What is the relationship between employee engagement and productivity?

Wide-ranging research into the links between employee engagement and higher productivity will be presented at the Co-operative Retail Conference next month. The event, which brings leaders from the UK’s consumer-owned retail co-ops...

Wide-ranging research into the links between employee engagement and higher productivity will be presented at the Co-operative Retail Conference next month.

The event, which brings leaders from the UK’s consumer-owned retail co-ops to Stratford-upon-Avon on 3-5 March, will see Unai Elorza, lecturer in HR management at Mondragon University, discuss the study.

It began in 20o9 and looks at 480 organisations with 5,000 employees, 60% of which are co-operatives. Some organisations are part of the Mondragon Group, while others come from the Basque country’s industrial sector, the education sector, distribution or consulting.

“Employee engagement is like supporting a football team,” said Dr Elorza. “One is feeling the team’s colours, always with the team, ready to make efforts for the overall good of the organisation, willing to sacrifice self-interests for the good of the organisation, feeling proud of being part of it and feeling owner of it.”

When employees are engaged, he argued, they are more likely to be involved in actions that are good for the organisation.

Related: Can responsible businesses create a fairer economy?

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“For example, they are staying 20 extra minutes,” said Dr Elorza, “or doing things they are not necessarily supposed to do for the good of the organisation. All these lead to satisfaction.”

Dr Elorza’s study includes several organisations within Mondragon
Dr Elorza’s study includes several organisations within Mondragon

When this engagement is not there, a business can lose opportunity, he warned – and the causes of disengagement can be complex.

Dr Elorza’s research shows that engagement is connected to enrichment of the working experience, such as working with colleagues or clients.

The sector in which businesses operate is also significant; for instance, in the industrial sector, employees are less likely to develop professionally if they are asked to do less qualified roles or repetitive work.

“In these types of jobs no information is needed. You are the extension of a robot,” he said. “You do not develop professionally but accumulate a year of experience repeated 30 times rather than 30 years of experience. In these contexts there is no engagement.”

Dr Elorza’s research has shown certain differences between co-op and non co-ops. “Employee engagement tends to be a bit higher in co-ops,” he said, “but they still face the same issues as other businesses.”

Co-ops operate in accordance to their values and principles, he said, but they can also import principles of management from other companies, which means they sometimes act like regular enterprises.

“You can be a member of a co-op but identity does not simply come with membership,” he added. “The enterprise needs to maintain that co-operative identity in daily management.”

Nor does engagement always boost productivity. In some sectors, like distribution centres where employees engage with clients on a daily basis, there is high engagement but this can actually harm productivity.

This is because higher rhythms of production imposed on employees can affect them negatively, said Dr Elorza. In this scenario higher productivity leads to unhappy staff.

Another problem comes when enterprises try to increase productivity by hiring fewer people but expect the same level of productivity.

Workers doing repetitive tasks are less likely to be engaged
Workers doing repetitive tasks are less likely to be engaged

“If a store wants to hire two fewer people but expects the same productivity then yes, in the short term, it will have higher productivity,” he said. “However, customers may not be attended very well due to the staff shortage and in medium and long term this could have a negative impact.”

This means businesses should consider short and long term goals in their engagement strategies – and here, management is crucial to the success, Dr Elorza’s research suggests.

“They need to assume there are other ways to manage. They have to delegate power to people, let them make mistakes and learn from this,” he said. “This implies having faith in people. The managers will no longer be the ones taking all decisions. There needs to be a cultural change in how one perceives managing a store.”

For this to happen, managers need to trust their people, he said – and when they don’t, “changes ended up hurting the enterprise because they lacked the determination needed and they generated expectations among employees that could not be met”.

Other important steps are integrating employees, providing autonomy, opportunities for training and enable them to take decisions. “To do this well management needs to be clear that the best change is within themselves,” concluded Dr Elorza.

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