Recent figures from the ONS show 10 successive quarters of growth for the UK economy. How did that creep up on us?
It seems only yesterday that the word ‘recession’ was bandied around every media outlet daily (let’s not forget there are still many areas of society that remain deeply affected by the fallout of one of the most dire periods of economic activity ever recorded), but for now, at least, we can breathe a collective sigh of relief that things are on the up and a level of economic stability has been restored.
Businesses love stability. It gives us confidence to make investments that can help us grow. This, for many, means investing in an increased headcount.
In their 2015 UK Salary Guide, Hays Recruitment’s findings illustrate this increased business confidence in spades: in the coming 12 months, a huge 70% of employers plan to increase their headcount. What a change from the lows of 2008/09.
They also found that wages are on the rise, with some skilled jobs seeing wages grow by as much as 10% over the preceding year.
Competition for skilled workers has ramped up, and is not going away any time soon.
Businesses looking to attract, retain and develop skilled people are facing a renewed challenge. Salary levels once again are becoming a fierce battleground.
One look at national productivity levels gives us even more cause for concern.
This month’s briefing paper published by the House of Commons shows that since the recession, national productivity has stagnated. Historically, labour productivity has grown by around 2% per year, but in the first quarter of 2015 it was still 0.8% below the pre-recession peak of January-March 2008.
To compound this further, the UK is falling behind our international counterparts in the G7. We’re now ranked a lowly sixth for productivity ahead of Japan, with the US way out in front.
We’re investing heavily in our businesses, in our people, yet we’re punching below our weight when it comes to getting the most from this investment.
If we are to protect our investment in people, we must find a way to be more productive.
The government has outlined a number of long term solutions for improving productivity, but what can employers and HR professionals do to tackle this problem in the here and now?
The case for employee engagement
The 2014 ‘Global Perspectives’ survey by ORC International canvassed the thoughts of 7,000 employees across 20 countries. Overall, the UK came 18th in their employee engagement index. Every G7 country that sits ahead of us for productivity also sits above us for employee engagement. An unhappy coincidence? Not for me.
Employee engagement has become a bit of a buzz phrase, but I believe there really is merit in taking it seriously. Whilst in some quarters the term has become interchangeable with ‘pay and benefits’, the CIPD reminds us that there are many elements employers should be focussing on.
Here at Computershare, there are four pillars to our employee engagement strategy:
- Clear objectives – set annually which align an employee with our own business goals. This creates the opportunity for regular interaction between employees and managers that strengthens relationships and improves communication.
- Face-to-face performance feedback – communicating at a company, team and individual level creates a greater connection between an individual’s actions and the company’s performance and promotes a sense of inclusivity.
- A consistent approach to reward and recognition and a positive work environment – we make sure we have a variety of rewards at our disposal, including a simple ‘thank you’, announcements on the intranet and bonus payments.
- A tailored employee benefits package – understanding the demographics of our people, and what they value, allows us to offer a tailored range of benefits to suit them.
But does employee engagement really work?
We, among many others, say yes. When employees are genuinely engaged, they are more likely to work harder. But there’s much more to it than that. As David MacLeod and Nita Clarke, co-chairs of the national Employee Engagement Task Force, commented in a recent article, “Engaged employees are more innovative; they seek to continuously improve processes, look for new ways of adding value to their work and are more likely to suggest and follow through on new ideas.”
So not only are engaged employees more committed, they are also much more effective. But that’s not all – engaged employees are much less likely to “jump ship”. When employees leave a company, there is of course the cost of replacing them to bear, but there is also the ensuing downtime and disruption which can be big barriers to productivity. Clearly, there are many ways in which employee engagement supports greater productivity.
Of course, the best way to know whether your company’s employee engagement strategy is working successfully is to measure. There is not one wholly-accepted method of doing this (employee engagement is still a relatively new concept and the CIPD is working on tools and techniques for measurement), but that does not mean all efforts are futile. Decide upon the key performance indicators that are right for your business (these could include employee satisfaction, retention, absenteeism…) and start recording results. Without knowing the effects of your strategy, how can you hope to refine it?
One thing is for sure: the link between productivity and employee engagement shows it’s time to take the ‘soft and fluffy’ out of the conversation, and bring in genuine value and return on investment.