Employee Engagement: The Missing “Success Ingredient” in Board Oversight


Creating a winning business strategy can be pretty straight forward - find an unmet need in the marketplace and develop a plan to satisfy it better than every competitor. For most companies this means providing outstanding service at a competitive price relative to their nearest competitors. But in the grind of the real world, delivering on that strategy day in and day out in a manner that will build customer loyalty and referrals is a completely different matter. In fact, it is one of the most difficult and enduring problems faced by organizations and their leaders all around the world.

Research shows that regardless of the economic circumstances, having an engaged workforce – one that is enthusiastically willing to give more than just what is required to hold onto their jobs - contributes to better business performance. Consistent, flawless execution of an organization’s strategy requires a dedicated and committed workforce that is passionately focused on achieving the aims and aspirations contained in it.

The Case for Engagement

Conceptually, this all makes sense. But practically, as experience has shown, it can be very difficult to do. Why? Because, according to a survey by The Conference Board, 55 percent of employees stated that they are dissatisfied with their jobs. And according to the Gallup Organization, 80 percent of employees surveyed say they dislike going to work while 40 percent dread showing up! Yet there is clear evidence that a significant relationship exists between the level of personal commitment (or “engagement”) an employee has towards their employer and organizational performance.

Hewitt Associates for example has found in its annual survey of employees in client companies around the world that for those organizations having less than 40% of their workers ‘engaged’, shareholder returns were 44% lower than the average. In contrast, when 65% or more of employees were engaged, shareholder returns were 19% higher than the average.

According to GreatplaceJobs.com, in a Q3 2007 to Q3 2008 comparison between the 100 Best Companies to Work For and the top Fortune 100 firms, the Best Companies had 30 percent revenue growth and no bankruptcies compared to the Fortune 100 with only 3 percent growth and 9 bankruptcies. And while both groups experienced significant drops in their share prices as part of the recession, the Best Companies bested the Fortune 100 by 10 percent.

www.oecsbusinessfocus.com So, why are there such dramatically better results for firms with engaged employees? It’s because engaged employees are both passionate about their jobs and the work they do as well as emotionally bonded to their organizations. They are willing to give that elusive ‘discretionary effort’. Companies that engage not just the minds but also the hearts of their employees have a more intense strategic focus, higher efficiency and better productivity which ultimately translates into better products, services and customer experiences. They execute better by beating out those competitors that aren’t able to produce the same level of human – some say, ‘spiritual’ - commitment. It’s for these reasons that eliminating workplace alienation and creating an engaged workforce has become the new mantra for organizations seeking to improve their performance – not just a little, but a lot! In other words, happy employees lead to happy customers...and happy shareholders!

Why ain’t it happening?

And yet the alienation persists despite the overwhelming evidence in support of having an engaged workforce. To be sure, creating and maintaining a high level of employee engagement can be a challenge. But it’s also not that difficult or complicated. After two decades of research on how companies can better execute their strategies (especially their missions and visions), I shared the five essential practices to capturing the holy grail of employee engagement in my #1 best selling book “A Tale of Two Employees and the Person who wanted to Lead them”. At their heart, they concentrate on three themes: the degree to which an employee knows and clearly understands what’s specifically expected of him/ her at work and, most importantly, how it is meaningful to the company’s mission and vision; giving rewards for good work that are actually valued by the employees receiving them; and having leaders who show they really are interested in and care about their (subordinate) associates as human beings and their development (and not just as instruments of production).

So again, why do the vast majority of organizations not have engaged employees. My work with CEOs and Boards over the past 30 years has caused me to believe that the root of the engagement problem lies with the Board’s lack of oversight for employee engagement and especially the three engagement themes described above. With such overwhelming evidence in support of employee engagement, Boards need to start holding their CEOs accountable for creating it and to acknowledge their responsibility for providing oversight on employee engagement efforts within the organization.

Employee engagement is not a fad, passing fancy or flavor of the month leadership issue. It’s a shareholder value issue, and accordingly, directors should take an enthusiastic role in monitoring it (through employee surveys) and see it as an appropriate and justifiable area of ‘board interest’. Accordingly, directors must make employee engagement part of their governance oversight obligations. More specifically, this means making sure, principally through executive compensation mechanisms, that their CEO and the rest of the senior management team view employee engagement as a major job responsibility similar to their accountability for building customer loyalty and the careful control of costs.

The Way Forward

In conclusion, the way to build better businesses is by having better boards who understand that their fiduciary responsibilities go beyond their organization’s financial performance and the safeguarding of its assets. Boards must look beyond the numbers and understand the root causes of financial success – loyal customers for sure but also dedicated, enthusiastic and engaged workers willing to give their employers the discretionary effort which separates ‘great’ organizations from the merely ‘good’.

So here’s the big, uncomfortable question for Caribbean directors: how would you rate the degree to which employees throughout your organization are truly engaged? If you think that there is room for improvement in the way your board’s oversight for this important component of an organization’s culture is carried out, you might want to suggest that they consider going to one of the corporate governance training programs currently available in the region – like the extraordinarily unique 3 day Chartered Director Program (“C. Dir.”) currently being offered exclusively by The Caribbean Governance Training Institute.

Over 500 Caribbean directors have attended this program to date (including all the Governors of the ECCB and the entire Government of Saint Lucia!)

By attending programs like this one, your organization’s stakeholders would then know that their interests are being represented not just by individuals with successful track records in business, but also by men and women who have the governance qualifications - and the certification - necessary for effective board leadership and oversight of their organization’s strategic activities. After all, it’s not education which is expensive, but rather ignorance.

Dr. Chris Bart, FCPA, F.CIoD is a recognized global governance authority and Co-Founder of the Caribbean Governance Training Institute. The Institute is the first to offer throughout the Caribbean an intensive 3 day governance program leading to the prestigious and internationally recognized Chartered Director (C.Dir.) designation.

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