Chapter 5

Employee engagement and psychological contract

Employee Engagement

Employee engagement is a human resources (HR) concept that describes the level of enthusiasm and
dedication a worker feels toward their job.

Engaged employees care about their work and about the performance of the company, and feel that their
efforts make a difference. An engaged employee is in it for more than a pay check and may consider their
well-being linked to their performance, and thus instrumental to their company's success.

 Employee engagement describes the level of enthusiasm and dedication a worker feels toward their
job.
 Employee engagement can be critical to a company's success, given its links to job satisfaction and
employee morale.
 Engaged employees are more likely to be productive and higher performing.
 Employers can foster employee engagement through effective communication, offering rewards, and
discussing career advancement.

Why is Employee Engagement Important?

Every business, big or small, needs to monitor employee engagement. Not only does it have a positive
impact on employee satisfaction and well-being, but it also directly impacts the bottom line.

Profit, customer experience, and productivity are all higher for companies with engaged employees.

Just look at some of these stats from Gallup for businesses with highly engaged employees:

 41% reduction in absenteeism

 17% increase in productivity
 24% less turnover in high-turnover organizations
 10% in customer ratings
 20% increase in sales
 21% greater profitability

Companies with engaged employees see 233% greater customer loyalty and a 26% greater annual increase in
revenue. (Aberdeen)

The benefits of having an engaged workforce are clear and important for every business unit to be involved
in solving.

3 Types of Employee Engagement

1. Actively Engaged

Actively Engaged employees are passionate about what they do in their role and fully committed to the
company mission. These are people who bring a positive attitude, that can trickle down into other
departments.
They offer new ideas and creativity to solving challenges and thrive in working in collaborative
environments with teammates. You’ll find these types of engaged employees sharing knowledge,
collaborating more, and even becoming your top brand advocates.

This part of the workforce is proactive about tasks and often goes above and beyond what is asked for by
managers.

These employees have a positive outlook about the direction the company is heading in the future and feel
pride in moving the organization forward.

Another component of strong levels of engagement is having strong bonds with co-workers.

Actively Engaged employees have meaningful relationships and interactions with their colleagues and feel
like they are a part of a supportive and close-knit team.

2. Not Engaged

Most employees fall into the middle ground for levels of engagement. They put in their time and fulfill their
job responsibilities, but they are more neutral about the company.

To them, work may just be a paycheck, and they need to see a reason to become more involved and spend
any extra effort beyond the job description.

Maybe they’re not happy with how business decisions are being communicated from executives or they want
to know more about how their work fits into the bigger picture.

This group may just need a reason to be inspired and could become actively engaged with an extra push
from managers and leaders.

3. Actively Disengaged

While Actively Disengaged employees are usually the outliers, they can have a big impact on team
dynamics. These employees are negative and resentful about the company and are often under-performers.

They are likely not to invest time in team-building activities or development opportunities that could help
them in their career growth at the company. And if these employees are vocal with their complaints and
negativity, there is a risk of disengagement spreading across the organization.

Actively disengaged employees are likely to be looking for jobs at other organizations and can lead to an
impact on a company’s retention rates. Plus, this negative energy can impact morale on various teams,
reduce productivity, and cost your company big money.

The expectations of the employee for their job and responsibilities need to be realigned with their managers
to see any improvements to the situation.

The Modern Elements of Employee Engagement

Companies that embrace employee advocacy platforms should tap into these key factors to drive employee
engagement in new and innovative ways.

Leadership

Managers play an important role in maintaining high levels of employee engagement so being accessible and
engaged in social arenas can have a positive impact on team productivity.
Managers that share photos from their personal lives, hobbies, and interests are also able to grow
relationships on teams and help everyone feel more connected.

For teams that are working remotely, getting more frequent updates from leaders and managers helps
employees feel in the loop and more connected to the company as a whole.

Communication

Open and honest communication is crucial for maintaining engagement levels.

Instead of solely relying on email, messaging platforms, or out-dated intranets, teams can share videos and
leave comments on social posts.

Keeping discussions going around both industry and company news lets employees weigh in directly and
share notes from their experiences with customers and clients.

Recognition and Rewards

Employee recognition is a strong motivating force to work harder and get more involved.

Celebrating work anniversaries, sending out notes of kudos after getting through a challenge, and sharing
customer feedback are all great ways to implement positive reinforcement for hard work.

And it’s especially challenging in global workplaces, those working remotely, or staff on the frontlines. But
one easy way for employees to know that you value their insights and efforts is to reward them for it!

EveryoneSocial’s leaderboard feature that shows which employees are most actively sharing and engaging.
It makes it easy for everyone at the company to see who is actively participating and drive some healthy
competition.

When your rewards system lines up with your business and employee values, everyone will want to get
involved and feel appreciated.

Professional Growth

Sharing content across teams leads to a more educated and strategic organization. Opportunities for career
development and growth can positively impact employee engagement levels.

Use employee advocacy platforms as a gateway to keep your employees learning from all departments and
teams. Plus, it can help your people feel more of an emotional attachment to their work, colleagues, and
company.
Top 8 Drivers of Employee Engagement

1. Employee wellness

Employee wellness is one of the most important drivers, employees with high welfare, focus better, perform
better and achieve not only their professional goals but also their personal goals. These are the employees
that don’t get distracted at work. It is up to an organization to provide a conducive environment to its
employees. Workplace culture plays a vital role in improving employee well-being.

2. Empower your employees

How well do you think you will perform in an organization where you are constantly told what needs to be
done. Not too well, yes, I thought as much! Learn to empower your employees instead of constantly nagging
them. You might think micromanagement will help, however, it is the worst thing you can do to your
employees. Employee empowerment drives better levels of engagement, give your employees a chance to
make their own decisions. This increases ownership and accountability amongst the employees.

3. Workplace culture

Workplace culture plays an important role in facilitating employee engagement at work and this is proven.
An average American spends up to sixty hours at work and somehow your work culture starts defining who
you are. Culture defines the tone of the organization. If you have a sorted organizational culture, you feel at
peace showing up to work. Imagine a chaotic organization, with no proper regulations or policies and now
imagine yourself working there. I bet, most people will stop me right here!

4. Career growth

Organizations need to understand employees have personal and professional goals and both are in tandem
with each other. If your employees don’t see clear career growth in your organization, it is likely they will
not stick around. Higher attrition rate means losing on valuable resources and money! And when employees
see others quitting their morale automatically goes down. Hence to retain employees make sure their
engagement levels are high.

5. Brand alignment
When employees are in tandem with the organization’s vision and goals, they feel in sync with their role.
When employees are engaged they don’t mind putting in a few extra hours to keep the ball rolling. They feel
they are an integral part of the organization and take ownership of the tasks assigned.

6. Rewards

Humans are wired to get excited when there is a reward offered. This is the essence of human behavior but
this can be used to your advantage at the workplace and is a way of simply thanking your employees for the
amazing work they have been doing for you for the longest possible time. This concept is known as
gamification at work. This motivates the employees to stick around and even work hard.

7. Social relationship at work

Learn to cultivate social relationships at work. Your workplace need not be high school, where you need
someone to constantly monitor you or punish you if things are not done in a certain manner. You don’t want
people ganging up and others feeling left out. Cultivate a social environment at work, where people meet and
greet their co-workers as they would do in the world outside the four walls of the organization.

8. Data and more data

As with any business, data is important, you will need a way to take the pulse of your organization and know
at what level are your employees engaged or otherwise. One of the best ways is to deploy the employee Net
Promoter Score survey. Typically the scores are ranked as:

 People who rate you between 9-10 are your Promoters, they are highly engaged and are willing to
promote your organization.
 People who rate you between 7-8 are your Passives. They aren’t at their maximum engagement but
are most likely to be productive.
 People who rate you between 1-6 are your Detractors. They are highly disengaged and are likely to
complain about the company as a whole.

Finally, it is extremely important growing your business in the right direction, for which you need to grow
your human resources. The reason is crystal clear: without a dedicated workforce, an organization cannot
achieve its goals. The best organizations know the importance of an engaged workforce and vouch for it. By
empowering your workforce with the right tools and technology you pave the road to success.

Measurement Employee Engagement

1) Establish clear employee engagement goals

Employee engagement goals are benchmarks for distinguishing an engaged employee from a disengaged
one. It’s what your engagement metrics are trying to find out. While your metrics can be both numeric and
qualitative, they should always serve to show how close you are to reaching your engagement benchmarks.

Here are some examples of employee engagement benchmarks:

 Employees feel that their opinions matter at work.

 Employees see professional growth and career development opportunities at their current job.
 Average employee Net Promoter Score is 9 or above.
 Employee absenteeism is low.
 There is a high level of employee engagement and retention for period [x].
 Staff regularly open your employee newsletter and show interest in company news.
2) Take advantage of email

Don’t underestimate old-fashioned email when it comes to measuring employee engagement. In fact,
internal email is the easiest and fastest way to gather hard data.

Remember, email is already the most popular internal communications platform among your employees. Its
accessibility and ease of use means that teams big and small rely on it daily.

With an employee engagement tool like Contact Monkey, you can monitor engagement and help it grow at
the same time. It lets you do this by providing detailed analytics on three key engagement metrics:

 Open Rate: This lets you know how many people are actually curious about your company news and
events. High open rates are a good sign that your employees are feeling engaged. But you can also
compare past and current email campaigns to check where engagement was higher.
 Click-through Rate: Greater click-through rate is a good indicator that your employees are aware of,
and interested in key company information. It allows you to see if your employee engagement ideas
are actually working. Not to mention, you can see which content is most relevant and engaging. That
way, you can model future content rollout on previously successful emails.
 Location: Knowing which department or company branch has the majority of opens and clicks lets
you see what teams are most engaged. By tracking this metric, you can check what’s working and
what’s not before adjusting your strategy accordingly.

3) Use pulse surveys

When it comes to measuring employee engagement, employee pulse surveys are great for getting quick,
consistent, and actionable insights.

Pulse surveys are short, focused surveys oriented around a specific question. They get their name from a
‘pulse’ check, which provides an overview of employee wellbeing fast.

Due to their short length, pulse surveys get more responses and have even been proven to drive employee
engagement itself.

The key is asking simple but meaningful employee engagement questions. As a rule of thumb, we
recommend zeroing in on three types of questions:

 Satisfaction questions: Does your team inspire you to do your best work?
 Opportunity questions: Are there enough opportunities for growth in your current team?
 Alignment questions: Do you feel like your leadership team considers your perspective on major
decisions?

With employees relying on email even more to stay in touch during the pandemic, email-based surveys
streamline the feedback process.

4) Calculate your eNPS

Number crunchers love eNPS (employee Net Promoter Score). Unlike more qualitative employee
engagement metrics, eNPS is great for getting a precise, numeric engagement score.

eNPS is calculated based on the difference between your most engaged and least engaged employee. Put
simply, it tells you how likely your employees are to brag about your company to others.
Contact Monkey’s built-in eNPS surveys let you gather feedback and find out your eNPS score all in one
place—your employee newsletter. It’s simple: select an eNPS survey from the template builder sidebar and
drag it to your desired location within the newsletter.

Frame your survey around specific topics relating to employee engagement.

We recommend asking:

On a scale from 0-10, how likely are you to recommend this organization as a place to work?

How to measure employee engagement using eNPS

For an added touch, provide an anonymous comments option. With ContactMonkey, simply turn on
commenting within your email template. Your employees are instantly free to voice their honest opinions
and feel safe doing so.

5) Set up one-on-one virtual meets

One-on-ones allow for more detailed and meaningful employee feedback while letting you gauge non-verbal
cues. It’s also a simple and straightforward employee engagement best practice.

In a virtual setting, making employees feel seen and heard is the key to creating a safe feedback
environment. It will also lead to more meaningful answers.

Before the meeting, make sure you get rid of any distractions so you show full attention. Once you’re on
your way, signal that you’re listening and understanding what’s being said by summarizing key points
raised.

One-on-ones are a great opportunity to get qualitative feedback so we recommend trying some of the
following questions:

 What’s one thing about your work experience that is really positive?
 Name one thing about your work experience that needs significant improvement?
 What three words or phrases best describe your organization’s culture?

6) Set up a focus group

Used widely in market research, focus groups allow you to gauge employee likes, dislikes, and attitudes
through a representative sample. This is especially useful for larger businesses where one-on-ones may be
harder to arrange.

To measure employee engagement through focus groups, create a callout for participants using your internal
newsletter. Choose employees from specific departments or combine staff from across the company for a
wider outlook. With a set of pre-planned questions, guide a discussion about team wins and challenges.

For engagement-focused insights, ask questions like:

 Do you have a good sense of your role in contributing to organizational goals?

 Is there anything that’s limiting your growth in the organization?
 Do you agree about the way our company defines “success”?

7) Check employee retention

As we saw earlier, engaged employees are much more likely to stay with their company longer. They’re also
less likely to be easily persuaded by alternative job offers.

Knowing how to measure employee satisfaction through retention is key, but it’s not as straightforward as
other metrics.

You’ll need to look at your employee turnover this year or quarter vs. last. Once you gather the data, ask
yourself: If my turnover rate is higher than in the past, what did I do differently back then? Did our
employee onboarding processes change?

To get even better insights, create a quick employee pulse survey dedicated to learning about employee
retention. Focus your questions on exploring how employees see their future within the company.

Ask yes/no questions like:

 Do you see yourself still working at [company] in two years’ time?

 Are you proud to work for [Company X]?

For surveys on sensitive topics like this, use a pulse survey tool with anonymous feedback options. That
way, employees can feel safe sharing their true feelings.

With ContactMonkey, both emoji reaction and eNPS-based surveys can include anonymous comment
options. Once responses are in, easily track pulse survey response rates on your analytics dashboard.

8) Look at employee productivity

We already saw that higher productivity is a key outcome of an engaged workforce. For the same reason, we
can use productivity to measure employee engagement. Employee productivity is about how effectively
employee inputs turn into business outputs.

To measure productivity, divide your revenue for a specific year or quarter by the total number of
employees. Compare the results across multiple departments and look for trends, patterns and improvements.

Keep in mind, productivity alone won’t tell you exactly how to increase employee engagement. Always
support your employee productivity scan with other engagement measurement tools like email tracking.

With ContactMonkey’s segmented email stats, you can get engagement data to support your insights on
productivity. Access all of your analytics in your campaign dashboard and organize stats based on
department, job title, or location. When it comes time to create your engagement strategy, you’ll know
exactly which areas of your company you need to prioritize.

9) Check your employee absenteeism rate

When an employee takes a few days off every month, it’s not necessarily a sign for concern. But if you
notice that absenteeism is becoming a trend among staff, it’s a red flag for employee engagement.

Analyze this metric by looking at the rate and amount of absent employees over a given period. High
absenteeism rates likely suggest high employee disengagement.

To support your insights, cross-reference your data with the responses on your employee pulse surveys.

Ask yourself:

 Did absenteeism increase in the same period that your eNPS plunged?
  Has employee turnover increased at the same time as absenteeism?

Answering these questions will give you a better understanding of overall engagement and employee
experience in your company. That way, you can make well-informed changes.

10) Use an exit survey

In an exit survey, engagement feedback is collected from employees who are already leaving your company.
Ones that are less likely to feel like they’re risking their job if they speak negatively about their experience.
This makes exit surveys a treasure trove of honest insights.

Use your ContactMonkey pulse survey to send a personalized message to a departing employee and frame it
with short, simple questions. Combine quantitative yes/no pulse survey questions with qualitative questions
by turning commenting “on” within your email template.

For quantitative questions, we recommend asking:

 Were you equipped to do your job well?

 Did you receive constructive feedback to help you improve your performance?

For qualitative feedback, ask:

 What was a key deciding factor that led you to accept a new position?
 Name one thing you liked most and least about your role.

Employee Engagement Benefits

1. Reduction in Absenteeism

Every organization is different, but absenteeism in the workplace is a common problem because it not only
affects individuals, but it’s also seen as a management problem. Absenteeism is costly for a company and
can spiral out of control if not addressed.

2. Increase Productivity

One of the main characteristics of the engaged employee is their positive behavior towards the organization,
as they are often the ones who believe strongly in the company’s mission and vision. This attitude makes
people work harder and proactively to reach their goals, which leads to a 17% increase in productivity.

3. Better Employee Safety

Employees who are willing to show up and are consistently engaged in the work environment have a greater
commitment to quality and safety at work. When employees have the right mind set and are not distracted or
stressed they can focus better, meaning they are less likely to make mistakes that can lead to work accidents.

4. Healthier Employees

Many companies operate on the basis that a high-stress environment is the best way to motivate employees
to perform at their best. The idea that co-workers are competition and not colleagues is thought to keep them
productive and focused. However, research published in the Harvard Business Review points to a “large and
growing body of research” demonstrating that this type of workplace environment actually reduces
employee productivity over time. Studies also point to the importance of employee engagement in reducing
healthcare costs to employers.
5. Lower Employee Turnover

Just like a chain reaction, less absenteeism and higher productivity lead to motivated employees who are
likely to stay in the organization longer. Engaged employees don’t look for new jobs – their positive
experience in the organization leads to high satisfaction rates. . On the contrary, non-engaged or disengaged
employees are constantly looking for new opportunities as their bond with the organization is not strong
enough.

6. More Effective Leadership

Leaders who want to inspire their employees to do more must connect with them first. They need to make
time for engaging with team members and getting to know employees. In return, the employees are more
likely to listen to the company leaders since they understand the leaders care about what is important to
them. Company morale increases, workers are excited about their jobs, and the level of employee
engagement gets a boost.

7. Higher Growth

Combining all the above, we can reach a tipping point that brings the organization closer to its customers.
Increasing profitability isn’t just about selling more products. Engaged employees help organic growth by
improving customer relationships, resulting in a 10% increase in customer ratings. This can allow the
organization to observe a 20% increase in sales and a 21% increase in profitability.

This is a perfect example of one of the benefits of employee engagement for employers. Happy staff means
happy customers. And happy customers are loyal and more likely to give positive reviews and
recommendations, that in return can bring new customers.

8. Better Customer Satisfaction

When employees are engaged this reflects in their attitude and how they deal with customers. Creating a
positive customer experience, making the customer feel valued and a smile goes a long way in building a
strong customer relationship. This equation also works between the company and its employees. Apply the
same effort towards your employees to:

 Increase employee loyalty

 Strengthen their knowledge and expertise
 Receive valuable employee input

Satisfied employees are likely to make more up-sales and cross-sales, driving even higher returns on
customer success management. In return, highly satisfied customers are a great PR machine as they’ll talk
about what a great experience they had.

9. Better Network

Engaged employees are not afraid to exchange feedback and collaborate with each other and management to
reach their goals. They know how to share information and work together as a team. Internal networking is
as advantageous as external networking. Engaged employees can apply themselves to do an excellent job
and are ready to take initiatives because they feel the support of their professional network.

Having a strong organizational network not only affects employees’ performance, but it creates a virtuous
circle within the organization. When an employee has a bigger network of colleagues he is working with on
a daily basis, usually his work gets more visibility and recognition. An engaged employee has the power to
influence others by setting good examples and promoting connectivity in all its forms.

10. Encouraging advocacy

“I love my job.” Isn’t this what every employer wants to hear? Employees often talk about their work
outside of the office and unfortunately negative feedback or complaints are easier to share. Whether
employees’ words are positive or negative depends heavily on their experience in the organization. That’s
why working on employee engagement is important if you want to encourage positive brand advocacy.

Employee advocacy is fantastic free publicity. It can lead to more loyal customers, quality applicants and
ultimately higher revenues. It’s also one of the biggest benefits of employee engagement to employees
themselves, since their advocacy can turn into referral bonuses if their network includes the right business
audience. Incentivising advocates with work benefits and recognition is a great way to say thank you for
spreading the word.

11. Boosts Employee Positivity

Positive work environment is very important for employee engagement. Learn how to nurture the positive
vibes and you will see how contagious it can be throughout the organization. Positivity affects employees:

 Attitude at work
 Confidence in the company and its future
 Job satisfaction
 Business relations within and out of the organization

But how do you know if your employees are really happy? One way to find out is to conduct an in-person
employee interview in order to get more personal feedback. Combine this with a short yes/no intranet survey
to collect more quantitative data and you will have a good base to build stronger relationships with
employees.

12. Stimulates Innovation and Creativity

Encouraging employees to be innovative and share their ideas is another way to build an engaged workforce.
Leverage specialists’ expertise by bringing them together to work and interact on common projects.
Investing time on innovation gives employees a sense of belonging and accomplishment, which in return
drives a much higher added value for the business

This can be a way to save time and resources too, as employees may come up with an idea that’s just as good
without resorting to external sources. An effective way to encourage employees to submit ideas could be
through a competition on the intranet, or offering employees the opportunity to join an internal R&D team.
Show creativity when approaching your employees and they will respond with the same amount of
enthusiasm and creativity to any task you give them.

Psychological contract
The psychological contract refers to the unwritten set of expectations of the employment relationship as
distinct from the formal, codified employment contract. Taken together, the psychological contract and the
employment contract define the employer-employee relationship.

Originally developed by organisational scholar Denise Rousseau, the psychological contract includes
informal arrangements, mutual beliefs, common ground and perceptions between the two parties.
The psychological contract develops and evolves constantly based on communication, or lack thereof,
between the employee and the employer. Promises over promotion or salary increases, for example, may
form part of the psychological contract.

Aspects of a psychological contract could include any of the following:

1. Job security
2. Opportunities for promotion
3. Opportunities to learn and improve (Learning and Development)
4. The employer’s reputation in society
5. The perception that the employee’s work contributes positively to society
6. A supportive manager
7. A perception of fairness in the company’s internal processes
8. The perceived fairness of pay
9. An expectation to go ‘above and beyond’
10. The perceived fairness of a Perks and Benefits package

Advantages

Having defined the psychological contract in greater detail, let’s turn the focus now to the pros and cons.

1. Agility

HR professionals consistently hear the terms agile or agility. The psychological contract is the epitome of
agility. As the worker changes, so too does the psychological contract shared between the employee and his
or her employer. Additionally, it provides a real-time look at the relationship between the two entities.

It could be argued that, while this attribute serves as a pro, it can also double as a con. Why? The fact the
psychological contract is so easily changed means it is difficult to “enforce” and equally difficult on which
to rely for guidance when it comes to the relationship between the employee and employer.

2. Loyalty

Loyalty is a massive asset for employers. When an employee offers loyalty to the company, it hinges a great
deal on the psychological contract that exists between the two. As long as the contract is honored by both,
loyalty will remain.

3. Empathy

Empathy, loosely defined, is the ability between the two parties to understand one another. Pressing it
forward under context of the psychological contract, when the employee and the employer can understand
one another it creates a positive work environment; one in which employees and employers feel free to bring
them full-selves to work.

4. Communication

That inevitably leads to positive communication. That means the environment in which both parties
function is one of openness and honestly.

Disadvantages

1. Not-On-Paper
As previously mentioned, the psychological contract is not a physical contract; it’s not documented in any
way. This makes it very difficult to execute. In fact, some say it is for this reason alone a PC cannot
actually be defined as a contract.

2. Inconsistent

The psychological contract is inconsistent. Every single employee develops their own PC with the company.
While these contracts may be similar across the board, they are still just as unique as each member of the
company workforce.

3. Redundant

There are some that believe the concept of the psychological contract is redundant, even obsolete. Why?
There are other ways to measure the employee-employer relationship. This includes employee engagement
and pulse surveys.