Importance of employee engagement recognised – but not acted on

Employee Engagement is low in middle management, a new survey has claimed. Research conducted by the Boston Consulting Group (BCG) and the World Federation of People Management Associations found that one-third of middle managers believe their company performs poorly in six areas conducive to high employee engagement.

Middle ranking executives expressed disappointment with their organisations' structured career management, compensation linked to performance and recognition which goes beyond compensation.

In addition, poor procedures for dealing with individuals not aligned with corporate values, managers being used as coaches and a lack of training in people-management techniques were other areas driving down engagement levels.

A joint BCG-WFPMA publication, "Creating a New Deal for Middle Managers: Empowering a Neglected but Critical Group," reveals a global engagement problem that, as the title suggests, is most severe among middle managers, who oversee the majority of employees at most companies. The publication is based on a survey of executives from more than 100 countries and an analysis of BCG's Engaging for Results database, which represents more than 1 million responses from employees about their level of engagement.

About one-third of the executives who responded to the survey reported that each of the following six areas was especially weak at their companies:

• Structured career management that rewards appropriate behaviours
• Clear consequences for individuals not living the company values
• Compensation linked to performance
• Managers acting as "resources," or coaches
• Training and development of employees in people-management practices
• Recognition beyond compensation

"Most senior executives recognize the importance of employee engagement to corporate performance, but they do not necessarily know how to take concrete steps to improve it," says Rainer Strack, a senior partner and managing director in the Düsseldorf office of BCG and coauthor. "This survey gives companies a clear idea of where they should focus their attention."

In order to understand the root causes of this global engagement problem, BCG and WFPMA also analyzed BCG's Engaging for Results database. Two conclusions jumped out of this deeper analysis. First, employees were particularly dissatisfied with the performance of their companies in three broad areas closely related to the six problem spots flagged in the survey.

• Performance management, which includes the processes and systems that set targets, collect feedback, and link actions to results
• Recognition, which includes formalized ways of acknowledging and rewarding strong performance
• People manager capabilities, which include people skills and leadership behaviors throughout the organization

Second, the decline in satisfaction was most dramatic among middle managers. Between 2007 and 2009, their scores for performance management and recognition dropped by 14 percent, and their scores for people manager capabilities fell by 10 percent.

"Many companies had to take drastic action during the recession in order to survive. Now that the worst of the downturn appears to be over, they should start reconnecting with their employees," says Jean-Michel Caye, a partner and managing director in the Paris office of BCG and co-author. "The best place to start is with the middle managers, who historically have not received adequate support or authority and yet play critical roles in the company."

BCG has created a four-pillar program to address the engagement trouble spots identified in the BCG-WFMPA survey and to energise middle managers.

• Delayer the organization and create larger, exciting roles for middle managers, in order to remove the barriers that frustrate them, and encourage initiative
• Empower managers to act by giving them the levers and authority to succeed, but first make sure they understand what is required of them
• Accelerate leadership skills so that middle managers have the training and tools to manage effectively
• Leverage the power of middle managers so that they can convey the corporate mission and vision, and help transform the organization

"These programmes will help unleash middle managers from the ties that bind them at many companies," says Pieter Haen, the president of the European Association for People Management.

To receive a copy of the full report based on the survey and more than 150 interviews, please e-mail creatingpeopleadvantage@bcg.com. The full report will be available in September 2010.