Source-http://www.cipd.co.uk/hr-resources/factsheets/employee-engagement.

aspx



What is employee engagement?
Employee engagement is a concept that has become increasingly mainstreamed into
management thought over the last decade. It is generally seen as an internal state of being
both physical, mental and emotional that brings together earlier concepts of work effort,
organizational commitment, job satisfaction and flow (or optimal experience). Typical
phrases used in employee engagement writing include discretionary effort, going the extra
mile, feeling valued and passion for work.
In its work with the Kingston Engagement Consortium, the CIPD has defined employee
engagement as being positively present during the performance of work by willingly
contributing intellectual effort, experiencing positive emotions and meaningful connections to
other.
This definition gives three dimensions to employee engagement:
Intellectual engagement thinking hard about the job and how to do it better
Affective engagement feeling positively about doing a good job
Social engagement actively taking opportunities to discuss work-related
improvements with others at work.
Go to our Creating an engaged workforce report
However, it is worth noting that numerous definitions of employee engagement exist, each
with their different emphases. For example, one of the most enduring is that from the Utrecht
University group of occupational psychologists
1
. This sees engagement as having three
elements, which overlap with the CIPD definition (above):
vigour (energy, resilience and effort)
dedication (for example, enthusiasm, inspiration and pride)
absorption (concentration and being engrossed in ones work).
Another element of employee engagement that is often considered essential is being aware of
business context
2
, or understanding the line of sight between ones own job role and the
purpose and objectives of the organisation
3
.
Indeed, it is helpful to think about what aspects of their work employees are engaged with.
Our report, The locus of engagement: understanding what employees connect with at work
highlights that in particular, employee engagement can be directed towards: the role job
itself; relationships with colleagues; the organisation as a whole; and in many cases, people
outside the organisation. Building on this, our research into transactional and emotional
engagement explores the different degrees to which employees can be engaged.
Go to our locus of engagement report
Go to our report Emotional or transactional engagement - does it matter?
What are the benefits of employee engagement?
Employers want engaged employees because, as well as being happier, healthier and more
fulfilled, they deliver improved business performance. Research has repeatedly demonstrated
a relationship between how people are managed, employee attitudes and business
performance. There are nuances in the drivers and outcomes of employee engagement, but
this basic link holds true across different sectors and job roles. Positive relationships are
evidenced with profit, revenue growth, customer satisfaction, productivity, innovation, staff
retention, efficiency and health and safety performance. A good summary of the performance
link with employee engagement has been published by the government-sponsored Engage for
Success
4
movement.
Organisations also increasingly recognise the importance of their brand and reputation.
Engaged employees will be stronger advocates of their organisations and help protect the
employer from the reputational risks associated with poor service levels or product quality.
Conversely, having a disengaged workforce brings huge risks. As well as productivity losses,
organisations may lose their best people and face huge difficulties when embedding
organisational change if employees are not on board. Disengagement also threatens effective
collaboration, innovation and human capital management, as employees will not be inclined
to use their tacit knowledge and skills for the good of the organisation.
Go to our factsheet on human capital
Go to our factsheet on change management
How to build an engaged workforce
Leadership, alignment and support

The drive for an engaged workforce builds on good people management and learning and
development practices. Successful employee engagement strategies need the active support of
senior leaders and line managers and will also be holistic, aligning organisational purpose,
vision and values with job roles, communications, management systems and team building or
cross-organisational events. A minority of employees may not want to be engaged;
recruitment practices and performance management are thus important engagement tools.
There is no shortcut to building and maintaining employee engagement.
Understanding some fundamentals

A great deal can be learnt from existing research on what drives employee engagement. For
example, the 2009 MacLeod Review
5
summarised four enablers that should be
fundamentals of any employee engagement strategy:
Leadership that gives a strong strategic narrative about the organisation, where its
come from and where its going.
Line managers who motivate, empower and support their employees.
Employee voice throughout the organisation, to challenge or reinforce the status quo
and involve employees in decision making.
o Go to our factsheet on employee voice
Organisational integrity: stated values are embedded into organisational culture;
what we say is what we do.
The last of these, integrity, closely relates to the sense of fairness and trust in the organisation
and the psychological contract, which depend on employers delivering on their commitments
and fulfilling employees expectations
6
.
Go to our factsheet on the Psychological contract
As well as these drivers, employee well-being (including work-life balance and manageable
levels of pressure) is often considered a crucial hygiene factor for employee engagement, in
that its absence is a serious impediment. Our research report Managing for sustainable
employee engagement, explains how engagement and wellbeing can be brought together for a
people strategy.
Go to the report
Go to our factsheet on Health and well-being at work
Assessing employee engagement in your organisation

Beyond these general truths, employee engagement has to be seen as something organisation
specific. What makes people tick, what gripes they have, the challenges to and opportunities
for fostering employee engagement will all vary with an organisations culture (and that of
the wider sector), the history of its development and the structures and leadership that shape it
today.
So a first practical step in fostering employee engagement is to assess and in large
organisations, preferably measure employee attitudes in your organisation. Most large
employers in both private and public sectors now conduct regular employee attitude surveys,
often alongside focus groups or other forums. The results typically show what employees feel
about dimensions of their work such as pay and benefits, communications, learning and
development, line management and work-life balance. Composite employee engagement
measures are also common. Employee survey and focus group data can be used to identify
areas in need of improvement and understand the particular drivers of employee engagement
in your organisation.
Surveys are still the mainstay of employee insight, but some organisations have started to
move away from them to what are considered more engaging methods. In particular, social
media platforms are being used in this way. Social media potentially marks a major shift from
the traditional survey approach, in particular because employees interact with each other as
well as management. This means they can read and comment on their colleagues opinions in
real time and before senior management or HR have digested them. It also makes gathering
employee insight a more active process, closely linking it to collaboration.
Go to our report on Social media and employee voice
Action planning

Once you have identified issues, it is important to develop and communicate a meaningful
action plan. Being seen to do nothing response to employee views will seriously erode trust.
Action plans will of course be specific to the employee engagement challenges the
organisation faces, but there are certain areas that invariably benefit from attention. One of
these is the ongoing opportunities for employee voice, which includes not only the processes
in place, but the culture that supports them or makes it difficult for employees to use them
properly. Voice should not be limited to a survey or to areas like terms and conditions. It
should be embedded within our daily work along with empowerment, so that employees take
greater responsibility for their work, innovate and hold each other to account.
Another area commonly in need of attention is line management. Our report Management
competencies for enhancing employee engagement identifies specific behaviours and
explores the differences between first-level line management and more senior-level
management. Building on this and the research mentioned above on engagement and well-
being, we have also published guidance on developing a behavioural framework for
managers for sustainable employee engagement.
Go to the report
Go to the guidance
The engagement levels of British employees
Our research with the Kingston Engagement Consortium, Creating an engaged workforce
(see link above) found just under a third of employees were actively engaged according to
our engagement index. Levels of affective engagement are the highest, of social engagement
the lowest, with intellectual engagement in between. Over the last couple of years, and in line
with most other research, our regular Employee Outlook survey has found employee
engagement levels to be stable in the UK (between 35% and 39% of employees indicating
positive engagement).
Other key results from the research are:
more women than men are engaged with their work
younger workers are less engaged than older workers
managers are more engaged than non-managers
those on flexible contracts are more engaged than those who are not
public sector employees show higher levels of social and intellectual engagement
whereas private sector employees are more engaged affectively.
The MacLeod Review and Engage for Success

The 2009 MacLeod Review
5
was a UK government sponsored review of the benefits and
drivers of employee engagement chaired by David MacLeod and Nita Clarke. To help put
this into action, the prime minister launched a new industry-led task force in 2011. The task
force has developed a website Engage for Success (see Useful contacts below) and set up two
groups:
A Practitioner group which welcomes participation from any organisations or
individuals looking to embed practices that foster employee engagement.
A parallel Guru group of academics and consultants, which works to further develop
understanding of employee engagement.
CIPD viewpoint
Employee engagement is not an entirely new concept and debates continue over its precise
nature, drivers and impacts. Nonetheless, as an area of both study and practice, it has been
hugely instrumental in putting good people management practices firmly on organisations
agendas. It powerfully brings together a focus on employee satisfaction and well-being with a
focus on performance to work for the good of the employee and the good of the organisation,
in tandem.
Leaders and mangers in all functions and at all levels should pay close attention to building
employee engagement. HR is the most natural function to lead on this, using its employee
advocacy role to benefit organisational performance.
Successfully fostering employee engagement requires working with all areas of the business.
Employers should especially pay attention to:
giving employees meaningful voice: facilitating upwards feedback, having respectful,
adult-to-adult conversations and responding to employee views
effective communications that keep employees well informed and reinforce the
organisations purpose
role modelling: employees need to see that managers are committed to the
organisation and uphold the values of employee engagement in how they act
fair and just management processes for dealing with problems and supporting
employee well-being.
Useful contacts
Engage for Success




@Fact sheet on human capital

What is human capital?
The term human capital is widely used in HR to describe people at work and their collective
knowledge, skills, abilities and capacity to develop and innovate. Human capital reporting
aims to provide quantitative, as well as qualitative, data on a range of measures (such as
labour turnover or employee engagement levels) to help identify which sort of HR or
management interventions will drive business performance.
It is now commonly accepted that the value of organisations is drawn from a mixture of
tangible assets in the form of equipment, money, land or other physical objects together with
intangibles in the form of brand, reputation, knowledge and, of course, people critically
important in an increasingly knowledge-based economy.
However, the evaluation of human capital remains difficult for most companies. There are a
number of reasons for this:
The contribution of people is difficult to isolate from other factors such as the
economic situation, market forces and customer or social trends.
The value of people is often expressed in qualitative rather than quantitative terms
that make it difficult to represent in traditional accountancy models.
HR data has traditionally been collected for administrative rather than evaluation
purposes.
HR people do not always have the skills or resources to interpret or explain data to
evaluate the contribution of people to business performance.
Senior leaders or stakeholders do not recognise human capital as a performance
measure and therefore do not demand human capital information.
These difficulties have been further compounded by the varying definitions of human capital
developed over the years.
Intellectual capital

In our CIPD research work, we have found it helpful to describe human capital as one of
three elements that make up intellectual capital. Intellectual capital encompasses:
Human capital the knowledge, skills, abilities and capacity to develop and innovate
possessed by people in an organisation
Social capital the structures, networks and procedures that enable those people to
acquire and develop intellectual capital, represented by the stocks and flows of
knowledge derived from relationships within and outside the organisation
Organisational capital the institutionalised knowledge possessed by an organisation
which is stored in databases and manuals, including the HR policies and processes
used to manage people.
Human capital management

While some commentators argue that there is little difference between the concept of human
capital and that of human resources, perhaps the key distinction is the focus of human capital
on the value of employees, and how this may be measured, rather than on the HR function
itself.
CIPD members may view our online tool Human capital management: introducing and
operating human capital management processes.
Visit the human capital management online tool
Types of human capital data

There are many different types of data that can be useful in measuring and evaluating human
capital. Generally these fall under the following headings:
demographic data: information on workforce composition including age, gender and
ethnicity
recruitment and retention: number of resignations/vacancies/applications, length of
service
learning and development: levels of expenditure on training, types of training
provided, length of time to reach competence levels, data on training needs
performance: performance management results, productivity and profitability data,
targets set and met, levels of customer satisfaction, customer loyalty
engagement and opinion: findings from employee attitude surveys
reward and pay: overall wage bill costs, distribution of individual performance-
related pay awards, level of total reward package.
Wherever possible, it is important to distinguish between measures of outputs and measures
of inputs. For example, figures for expenditure on specialist training provision is an input, the
output might be higher levels of customer sales or higher levels of employee skill and
capability.
Measuring human capital
The CIPD has been undertaking work in the field of human capital since 2000 around the
time the subject emerged as a key issue for the HR profession. Much of our research in this
area since then suggests that there is no single measure or set of measures that can uniformly
provide a value for human capital.
This conclusion was confirmed by the 2003 report
1
of the Task Force on Human Capital
Management, which was set up by the government under the chair of Denise Kingsmill to
address the lack of reporting on human capital in business - as this was felt to be inhibiting
competitiveness.
Measurement difficulties

Measurement is notoriously difficult, in part because the factors that human capital is likely
to influence (such as customer satisfaction, innovation and service delivery) are at the mercy
of numerous other contextual factors. Whereas it can be relatively easy to collect data to
describe the workforce and the prevalence of certain practices, particularly where
sophisticated human resource information systems (HRIS) exist (such as absence and
attendance data) it is more difficult to develop credible and reliable new measures and assess
how such data may be interpreted.
For example, CIPD research has found that engaged employees are more likely to perform
better and hence contribute to bottom line performance, meaning that this is a key measure
impacting on business success. However, engagement levels are extremely difficult to
quantify as much of the data pertaining to engagement is actually measuring elements of it,
such as satisfaction or commitment. To find our more about engagement, see our factsheet on
that topic.
Go to our factsheet on employee engagement
Focus on business context

Organisations will, in addition, wish to measure the aspects of human capital that are relevant
to their own business strategy (for example the need for a particular type of employee
competency). As a result of this consideration, together with the other factors identified here,
the emphasis of measurement has shifted away from absolute measures towards
understanding of context to make an informed decision.
Differing levels of data collection

At the most basic level, human capital data can be collected for simple monitoring purposes,
such as controlling absence or monitoring retention difficulties. At the highest level data can
be used to identify performance drivers: by correlating different types of data with
performance data organisations can begin to understand what the real benefits are of
improving levels of motivation or retention.
The table below summarises the different levels of data collection that might take place and
the likely outcomes of data collection.
Basic level Intermediate level Higher level
Action Collect basic input
measures such as
absence data,
turnover data
Identify useful data
already available,
such as data from
Design data collection
for specific human
capital needs. For
example, conduct an
employee attitude survey
to measure satisfaction,
or follow up on training
Identify key
performance
indicators relating to
the business
strategy, and design
data collection
processes to
Basic level Intermediate level Higher level
pay reviews,
performance
management, job
evaluation, training,
the recruitment
process
Use this data to
communicate
essential information
to managers about
absence, turnover or
accident levels,
compared by
department
Look for trends or
patterns in the data
and investigate their
causes
activity to monitor
implementation and use
Look for correlations
between data for
example, whether high
levels of job satisfaction
occur when certain HR
practices are in place,
such as performance
management, career
management or flexible
working
Identify specific actions
to improve people
management
measure against
them
Provide managers
with indicators on a
range of measures
designed to inform
them on
performance and
progress in their
department
Accompany this
with specific actions
to be taken informed
by the resulting
human capital data
Communicate data
in ways that are
meaningful to
differing audiences
Outcome Basic information for
managers on
headcount and make-
up of the workforce
Identification of any
action that might be
needed as a result of
these measures for
example, to reduce
accident rates, to
improve the diversity
profile of the
workforce or to
reduce absence
Information to help
design the HR model
most likely to contribute
to performance
Communication to
managers not just on
how to implement
processes, but with
accompanying
information on why they
are important and what
they can achieve
Identification of the
drivers of business
performance
Information that will
enable better-
informed decision-
making both
internally on the
management of
people and
externally on the
progress with regard
to strategy
Reporting human capital
Different types of information will be of value to different audiences within the business:
Shareholders seek information on the employee attributes or behaviours that are likely
to influence short- or long-term financial performance.
Customers wish to know if they will get good service and after sales support.
Employees want to know their jobs are secure and how they can develop themselves
and their skills.
Managers require information on which actions they can take to improve the
performance of their business units.
External reporting
Regulatory background
The extent of external reporting on human capital remains limited. There are two main
sections where such data may be published within companies annual reports:
Business review - quoted companies are required to include information on
employees (as well as other issues) within the business review section of the annual
report.
Operating and financial review - with the growth of interest in the idea of human
capital reporting during the early years of this century, culminating in the publication
of the Kingsmill report (mentioned above), government proposals were developed to
introduce mandatory compliance with best practice principles on narrative reporting
in the operating and financial review section of annual reports. However, these plans
for compulsion were abandoned in 2005, although some companies follow such
principles on a voluntary basis, though only among in a minority of cases, according
to the latest analysis of the content of annual reports from Deloitte
2
.
A detailed consideration of the highly complex regulatory background is beyond the scope of
this factsheet. However, recent years have seen a renewed interest in the issue of company
reporting as a result of perceived deficiencies in companies reporting procedures in the wake
of the global financial crisis. More information can be found in our factsheet on corporate
governance.
Go to our corporate governance factsheet
In 2010, the Department for Business Innovation and Skills launched a consultation on the
future of narrative reporting (sometimes known as the front half of company reports)
3
.
Information on the CIPDs position is available in our response to that consultation. As yet no
firm proposals or reporting have been forthcoming.
Visit CIPD response
Published human capital data
More information on the extent of human capital reporting that is included within annual
reports is available in our report Human capital management: an analysis of disclosure in UK
reports setting out an analysis of disclosure levels produced in conjunction with professional
accountants body ACCA.
Visit the report
Additionally, our latest research into the ways in which human capital reporting can inform
investment decisions has found that stakeholders would particularly value information that is
comparable, explained in context and related to business outcomes, whilst also finding that a
focus on risk in human capital reporting would be particularly relevant to the business
community.
Find out more in our report View from the City: how can human capital reporting inform
investment decisions?
Go to the report
Internal reporting

Internal reporting is far more prevalent than external reporting, as this is important in the
evaluation of the effectiveness of HR interventions and guiding future HR strategy, while
also protecting business confidentiality where desired. It takes a number of forms.
Generally any human capital data reported internally should be:
reliable and open to scrutiny
accompanied by adequate explanation
presented in a manner that is easily understandable for the audience
related to business needs
enable managers to identify appropriate actions that will improve business
performance.
Identifying business drivers

Because the evaluation of human capital is context-dependent, the key to identifying business
drivers lies in developing a better understanding of the people element of the business and
what policies and practices to manage teams or individuals are likely to achieve results.
There are a number of good examples of organisations that have successfully correlated
human capital data with performance data to identify which interventions are likely to
produce results. Many of these are reported in our guide on internal human capital reporting
Human capital reporting: an internal perspective.
Go to our guide
CIPD viewpoint
There is a great deal of evidence that the contribution of people is the largest driver of
organisational performance. Systematically collecting, analysing and communicating
information on the value of this contribution is vital and will assist in the design and
implementation of HR policies and practices to maximise the impact on business
performance. However, all our research to date indicates that the evaluation of human capital
is highly contextual and therefore no single measure or set of measures can adequately
convey its value. Organisations need to decide which measures are relevant to them and will
give them to information they need to effectively communicate the value and contribution of
human capital both internally and externally. They will then need to interpret these measure
in context to inform their relevance to key business performance indicators.

























@Factsheet on change management


Why organisations need to change
Many things cause organisational change. These include:
challenges of growth, especially global markets
challenge of economic downturns and tougher trading conditions
changes in strategy
technological changes
competitive pressures, including mergers and acquisitions
customer pressure, particularly shifting markets
to learn new organisation behaviours and skills
government legislation/initiatives.
All organisations are in flux: changing their focus, expanding or contracting their activities
and rethinking their products and services. Most organisations more than ten years old look
nothing like they did even five years ago. And it is likely that in the next year or two
organisations will not look as they do today.
In this context managers have to be able to introduce and manage change to ensure the
organisational objectives of change are met, and that they gain the commitment of their
people, both during and after implementation. Often, at the same time, they also have to
ensure that business continues as usual.
For practical advice, frameworks and diagnostics, CIPD members can access our interactive
tool Approaches to change: building capability and confidence.
Go to the tool
Why the management of change is important
Change management matters because, although change is taking place at an ever-increasing
pace, there is evidence that suggests that most change initiatives fail. For example, CIPD
research suggests that less than 60% of re-organisations met their stated objectives which are
usually bottom line improvement. This is consistent with other published research.
The impact of failures to introduce effective change can also be high: loss of market position,
removal of senior management, loss of stakeholder credibility, loss of key employees, and
reduction in engagement see our factsheet on engagement for more on this issue.
Go to our employee engagement factsheet
One organisational response to change is that organisational forms are themselves evolving.
Therefore, the change management response will have to be adaptive. For example, the
increased competitive challenges and the need to be responsive to the changing environment
are resulting in emerging organisational models. Traditional organisational models following
functional or matrix lines are being supplemented by new models that rely on project teams,
on networks and on virtual structures.

In theory, some of these newer models, for example virtual and project-based structures,
allow increased flexibility to respond to change. However such models are not always
introduced uniformly, and in practice often introduce other issues that also impact upon
change management, for example ability to share knowledge and to operate efficiently. These
may also impact effectiveness of communication or employee commitment, which
themselves have implications for change effectiveness.

Our research report Managing across boundaries: human resource management beyond the
firm highlights how the move towards network-based organisations means that HR managers
must now consider issues that exist across and outside the boundaries of the firm: they need
to address the concerns of cross-boundary human resource management. This requires the
development of a series of boundary spanning HRM practices which involve the extension of
practices which are traditionally used only for employees (that is, individuals contracted to
the organisation) to these important people who are outside the boundaries of the organisation
(that is, individuals contracted to a different organisation or self-employed but who deliver
services within the organisation).
Find out more about the report
Issues in the change management process
A large number of issues have been identified as having negative impact on effective change
management. Some of the key themes are identified below.
Organisational issues

Individual change initiatives are not always undertaken as part of a wider coherent change
plan, for example through considering linkages between strategy, structure and systems
issues. Therefore a change that considers a new structure but fails to establish the need to
introduce new systems or processes to support such a structure is less likely to succeed.
Lack of effective project management and programme management disciplines can lead to
slippages in timings, in achievement of desired outcomes and in ensuring that the projects do
deliver as planned. Insufficient relevant training, for example in project management, change
management skills and leadership skills can impact negatively on the effectiveness of any
change initiative.
Poor communication has been linked to issues surrounding the effectiveness of change
management in achieving effective change in various ways. For example, imposed change
can lead to greater employee resistance (see section below also).
Change initiatives can also be over-managed, with too much energy spent on project
management and too little on enacting change.
Finally, lack of effective leadership has been identified as an inhibitor of effective change.
Individual/group resistance to change

Resistance to change can be defined as an individual or group engaging in acts to block or
disrupt an attempt to introduce change. Resistance is not necessarily negative, as it may be a
clear signal that the change initiative requires rethinking or reframing. Resistance itself can
take many different forms from subtle undermining of change initiatives, withholding of
information to active resistance, for instance through strikes.
Two broad types of resistance can be considered:
Resistance to the content of change - for example to a specific change in technology
or to the introduction of a particular reward system.
Resistance to the process of change. This concerns the way a change is introduced
rather than the object of change per se, for example, management re-structure jobs
without prior consultation of affected employees.
Management need to be aware of these different criteria to ensure they respond appropriately.
Suggested reasons for resistance include: loss of control, shock of the new, uncertainty,
inconvenience, threat to status and competence fears. It is important to try to diagnose the
cause of employee resistance as this will help determine the focus of effort in trying to
address the issue.
Making change management more effective
From the issues raised in the section above it can be seen that change is complex and there is
no single solution. However, a number of key areas of focus emerge.
Effective leadership is a key enabler as it provides the vision and the rationale for change.
Different styles of leadership have been identified, for example coercive, directive,
consultative and collaborative. These different styles may each be appropriate depending on
the type and scale of change being undertaken. For example, when there is a large-scale
organisation-wide change a directive style has been identified as most effective.
Appropriate and timely training is frequently identified as key to effective change. Examples
of learning and development requirements might include:
project and programme management skills to ensure change initiatives are completed
both on time and to budget
change management skills, including communication and facilitation
leadership coaching.
Organisational development is one approach or intervention used when trying to bring about
change orientated to improving organisational effectiveness - see our factsheet on
organisation development for more information.
Go to our OD factsheet
Two-way communication with employees and their active involvement in implementation
has also been identified as a key enabler of change. Active participation is one suggested
means of overcoming resistance to change. Our research on mergers and acquisitions
highlights the importance of senior leaders devoting attention to communication with
employees during a time of transformation for the organisation. See our factsheets on the
psychological contract and employee communication for more information on these topics,
and our research report The impact of mergers and acquisitions on employer brands.
Go to our psychological contract factsheet
Go to our employee communication factsheet
Go to our research report
CIPD members can find practical frameworks, checklists and advice on employee
communication in our interactive tool HR: taking employee communication seriously.
Go to the tool
Finally, linking all the change agendas within an organisation coherently, rather than
completing changes in isolation, is vital to ensure that change effectiveness is maximised.
CIPD research with Said Business School has identified seven areas of activity that make
successful change happen - 'the seven c's of change':
choosing a team
crafting the vision and the path
connecting organisation-wide change
consulting stakeholders
communicating
coping with change
capturing learning.
Find out more about our HR: making change happen report
HR and L&Ds role in change management
People management and development professionals have a significant role to play in any
change management process.
CIPD research has also identified that HR and L&D's involvement in various aspects of
change can make the difference between successful and less successful projects by, for
example, their:
involvement at the initial stage in the project team
advising project leaders in skills available within the organisation identifying any
skills gaps, training needs, new posts, new working practices etc
balancing out the narrow/short-term goals with broader strategic needs
assessing the impact of change in one area/department/site on another part of the
organisation
1

being used to negotiating and engaging across various stakeholders
understanding stakeholder concerns to anticipate problems
understanding the appropriate medium of communication to reach various groups
helping people cope with change, performance management and motivation.
CIPD viewpoint
Organisational change is increasingly the norm, yet the high levels of failure indicate that
effective management of these changes is an issue. There is no single model of change and no
single solution to effective management, but, as HR and L&D professionals are recognising,
they need to ensure they have the skill, knowledge and credibility within the organisation to
act as champions of change.

HR has a clear role and responsibility to ensure that issues like organisation (re)design, due
process, employee voice, access to clear communications and so on are appropriately and
effectively addressed as part of change management. L&D professionals also have a critical
role to play in ensuring the long term sustainability of a change, through effective design and
delivery of learning initiatives. The key for HR and L&D is to build credible relationships
throughout the organisation which enable them to anticipate change, and be involved from
the beginning.















@factsheet on employment voice



What is employee voice?
Employee voice is the two way communication between employer and employee. It is the
process of the employer communicating to the employee as well as receiving and listening to
communication from the employee.

The factsheet should be read in conjunction with our factsheet on employee communication,
which goes into greater detail on particular techniques of communication, both downward
and two-way.
Go to our factsheet on Employee communication
The two subjects clearly have a lot in common. However the concept of employee voice
focuses more on opportunities for employees to be involved in decisions collectively,
whether through trade unions or by other means. It appeals both to those seeking greater
business efficiency and to those looking for employee rights. In the last two decades,
organisations have increasingly focused on initiatives that directly involve employees,
moving away from representative participation

CIPD research
1
suggests that organisations that seek to promote voice are those that believe
that employees want to contribute to the business and that for employees to have an
effective voice, the important part of the communication process is not what the employer
puts out but what it gets back. Good managers recognise that much of the knowledge required
for businesses to be competitive is actually in employees heads. Voice is defined most
typically in terms of two-way communications, an exchange of information between
managers and employees or having a say' about what goes on in the organisation.

Some managers see voice as enabling all employees to represent their views to managers, and
for those views to be taken into account. Other managers take the more limited view that
voice is not so much a dialogue or two-way exchange of ideas as a mechanism for employees
to transmit ideas to managers in order to improve organisational performance.
A brief history of employee involvement in decisions at work
Workers control

With the growth of the factory system came the rise of trade unions. In some cases, this was
accompanied by a desire for workers in the shape of trade union members to have a say in
decision-making at work.
Co-determination

In continental Europe there is more emphasis on employee having some role in the
management of companies. Germany has a system whereby employees in large companies
elect representatives to a supervisory board in which they have one third of the seats. The
employees also elect a worker director, who has a seat on the main board but can only vote
on matters concerning employees. Smaller German companies have a single tier board with a
worker representative.
This model has spread to other European countries, with variations. Sweden, for example, has
a one-tier board system with co-determination. Because of its widespread nature on mainland
Europe, co-determination has also had an impact on the thinking of the European
Commission.

In the UK co-determination has not developed as elsewhere in Europe. A controversial
report
2
proposed radical changes in UK company law to bring about so-called industrial
democracy with union representatives on company main boards. However, this was never
implemented and the Thatcher years saw interest in employee involvement of any kind
disappear from the agenda, at least as far as public policy was concerned.
The United Kingdom: collective bargaining and joint regulation

Throughout the twentieth century collective bargaining was the most significant means of
regulating relationships in the UK between employers and employees via trade union-led
negotiations. Collective bargaining is largely seen to focus on pay negotiations, but its role in
setting other working conditions is equally important. Collective bargaining necessarily
contains an element of negotiation, which distinguishes it from consultation, and the
academic Allan Flanders defined it as a process of rule-making leading to joint regulation
3
.

Collective bargaining has been seen as necessary to give employees a say in decision making
(in unionised organisations), and emphasis has been on managing the conflict between
employees and employer. As union membership has declined so has collective bargaining,
although it remains influential, particularly in the public sector.
Joint consultation

Joint Consultation Committees (JCCs) exist in organisations to address issues not covered by
collective bargaining issues from the trivial to strategic. JCCs consist of management and
employee representatives. In unionised organisations the employee representatives are
typically union representatives. JCCs do still exist in many organisations, but have declined
as organisations have moved their emphasis to direct communication.
Recent legislation

The legislative changes of the 1980s had left British workers with fewer rights in terms of
workplace consultation than their counterparts in other EU member states, and before 2005,
the only requirements on British organisations to inform and consult employees related to
specific issues such as health and safety, collective redundancies and pensions. The
Information and Consultation of Employees Regulations 2004 (SI 2004/3426), based on an
EU Directive, now place wider obligations on employers, though their impact has been
limited
4
.
In addition, European Works Councils which bring together senior managers and employee
representatives from a numbers of sites across Europe have introduced international
consultation in British-based multi-nationals.
More recent initiatives

In the 1980s and 1990s, organisations became aware that those that involved and engaged
with their employees were likely to benefit from increased motivation and commitment.
Initiatives on working in teams and quality, which involved employees directly and often
originating from Japanese manufacturing practices, grew and were seen to succeed.
Our Research Insight Voice and engagement: how does collective consultation contribute?
reports on evidence from a number of ways in which collective forms of employee voice can
potentially support employee engagement.
Go to the Research Insight
It is increasingly recognised that whistleblowing can be an effective means for employees to
communicate important messages to employers. It is important for organisations to recognise
its value and support its use. See our factsheet for more information.
Go to our whistleblowing factsheet
Mechanisms of employee voice
There is a range of different and often complementary mechanisms for employee voice. The
CIPD research referred to above put them into two broad categories: upward problem-solving
and representative participation.
Upward problem-solving

Upward problem-solving refers to any technique that managers use to tap into employee
ideas and opinions, either through two-way communications channels or through specific
systems that are set up for employees to express their voicethe structures are management-
initiated and operate directly between managers and employees rather than through employee
representatives.
Techniques include:
Electronic media disseminating, sharing and seeking of ideas via electronic means
as opposed to face-to-face; for example, by using e-mail to raise questions that have
to be answered by a senior manager.
Two-way communications - disseminating, sharing and seeking of ideas face-to-face
between managers and staff for whom they have responsibility; for example, by
regular meetings every few weeks.
Suggestion schemes under which employees put ideas to management, who then
reward those whose ideas are implemented.
Attitude surveys questionnaire surveys (electronically or paper-based), designed to
discover staffs levels of satisfaction with particular aspects of work.
Project teams groups of individual employees brought together on a regular or ad
hoc basis to discuss (for example) quality or work organisation.
Representative participation

Representative participation refers to schemes under which employee representatives meet
managers on a regular basis in the case of scheduled committees, or through more ad hoc
arrangements. The essential characteristic is that participation is not direct between individual
employees and their managers but is mediated through representatives. Approaches include:
Partnership schemes here the emphasis is on mutual gains and tackling issues in a
spirit of co-operation rather than through traditional adversarial relationships. It
includes a high commitment to information-sharing.
European Works Councils see above.
Joint consultation - to consider issues that are deemed to be of common interest or of
key importance to the parties and existing at non-union as well as unionised
workplaces.
Collective representation negotiations leading to joint regulation of pay and other
conditions of employment between employer and employee representatives, usually
but not exclusively union representatives. Episodic in the case of pay, but continuous
and ad hoc in the case of other matters, for example grievances.
Employee forums groups of non-union or mixed groups of union/non-union
employees meeting with management for consultation and information sharing.
All these mechanisms are formal. But informal mechanisms (typically more important in
smaller organisations) can be a very effective form of voice. Organisations are increasingly
making use of social media to provide employees with opportunities of conducting informal
conversations with each other and contributing their opinions.
See more in our Social media and employee voice report
Benefits and success factors
Benefits for employers

In high performance workplaces (see our factsheet on sustainable organisation performance
for more information), knowledge and skills are developed and better used, leading to high-
value enterprises and an increasingly knowledge-based economy.
Go to our factsheet on Sustainable organisation performance
With a greater voice for employees:
employees skills and knowledge can be better used, leading to higher productivity
employees feel more valued, so they are more likely to stay and to contribute more
the organisation gains a positive reputation, making it easier to recruit good
employees
conflict is reduced and co-operation between employer and employee is based on
interdependence.
Go to our factsheet on employee engagement
Benefits for employees

Employees benefit from:
having more influence over their work
higher job satisfaction
more opportunity to develop skills
more job security if their employer is more successful as a result of voice initiatives.
Success factors

The factors that make for success are:
Leadership: without active commitment from the top, initiatives will not succeed.
Further down, managers also need to lead by example, while employee
representatives (whether union officials or others) must also be effective leaders of
those they represent.
o Go to our factsheet on Leadership
Training: middle managers brought up in a top-down tradition of communication
may find it difficult to adapt to a more open way of doing things and may need to be
trained in communication skills. Similarly, employee representatives may need
training.
Trust and openness: initiatives will not succeed without honesty in communications,
even when messages may not be palatable.
The potential barriers are the reverse of the success factors. Absence of leadership and lack of
commitment from middle managers are cited as reasons for failure. There is also an issue of
employee reaction not all might want a voice.
In the past, union opposition might have been an obstacle, but with unions today having
greater interest in business issues, union support can give added credibility to management
messages.

A study by Bryson
5
, found that perceptions of management were no better amongst
employees with voice than amongst those without voice. However, Bryson concludes that
the use of particular types of direct voice notably regular meetings between senior
management and the workforce and problem-solving groups tended to increase
significantly perceptions of managerial responsiveness, while team briefings did notdirect
voice was particularly effective in a union setting'.
CIPD viewpoint
Measurement of the effectiveness of employee voice is difficult because it is hard to separate
the impact of voice mechanisms from that of other factors. A range of mechanisms needs to
be used; such mechanisms will tend to blur into one another, and will evolve over time.
Success may be limited unless there is leadership at all levels (including employees), and
openness and honesty exist as part of the organisational culture. Nevertheless, effective two-
way dialogue, and particularly employees ability to feed views upwards, is clearly crucial to
a healthy employee relations climate and the MacLeod review of employee engagement has
identified voice as one of the four key drivers of an engaged workforce.
Effective machinery for joint consultation requires commitment and trust on both sides. The
Workplace Employee Realtions Survey (WERS) 2004 suggests that trust is higher between
employers and non-union representatives than between employers and union representatives.
There is no evidence that the Information and Consultation of Employees
Regulations have led to any reversal of the trend for employers to rely more heavily on direct
and less on indirect (representative

















@factsheet on psychological contract

What is the psychological contract?
The term 'psychological contract' was first used in the early 1960s but became more popular
following the economic downturn in the early 1990s. It has been defined as 'the
perceptions of the two parties, employee and employer, of what their mutual obligations are
towards each other'
1
. These obligations will often be informal and imprecise: they may be
inferred from actions or from what has happened in the past, as well as from statements made
by the employer, for example during the recruitment process or in performance appraisals.
Some obligations may be seen as 'promises' and others as 'expectations'. The important thing
is that they are believed by the employee to be part of the relationship with the employer.

The psychological contract can be distinguished from the legal contract of employment. The
latter will, in many cases, offer only a limited and uncertain representation of the reality of
the employment relationship. The employee may have contributed little to its terms beyond
accepting them.

The psychological contract on the other hand looks at the reality of the situation as perceived
by the parties, and may be more influential than the formal contract in affecting how
employees behave from day to day. It is the psychological contract that effectively tells
employees what they are required to do in order to meet their side of the bargain and what
they can expect from their job. It may not - indeed in general it will not - be strictly
enforceable, though courts may be influenced by a view of the underlying relationship
between employer and employee, for example in interpreting the common law duty to show
mutual trust and confidence.
Guest
1
identifies the following key points: :
the extent to which employers adopt people management practices will influence the
state of the psychological contract
the contract is based on employees' sense of fairness and trust and their belief that the
employer is honouring the 'deal' between them
where the psychological contract is positive, increased employee commitment and
satisfaction will have a positive impact on business performance.
What happens if the contract is broken?
If the psychological contract is broken there are a number of impacts:
a negative impact on job satisfaction
a negative impact on the commitment of the employee
a negative impact on employee engagement.
Managers need to remember:
Employment relationships may deteriorate despite managements best efforts:
nevertheless it is managers job to take responsibility for maintaining them.
Preventing breach in the first place is better than trying to repair the damage
afterwards.
Where breach cannot be avoided it may be better to spend time negotiating or
renegotiating the deal, rather than focusing too much on delivery.
What has persuaded people to take the psychological contract seriously?
Changes currently affecting the workplace include:
more employees on part-time and flexible work.
organisations downsizing and delayering, meaning remaining employees have to do
more.
markets, technology and products constantly changing.
technology and finance becoming less important than human resources as sources of
competitive advantage.
traditional organisational structures becoming more fluid.
The effect of these changes is that employees are increasingly recognised as the key business
drivers. The ability of the business to add value rests on its front-line employees or 'human
capital'. Organisations that wish to succeed have to get the most out of this resource. In order
to do this employers have to know what employees expect from their work. The
psychological contract offers a framework for monitoring employee attitudes and priorities
on those dimensions which can be shown to influence performance.
Employer brand

Employees in large organisations do not identify any single person as the 'employer'. The line
manager is important in making day-to-day decisions but employees are also affected by
decisions taken by senior management and HR. Employees may have little idea who, if
anyone, is personally responsible for decisions affecting their welfare or the future of the
business. Unsurprisingly surveys confirm that employees tend to feel more confidence in
their line manager, whom they see on a regular basis, than in members of senior management.
In order to display commitment employees have to feel that they are being treated with
fairness and respect. Many organisations have concluded that they need to create a corporate
personality or identity with a set of corporate values or a stated mission - an employee value
proposition or employer brand' which employees will recognise and relate to. In practice
the employer brand can be seen as an attempt by the employer to define the psychological
contract with employees so as to help in recruiting and retaining talent. For more information
see our factsheet on employer branding.
Go to our employer brand factsheet
The changing employment relationship

The traditional psychological contract is generally described as an offer of commitment by
the employee in return for job security provided by the employer - or in some cases the
legendary 'job for life'. The recession of the early 1990s and the continuing impact of
globalisation are alleged to have destroyed the basis of this traditional deal since job security
is no longer on offer. The new deal is said to rest on an offer of fair pay and treatment by the
employer plus opportunities for training and development. On this analysis, an employer can
no longer offer security and this has undermined the basis of employee commitment.
Research suggests that in many ways the 'old' psychological contract is in fact still alive.
Employees still want security: interestingly labour market data suggest that there has been
little reduction in the length of time for which people stay in individual jobs. They are still
prepared to offer loyalty, though they may feel less committed to the organisation as a whole
than to their workgroup. In general they remain satisfied with their job.
The kinds of commitment employers and employees might make to one another and reflect in
an employment proposition are:
Employees promise to: Employers promise to provide:
Work hard Pay commensurate with performance
Uphold company reputation Opportunities for training and
development
Maintain high levels of attendance and
punctuality
Opportunities for promotion
Show loyalty to the organisation Recognition for innovation or new
idea
Work extra hours when required Feedback on performance
Develop new skills and update old ones Interesting tasks
Be flexible, for example by taking on a
colleagues work
An attractive benefits package
Employees promise to: Employers promise to provide:
Be courteous to clients and colleagues Respectful treatment
Be honest Reasonable job security
Come up with new ideas A pleasant and safe working
environment

Many employers recognise employee concerns about security and indicate that compulsory
redundancy will be used only as a last resort. However employers know they are unable to
offer absolute security and employees do not necessarily expect it. Indeed many younger
people are not interested in the concept of a job for life, being more likely to move between
jobs and change careers.
The state of the psychological contract
Research suggests that while organisations have been de-layering and reducing the number of
middle management posts many continue to offer careers and that most employees have
adjusted their career expectations of individual employers downwards. Many will be satisfied
if they believe that their employer is handling issues about promotion fairly. They may also
benefit from the opportunity to negotiate alternative career options.
The recession has had an increasingly negative impact on employee attitudes, including in
relation to job satisfaction and security. This suggests that managers face a serious challenge
to restore and maintain employees commitment in both private and public sectors. Current
statistics on topics including job satisfaction, trust and fairness can be found in our quarterly
Employee outlook surveys.
Go to our latest Employee outlook
A positive psychological contract typically supports a high level of employee engagement.
However the concept of engagement goes beyond employees attitudes and underlines the
need for managers to draw out employees' discretionary behaviour.
Go to our factsheet on Employee engagement
The importantance of communication

CIPD research into employee 'voice' demonstrates the importance of communication and
specifically of dialogue in which managers are prepared to listen to employees' opinions. See
our factsheet on employee voice and employee communication for more information.
Go to our factsheet on Employee voice
Go to our factsheet on Employee communication
Managers need to manage expectations, for example through systems of performance
management which provide for regular employee appraisals. HR practices also communicate
important messages about what the organisation seeks to offer its employers. But employee
commitment and 'buy-in' come primarily not from telling but from listening.

Employee attitude surveys can also be an effective tool for exploring how employees think
and feel on a range of issues affecting the workplace. In times of rapid change managers and
employees frequently hold contrasting opinions about what is going on. Two-way
communication, formal and informal, is essential as a form of reality check and a basis for
building mutual trust. Our research report Where has all the trust gone? re-examines the issue
of trust, exploring why it matters and what can be done to repair it.
Visit the research report
Strategic implications of the psychological contract
The psychological contract may have implications for organisational strategy in a number of
areas, for example:
Process fairness: people want to know that their interests will be taken into account
when important decisions are made; they would like to be treated with respect; they
are more likely to be satisfied with their job if they are consulted about change.
Communications: an effective two-way dialogue between employer and employees
is a necessary means of giving expression to employee 'voice'.
Management style: in many organisations managers can no longer control the
business 'top down' - they have to adopt a more 'bottom up' style. Crucial information,
which management need, is known by employees from their interactions with
customers and suppliers.
Managing expectations: employers need to make clear to new recruits what they can
expect from the job. Managing expectations, particularly when bad news is
anticipated, will increase the chances of establishing a realistic psychological contract.
Measuring employee attitudes: employers should monitor employee attitudes on a
regular basis as a means of identifying where action may be needed in order
to improve performance.
Breach of the psychological contract can seriously damage the employment relationship. It is
not always possible to avoid a breach but damage is less likely if managers are open with
employees about the issues that need to be addressed.
CIPD viewpoint
Public interest in the psychological contract has been stimulated by fears about job insecurity.
Employers should ensure that trust remains: this means clarifying what is on offer, meeting
commitments, or if necessary explaining what has gone wrong, and monitoring employee
attitudes on a regular basis. Employee engagement strategies can provide a useful framework
for this purpose.

The psychological contract does not supply a detailed model of employee relations but it
offers important clues about how to maintain employee commitment. With the decline in
collective bargaining, attention is more clearly focused on relations between the organisation
and the individual employee. The psychological contract reinforces the need for managers to
become more effective in communication and consultation, which will help in adjusting
expectations and if necessary renegotiating the deal.

The psychological contract provides a convincing rationale for 'soft HRM' or behaving as a
good employer. It offers a perspective based on insights from psychology and organisational
behaviour rather than economics. It emphasises that employment is a relationship in which
the mutual obligations of employer and employees may be imprecise but have nevertheless to
be respected. The price of failing to fulfil or manage expectations may be serious damage to
the relationship and to the organisation.