Why Companies Fail To Engage Today's Workforce: The Overwhelmed Employee

We just completed a major study of human capital trends around the world (Deloitte Global Human Capital Trends, 2,500 organizations in 90 countries) and the message is clear:  companies are struggling to engage our modern, 21st century workforce.

This is a worldwide issue. Gallup research shows that only 13% of employees around the world are actively engaged at work, and more than twice that number are so disengaged they are likely to spread negativity to others.

Before I explain what's going on, let me share some statistics from the research:

• 86% of business and HR leaders believe they do not have an adequate leadership pipeline (38% see it as an urgent problem)
• 79% believe they have a significant retention and engagement problem (26% see it as urgent)
• 77% do not feel they have the right HR skills to address the issue (25% urgent)
• 75% are struggling to attract and recruiting the top people they need (24% urgent)
• Only 17% feel they have a compelling and engaging employment brand.

And when we asked companies to evaluate their management practices they were particularly critical of the way they manage performance, leading us to the conclusion that performance management is broken. (Read The Myth of the Bell Curve for more on this topic):

• Only 6% believe their current process for managing performance is worth the time, 58% called their process "weak," with North American companies 20% worse than the rest of the world.

(You can explore the data yourself by viewing our new online Deloitte Human Capital Dashboard.)

A Changed Work Ethos

What is going on here? Why all these talent challenges at the beginning of an economic recovery? Shouldn't people be pretty excited to see new jobs being created?

Our conclusion, after looking at the data and talking with many companies, is that workers today want more. They want something different. They are demanding, they want meaningful work, and they expect their employer to make work more rewarding in many ways.

As one HR manager put it, "today employees don't want a career, they want an experience."

Look at some of the statistics. Nearly 40% of the US workforce now works part time. Baby boomers who lost their jobs are often out of work for 18-24 months. Millennials want more creative jobs and they want to work for startups (or for themselves). And everyone wants work to be easier, less punishing, and more meaningful.  (Read Millenials Will Soon Rule for more details.)

And this issue is becoming urgent - studies show that nearly 26% of the US workforce is going to change jobs this year, and these are typically the most highly skilled and motivated people. This is why "retention" was the #2 issue in our study.

Incidentally, I think it's time we throw away the word "retention." No employer can "retain" anyone - we have to "continuously attract" our own people. We like to think about creating a "magnetic" workplace that "attracts" people.

The Overwhelmed Employee

One of the topics that came up in our research is the fact that 2/3 of today's employees feel "overwhelmed." The concepts of work-life balance have been lost, thanks to a proliferation of technology and the breakdown in barriers between work and life.

People are working too hard (40% of men work more than 50 hours per week and 80% would like to work fewer hours), they are too distracted (mobile device users check their phones 150 times per day), and they are flooded with too many emails, conference calls, meetings, and other distractions. Recent research shows (Neurologist Larry Rosen) that the average office worker can only focus for seven minutes at a time before they either switch windows or check Facebook. And this research also shows that

65% of business and HR leaders rate this an important or urgent challenge, yet fewer than 10% of organizations know what to do about it. And this problem impacts our personal lives, our children, and our family. Anxiety is now the top issue facing children - driven largely by our "always on" lifestyle.

(Schools are now asking children to turn off their phones when they come to class. How about "technology moratorium" days at work?")

Let's Redefine What Engagement Means

The word "engagement" is an old-fashioned term used by Human Resources managers. It typically refers to an employee's willingness to exert "discretionary effort" - and is measured through an annual survey.

As I talked with companies about the research, I found that while most companies do these annual surveys, the majority do not find this sufficient. While they give us an annual view, they do not help organizations understand the passion, soul, and real issues going on day to day.

We have to change our mindset and redefine what "engagement" means.

Our research (which I will be presenting at our upcoming IMPACT conference) shows that there are five elements which drive a highly engaged workforce:

1. The work itself,
2. The management environment,
3. The flexibility and inclusion of the workplace,
4. People's ability to learn and grow, and
5. Trust and meaning from leadership.

So it's a whole set of issues to consider.

"Best places to work" companies don't just have ping pong tables and free lunch, they have a "soul" which makes work exciting and energizing. They invest in great management and leadership. The train and develop people so they can grow. And they define their business in a way that brings meaning and purpose to the organization.

Look at how Satya Nadella, the new CEO of Microsoft , talks about work in his introductory email to employees:

Finally, I truly believe that each of us must find meaning in our work. The best work happens when you know that it's not just work, but something that will improve other people's lives. This is the opportunity that drives each of us at this company.

A New Industry Focused on Mindfulness and Balance

Supporting this growing problem, the "mindfulness industry" has become one of the fastest growing markets in the world. The Wisdom 2.0 ("Living Wisely in the Digital Age") conference in San Francisco was sold out in weeks. Arianna Huffington's new website The Third Metric, dedicated to work-life balance, is her fastest growing property (her new book Thrive will very likely be a best-seller). And books like "The Happiness Project," authored by Gretchen Rubin, are rapidly becoming best-sellers.

Interestingly, the UN "World Happiness Report," shows that the happiest countries (Denmark, Norway, Switzerland, Netherlands, and Sweden) are those with some of the best reputations for work-life balance. Businesses in these countries are quite successful - and they have learned to build work environments which are humanistic and let people think.

The Deloitte research actually shows that some of the most stressful places to work are in fast-growing countries like China, where work practices are still immature.  Your can visit the Deloitte Global Human Capital Dashboard to explore the data.

I recently found research by Zeynep Tom ("The Good Jobs Strategy") that compares profitability among retailers that "overstaff" (hire extra people to give people slack time) vs. those who "understaff" (they keep the stores very lean).She found that those who overstaff are more profitable by far, driven largely by their employees' ability to think, serve customers, re-arrange the stores, and be cross trained.

This illustrates a simple fact:

Making the work environment more forgiving is good business.

The Solutions Are Not Easy And They Take Leadership Commitment

Now that we've identified the problem, I suggest that the solutions are not easy. Many of the work practices in large companies have been built up over decades - and leaders are often afraid to make radical changes.

I recently met with the CEO of a major business in Australia and discussed their need to revamp and humanize their performance management process (their employees referred to their performance appraisal process as a "drive by shooting"). While the business was performing well, they had high turnover and were struggling to attract great people.

As we discussed a simpler, more coaching-based performance process, I saw the fear in his eyes. "What if people start goofing off around here?" I told him that part of building a great company is building trust - trust in leaders, trust in managers, and trust in employees. Not always an easy thing for a hard-driving CEO to accept.

We also know that complex issues like diversity and inclusion are important. Research by Deloitte shows that work teams which have high levels of inclusion outperform others by 8:1.

But creating a culture of inclusion takes time, effort, and demands top level commitment. An inclusion strategy impacts hiring, training, as well as leadership behavior. Our new research shows that while more than 80% of companies promote themselves as "highly inclusive" only 11% admit that they really are. Unconscious bias is an important topic and a difficult one to address.

One way to get your head wrapped around this issue is to think of employees as customers. Just like we use Net Promoter scores to tell us what customers want, we should do the same for our own people. Adobe, for example, now uses "pulse" surveys to analyze employee engagement four times a year - and this, coupled with a totally revamped performance management process, has reduced turnover among high performers by over 30%.

New Tools Are Coming

We also see new tools and Big Data solutions beginning to help. While Gallup, Kenexa (IBM), Towers Watson, and many others offer traditional solutions, a new breed of solutions is coming.

Real-time survey providers like CultureAmp, BlackbookHR, TinyHR, and RoundPegg, let you assess engagement and culture fit in real time. Companies like Evolv, Deloitte, and IBM now have retention analytics models you can implement. And a variety of exciting tools from companies like Good.co, Evolv, Entelo, Orgstars, Glassdoor, and others let you monitor employee "happiness" through their online behavior. These companies are marrying the old-fashioned world of I/O psychology with the new world of Big Data and social networking.

I wouldn't be surprised to see LinkedIn offer you an "employee happiness" dashboard some day soon.

Bottom Line: Engagement Is a Big Deal

Let's face it. If you're a CEO or business leader, the only thing you really have is your employees' commitment and engagement. This is not "one of the things" to worry about, this is "the thing" to worry about.

I encourage you to think more holistically about your own team (or organization) and what you can do to improve work, provide more coaching, improve flexibility, become more inclusive, and drive meaning into the workplace.

Of course we have to hold people accountable for results - but work is far more than producing output for a dollar - it is an integral part of our lives.

Now is the time to think holistically about your company's work environment and consider what you can do to create passion, engagement, and commitment. It may be "the issue" we face in business over the next few years.

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I am an industry analyst and researcher focused on corporate talent and learning, HR, leadership, HR technology, and the intersection between work and life.

You can follow me to stay up to date on trends, research, and news on twitter at @josh_bersin or on LinkedIn at http://www.linkedin.com/in/bersin.

For more information on Bersin by Deloitte, please visit http://www.bersin.com .

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