Like everything else in the world, employee engagement has gone through significant upheaval over the past several years. Employees’ relationships with their organizations shifted with the onset of the COVID-19 pandemic and the transition to remote and virtual work, with employee priorities undergoing a considerable change in tandem with these necessary adjustments to the way we work. To assist HR leaders in understanding and evaluating the causes, significance, and impacts of these changes, leading HR research and advisory firm McLean & Company has released its annual Employee Engagement Trends Report 2023. The timely industry report combines insights, analysis, and benchmarking data obtained from 2021 to 2022.
In the report, the firm defines employee engagement as “an overall sense of being energized by and passionate about one’s work and dedicated toward one’s workplace” and notes it is important to differentiate this concept from employee satisfaction. Employee engagement is also a component of the overall employee experience (EX), with EX remaining a high priority for organizations because of its impact on outcomes such as productivity and retention.
“In a challenging labor market and economy, employee engagement plays an even more critical role in talent retention,” says Amanda Chaitnarine, director of Advisory Services at McLean & Company. “Individual employee engagement is the outcome of a strong overall employee experience, which is measured simply by asking ‘How likely would you be to recommend this organization to a friend or family member as a great place to work?’ If the answer isn’t ‘yes,’ it’s a good indication that an organization’s employee engagement and experience need evaluation and intentional effort to improve.”
To inform organizations’ efforts to improve engagement, the firm identified and measured three key driver categories for employee engagement via a survey distributed to over 157,000 employees in 179 organizations. Those three drivers are outlined below:
- Organizational – Organizational drivers impact an employee’s satisfaction and commitment to their organization. They include department collaboration, executive and departmental leadership, company potential, culture, and inclusion.
Organizational drivers saw mixed results, with department collaboration and executive leadership ranking lowest, signalling a need for improved communication. Culture and inclusion were viewed most positively and should remain a high priority. - Job – Job drivers affect an employee’s motivation for and commitment to their day-to-day role. They consist of career advancement and development, recognition, employee empowerment, manager relationships, and co-worker relationships.
Employees viewed job drivers most positively, with career advancement and development increasing from the previous year by an average of 3.3 percentage points from 54.4% to 57.7%, and co-worker relationship drivers increasing by an average of 2.9 percentage points from 78.9% to 81.8%. - Retention – Retention drivers influence an employee’s desire and likelihood to stay at an organization. An organization cannot make progress on engagement without satisfying a minimum requirement in these drivers. They include total compensation, working environment, and work-life balance.
Retention drivers were the lowest scoring area, likely due in part to economic uncertainty and inflation throughout the year impacting total compensation drivers, which decreased by 2.5 percentage points. Work-life balance and workload continue to be areas of opportunity for improvement.
With the talent acquisition and retention challenges that organizations are facing in the current labor landscape, it is unsurprising that retention drivers were the lowest performing of the three categories in this year’s report. While prioritizing job and organizational drivers remains important to overall engagement success, there is a clear and critical need to put intentional effort into improving retention driver scores. Developing the retention driver areas of total compensation, working environment, and work-life balance can ultimately lead to increased talent attraction and retention and should be a primary focus for organizations in 2023 and beyond.
The firm advises that some of the ways organizational and HR leaders can work to improve employee engagement within their organizations are:
- Focusing on providing career and skill development opportunities for all employees by developing a high-potential program and creating a learning and development strategy.
- Revisiting career pathing and succession plans to ensure they are inclusive and free from barriers for all employees.
- Creating or revamping employee recognition programs for a quick win that leverages manager and co-worker relationships and that can be built on to create a culture of recognition and appreciation in the future.
McLean & Company also reminds HR leaders that employing benchmark engagement data when evaluating their organization’s employee engagement is a key component in the process to provide direction, but it is not a final solution. Employee engagement action planning should always be based on feedback from an organization’s employees, not on how other organizations are performing.
HR leaders seeking to understand, assess, and improve their organization’s employee engagement can download the full Employee Engagement Trends Report 2023.
Additional resources from McLean & Company to support improving retention drivers include:
- Build a Total Rewards Strategy
- Create a Talent Acquisition Strategy
- Redesign the Talent Acquisition Structure
- Design a High-Value Succession Planning Program
The firm also offers various levels of support and practical resources to best suit organizations’ unique, individual needs, including DIY toolkits, guided implementations, workshops, and consulting. For additional support in determining where to start in resolving engagement and retention challenges, visit mcleanco.com/services or follow McLean & Company on LinkedIn and Twitter.
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