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The Impact of Effective Leadership on
Employee Engagement
Jack W. Wiley
I n both good times and bad, how can organi-
zations boost employee confidence and keep
performance from wavering? Smart compa-
nies focus on fostering a culture of engaged
employees. Visionary leaders who create a
culture of engagement maintain employee
trust, drive optimal levels of productivity,
increase overall satisfaction and retention, and
are able to position the company for success.
A critical element in building confidence,
motivating performance, and increasing
employee engagement is having people at the
top who inspire belief in the organization’s
future. When done effectively, organizations
experience better business success and
stronger bottom-line business performance.
To understand the impact of executive
influence, think about how employees
respond when times get tough: they’re anx-
ious, fearful, and worried about their future.
It is in these times that employees look to
organizational leaders for guidance. How they
communicate and whether their actions align
with what they say sends a strong message to
employees and helps drive the perception of
effective leaders. When times are good, hon-
est communication from those at the helm
creates loyalty and organizational pride,
ensuring companies retain top performers.
Leadership effectiveness can be defined
by five characteristics: (1) the ability to give
employees a clear picture of the direction the
company is headed; (2) the ability to handle
© 2010 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/ert.20297
the organization’s challenges; (3) a genuine
commitment to providing high-quality prod-
ucts and services; (4) a demonstrated belief
that employees are important to company
success; and (5) the ability to inspire confi-
dence in employees.
According to the latest research from the
Kenexa Research Institute (KRI), an organiza-
tion’s senior leadership team has a signifi-
cant impact on its employees’ overall opin-
ions of the company and engagement levels,
which have been linked to both earnings per
share and total shareholder return. The data
come from an analysis of the 2010 Work-
Trends™ database, an annual survey of
worker opinions conducted by KRI.
The WorkTrends survey asks employees to
rate their organization on items such as “I am
proud to tell people I work for my organiza-
tion”; “I am extremely satisfied with my organi-
zation as a place to work”; “I would recom-
mend my organization to others as a good place
to work”; and “I rarely think about looking for
a new job with another company.” These four
items are used as measures for the Employee
Engagement Index (EEI), typically reported as
percent favorable—that is, the average level of
agreement across the four items.
Employee engagement is a means to an
end. That is, organizations that want to drive
high levels of business success need motivated
and engaged employees to get there. To give
rise to higher levels of employee engagement,
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Employment Relations Today
companies need to ensure that leaders are
empowered to build a culture of employees
who are motivated to achieve business goals.
By understanding what drives employee
engagement, organizations can then leverage
that upwardly and generate greater levels of
productivity, lower absenteeism, deliver high-
quality customer service, and drive top-line
business performance and profitability.
THE DRIVERS OF EMPLOYEE ENGAGEMENT
Employee engagement—the extent to which
employees are motivated to contribute to organi-
zational success, and are willing to demon-
strate commitment, loyalty, and a willingness
to go beyond basic requirements to accomplish
To give rise to higher levels of employee
engagement, companies need to ensure that
leaders are empowered to build a culture of
employees who are motivated to achieve
business goals.
tasks and organizational goals—is critical for
business success. However, nurturing a moti-
vated workforce in the face of challenging
economic times that include downsizing, fur-
loughs, and salary reductions creates new
challenges. With reduced resources and grim
economic pressures, leaders are still expected
to motivate high levels of performance. In
prosperous times, it is equally essential to
maintain high levels of engagement to retain
the company’s best talent.
In periods of turbulence and change as
well as in times of economic growth, leaders
who understand what drives employee en-
gagement can build a workforce that is moti-
vated to perform. Conversely, how employees
view company leadership can have a significant
48
impact on their engagement level and overall
views of the company.
To drive higher levels of engagement, it is
important to first understand the behaviors
that support employee engagement:
❏ Leaders must inspire confidence in the future
of the organization. The Bureau of Labor
Statistics projects a shortfall of 10 million
workers in the United States by this year
and a slowdown in the labor force growth
rate through 2018.1 As organizations
require more work from fewer people, it’s
imperative to have leaders who can moti-
vate remaining employees to perform
their best. Leaders who minimize uncer-
tainty by securing employees’ perceptions
of the organization’s future, and support
the belief that there is a future for the
employees, will be able to drive higher
levels of engagement.
❏ Managers must demonstrate respect and
recognition for their employees. Employee
recognition is a critical component of
achieving higher levels of engagement.
Having reinforcement from managers and
others whom employees hold in high
regard is essential. People like to be
appreciated, acknowledged, and respected
and know that their efforts are making a
difference for their organization. Man-
agers need to understand that recognizing
employees for their contributions is more
than just nice to do—it is an imperative.
In addition to receiving praise for a job
well done, employees want to know that
their opinions are valued, that they have
input into decisions, and that even when
they make mistakes, they can count on
the support and respect of their managers.
❏ Individuals must have a job that is interest-
ing and exciting to them. Management and
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leadership play a significant role in
employee engagement, but it’s equally
important for employees to have enthusi-
asm for the work that they do. Beyond
mastering the job’s tasks, employees need
to feel pride in what is being accom-
plished and share in the excitement when
goals are achieved. The more employees
feel they are building their own skill sets
and feel competent and in control of their
work product, the more likely they are to
demonstrate high levels of engagement.
❏ The organization must demonstrate genuine
concern for employees and the communities
in which they operate. In addition to feeling
respected and recognized for their contri-
butions, engaged employees value work-
ing for an organization that is committed
to serving others. When workers feel their
organization is committed to its employ-
ees’ livelihood and community, through
both support of an employee’s work/life
balance as well as through corporate
responsibility efforts, engagement levels
increase. For employees to care about its
organization’s mission, they need to feel
that the sentiment is reciprocal.
When leaders understand the pillars of
engagement, they can then begin to leverage
employee engagement for positive organiza-
tional outcomes such as higher employee
retention, greater customer satisfaction, and
improved financial performance.
WHAT CAUSES EMPLOYEES TO SEE
LEADERS AS EFFECTIVE?
Not surprisingly, an organization’s success is
fundamentally tied to the skills and actions of
its leadership. By understanding the fundamen-
tals of employee engagement, organizations can
The Impact of Effective Leadership on Employee Engagement
Employment Relations Today DOI 10.1002/ert
Summer 2010
then begin to shape and reinforce leadership
practices and behaviors that support high levels
of engagement to create high-achieving work-
forces.
New research from KRI’s WorkTrends sur-
vey program examines what causes employ-
ees to view their leaders as effective. The
WorkTrends database is derived from an
annual survey of worker opinions conducted
by KRI and surveys the largest economies in
the world (by gross domestic product) to look
at the drivers of employee engagement.
In 2010, approximately 10,000 workers in
the United States and 1,000 workers in each
of the following countries/regions took the
WorkTrends survey online: Australia, Brazil,
In addition to receiving praise for a job well
done, employees want to know that their opin-
ions are valued, that they have input into deci-
sions, and that even when they make mistakes,
they can count on the support and respect of
their managers.
Canada, China, Denmark, Finland, France,
Germany, India, Italy, Japan, Mexico, the
Netherlands, Russia, Spain, Sweden, Switzer-
land, and the United Kingdom. The Gulf
Cooperation Council (GCC) countries of the
Middle East were also surveyed to a lesser
extent due to surveying limitations in that
region of the world. The GCC countries
include Saudi Arabia, the United Arab Emi-
rates, and Qatar. Altogether, 29,338 employ-
ees were surveyed in 2010.
WorkTrends is a multitopic survey com-
pleted online by a sample of workers
screened to match a country’s worker popula-
tion in terms of industry mix, job type, gen-
der, age, and other key organizational and
demographic variables. Those who work
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Employment Relations Today
full-time in organizations of 100 employees or
more are allowed to take the survey. The sur-
vey has 115 items that cover a wide range of
workplace issues.
The latest results indicate that the global
rating of senior leadership effectiveness is 55
percent. Employees in India (72 percent),
China (71 percent), and Switzerland (63 per-
cent) report the highest ratings of leadership
effectiveness; much lower ratings are pro-
vided by employees in France, Italy, the
United Kingdom, and Finland (47 percent).
Workers in Japan (35 percent) reported the
lowest ratings. The U.S. rating of senior lead-
ership effectiveness is 56 percent.
Effective leaders need to demonstrate that they
are quick to respond to threats, abreast of new
trends that are disrupting or driving change,
open to new technologies, and able to influence
others.
For all workers studied, a strong organiza-
tional leadership team has a significant
impact on its employees’ engagement levels.
As noted earlier, an organization’s success is
dependent on the skills and actions of its
leadership. That’s why organizations need to
ensure that its leaders are committed to driv-
ing high levels of employee engagement.
So what drives the perceptions of effective
leaders? Consider the following:
❏ Leaders who are nimble and innovative and
demonstrate a sense of urgency are likely to
be viewed as effective. Effective leaders
need to demonstrate that they are quick
to respond to threats, abreast of new
trends that are disrupting or driving
change, open to new technologies, and
able to influence others. French soldier
and statesman Charles DeGaulle said,
50
“Men are of no importance. What counts
is who commands.” When it comes to
employee engagement, he is only half cor-
rect. Employees are of utmost importance
to drive business success, but it is the
leadership that helps to encourage
employee performance. Leaders who can
demonstrate the ability to innovate and
respond to change are likely to be per-
ceived as effective leaders. As a result,
they can affect business results.
❏ Effective leaders recognize quality customer
service as a key component of customer satis-
faction, retention, and financial growth.
Senior management needs to demonstrate
that they are committed to providing high-
quality products and services, employee
training, and supporting employee in-
volvement in decision making. Going the
extra mile at every interaction and every
opportunity influences employee percep-
tion. Leaders with a sharp focus on cus-
tomer service show that they are dedi-
cated to high performance standards, care
about the communities they serve, and
understand that the target of business is
a satisfied customer. When leadership
demonstrates a commitment to being the
best, they are able to inspire employees to
achieve the same goal, and organizational
performance improves.
❏ Giving employees a clear picture of the direc-
tion in which the company is headed reduces
uncertainty and helps employees find mean-
ing in the work they do. Trustworthiness,
integrity, and the ability to communicate
truthfully are critical for leaders who
want to drive engagement and motivate
performance. Regular ongoing and two-
way communication is essential for boost-
ing confidence in leadership. Leaders
need to acknowledge the truth about the
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current state of affairs and articulate a
vision for the future. As the old adage
says, actions speak louder than words.
Leaders who want to motivate others
need to do what they say they’re going to
do, communicate on progress, and hold
themselves and the executives who report
to them accountable. Research has
unequivocally demonstrated that the more
leadership inspires trust and confidence in
the future, and the more managers recog-
nize and respect employees, ensure that
people are growing and developing, and
match employees to their work, the higher
the employee engagement.
❏ Leaders need to address a diverse audience
and recognize multistakeholders. To inspire
confidence in employees, leaders must
show they are also interested in cus-
tomers, suppliers, and business partners,
and not just the financial stakeholders of
the enterprise. Embracing feedback from
each contingency, being accountable, and
responding appropriately requires a strong
commitment. There is, however, a payoff.
A multistakeholder approach ensures a
common understanding of a shared goal,
and by understanding how decisions
affect others, leaders can create commit-
ment from employees, customers, and
even among the community and society as
a whole, as well as from investors.
❏ Employees have confidence in leaders who
define clear expectations and hold managers
and others accountable for their actions.
Employees are well informed and under-
stand how their companies’ products and
services are perceived in the marketplace.
To drive higher levels of engagement, the
message from leadership needs to be one
of responsibility and accountability.
Employees who understand where they
The Impact of Effective Leadership on Employee Engagement
Employment Relations Today DOI 10.1002/ert
Summer 2010
are expected to focus their time and
energy are more likely to achieve desired
results. Part of creating a culture of
accountability also means creating an
environment where employees are
rewarded for their contributions—and tak-
ing action when employees fall short of
expectations. Having a strong monitoring
and feedback mechanism to measure
results is also important to help employ-
ees understand where they need to make
adjustments.
One of the world’s largest optical retailers
attributes a tremendous amount of its success
to how it manages its workforce. The com-
pany’s leaders have embraced the management
Research has unequivocally demonstrated that
the more leadership inspires trust and confi-
dence in the future, and the more managers rec-
ognize and respect employees, ensure that peo-
ple are growing and developing, and match
employees to their work, the higher the
employee engagement.
principle that success is contingent on how
they lead employees at all levels of the orga-
nization. The leadership team has a clearly
articulated value system and consistently
measures the extent to which they are operat-
ing in accordance with those values on an
annual basis. They share results with all their
associates and regularly identify a few areas
where they can make improvements. They
also keep associates updated on the causes of
problems in those areas and what the solu-
tion is going to be. Over the course of time,
their scores have shown continuous improve-
ment, thus helping to secure their number-
one position in the marketplace.
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Employment Relations Today

EMPLOYEE CONFIDENCE IS KEY successes and failures. Work is no place

Perhaps the most critical element in employee
engagement is ensuring employee confidence
in leadership and the organization. Tips for
inspiring confidence include the following:
❏ Be visible to employees and “walk the talk.”
How leaders “show up” to work is extremely
important. Don’t make employees play
guessing games. Instead, communicate
clearly and let them know what is ex-
pected of them. In addition to clear ver-
bal communication, make sure nonverbal
language is transparent. By operating with
no surprises, employees are able to oper-
ate with confidence and clarity.
❏ Be truthful about the current state of affairs.
Great leaders inspire trust by being truthful.
Creating a culture of candor—even if it is
not easy—is important. Have integrity in
what you say and do. A leader should be
honest in assessment, have clarity around a
plan to move the business forward, and be
able to communicate confidence in the plan.
❏ Communicate on progress. To enhance lead-
ership, be ready to communicate both
for snow jobs. Ongoing communication
and regular feedback are critical for
improving performance. Recognize
employees for stellar performance and pro-
vide coaching in areas for improvement.
❏ Hold executives accountable. Executives
make decisions that affect the company’s
performance. Break down communication
barriers, and let executives know that they
need to remain engaged in how things get
done. Ensure that information is free flow-
ing throughout the organization. To instill
confidence, executives need to be account-
able for their actions as well as the results.
❏ Encourage upward communication. Create
opportunities for dialogue with lower-level
managers and employees. This can be
accomplished through informal lunch
discussions, town-hall meetings, and other
ways aimed at increasing visibility. You
will find the ideas and input received are
well worth the effort invested.
NOTE
1. Bureau of Labor Statistics, Employment Projections
2008–2018 Summary, December 2009.

Jack W. Wiley, PhD, is founder and executive director of the Kenexa Research Institute.
Dr. Wiley is recognized internationally for groundbreaking research that links employee sur-
vey results to measures of customer satisfaction and business performance. He is also the cre-
ator of WorkTrends, an international survey research program that produces results featured
in both scholarly studies and the popular press worldwide. He has more than 30 years of
experience consulting with organizations in the health care, financial services, manufacturing,
and retail industries. He has written several articles and book chapters and has made numer-
ous presentations to professional associations around the world. He is a licensed consulting
psychologist, was elected as a fellow in the Society for Industrial and Organizational Psychol-
ogy and the American Psychological Association, and serves on the board of directors of the
Human Resources Planning Society. Prior to joining Kenexa in 2006, he was the founder and
CEO of Gantz Wiley Research, a survey research consulting firm specializing in employee and
customer surveys for corporate clients. He may be reached at jack.wiley@kenexa.com.

52 Jack W. Wiley
Employment Relations Today DOI 10.1002/ert
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