Employee engagement doesn't equal high performance

We're seeing a lot of talk around the topic of employee engagement and its impact on performance. We spoke to Jan Paul van Vliet, from Objeqts, and he shares his experience and insights on the topic—what employee engagement is, the correlation between engagement and performance as well as the role OKRs play in overcoming challenges in these areas.

Perdoo:

Hi Jan Paul, please tell us a bit about yourself and your journey with OKR.

Jan Paul:

"When you are lacking clear insights in the relationship between your activities and the value it delivers, you will never meet your full potential.”

This is my strong belief and has always been the foundation for my professional work. For 14 years now,  I’ve been running a boutique consultancy called Objeqts that focuses on activating people in their daily work. Our work was always built on all the principles that OKRs have too, only we didn’t know this at that time. That OKRs are becoming widely known is a real boost for the embracement of our work.

For our strategy execution work, OKR is our methodology of choice. This is why we recently launched the platform GreatinOKRs.com.

Perdoo:

How would you define ‘employee engagement’?

Jan Paul:

There’s a gap between how the academic world defines employee engagement and how others do. When you google “employee engagement”, these different definitions may get you confused.

The promises versus what employee engagement actually delivers don’t make it any easier. For example, no one specifies whether engagement is an attitude or a behavior, or as to whether engagement is an individual- or a group-level phenomenon.

For me the best definition has been given by William Kahn, who defines employee engagement as “an employee’s ability to harness their full-self at work”. He explains this by saying that engaged people consider their work as meaningful, enjoy a rewarding and supportive relationship with managers and colleagues (aka psychological safety), and experience that they have the resources needed to accomplish their work (aka psychological availability).

Although this is probably the best definition out there, it is a rather complex one. Therefore we tend to refer to employee engagement as “someone’s willingness and ability to contribute to the value creation of an organization.”

Perdoo:

There’s a lot of talk about disengaged employees. A famous Gartner study found that around 70% of employees are disengaged. What’s your take on this?

Jan Paul:

Not just a respected body like Gartner is telling us this, Gallup, Deloitte and Hayes report similar results. They all seem to use a different definition of employee engagement. I find it difficult to get a good understanding of, what I would call, the “true” level of employee engagement and its root cause. But the numbers all seem to be low so I do believe something is really wrong, only the reasons why vary quite a bit.

What interests me more is the enormous hype around the topic. We see an explosion of HR seminars and congresses that are fully focused on employee engagement. It is now called things like ‘happiness at work’, ‘employee experience’ or ‘job satisfaction’. I regularly work with organizations where HR makes significant investments in (improving) employee engagement. In many cases they fail to make any meaningful improvements - sometimes the engagement scores are even getting worse. So the intriguing thing is that employee engagement is at an all-time low, while organizations are investing more than ever in improving employee engagement

Perdoo:

According to Gallup, the 18% of employees who are actively disengaged cost around $500 billion in lost productivity each year—and that's just in the United States. How would you define ‘high performance’, and how do you see the relationship between employee engagement and high performance?

Jan Paul:

To answer your first question, Pierre Richard (et al.) from the Australian School of Management found that performance is always related to an impact on the bottom line in three different ways: financial performance, product market performance, and shareholder return.  So high performance would equal substantial impact on one of these three aspects. Unfortunately, most of the time the relationship between someone’s efforts and the impact on one of the three factors is vague, abstract, or even unknown.

Then your question about the relationship between employee engagement and (high) performance. Although it intuitively makes sense, in almost any study or report on the topic you’ll find an assumed causality between the two, which - as far as I know - has never been supported by science. There may be some level of correlation between the two, but there definitely isn’t a scientifically proven cause-and-effect relationship.

Put differently, an engaged employee doesn’t necessarily deliver better results. That you are happy at work, agree with what the company stands for and feel aligned with its Objectives, doesn’t mean that you are capable of doing the right things.

In contrast, there is empirical evidence that when performance is going well, engagement tends to improve, which helps support further increases in business performance, etc. The opposite also holds true: falling business performance causes morale to drop, which hinders improvements in performance, which further hurts morale, etc.

Perdoo:

What role do OKRs play in relation to engagement and performance?

Jan Paul:

OKR is aimed at delivering valuable business outcomes. OKRs always put outcome over output, where outcome should be considered as a relevant contribution to the bottom line results of the organization.

OKR is also about alignment, transparency, focus, etc. OKR makes sure that everyone within the organization works together towards the same overarching goals. In this, OKR is all about reaching higher levels of performance. And as we have just discussed, good performance reinforces effective behavior and gives a strong feeling of personal relevance. Therefore, high performance has a positive impact on employee engagement. OKR is positioned exactly in the middle of these two forces: it functions as a catalyst for both. It aligns people behind common goals and makes people feel relevant. At the same time, it focuses on an increase in performance that affects the bottom-line results of the organization.

Perdoo:

What should organizations do to improve performance?

Jan Paul:

With my clients, I see that when you just focus on improving employee engagement only, you can only hope and pray that an increase in performance will follow. But when your focus is on improving performance, you have a very good chance that an increase in employee engagement will follow.

The strength from OKRs is that it drives both engagement and performance!

Perdoo:

Thanks for sharing your views with us! A large part of our audience are people in leadership positions. Before we end our conversation, is there any other advice that you’d like to share with them?

Jan Paul:

While employee engagement is mostly considered to be an HR topic, OKR is not. It’s the CEO and the Leadership team that should be put in charge of the OKR program. OKR is about bringing your strategy to life, which is the primary responsibility of the leadership team. HR contributes to organizational success, but don’t mistake my take on engagement vs performance that HR should own the OKR methodology.