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4. Managing IR throughPsychological Contract
andEmployee Engagement
Debi S. SainiProfessor HRM Area
Management Development Institute, Gurgaon-122007
1. Globalization changed the business world
2. Competition: What do CEOs expect from HR?
3. Use of Psychological contract for promoting engagement
4. Meaning of engagement & its incidence across countries
5. Engaging orgs. necessitate transformational leadership
6. 12 Key factors that help Cos. promote engagement
7. Practices of some companies to promote engagement
Issues Dealt with in this Presentation
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We know that the Worldhas Changed substantially
in the Pasttwo Decades!!
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Employee Engagementis expected to be promoted
throughPsychological Contract:
What is it?
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What is Psychological Contract?
The perception of
overall set of expectations
held by employees and the employer regarding
what employees will contribute to the org. (contribution)
and what the org. will provide in return (inducement)
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HR Practices, Org. Culture & Leadership as Factors for Outcome
PsychologicalContract
Employee care Empowerment Competency-bldg. Career Development Reward/r ecognition
=EngagementHigh p erformance
FormalEmployment
Contract
Performing duty asper job description &Adhering to Co. Rules
+
Compensation &Job security
BusinessEnvironmental
Context
Strategic HR Systems& Interventions
Leadership
FormalOutcome
Fig.: Psychological contract between employer & employee is a tool of engagement
Org. CultureValuesPositive Emotions
Debi S. Saini 2009
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Employees Expect various Types of Justice
Organizational Justice: Extent to which people perceive overall fair treatment at work by the org.
Distributive JusticePerceived fairness of how resources/rewards are distributed
Procedural Justice perceived fairness of the procedures used to make allocation
Interactional JusticeFairness in process of making decisions(Interpersonal side of decision-making)
Psychological Contractis expected to result inEmployee Engagement
& ExcitementWhat is Employee Engagement?
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An employee is said to be engaged when s/hebelieves in an org.s goals & makes efforts in their realization
Has passion for work; says that s/he is satisfied doing the work
Says that s/he is enthusiastic/proud about work
Is willing to recommend the organization to others
Stays with the organizations despite other attractions
Is prepared to go beyond job requirements
What does Employee Engagement Involve?
People Engagement at Work in Britain: Study
Source: Gallup Poll data of Great Britain, working population 18 years and older June 2005. n = 1,006
Copyright 2005 The Gallup Organization, Princeton, NJ. All rights reserved.
EngagedEngaged Not EngagedNot Engaged Actively DisengagedActively DisengagedThese employees are loyaland psychologicallycommitted to theorganization. They are moreproductive , more likely tostay with their company, lesslikely to have accidents on the
job, and less likely to steal.
These employees may beproductive, but they are not
psychologically connectedto their company . They aremore likely to missworkdays and more likelyto leave .
These employees arephysically present but
psychologically absent. Theyare unhappywith their worksituation and insist on sharingthis unhappiness with theircolleagues.
16% 60% 24%
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Gallups QuestionnaireQ uest ions A R esponse
D o I know what is expected of m e at work ? Y es
D o I have the material and equipm ent I need todo my w ork right?
Y es
A t work do I have the opportunity to do what Ido best every day?
Y es
In the last 7 days, have I received recognition orpraise for good wor k?
Certainlynot
Does my supervisor or someone at work, seem tocare about me, as a person?
Certainlynot
Is there someone at work who encourages my Y es
Employee Engagement Around the Globe is Low
Source: Towers Perrin Global Workforce Study: Executive Report, Winning Strategies for a Global Workforce, 2006Towers Perrin was later on taken over by Watson WyottThis study was based on a sample of 86000 employees from16countries and covered all actegories of employeesshop floor, supervisory, middle & senior management
* Global weighted average,based on total surveysample
Countries are not
necessarily comparable,
due to cultural
differences in survey
res ponse patterns
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Promoting EngagementShift taking place
from Traditional Personnel managementto Strategic HRM
through Soft Levers:
But Still, in many cases
P&A is still negative
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Engaging &Organizations are Creations ofTransformational Leadership:
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Leaders Focus on Culture & Outcome; not Rules
1. Develop business vision
2. Culture to achieve vision
3. Flatten the organization
4. Eliminate bureaucracy
5. Empower individuals6. Raise quality & efficiency
7. Eliminate boundaries
Welchs 7 Point Program forMgt by Leadership
GE MarketCapitalization
Some Factors that leadto Promoting
Engagement in
HPOs: Research?
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--Relationship with boss is the greatest motivator
--People wish to lead a meaningful, dignified life
--They need to be heard
--They need to be inspired
Some cos. are trying to create thousands of leaders
1. Creating Leaders in place of Bosses
In Search of Excellence revealed Importance of:
Shift in people mgt. from Hard to Soft Model
People Emotion
Engagement Empowerment
Caring & EnjoymentPower of Trust: C-DOT Library
From effectiveness to: creativity, enthusiasm, excitement
2. Focus on Peoples Care & Trust
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3. Living Wage and Benefits3. Living Wage and Benefits
Pay Benefits
Meeting reasonable reward expectations of the employee
4. Culture of Respect & Dignity4. Culture of Respect & Dignity
Marching towards realization of bundle of needs
It requires nurturing & sustaining a conducive culture
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5. Job design & Interesting Work5. Job design & Interesting Work
Devise the job design thatmakes the employee feel unique!
Job Features Important to applicants?For Males
Interesting Work
Chance for promotion
Good benefits
Job security
Opportunity to learn new skills
High income
Annual vacations
Geographical location
Flexibility in work hours
Able to work independently
For FemalesInteresting Work
Good benefits
Job security
Chance for promotion
Opportunity to learn new skills
Geographical location
Annual vacations
High IncomeFlexibility in work hours
Able to work independently
Survey by Time : 11,666 people in all: 10,221 ages 18-28 (average age: 22) 1,046 ages 29-39; 310 ages 40-50; 89ages 51-61 Of the 10,221 emerging adults: 3,120 males (30%), 7,122 females (70%)
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6. Growth Opportunities & Development
People want challenging work so thatthey develop their employability
7. Employee Empowerment & Ownership
Giving power to make work decisions
Decisions delegated to lower levels
Aim: Soft HR trust & development EngagementHRD
Individual Empowerment: Job enrichmentFlexitimeRotation
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Empowerment through Employee Involvement:The Elixir of 1990s in West
In-house newsletters
Suggestion schemes
Attitude surveys
Quality Circles
Communication is key
The synergy of team
8. Communication is an Important Aspect of
Open & Caring Culture: MBWA in HPSustained interactions
that mutually benefitthe parties concerned
Proves magnetic
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EncouragingInformal Peer
Culture
Open Forums(Transparency)
News Letters,House Journals
Individual
Group
Mass
Informal
Goal-setting/Review
VideoMagazines
Gettogethers/
Picnics
Open doorCaringCulture
FormalMeetings
Communication can be Enhanced in Various ways
9. Engagement through Getting the Family Involved
Family buttresses feelings of employee;So Care for Family
Invite family to company premises before joining
Welcome letter to parents & spouse on employees joining
Inviting family on celebration/ annual days, family excursions
Support to family when employee is abroad(Medical coverage for dependent parents; assistance, 2 nd house maintenance)
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10. Engagementthrough
Diversity Management
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The process of developing an environment
that maximizes potential of
all people in an org
that involves learning to value qualities
that are different between groups & even individual s
What is Diversity Management?
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EngagementThrough
Individuality &Diluting Rule-centricity
in Google
Google has become a magnetfor like-minded geniuses:
#1 on Fortunes 100 Best Places to Work
Google: $200 billion market cap.
Larry Page and Sergey Brin
Co-founders, Google
Google Creating Joy by Giving Employeeswhat they need: casualness, diversity, fun
The only U.S. companieswith larger market caps are:
Exxon Mobil, at $328.4 billionMicrosoft, at $276 billion
Wal-Mart, at $207.6 billion.
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1. Pre-school & after-school child care
2. Extended maternity /paternity leave
3. Safeguards against sexual harassment
4. Flexible working hours
5. Work-life balance
Some Initiatives in Diversity Mgt. in the West
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6. Alternative career paths
7. Training to avoid mid-career plateau
8. Telecommuting facilities
9. Harassment prevention training
10. Networking opportunities for the diverse: Share experience & learn from others
Some Initiatives in DM contd
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11. Raising the profile of women employees through dissemination of info. on their achievements/issues
12. Awareness about potential of disabled/aged
13. Adjustment audit for disabled, women, aged
14. Mentoring of disabled for advancement
Some Initiatives in DM contd
11. Ingrain Positivity at the Workplace
Little victories celebrated
Praise, praise, praise
Sports/co. clubs arranged
Creating your small world of living joyfulness
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12. Involving Employeesin
Community Programmes
Community Programs & Culture: e.g. IBMs Smarter Planet
Employees contributions towards the organization being aresponsible citizen and enhancing satisfaction
Its objective is: Caring for emotional & spiritual needs of employees
Implementing the practice
Sabbatical for social work including funding
Encouraging Socially responsible behaviors--Adopting villages, working for charitable cause-- included as official work
Community work week--certain hrs per month available for community work
Choose your social project
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The Above Ideas in Action:How have Some
Companies CreatedEngaging Environment
through Different Practices?
Benchmark the Suitable ones
SaskenCommunication
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Sasken Communication Technologies, Bangalore
Values, Culture, Trust, Transparency, Informality
State of the art soft HRM in operation
Unique HR policy: No attendance system No limit on sick leave Freedom to come & go; & think/innovate
Policy Change Request can be made by any one
Same rules for all categories of people Same hotels when on travelCEO sits in similar cubicles
Prudential:Culture & Affiliation
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Prudential Process Mgt. Services (PPMS)
Company with 1,200 employees Serves Prudential UK
Well thought out HR Strategy: conducive environment Has reduced attrition to 20% (Industrys attrition is 45%)
HR Strategy: Competes on culture; not compensation
Involves families in get together; funds their HRD needs
Vitas Inc. USA
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Employees highly cared; wear the 4 Co. values on Shirts1. Patients and families come first2. We take care of each other3. Ill do my best today & do even better tomorrow4. I am proud to make a difference
Live a sense of pride: Great excitement in working for Vitas
HR-VP received:HR Leadership of the Year 2006 award of SHRM
One nurse said: Sometimes we wonder why we came here so late.
Vitas Inc. USA
Miscellaneous Practicesthat PromoteJoyfulness in
Different Companies
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Some Other Culture-Building HR Practices
Associate Delight Index (ADI): How do people feel in the co.
Trust Index (Credibility, Respect,Fairness, Pride & camaraderie)(Used by Grow Talent for Best Places to Work Survey)
New planes linked toits employees childrens name