were more interested in leisure activities at the expense of productivity. I theorized that this was simply a result of an opening of the world combined with some extra wealth. Jeff’s idea was that the younger generation view work more cynically in terms of wealth (salary) distribution and were thus less likely to be engaged in work.

An unsurprising but important insight from research into employee opinions is that different employees evaluate programs differently. For example, long-tenure employees in their late 50s covered by a defined benefit plan are likely to value their retirement plan more highly than other workers. Entry-level employees may be more interested in training programs and other opportunities for career advancement. “Lessons From Watson Wyatt’s 2005 HCI” Febraury 2006. Retrieved from http://www.watsonwyatt.com on February 20, 2006.

My thoughts are still the same. Entry level employees really do realize their lack of skill and are more willing to undergo training to develop it. While it’s difficult to engage employees in work when they are in lower paying (and thus often less interesting) work, these employees are willing to invest time if they see the payoff in skills growth.

Ibid

If you were reading systematicHR last year, you’ve seen at least a couple of posts on the differences between commitment and engagement. I have always maintained that attraction was a factor of total rewards, but that retention was a factor of commitment and engagement. These last two are more difficult to define. Commitment refers to your ability to build an employer brand that employees relate to. Engagement is the your ability to provide both work and a work experience that employees find meaningful and fulfilling.

If you take the abive definitions, I’m finding it difficult to see how my definitions fit into Wyatt’s survey results. Let’s start with total rewards (defined by Wyatt as comp and benefits). If you include a healthy benefits package that is well communicated with effective incentive compensation, I could see how employee commitment would be enhanced. However, I still see growth opportunities (both cash and career) as the real incentives for acheiving commitment. Therefore I’m incredibly surprised that training was not high for commitment.

Work environment was also the largest contributor to employee engagement, whereas I have always thought learning to be a higher factor. While I haven’t seen the data, It’s pretty clear that learning takes second fiddle to environment. If we define work as the culture around your fellow associates, managment staff, and the general employer brand that has been built, then this becomes quite intuitive that it would factor highly in engagement.

The major HR firms are all tossing phrases like “engagement” around freely. It’s interesting to see (they all have HCI studies) how they differ in approach and results. However you define it, employee engagement and your company’s ability to retain talent, make talent want to work harder, and develop them into future leaders is critical to your financial success.