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Why Thinking Small is Thinking Big ➝
Usually, enterprise-sized companies don’t spend significant time worrying about their smaller competitors. When it comes to funding, brand recognition, and huge talent pool, enterprises dominate small businesses. However, the one arena where big companies could learn from small businesses is understanding and implementing drivers of employee engagement.
Despite having more abundant resources, bigger HR teams, and better basic benefits, enterprises lose out to small businesses when it comes to employee engagement. Year after year, reports churn out the same result: employees are significantly more engaged when employed by a smaller organization.
How can this be when larger companies have so many resources relative to their small business counterparts? More importantly, what drivers of employee engagement are enterprises failing to support that have created such a counterintuitive discrepancy? This guide unpacks these and other questions, posing suggestions on how enterprises can close the engagement gap.
But first: why does employee engagement matter?
It goes without saying that employee engagement has an impact on a person-by-person basis, but thinking strictly in terms of business, is it really so important? If you don’t actively support drivers of employee engagement, how much will you suffer? Does employee engagement deliver returns that make it worth investing in?
The answers to these hard-hitting questions might surprise you.
Employee engagement is far from an abstract and feel-good concept invented by HR. We’ll share more about how to measure engagement at your own organization later on, but before we dive into how you should measure employee engagement, let’s talk about why.
Employee engagement refers to the dynamic between an employee and their work, their co-workers, and their company. It is the attitude they bring to the office, the pride they take in deliverables, and the ownership they demonstrate in the initiatives they take on. Many experts use an employee’s willingness to ‘go the extra mile’ as a proxy for their engagement.
Forbes career expert Kevin Kruse illustrates the way employee engagement relates to a company’s corporate well-being is through a successive process he labels “The Engagement-Profit Chain.” In this chain, employee engagement directly triggers three main effects:
- Improved quality of service
- Increased productivity
- Reduced likelihood of turnover
High-quality service has a direct effect on customer satisfaction, and so does the impact of having a team of long-lasting employees. A deeper, more historically-grounded understanding of the way your organization functions begets better customer service.
When customers are routinely satisfied by the quality of service they receive, they grow loyal to your brand. The more loyal customers you have, the more profitable you are. In Kruse’s model, productivity has a direct impact on profit. The last step of the employee engagement profit chain links profit directly with company growth.
If Kruse’s employee engagement profit chain isn’t enough to convince you it is important to support drivers of employee engagement, other studies link employee engagement with innovation, higher sales, and reduced absenteeism. The list of positive outcomes goes on — the point is, employee engagement is a small concept with the potential to make a big impact on company success.
Given this potential, it should come as no surprise that the past several years have seen a steady rise in the amount of attention employers and organizations pay to employee engagement. What is surprising, however, is the fact that larger organizations that normally stay ahead of these far-reaching trends haven’t caught up to the high levels of engagement smaller organizations regularly report.
How Employee Engagement at Enterprise Companies Compares to Small Business
A growing line of research focuses specifically on comparing how outcomes and drivers of employee engagement change as a function of company size. Below is a list of consolidated list of pros and cons, as told by research:
Drivers of Employee Engagement Where Enterprises Win
- Job stability
- Perception of product quality
- Basic benefits (e.g. healthcare, 401k, etc.)
- Diversity of internal opportunities
- Opportunities for specialization
Drivers of Employee Engagement Where Enterprises Fall Behind
- Accommodation for personal matters
- Personalized benefits and rewards
- Opportunities for employees to “do what they do best” each day
- Identification with company’s mission
- Opportunities to learn and grow
- Materials and equipment to do their job well
- Pace of recruitment
- Bureaucratic limitations
- Personal relationships
- Ability to affect change
- Opportunities for community impact
- Opportunity to voice their ideas
- Having fun at work
- Employee happiness
Smaller organizations are outperforming enterprises in supporting drivers of employee engagement. One Gallup study found an abrupt drop in engagement when comparing companies above and below 1,000 employees, and that same study noted another significant drop at the 5,000 employee mark. Even at the most extreme ends of the spectrum, the pattern holds: companies with only 25 employees top the employee engagement charts, while the largest companies in the United States reliably end up at the bottom of the list.
In the past, employers at larger organizations have found solace in the fact that competitive salaries offset the myriad of smaller, albeit meaningful, benefits of high engagement when it comes to who employees will choose to work for. For much of the past century, economists have reported that the employees at enterprise-sized companies made roughly 50% more than their peers in comparable roles at small business. But in recent years, this gap is closing quickly. A 2013 report indicated that the gap had shrunk to 20% and in the years since it’s only continued to narrow.
This means that now more than ever, it’s time for enterprises to address drivers of employee engagement.
How do you measure drivers of employee engagement?
The first rule to make any lasting change is to track your progress, and this is especially true of employee engagement. The topic of employee engagement can easily dissolve into an emotionally charged discussion of intangible abstracts, so it’s important to have a tool for quantification. If your company invests resources in leveling up employee engagement, it should also have an objective system for measuring progress.
Employee engagement is a psychometric, or a measure of a mental state. It can’t be evaluated via the usual dimensions of space and time. Instead, it must be captured indirectly through carefully designed questions. When measuring employee engagement, it’s best to use a well-vetted tool proven to measure the factors you’re actually trying to capture. Psychometrics can be tricky to assess, so relying on the experts ensures you’ll avoid letting politics or accidentally leading questions skew your survey results. Find a tool that provides actionable insights and full access to the data you collect.
After assessing the current state of engagement at your organization, consider which drivers of employee engagement run strong through your company and which ones need a little work. That’s where the progress truly begins.
Key Drivers of Employee Engagement for Enterprises
If the lengthy list of enterprise employee engagement cons a few sections back frightened you, this section will come as a relief. Many of the circumstances that lead to such high levels of employee engagement at smaller companies can be replicated on a larger scale. Although an enterprise may never quite capture the close-knit feeling of working at a fifty-person start up, they can certainly support the key drivers of employee engagement that matter most.
Remember Your Values
That quirky, fresh startup culture is a big draw for many employees who opt for positions at smaller companies. Startup culture’s distinct values represent a key strategy small businesses use to stay competitive in the war for talent. Many people have the misconception that the larger a company, the more watered down and painfully bureaucratic its culture is. But with the right degree of forethought, large companies can cultivate a culture that incites engagement as well as any startup.
One of the most critical pieces of advice given when scaling is to make sure a company’s core values can scale with it. The point is an important one, as mission-driven companies with strong values have 30% higher innovation and 40% higher retention. Given the strong positive correlation between employee engagement and these same outcomes, it follows that core values are a key driver of employee engagement.
For enterprises, creating company core values in the first place is only step one. The real work begins when it comes to reinforcing them. Value-based recognition programs are a fantastic option for helping a large team engage with company core values. By investing in a recognition program specifically designed to reward your employees for upholding company core values, you build awareness around what those values are and incentivize your employees to live up to them.
Strong company core values help enterprises catch up to small businesses when it comes to drivers of employee engagement including identification with the company mission and opportunities to make a meaningful impact on the world. By regularly reinforcing company core values, you build a team that’s united by something more meaningful than their desire to churn a profit. Identifying with that shared mission drives employee engagement.
Cultivate Closer Groups
Many of the drivers of employee engagement that enterprises don’t support stem from interpersonal exchanges taking place in small groups. When employees regularly work in teams small enough that they know everyone’s name and a little about who they are, personal relationships naturally arise.
There are two kinds of relationships companies should encourage to foster high employee engagement:
1. Peer-to-Peer Relationships
The relationships your team members have with their fellow peers are one of the most impactful drivers of employee engagement. When team members feel connected to one another, they develop an increased sense of accountability and ownership. Close peer-to-peer relationships also foster trust, which makes way for better collaboration and gives people the opportunity to get innovative without as much fear of failure.
Giving your employees plenty of opportunities to work in small teams and even organizing a company outing is a great way to make sure that peer-to-peer relationships thrive. Ultimately, it’s up to your employees to make the effort to connect, but you can make it easier by giving them plenty of opportunities to do so.
2. Manager-to-Employee Relationships
While opinions about the ideal manager-to-employee ratio vary depending on the nature of your organization, employees generally agree that they want to check in with their managers about once a week. This ensures that managers and employees stay on the same page, and also gives employees opportunities to share ideas, concerns, and questions just like they would at a smaller organization.
People are social creatures and become highly engaged when given the opportunity to form genuine interpersonal bonds. When large companies intentionally create smaller groups and transparent manager-employee relationships, they open up opportunities for personal connection. These relationships provide employees a chance to have their voices heard and make the workplace an all around more enjoyable and productive environment to exist in each day.
Go Beyond Professional Support
One of the things enterprise companies struggle with is conveying that they support their employees outside of the office. Employees report that accommodation for personal matters, as well as benefits catered to fit their unique needs are worse at large organizations.
This indicates that although large employers might be taking care of their employees’ needs inside the office, they’re neglecting them outside of it. An employee who struggles outside the workplace won’t be well-equipped to thrive in it. This is one of the most important drivers of employee engagement to support.
Giving employees a little extra in the form of rewards and/or corporate discounts can go a long way. If your employee has done an excellent job on a particular project, give them a reward they can use to have fun outside the office, whether that be a gift card to a local restaurant or a free movie ticket. Many companies invest in rewards and recognition programs to give their managers an easy way to deliver personalized rewards.
Another great way to show employees you care about them outside the office is by offering a wide variety of corporate discounts. When they book a flight, buy that necklace they’ve been eyeing, or join a gym, your employees will thank you for the extra savings. Offering them these benefits sends the message that not only do you care about them as employees, you care about them as people.
Why Thinking Small is Thinking Big
Although all of these recommendations are well within the means of most enterprise level companies, the statistics reported at the beginning of this article indicate that enterprises are failing to take action. At larger companies, it’s rarely a matter of whether you are able to expend the effort — it’s a matter of whether you know how.
Consider the fact that if employee engagement has a substantial impact on productivity, profitability, and growth at small organizations, it has an exponentially larger impact on those same factors at enterprise-sized organizations. The larger the company, the more people who can collectively make significant progress towards those ends when engaged appropriately.
Ask what drivers of employee engagement your company is supporting and which ones need attention. By putting your resources to use in a thoughtful, informed, and intentional way, you can drive employee engagement as effectively as even the smallest organization.