Module 5: Employee Engagement and psychological Contract
What Is Employee Engagement?
Employee engagement is a human resources (HR) concept that describes the level of
enthusiasm and dedication a worker feels toward their job. Engaged employees care
about their work and about the performance of the company, and feel that their efforts
make a difference. An engaged employee is in it for more than a paycheck and may
consider their well-being linked to their performance, and thus instrumental to their
company's success.
Why is Employee Engagement important for business?
To improve employee engagement, strategies that enhance engagement are crucial for
achieving higher productivity, increased profitability, and other positive business
outcomes. Engaged employees are more focused, motivated, and committed to their
work, leading to higher levels of productivity. They are willing to invest discretionary
effort to achieve organizational goals.
Increased Profitability: Research shows that organizations with higher levels of
employee engagement tend to be more profitable. Engaged employees are more likely to
deliver high-quality work, provide excellent customer service, and contribute innovative
ideas that drive business growth.
Improved Customer Satisfaction: Engaged employees are more likely to provide
excellent customer service and go above and beyond to meet customer needs. This leads
to higher levels of customer satisfaction, loyalty, and repeat business.
Higher Retention Rates: Engaged employees are less likely to leave their jobs, reducing
turnover costs for organizations. They are more committed to their organization’s goals
and values, leading to higher retention rates.
Enhanced Innovation: Engaged employees are more likely to contribute innovative
ideas and solutions to organizational challenges. They are more creative, collaborative,
and willing to take risks, leading to a culture of innovation within the organization.
Better Employee Morale: Engaged employees are generally happier and more satisfied
with their jobs. They are more likely to have positive relationships with their colleagues
and feel a sense of belonging within the organization.
Stronger Employer Brand: Organizations with high levels of employee engagement are
seen as desirable employers. They attract top talent and have a positive reputation in the
marketplace, which can give them a competitive edge.
Improved Health and Well-being: Engaged employees are more likely to have better
physical and mental health. They experience lower levels of stress and are more resilient
in the face of challenges.
Types of Employee Engagement
1. Cognitive Engagement
Cognitive engagement revolves around the intellectual investment an employee makes in
their work. It’s about -
• How deeply they think about what they do,
• How they approach problem-solving, and
• How much they align their thinking with the broader goals of the organization.
Employees who are cognitively engaged don’t just complete tasks; they approach their
work thoughtfully and strategically, constantly seeking to improve and innovate.
What is Cognitive Engagement?
Cognitive engagement refers to the mental effort employees put into understanding their
roles, the tasks they perform, and the organization’s mission. It involves a deep
intellectual connection to work, where employees are not only aware of what they’re
doing but also why they’re doing it and how it impacts the larger picture.
Examples of Cognitive Engagement
• An employee who proactively learns new skills to adapt to the company’s evolving
needs.
• A team member who digs deep into data to discover insights that lead to improved
decision-making.
• A worker who seeks out opportunities for innovation, constantly questioning how
processes can be refined for better results
2. Emotional Engagement
Emotional engagement focuses on the feelings and emotional connections employees
have with their work, their team, and the organization. This type of engagement reflects
how personally invested employees are in the company’s success and whether they feel a
genuine sense of belonging and pride in what they do.
What is Emotional Engagement?
Emotional engagement refers to the emotional attachment an employee has to their job
and the organization. Employees who are emotionally engaged feel a strong sense of
purpose and connection to their work. They’re not just working for a paycheck; they’re
emotionally invested in the mission, the culture, and the impact they can make.
Examples of Emotional Engagement
An employee who feels a sense of pride and fulfillment from contributing to a project
that aligns with their personal values.
A team member who shows genuine enthusiasm for company events and team-building
activities, fostering camaraderie.
A staff member who regularly goes above and beyond, not because they have to, but
because they care deeply about the outcome.
3. Behavioral Engagement
Behavioral engagement is the visible and measurable actions that reflect an employee's
commitment to their work and the organization. It’s the way employees behave in the
workplace, how they contribute to tasks, and how they interact with their colleagues.
When employees are behaviorally engaged, their dedication translates into tangible
outcomes that drive productivity and success.
What is Behavioral Engagement?
Behavioral engagement refers to the actions employees take that show their level of
involvement and commitment. This type of engagement is about what employees do, not
just how they feel or think. It includes their participation in meetings, their willingness to
take on new challenges, and how consistently they contribute to the organization's goals.
Examples of Behavioral Engagement
• An employee who regularly volunteers to lead projects or take on additional
responsibilities.
• A team member who actively participates in brainstorming sessions, offering
constructive ideas and solutions.
• A worker who consistently meets deadlines and exceeds performance expectations,
taking ownership of their tasks without needing to be micromanaged.
How Behavioral Engagement Contributes to Organizational Productivity and
Success
Behavioral engagement has a direct impact on organizational outcomes. Employees who
are engaged in their behaviors are more likely to:
• Increase Productivity by approaching tasks with enthusiasm and dedication, often going
the extra mile.
• Strengthen Team Collaboration with their proactive participation, which fosters a culture
of teamwork and shared responsibility.
• Drive Organizational Growth with consistent and engaged behavior to meet its goals and
continuously improve performance.
What Are the Drivers of Employee Engagement?
Engagement initiatives in the following areas, spanning the entire employee lifecycle,
can prevent the attrition of high-value and high-potential employees. Earlier,
presentations and other handouts did the trick in communicating with employees and
trying to engage them. This has now changed, with employees needing much more than
just one-way communication to be engaged. Here are the eight drivers of employee
engagement.
1. Seamless onboarding
Employee engagement truly begins when the employee is recruited and begins the
onboarding process. However, even before being hired, a candidate gets a glimpse of the
organization’s communication culture. Once hired, the onboarding process gives
employees an idea of whether they want to continue in the organization for the long term.
One way to ensure employee engagement during onboarding is to give employees
enough time to master their job before they hit the [Link] means that when they do,
they will be ready to take on the job with confidence and build a lasting career in the
organization
2. Positive work culture
Work culture is a broad term, but specific factors contribute to keeping employees
engaged.
Transparency: Engaged employees care about the organization. Employees tend to care
when organizations:
• Share company goals and values with employees.
• Tell employees exactly what is expected of them and how to achieve it.
• Give them regular updates about the progress of the company and where it stands in
the global marketplace.
• Communicate how employees’ effort benefits the organization and contributes to
the bigger picture.
All these steps create a sense of belonging and naturally encourage employees to do
more to drive better results.
Openness: An open work culture is essential to make employees feel respected and
cared for. In an open work culture, employees should be able to:
• Receive important communication regularly through a unified channel from the
organization, their managers, and colleagues.
• Freely communicate with their managers about any task/issue.
• Provide anonymous feedback about issues they are having with their managers.
• Report workplace misconduct anonymously.
Autonomy: Micro-management is rarely well-received by employees. They need a
certain degree of independence to be productive. An organization can ensure employees
have this autonomy by answering these questions:
• Do employees have the freedom to decide how they go about their daily tasks?
• Do they have the freedom to plan their career path in the organization?
• Are they included in making critical decisions that may affect them directly?
Respectful Treatment: Employees rate respectful treatment and empathy as high as
compensation when it comes to job satisfaction and engagement. When treated with the
same level of respect as a company’s most loyal customers, employees will be more
invested in achieving business outcomes.
3. Access to productivity and time management tools
A slew of unplanned activities, meetings, and workplace distractions can reduce the
overall productive time in a day for an employee. Time management is an inherent skill,
but in a dynamic work environment, even the most efficient employees need time
management tools. Supporting time management can directly result in improved
productivity.
Tools that enable employee engagement include time management and collaboration
tools such as Slack, Wunderlist, and Trello to break down and time deadline-oriented
tasks. Even with frequent interruptions, to some extent, these tools can improve
employee output.
4. Learning and development opportunities
Organizations that provide structured learning and development opportunities to their
employees notice higher levels of engagement. This visible interest in employee growth
elicits a feeling of reciprocation from employees – they are more likely to be interested
in the organization’s growth.
In a generation that is on the go, this learning is mainly delivered through learning
experience platforms via m-learning (mobile learning) and microlearning. Additionally,
gamifying the learning process can get even less engaged employees to participate and
open up greater opportunities for themselves.
5. Effective leadership and succession planning
Employees are more likely to demonstrate the traits of engagement when they are made
aware of the growth opportunities that lie in store for them. Closely tied to learning and
development, leadership and succession planning is a key driver of engagement,
especially among the millennial and younger workforce. In this area, HR teams and
leaders of the organizations work together to identify key positions to be filled and the
available talent to fill these positions.
Applying technology to an organization’s succession planning strategy can make it a
more streamlined process. Machine learning-powered analytics solutions such as
Ascendify can help identify potential talent, link them with the skills and qualifications
required for a specific leadership position, and enable HR to tailor learning and
development plans for that talent. This level of personalization can significantly improve
engagement levels.
6. Workplace wellness initiatives
Stress is a more common problem in the workplace than is visible. Combined with the
physical inactivity of most office jobs, a cocktail of health issues emerges that can easily
be attributed to the workplace. Workplace wellness initiatives can go a long way in
showing employees that employers care.
Organizations are now investing in wearable technologies to help employees stay fit.
These include fitness bands and smart footwear. Some of these wearables are even
equipped to monitor blood pressure and general health. Given the sensitive nature of this
data, HR teams need to adhere to strict compliance rules when receiving and using this
data. Also, employees need to be able to opt out of workplace wellness programs if they
are uncomfortable sharing their health data with their employers.
7. Flexibility
In a studyOpens a new window conducted in 2014, 13% of those surveyed said they
had quit a job due to lack of flexibility. In 2018, this number was 31%. The arrival of the
gig economy and the increasing demand for workplace flexibility has made it one of the
most critical drivers of employee engagement. Any organization that allows employees
to enjoy a certain amount of flexibility in where they work is more likely to experience
higher levels of engagement. There are two reasons for this:
• Organizations show that they trust employees to do their job no matter where they
are.
• Employees tend to perform better without the stress of commuting and when they
are in their own comfortable space.
Collaboration tools like Slack and Skype enable seamless conversations not only within
organizations but also across remote teams. With the advent of unified HCM platforms,
all the benefits that are offered to in-house employees can be provided to mobile workers
as well.
8. Rewards and recognition
Employees appreciate meaningful recognition for their work. Regular feedback and
checking in on employees are positive drivers of engagement. This feedback should be
designed to communicate how the employees’ efforts are helping the organization.
How Is Employee Engagement Measured?
Employee engagement is measured in two parts. First, the data is collected through
various channels. Then, this data is analyzed against key metrics that quantify the
engagement levels of the whole organization.
1. Pulse surveys: While surveys are the most common way of measuring employee
engagement, they should be supplemented with measurable data that can be verified
independently. Consider a survey question that asks, “Do you think that having X
number of meetings in a day hampers your productivity?” This survey should be
supplemented with data on how many meetings occur per day, the amount of time
employees spend unfocused before and after the meeting, and what their productive
output for the day is. This data, along with the survey responses, can then be used to
identify what the actual effect of having a certain number of meetings every day is.
2. Sentiment analysis:
Sentiment analysis, a method of extracting information from subjective data, can help
identify the general sentiment found in the language employees use in their online
conversations. By combing through email and chat data, sentiment analysis tools enable
the identification of toxic workplace behaviors in a single team, for example, or across
teams. All the data collected is kept anonymous. Sentiment analysis can provide real
insights into whether employees honestly answer surveys.
3. Employee net promoter score (eNPS)
Employee net promoter score is a metric used to measure employee loyalty by asking
how willing employees are to promote the organization as a place to work. For eNPS to
be a valid measure of employee engagement, it must:
• Be administered at regular intervals – monthly or quarterly.
• Collect anonymous responses.
• Be combined with data received from surveys and other sources.
4. One-on-one meetings (monthly)
No technology can replace the human touch of one-on-one meetings. Employees feel
heard when they are given the opportunity to have a real conversation to express their
thoughts. Anonymous feedback can help voice the broader issues. For more specific,
personal issues, one-on-one meetings are an excellent way for managers to identify the
general mood of employees
5. Stay/Exit interviews
Sometimes it is difficult to get employees to stay in a company. But conducting an exit
interview can give HR teams a valuable trove of information, which they can use to
enhance the engagement levels of existing employees. These interviews often reveal how
important it is to continuously engage with employees to prevent such instances, starting
from the onboarding process and setting the tone in that crucial 90-day period to define a
culture that even new employees can feel engaged in.
Once data is obtained from these methods, employee engagement analytics can come to
your aid to offer actionable insights. Analytics platforms empowered with predictive
technologies can provide insights that can help develop robust employee engagement
strategies or simply modify existing strategies to meet engagement goals, improve
engagement, and even sustain engagement.
Benefits of employee engagement
1. Better team performance
Employee engagement doesn't just benefit individual employees – it benefits the team.
This is because engaged employees perform at a higher level. And when you have a
group of engaged employees working together, the team naturally performs at its best as
well.
Not only that, but employee morale can be really contagious. When team members are
surrounded by driven and motivated peers who care about what they do, they're more
likely to feel engaged in their own roles. Individual engagement leads to team
engagement, and individual performance improves team performance.
2. Increased employee productivity
Highly engaged employees are more efficient and produce higher-quality work. Why?
Because they're personally invested in their job, and their performance matters to them.
They're aligned with the team and business goals, and accountable for their individual
contribution. This means increased productivity on your team and greater returns for
your business.
3. Achieved team objectives
Speaking of hitting targets, employee engagement plays a huge role in your team's
success and achievements. As a manager, it's natural to focus your attention on
your team's goals. But this doesn't mean you should neglect the employee engagement
side as it has a direct, positive impact on your objectives.
It's a two-way street: team members that are aligned on goals feel more engaged, and
engaged employees are more motivated to work towards common objectives.
Team members who believe in the vision will help you get there. And they do so because
they are engaged in their work and aligned with your business strategy.
4. Less workplace stress
Engaged employees and disengaged employees alike are susceptible to stress at work.
The difference lies in how it's managed, as well as the outcomes of that stress. And as a
manager, your support will play a huge role here.
For engaged employees, some stress at work is usually much easier to manage and could
even become a motivator. Employees who are engaged tend to be more self-aware and
can better detect when their stress levels surpass a healthy threshold. They're also more
prone to seek support from managers and peers when needed.
On the other hand, when engagement dwindles, stress can become unmanageable and
sometimes even detrimental to people's well-being. And this is especially true when
employees do not feel a sense of belonging at work and feel unsupported.
Be mindful of when and how you push people. Stress can be a sign that we're on the
brink of something amazing! But it can also completely hinder us from reaching those
achievements. Make sure your team members know that you have their backs and that
stress is only okay if it's propelling them forward.
5. Lower risk of burnout
Employee burnout, which the World Health Organization defines as an “occupational
phenomenon… resulting from chronic workplace stress that has not been successfully
managed,” is one of the biggest issues facing today's workforce.
When employees reach the point of burnout, it has serious consequences – for them, your
team, and your organization. Burnout is bad news. But the upside? By keeping your
employees engaged with their work and monitoring stress levels on your team, you're
helping significantly lower their risk for burnout
6. Lower employee absenteeism
Absenteeism has become a big issue in recent years. In the United States alone,
nearly one million people skip work each day due to stress. And alarmingly, those who
take time off for mental health reasons are seven times more likely to be absent in the
future.
When workloads become overwhelming and work-life balance feels unattainable,
engagement falls and absenteeism takes a hike. So how can you help as a manager? You
can improve employee engagement by fostering a motivating environment that
prioritizes health and well-being. You'll see your engaged employees excited to show up
for work (online or in person), innovate with ease, achieve goals, and perform at the
highest level in no time.
[Link] employee retention and lower turnover rates
If you want to build a high-performing team, you need your employees to stick around.
It's hard for teams to do their best work if employees are constantly cycling in and out.
When long-standing employees leave, they take valuable knowledge and expertise with
them. Plus, training new hires is a significant investment of time, energy, and resources.
An engaged, satisfied employee who's committed to their objectives is less likely to
leave. So by improving employee retention rates, you'll have more engaged employees
that make your team stronger, more experienced, and better equipped to hit targets.
[Link] recruitment
It's no surprise that when your employer brand shines, HR's job becomes way easier in
the recruitment process. Candidates want to be 100% sure when deciding to join an
organization, so they're sure to scour online reviews or their networks for the scoop on
what it's like to work at your company.
If your employee engagement is strong, you have nothing to fret about. In fact, your
employees are probably doing a lot of the heavy lifting when it comes to attracting top
talent simply by speaking highly about their positive experiences at work. And
considering that 66% of candidates want to hear more from employees, you'll want to
continue involving engaged employees throughout your recruitment.
What is the psychological contract?
The psychological contract refers to the unwritten, intangible agreement between an
employee and their employer that describes the informal commitments, expectations and
understandings that make up their relationship.
Aspects of a psychological contract could include any of the following:
⚫ Job security
⚫ Opportunities for promotion
⚫ Opportunities to learn and improve
⚫ The employer’s reputation in society
⚫ The perception that the employee’s work contributes positively to society
⚫ A supportive manager
⚫ A perception of fairness in the company’s internal processes
⚫ The perceived fairness of pay
⚫ An expectation to go ‘above and beyond’
⚫ The perceived fairness of a Perks and Benefits package.
Features of psychological contract
• Unwritten Nature
The psychological contract is not documented but is based on implied understandings
between the employer and the employee.
These perceptions can vary from person to person, making the contract subjective and
fluid. Despite its informal nature, it strongly influences workplace relationships and
employee behavior.
• Mutual Expectations
Both employers and employees have expectations of each other, such as job security, fair
treatment, and loyalty.
Employees may expect recognition, while employers anticipate commitment.
When these expectations are met, trust strengthens; when unmet, dissatisfaction can arise,
affecting performance.
• Dynamic and Evolving
A psychological contract evolves due to changes in roles, management styles, or
organizational policies.
For instance, a promotion or company restructure can reshape employee perceptions,
affecting their expectations. Regular communication helps manage this evolution,
reducing misunderstandings.
• Perception-Based
Unlike formal contracts, the psychological contract is driven by personal perceptions
rather than legal terms.
Employees may feel a breach if they believe promises have not been kept, even if the
employer did not intend any breach. Clear communication can prevent these perceived
breaches.
• Influences Employee Behavior
A positive psychological contract fosters employee engagement, motivation, and job
satisfaction. Conversely, a perceived breach can lead to disengagement, reduced
productivity, and even higher turnover.
Organizations must ensure consistency between verbal promises and actions to maintain
trust.
• Emphasizes Fairness and Reciprocity
Employees expect fair treatment, recognition, and respect in exchange for their efforts
and loyalty. Similarly, employers expect dedication and high performance.
When fairness is perceived, employees feel valued and more inclined to contribute
positively to the organization.
• Affects Organizational Commitment
The strength of the psychological contract significantly impacts an employee’s
commitment to the organization.
A strong contract encourages long-term loyalty, while a weak or broken contract may
result in disengagement, absenteeism, or job hopping, impacting overall organizational
stability.
• Non-Legal Obligations
Psychological contracts involve moral and ethical commitments rather than legal ones.
For example, an employee may expect professional development opportunities, which
are not legally required but morally expected.
Meeting these non-legal obligations enhances trust and fosters a positive work
environment.
• Influences Leadership Perception
How leaders communicate, provide feedback, and fulfill promises directly affects
employees’ perception of the psychological contract.
Effective leadership that respects these expectations strengthens employee trust and
morale, whereas inconsistency or broken promises can harm the employer-employee
relationship.
• Can Be Breached
A breach occurs when one party perceives that the other has failed to fulfill their
obligations.
For example, if an employee feels overlooked for a promotion promised verbally, they
may feel betrayed.
