What Should We Be Measuring-satisfaction Or Engagement?

Following the downturn in the economy that began in 2001, CEOs all over the U.S. began "high-five-ing" one another in celebration of the fact that the "war for talent" was over. As one CEO told me during that time, employees were "tree-hugging" their jobs, staying for the benefits, or thankful just to be working when so many of their friends, relatives, and coworkers were being laid off.

In most companies, employees were no longer in the driver's seat, demanding sign-on bonuses and asking to bring their dogs to work. Gone were the personal concierges, take-home meals, and, in many companies, the paid health-care benefits most employees had come to take for granted.

Cost-cutting and employee productivity ruled the day, replacing the focus on employee recruiting, re-recruiting, retention and satisfaction that had become the chief preoccupation of employers in the late 1990's. For some employers, it was enough that employees stayed, but for most others, retention and so-called satisfaction were not enough. It became all-too obvious what we had known all along-that many "satisfied" employees were not necessarily productive contributors. Recognizing this more acutely, many executives and managers began to ask themselves, "why are we still doing employee satisfaction surveys?"

The Focus Shifts to Engagement

Around 2002, we began to hear the term "employee engagement" used to describe a state of being not only satisfied with the job and workplace, but also giving one's best effort on a daily basis, and intending to stay. Using this definition, consulting firms such as Gallup, Hewitt, and others developed "employee engagement surveys" to help companies measure what percentage of their workforces is truly enthusiastic, dedicated, and committed-in other words-engaged. As of 2006, Gallup has surveyed hundreds of thousands of employees, and reports that only about 25% of the American workforce can be described as engaged, while 60% are "not engaged", and 15% are "actively disengaged", meaning they are actually undermining the productivity of everyone around them. Hundreds of companies have since switched from using employee satisfaction surveys to using engagement surveys. They are convinced, as am I, that employee engagement is superior to employee satisfaction as a measure, because it sets a higher standard of what we want and expect from the workforce.

Employee Engagement as a Leading Indicator of Business Success

Many progressive companies now use employee engagement surveys for this reason, but mostly they use it because they believe that employee engagement is a leading indicator of better customer service, and therefore a precursor of bottom-line measures such as revenue-increases, profitability, and total shareholder return. As Anthony Rucci. Executive VP of Human Resources at the large health-care supplier, Cardinal Health, Inc., reported in Fast Company magazine (August, 2005): "'I know absolutely that employee engagement scores have an impact on our business,' accounting for between 1% and 10% of earnings, depending on the business and the employee's role."

Why They Disengage and Leave: Belief vs. Reality

In my book, The 7 Hidden Reasons Employees Leave, I report the findings of Saratoga Institute's surveys of 20,000 employees in 17 industries that 88% left their companies because they had become "disengaged" for reasons other than pay.

Part of my mission is to spread this news to as many managers as possible, because surveys reported by The Harvard Management Update and Monster.com in recent years reveal that a majority of managers still believe that pay is the main reason employees leave their jobs. They believe that mostly because when employees do leave, they almost always get a pay increase. And understandably, they would rather say during an exit interview that pay was the main reason during an exit interview than risk burning a bridge by pointing out the things that made them start thinking of leaving in the first place.

The Saratoga data does show that 12 percent of employees do leave mainly for pay-related reasons, mostly because they need the extra money to pay the bills. The data also shows that many other employees leave because they feel devalued by the fact that pay isn't linked to performance, or they have no idea how pay raises are determined, which have more to do with failures of communications and performance management than just the size of the paycheck. But we have known since the heyday of the great industrial psychologist and researcher, Frederick Herzberg, that money is not the main motivator or satisfier for most workers.

The SHRM Satisfaction Survey: Something's Missing

So, you can imagine my disappointment when the Society for Human Resource Management released the results of their latest job satisfaction survey reporting that compensation and benefits were ranked as the two most important factors to the satisfaction of 604 surveyed employees out of a list of 21 different factors. I was disappointed for two reasons-first, because asking employees to look at a list of factors and rank doesn't tell us what we most need to know--what it takes for them to be inspired, energized, and engaged on a daily basis.

I am not questioning the validity of SHRM's findings. We have known for years that pay and benefits are important. I am simply pointing out that measuring job satisfaction isn't enough. When workers respond on a survey in a general way that pay and benefits are important to their satisfaction, does that mean they use those same criteria as they make their daily decisions to stay or leave, work their hardest, or withhold effort? I think not. There are too many other factors at play.

SHRM is measuring things that workers are justifiably concerned about-no problem with that. The fact that SHRM survey respondents ranked intangible factors such as whether managers care, recognize, give honest feedback, and help employees grow and develop a little lower should not mislead or confuse us.

That is the second reason for my disappointment with the SHRM survey-the results imply that HR professionals and company executives should mostly focus on the short-term tangibles--pay and benefits. We have seen time and again what results may follow--unnecessary wage wars, and managers who absolve themselves of the responsibility to improve their people management skills. Instead of working to improve these "softer" (but hard to do!) practices, many managers will use the SHRM survey results to justify the belief they have always held-that it's all about the pay, and not about how you treat your people. And they will push HR professionals to raise pay in spite of the consequences (not that some organizations don't need to raise pay rates to become competitive with the market).

Let me make clear that I have no interest in bashing SHRM. I have written a letter to the editor of HR Magazine stating my concerns. I am a member of SHRM and value highly the contributions they make to the Human Resources profession through their conferences, chapters, web resources, certification standards, and other research they sponsor.

I am simply expressing my strong belief that when we measure the wrong things, or measure the right things in the wrong way, we unintentionally encourage the wrong conclusions and practices and do a disservice to those we purport to serve.