How company culture drives employee engagement

By now, almost everybody is familiar with the Harvard Business Review study from 2013, explaining how a highly engaged workforce is a more productive one.

Since then, companies and individual leaders have started to look at employee engagement as a strategic goal.

Now more than ever before, the question that haunts company leaders at night seems to be “How can we drive better employee engagement?”

Note: this article was originally published in Revista Biz, a business magazine in Romania. Therefore it contains a section at the end about the particular challenges of driving employee engagement in Romania. The article can be read in the Romanian language here.

 

The failures

At first, companies added more benefits to their compensation package, in hopes of attracting more talent. Free medical insurance, increased salaries and bonus schemes were the first attempts.

In addition, the thinking was that the additional compensation package would also make employees more loyal and more engaged. It didn’t quite work.

Companies then started to look for inspiration outside their own little world. Many have tried to get inspiration from looking at younger startup companies. In the early 2000’s, we’ve seen companies creating recreational hangout areas, with free snacks, fruit baskets and football tables.

Older, more established companies have been copying that approach, and begun putting football tables and playstations in their newly established hang-out areas, too. Although some leaders actually despised the idea of encouraging “laziness” at work.

Did the employee engagement go up? Have they been able to stop the drain of talent? No.

Searching for answers

The misunderstanding is that employee engagement isn’t coming from offering entertainment perks. Nor does it come from compensation. In a survey done in the US, researchers have found that people’s happiness did not continue to rise as much anymore, once they have achieved 75,000 USD of annual income. Note, that in the US, this is not the kind of income that affords people many luxuries.

If fact, these companies have been asking the wrong question to begin with!

Before asking “How do we increase employee engagement”, companies have to ask “What is our de-facto culture right now, and is it the kind of culture that we need and want”?

Culture sits at the root level of engagement

What do we mean by “company culture”? It’s a set of shared values, goals, attitudes and practices that characterize an organization. Combined, these elements practically become the “personality” of an organization.

The way companies can successfully increase employee engagement is by re-aligning their culture first - to something that is designed to support the most core emotional needs of its employees: autonomy, appreciation, affiliation & purpose, respect and fairness. When any of these are violated, people disengage. 

Great cultures - on paper

In recent years, a lot of HR departments have been advocating for introducing several best practices that are ultimately aimed at improving employee engagement, and to unlock more of the existing talent potential.

For example, managers are undergoing 360 degree feedback reviews. Diverse innovation teams lock themselves into a room to come up with new solutions. The company values are beautifully framed and hung up in the atrium for everyone to see.

Yet, talent still leaves for the competition - on the surface, seemingly for a 100 Euro paycheck increase, or a fancier title.

Why?

The answer is, that the desired culture and the de-facto culture remain grossly misaligned!

Employees feel deeply discouraged to pour everything they’ve got into their work, if the most terrible manager, whose history of violating the company values is legendary, receives another promotion.

And what’s the point of putting every ounce of energy into finding better solutions, if every change is only ever coming from the top?

How motivated would you feel about sharing your point of view, if your colleague just got fired for having spoken up one too many times against the current product roadmap?

When the values and practices, behaviours and rules of a company culture exist only on paper, there will be no employee engagement beyond the call of duty. And the next job offer starts to look so much more intriguing.

The bottom line is: Not paycheck or job safety, not ping pong table or free pizza, but CULTURE drives long-term employee engagement.

How about Romania?

Up to this point in this article, everything is of relevance regardless of geography. Now, traditional companies in Romania seem to have a somewhat harder time creating self-motivated employee engagement, which is grounded in an inclusive company culture.

Culture researchers at Hofstede Insights provides us with some valuable hints as to why that may be so.

According to Hofstede Insights, Romania scores very high on a particular cultural marker, called “Power Distance”. To quote Hofstede, Romania’s high score on “power distance” is to be interpreted in the following way:

“(The high score) means that people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat.”

A second cultural marker, “Uncertainty Avoidance”, stands out as well for Romania:

“Countries exhibiting high Uncertainty Avoidance maintain rigid codes of belief and behaviour and are intolerant of unorthodox behaviour and ideas. In these cultures there is an emotional need for rules (even if the rules never seem to work), (...), innovation may be resisted, security is an important element in individual motivation.”

Both cultural markers combined create a plausible backdrop for why older companies under Romanian ownership often display so much resistance to transforming their cultures in such a way, that the culture ultimately drives employee engagement - that it attracts and retains talent, creates innovation, competitive advantages and outstanding international market success.
Help is just around the corner

However, not all is lost for the more traditional, older companies!
Luckily, most companies have help sitting nearby!
HR leaders and teams have been studying the subject for years. Most likely, they have tried to blow the fanfare of cultural transformation more than once, but haven’t been seriously listened to.

One last observation: Every single company we have encountered, that has been successful transforming and maintaining an inclusive culture, has empowered an executive VP of human resources to hold the reins for cultural transformation. And we mean “empowered”, not just “appointed”.