12 minutes
True story: On my first day of work as a human resources director—my first job in a credit union—over $20,000 was stolen from a vault at the main office. On my second day of work, the investigation began.
Long story short, an interim safe held the money that was supposed to be locked in the main safe that night. One of the tellers knew the money was in the interim safe and, as they were closing, took it. Why did she do this? Not to get rich, but to get the head teller in trouble for not properly securing the money. When the teller admitted what had happened, all the money was recovered; her only motivation was to have the head teller dismissed.
Prior to starting my job, I earned a master’s degree in which I focused a lot of my studies on effective leadership. Even with that, I was floored by the teller situation. How could one person be pushed so far just to spotlight a perceived ineffective supervisor? Turns out, while the example is drastic, the impact of supervisors on their employees can be seen in all facets of business.
Defining Engagement
There’s been a lot of research done in the past decade or so on the impact of employee engagement on the workplace. First, what does employee engagement mean? It’s the willingness of an employee to exert discretionary effort toward their work. Characteristics of engaged employees include feeling a strong emotional bond to their credit union and caring about its future, being willing to invest extra effort, being fully involved in and enthusiastic about their work, and acting in a way that furthers their credit union’s interests. So basically, this is the ideal employee. I bet you can think of a few right off the top of your head.
Although these are your ideal employees, unfortunately, they are somewhat rare in the workplace. Gallup reports that engaged employees in the U.S. make up only about 29 percent of the workforce. In contrast, 54 percent of employees fall in the category of “not engaged employees.” These employees are essentially “checked out,” putting in the time, but not the energy and passion. The third category includes employees who are actively disengaged. This category makes up the smallest group, at about 18 percent of the workforce. These folks are unhappy and unproductive at work, liable to spread negativity to co-workers, and are inclined to undermine what engaged employees accomplish.
Impact of Employee Engagement
So what difference does it make to CUs whether employees are actively disengaged or engaged? In short, Gallup found compelling evidence that engaged employees translate to significantly higher customer ratings, profitability, productivity and product quality.
On the other hand, disengaged employees lead to higher incidences of employee turnover, more safety issues, higher occurrences of theft (see example above!), and absenteeism. Gallup goes on to assert that over $300 billion is lost in productivity due to employee disengagement.
There are a lot of variables that impact a credit union’s performance—national and local economic issues, technology demands, membership trends, etc. Engagement also impacts credit union performance, but the difference is that it is almost exclusively within the CU’s control. As such, it is one of the most crucial imperatives to be addressed in any successful company.
Employee Engagement Influencers
According to Gallup, three variables have been found to most strongly influence employee engagement in the workplace:
- the relationship with the manager,
- the pride the employee has in working with the company, and
- the confidence/belief in the company’s senior leadership.
Of these variables, the relationship with the manager is the top driver of employee engagement. This includes the type and amount of supervision and direction leaders give to their employees, being treated fairly, receiving feedback and direction, having a strong working relationship based on mutual respect, and the managers getting to know them as individuals.
Management Impact on Employees
So how does management effectiveness specifically impact employees? Through recent studies, numerous employee variables have been found to be significantly influenced by how effective the manager is. Quantum, in particular, has uncovered positive outcomes through its study of 500,000 employees at 4,000 organizations. Specifically, effective managers have employees with:
- higher job satisfaction,
- a clearer understanding of the company’s direction,
- stronger feelings of team cohesiveness in the department or group,
- a stronger desire to grow and develop in the workplace, and
- more trust in the workplace and with colleagues.
Quantum also found a very distinct relationship between manager effectiveness and employee turnover. As the saying goes, “Employees join companies but leave managers.”
Credit Union Responsibility
Before we address how managers can enhance employee effectiveness, we must first acknowledge the credit union’s role in fostering effective management practices. Without the foundation at the credit union level, management effectiveness will be compromised.
The first step, of course, is the credit union needs to ensure the right managers are in place. This is done through an effective management succession plan, promoting “producers” from in house who develop others, and having strong selection systems in place for hiring outside candidates into these management roles.
With well-selected managers, clear expectations must be provided for what behaviors the credit union deems appropriate with these individuals, and learning opportunities and coaching must be available to develop these competencies. This is done through providing ongoing support, coaching with outside facilitators and in-house mentorship opportunities.
When managers are in their positions, the credit union must be proactive in initiating both positive and negative consequences for management behaviors. Positive consequences include recognizing good work not only through the department’s bottom line performance, but also through celebrating supervisory success.
Unfortunately, this is rarely done in most workplaces. For example, credit unions could reward supervisors for their staff’s high engagement levels. Given that managers directly impact their subordinates’ levels of engagement, this is an excellent way to reinforce this outcome.
And finally, the CU must be willing to replace or correct managers without the necessary competencies or appropriate attitudes. Given the impact managers have on engagement, this must be a proactive initiative on the credit union’s behalf.
So with all of that then, how can managers improve their employees’ engagement levels?
Below are several ideas that have been suggested throughout research. Each idea is broken out across six dimensions of manager effectiveness.
Communication
Over 37 percent of employees in a recent Kelly Global Workforce study reported that more transparency in communication by their manager would improve their engagement.
What behaviors characterize effective management communication? Sharing important credit union information with staff, as well as holding formal and informal regular meetings with staff.
Both of these initiatives must be handled in a timely manner. For example, it isn’t timely when a promotion is rolled out and a branch hears about it only after a member asks branch personnel a question about it.
The other facet of communication is soliciting feedback from staff. By asking staff for input and then acting on it when feasible, managers can affect their employees’ engagement levels.
Performance Management
Empowering employees to do their job with little interference is a strong predictor of employee engagement. Specifically, fostering participative and facilitative management leads to high employee engagement, and micromanaging or controlling subordinates’ work leads to disengagement.
Other facets of performance management include communicating clear goals and expectations with staff, identifying and managing problem employees, and delegating assignments effectively with subordinates.
Here, ensuring that workload is manageable and meaningful to staff are key components.
Employee Development
Gallup conducted a very interesting study looking at performance feedback techniques with staff. In it, not surprisingly, they found that employees who receive predominantly positive feedback are 30 times more likely to be engaged than employees whose performance is ignored. More surprising was the finding that employees who receive predominantly negative feedback (which comes to about 10 percent of the workforce) are actually 20 times more likely to be engaged than employees who are ignored. This indicates that it is better to give some type of feedback (be it negative or positive) than to not give any feedback at all.
Still, the positive feedback takes the prize—managers who focus on employee strengths are 33 percent more likely to manage actively engaged workers compared to those who focus almost exclusively on weaknesses.
In developing staff, researchers also point out that it is important to continually provide training and growth opportunities when possible. In fact, 53 percent of respondents in the Kelly Global Workforce study indicated that more training and development would improve their engagement. Additionally, to enhance engagement, managers should consistently encourage innovation and initiative with staff. As stated by Tom Peters, a well-known management author and speaker, “The role of the leaders is not to create followers, but to create more leaders.”
Fostering Teamwork
Nothing can kill the feeling of team morale and spirit faster than pitting one staff member against another, or being negative about one employee to others in the group. Unfortunately, this is something that surfaces often in feedback from disengaged employees in surveys that we conduct with credit unions.
To continually foster strong feelings of teamwork, frequent discussions should take place with the team, discussing what staff is working on, what has gone well, what has been challenging, and what can be done to improve in the future.
Many credit unions do this to some extent, but may not do it consistently across all levels. Also, recognizing and rewarding employee and team achievements, along with creating opportunities for employees to connect in ways besides work projects, can also enhance perceptions of teamwork.
Management Effectiveness
Later in my tenure as a human resources director (after I got over the initial shock of my first week on the job), I worked with a branch manager who knew a lot about her staff on a personal level, as well as staff in the back-office departments and other groups with which she worked. She was the manager that most employees would call if they had branch questions; they knew she would be helpful and approachable in whatever way she could. Not surprisingly, engagement levels within her branch appeared to be quite high. Employees were comfortable with her and knew if they had a concern, she would help if possible. She really represented the notion of management effectiveness. This involves being available to staff, essentially, by having an “open door.”
Research in this area has also found that the manager’s support and guidance directly links to high employee engagement levels.
Leadership Effectiveness
What differentiates leadership effectiveness from management effectiveness is the more strategic competencies of the manager and how this person is perceived at the organizational level. Leadership characteristics that contribute to employee engagement include actively promoting the credit union’s effectiveness, reputation, values and ethics.
Employees want to feel good about where they work and lauding the credit union’s work to staff will help them do so. Effective leadership also involves leading by example with the group. This is the manager who will step in to help members when the line is unusually long, or take calls when the queue is backed up.
Make Managers Accountable
With the impact that managers have on employee engagement and the ideas that are presented here for managers to employ to help boost that engagement, how can the credit union hold managers accountable for doing so? It’s usually not enough to simply give the information to managers and tell them to implement it. There should typically be some accountability standards to ensure the techniques are actually being utilized. Here are five suggestions:
Check participation levels in company-wide morale programs. Credit unions are very good about implementing programs throughout the year to boost employee morale. These include “Employee of the Month,” as well as other awards. Even with the best programs, however, there always seem to be managers who are better at nominating their employees for special recognition than others. While this is understandable, it doesn’t seem to be fair for the employees who never receive recognition from their more spotlight-averse managers.
Hold managers accountable for voluntary turnover. As mentioned previously, employees often leave managers, not the credit union. By tracking voluntary turnover at the department level, the credit union can determine if excessively high levels of turnover exist in certain areas.
Audit communication channels. Have meeting minutes from regularly scheduled department meetings forwarded to senior management and/or human resources to ensure that important information is shared with staff. Doing this consistently across all managers ensures all are meeting the credit union’s communication standards.
Hold managers accountable for staff engagement levels. Many of our credit union clients conduct employee engagement and satisfaction survey projects with us. With the feedback on department engagement levels, managers can be held accountable in their own group for making improvements.
Conduct a leadership assessment. Perhaps the best way to determine management effectiveness is to simply ask the employees who are being managed. What are their manager’s strengths? Weaknesses? Here, it’s important to not only measure how effective the manager is, but how important each area is to employees so the credit union can gauge what areas take priority in being addressed.
The facts surrounding employee engagement in the U.S. are compelling: Less than one-third of the workforce is engaged, the impact that engagement has on the workforce is enormous not only through such variables as turnover, safety, and productivity, but also the company’s bottom-line profitability. Moreover, it is one of the most controllable variables impacting company profitability.
Given that management effectiveness is the top predictor of employee engagement, it should be the credit union’s first focus in enhancing engagement. Using some of the ideas listed here can help to foster more employee engagement, as well as providing support for managers at the credit union level and holding them more accountable.
Kerry Liberman is president of People Perspectives LLC, a company that specializes in leadership assessments and employee engagement and satisfaction surveys for credit unions. She can be reached at 206.451.4218, or via email at kliberman@peopleperspectives.com.
