Employee Engagement

1.0 Introduction

1.1 XYZ Manufacturing, Inc.

Our group has selected XYZ an affiliate of XYZ as our reference organization, focusing on the Company's sales business unit comprising of 330 employees.

XYZ's business is the manufacturing, distribution, and sale of fast moving consumer goods. Approximately 70% of the Company's sales in the XYZ are through traditional privately owned and independent small retail stores distributed nationwide.

Appendix A presents the organizational structure of XYZ sales business unit.

The goals of the sales business unit are:

1. Grow sales volume

2. Attract, develop and retain the best talent

3. Maintain good relations with the trade market

1.2 What is Employee Engagement?

Whilst the current lack of empirical research on employee engagement has resulted in speculation that it is merely a fad with little theoretical basis, Saks (2006) study supports the concept that engaged employees will have a higher quality relationship with their employer resulting in more positive attitudes, intentions, and behaviours. Recent studies confirm that high employee engagement translates into "increased discretionary effort, higher productivity and lower turnover at the employee level, as well as increased customer satisfaction and loyalty, profitability and shareholder value for the organization" (Richman 2006).

Saks (2006, p. 602) identifies employee engagement is "a distinct and unique construct that consists of cognitive, emotional, and behavioural components that are associated with individual role performance" and importantly is distinguishable from several related theories, including, organizational commitment, organizational citizenship, and job involvement.

Both Robinson et al. (2004) and Saks (2006) discuss employee engagement as being a relationship of reciprocal interdependence between an employee and their employer. According to Saks (2006) caring and concern exhibited by an organization creates a sense of obligation from employees who reciprocate with greater levels of engagement. Saks (2006) expounds on this interrelationship and concludes that a theoretical foundation to explain employee engagement this can be found in social exchange theory (SET), wherein individuals who receive economic and socio-emotional resources and benefits from their organization feel obliged to respond in kind and repay the organization.

Thus, organizations that wish to improve employee engagement should focus on employee' perceptions of the support they receive from their organization, and providing employees with resources, benefits and rewards that over time provide for mutually and rewarding transactions and relationships that will oblige them to reciprocate in kind with higher levels of engagement.

2.0 Employee Engagement Practices of XYZ.

In our review of literature on employee engagement we have identified XYZ practices that we perceive provide the resources, benefits and rewards central to Sak' (2006) foundation in SET. These practices are:

1. Rewards and Recognition

2. Communication

3. Market visits

4. Measuring employee engagement

2.1 Rewards and Recognition

When employees receive rewards and recognition, they respond with higher levels of engagement. While other intrinsic rewards also have a role in influencing employee engagement, external rewards are more influential on an employee's commitment to a company or organization (Ferrer 2005). Saks' SET foundation also links benefits to higher engagement, "people vary in their engagement as a function of their perceptions of the benefits they receive from a role" (Saks 2006, p. 604).

2.1.1 Performance-Based Rewards - The Managing and Appraising Performance (MAP) review and Sales Incentive Program (SIP)

XYZ currently uses one performance-based reward, The Managing and Appraising Performance (MAP) review. The MAP is implemented companywide to uniformly measure performance which influences the employee's annual merit increase (wage increase). The MAP originally measured performance using two criteria, comparing predetermined objectives to employee achievements (what) and the behaviors and actions used to achieve the objectives (how). Recently, the Sales Training Department has developed a set of Key Sales Indicators (KSI's) to monitor each Sales Representative's sales performance against predetermined monthly targets. This was done to align the MAP to XYZ goal of improving sales performance and to reinforce the selling mindset of the sales department.

In addition to the annual merit increase, the Sales Management Team and HR department is currently developing a new sales commission based reward called the Sales Incentive Program (SIP). This program intends to reward and recognize sales employees who surpass their monthly and annual sales targets. The SIP will also be linked to a companywide, monthly email broadcasting the best sales region and top ten performers in each region providing recognition for their sales contribution to the company and provide further incentive for others to follow suit.

From the literature reviewed, the key best practices for applying performance based rewards and recognition are:

* Rewards and recognition must be well defined and employee performance measurable.

* Rewards and recognition must be tied to the most important goals of the organization

* Rewards and recognition must be in-line with industry standards.

Saks (2006) states how important it is for organizations to clearly define implementation and allocation procedures for rewards, and maintain predictability and consistency in their allotment, which will in turn achieve higher perceptions of procedural justice within the organization. Employees with "higher perceptions of procedural justice are more likely to be engaged" (Saks 2006, p. 613). XYZ MAP and associated annual merit increase clearly outlines the goal or objective of the reward (improve sales performance), how it will be measured (KSI's), frequency (annual), type (annual merit