Over the past few years, evidence has accumulated that enlightened leadership creating highly engaged employees is good for business. Companies that pride themselves on engagement tend also to be resilient over the long-term. Everyone has their favourite example, be it Semco, WL Gore, John Lewis, Westpac, Marks & Spencer or Arup (see our case studies section here). Students have their favourite guru, such as Jeffrey Pfeffer, Daniel Goleman or Lynda Gratton.
The logic is not difficult to follow: leaders and managers who attract the best talent for the right roles, and encourage the right mix of discipline and enthusiasm among their teams, are more innovative, productive, and resilient. They also tend to have lower absence rates and staff turnover, and to be environmentally friendly.
Despite this, the findings are far from universally accepted. Something that is a) supported by evidence, b) is intuitive and logical and c) has huge social and environmental benefits struggles for recognition. Why is this? Some further inquiry is required.
What an investigation reveals is that there is a rival theory to the idea that engaging workers helps the business. And this is the theory that dis-engaging them helps the business: to keep them in the dark, patronize them, subject them to intrusive surveillance and pay them the absolute minimum. This practice has wide support. It is backed by neo-liberal MBA courses, the bulk of the trade union movement, right-wing economic theory and left-wing economic theory. It is tacitly accepted by most political parties. It results in the disturbingly common example of representatives of workers exaggerating the benefits of exploitation, as summarized in our recent blog ‘Please stop encouraging low pay!’
It is also supported institutionally by the ways in which companies define and measure costs, and the ways in which they are required to report to the authorities. In the accounts and the annual report, employees appear as a net cost, through the salary bill. There is no requirement to report skills, engagement or staff turnover.
The accountancy profession, much more established than the employee engagement industry, is trained to view costs on the basis of the 500-year-old ‘money in, money out’ basis, and not to analyse the costs of poor management. So a finance director will instinctively treat the costs of a pay rise more seriously than the costs of disengagement from a pay freeze. Measuring business cost is not a science. Costs are defined and prioritized in a way that reflects cultural biases.
People often comment that company’s annual report includes a reference to employees being their greatest asset in a token, insincere way, as if it were in their interests to do this! A proper business analysis, however, ought to consider the following: either our employees are our greatest asset, or they are not. If they are, we should treat them as though they are, and understand their strengths in much greater depth. If they are not, then what on earth were we doing hiring them in the first place? The first thing we have to address is our recruitment strategies!
In practice, what happens with the theory of engaging workers and the theory of disengaging them is that many in business operate as though they were perfectly compatible with one another. Hence you commonly observe leaders who practise the doctrine of low pay, surveillance and minimum trust for much of the time, but then expect teams to be enthused by an away-day or a Christmas party. The result is confusion.
Some skeptics of engagement theory often feign an interest, but load the onus in a heavily skewed way, reflecting the same cultural biases. Their argument is: when there is conclusive evidence that investing in emotionally intelligent leadership and more engaged staff really helps the business, I’ll take an interest. This onus is misleading, because it supposes that there is an evidence base for the alternatives.
It would be better to engage in an open debate. In this column we think that engagement is better than disengagement – if done in a commercial way to help the customer and the business, not only the staff; and that ultimately this is the responsibility of leadership. In our opinion, opposition to this view rests on tradition, cynicism and a hopelessly outdated way of measuring and understanding the organization.
Sometimes you have to challenge a bad idea as well as promote a good one.