Happy employees are good for business. Decades of research support the theory that increasing employee engagement boosts productivity, customer satisfaction and, ultimately, profits. Countless studies have proven a link between a committed workforce and the bottom line.

The trouble is, we’re still not very good at it.

The numbers vary in different studies, but there’s agreement across the board that a minority of employees are strongly engaged in their work. In the United States it’s about one in three, falling to about one in four in Australia, according to Gallup, the US-based performance management consultancy whose annual surveys are widely cited.

“Worker engagement is the continuing Achilles heel of modern organisational life,” said AHRI chairman Peter Wilson when delivering the Kingsley Laffer Memorial Lecture late last year.

Why does it matter? Well, Gallup’s research mirrors many studies around the world in finding that organisations with high levels of employee engagement have superior figures for productivity, customer satisfaction, staff turnover, absenteeism, safety incidents and quality defects. It adds up to improved profitability of as much as 22 per cent.

The whole game

Leaders can’t afford to be indifferent to the problem of low engagement, says consultant and author Gary Hamel. It may have been optional once, but now it’s “pretty much the whole game”, he wrote in a Wall Street Journal blog post.

AHRI research shows that Australian employers are aware that worker engagement is critical to future business success, said Wilson. But a yawning gap remains between where engagement levels are today and where they need to be to reap the benefits.

It has led to an industry of academic research, consultants and authors working on new theories and practices. One conclusion from these investigations is that it’s not about the money. Reviewing some of the key engagement themes in recent years, it’s clear that remuneration is not a motivation. As author Daniel H. Pink writes in his 2011 bestseller, Drive: The Surprising Truth About What Motivates Us, assuming employees believe they are paid fairly and adequately, that issue is taken off the table.

What matters, says Pink, are feelings of “autonomy, mastery and purpose”. In other words, that employees don’t feel managers or supervisors are breathing down their necks (“you can’t manage people into engagement”), that they’re properly trained and equipped to do the job, and they understand the purpose.

Hamel agrees that the real dampener on employee engagement is the “soggy, cold blanket of centralised authority”. In typical hierarchical management structures, employees are disenfranchised from most policy decisions, he says.

“They lack even the power to rebel against egocentric and tyrannical supervisors. When bedevilled by a boss who thwarts initiative, smothers creativity and extinguishes passion, most employees have but two options: suffer in silence or quit.”

Hierarchy change

The traditional hierarchical cascade of information, from the CEO through the leadership team and down to the employees, has gone believes Michael Rosmarin, chief operating officer at property and shopping centre giant Stockland.

“When you look at the immediacy of information now, the old approach takes too long. You need to engage more directly,” says Rosmarin.

Two years ago, Stockland was facing a difficult market and declining earnings, as well as their former CEO’s retirement after 12 years in the job. With Mark Steinert taking over the reins, the company underwent a massive upheaval. The organisation was restructured including a management shake-up, a drop in bonuses and job cuts. “We changed the way we worked,” says Rosmarin. Underlining the success of the restructure (along with a healthy property market), Stockland announced strong profit growth in its half yearly results. And, significantly, says Rosmarin, the company’s engagement scores were the highest they had ever seen.

Rosmarin says it was due to the company beginning to communicate early on, “openly and often” with its employees and involve them in refreshing the business vision and values through focus groups, surveys and storytelling contributions.

“The values we came up with really resonated with our people because they’d been involved in setting them,” he says.

“Part of the objective of my role is looking at how we can continue to have a far more integrated and aligned organisation,” he says. “If people are clear how they can contribute to delivering our strategy, how they work together with others and how they can get involved in things beyond what’s in their role descriptions, that all leads to engagement. It also leads to a far more effective organisation and quicker and better outcomes.”

For more information on motivation in the workplace AHRI is running a series of breakfast events across Australia with motivational strategy and design expert Dr Jason Fox. Find out more.

This article is an edited version. The full article was first published in the April 2015 issue of HRMonthly magazine as ‘Mind the gap’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.