The true cost of undervaluing your people

A recent webinar hosted by People Management posed this very question, and invited three expert panellists* to discuss it. In this article, we take a look at the key takeaways and consider how UK SME business leaders can apply the learnings for maximum impact.

Europe reportedly ranks among the lowest for employee engagement at a worrying 14%.

In the same research, the UK came out at just 9%.

But what is the cost of disengagement? What does it look like day-to-day? And, critically, how can business leaders address it, and seize the opportunity to increase engagement for the good of their organisations?

What does employee engagement look like?

An engaged workforce will typically demonstrate particular characteristics, which include things like enthusiasm, participation, focus, proactivity, responsiveness, connection and energy. People will feel safe to speak up with ideas, issues and constructive challenges, and feedback will be given and received regularly and effectively.

The metrics of good engagement tend to be around productivity, low absence rates, low staff turnover and good employee wellbeing ratings and positive feedback.

It is not all about “happy” employees: happiness, as the panel discussed, is a more fleeting state which no organisation has a great deal of control over, whereas engagement is actionable, as it relates more to involvement and consultation, planned development, good management practice, reward, recognition and company culture; elements which businesses do have more control over.

How do you measure engagement?

There is no one size fits all solution, so it will vary by organisation. As mentioned above there are certain flags which would indicate engagement rates, like high absence rates or churn, and reduced productivity. Other indicators are less finite: morale, energy, trust and connection are hard to measure, for example.

Some organisations use the Net Promotor Scoring system (NPS) to show how likely employees would be to recommend their organisation, while many will use internal feedback systems via surveys or face to face interviews to assess engagement levels. The honesty with which systems like this will be completed usually depends on the level of psychological safety present within the business, so might not always give a true indication of the real engagement felt day-to-day.

The impact of disengagement

Many of you reading this will have heard the term “quiet quitting,” which rose sharply in prominence in 2022, peaking at around 1.2 million monthly Google searches and sparking a raft of similar terms, all relating in essence to the importance of employee engagement. The volume of search traffic alone suggests just how common a phenomenon it is, and it’s a very clear sign of a disengaged workforce.

When people are disengaged, they won’t go that extra mile, they won’t be proactive, enthusiasm dwindles and there can be a significant, negative ripple effect across teams and even whole organisations.

The most obvious symptoms are usually high staff turnover and increased absence, but there are many others, like decreased productivity, slower delivery on projects, fewer volunteers for new assignments, non-productive conflict and general apathy. Without the drive and purpose that engagement brings, workforces stagnate and their effectiveness is significantly impacted. There can also be more cases of mental health concerns and burnout.

So how do you drive better engagement?

While the details of delivery will vary widely, there are a few common threads which are widely agreed on as the critical ingredients for employee engagement: reward, recognition, purpose, psychological safety and development.

Without a sense of purpose, it’s hard to unite and motivate people to achieve their goals, and without the appropriate levels of reward and recognition, it will be nigh on impossible. Psychological safety is what will enable honest conversation, constructive feedback and challenge, trust and flourishing relationships, while personal and professional development not only keeps people involved and motivated, it also benefits the organisation as a whole.

Remember – reward isn’t always about the money, but fair compensation for effort is important. It’s just not the only important thing. And as the panel said, no-one ever quit from too much recognition: letting people know they are appreciated and add value goes a long, long way.

The best ways to engage and motivate your people

According to the webinar panel, these are the best ways to motivate your people, taken from extensive research, observation and conversation with both senior leaders and employees at all organisational levels.

Good management is key. Managers aren’t always equipped to handle all the elements of managing people and require support when transitioning and developing in these roles. Micromanagement and other issues can result in depleted team moral and performance, as team members feel undervalued and untrusted. Effective management and good relationships within teams are absolutely essential for engagement and managers at all levels need support in developing their people skills.
Purpose and meaning are really, really important. People will usually put more effort in when they feel connected to a shared vision and purpose. If you don’t buy in to that vision, you’re less likely to feel emotionally or personally committed to your role and will therefore be less engaged. Without purpose it’s difficult to create any sense of personal accountability, and accountability is vital for true engagement.
Reward isn’t always about money. Financial incentive is important and people need to feel valued and able to meet their financial needs. But reward can come in many forms, from additional leave to corporate perks, extra flexibility, travel or additional learning opportunities. The key factor is choice – people want their rewards customised to them, so beware the one size fits all approach! For a more in-depth look at this subject, this blog highlights ways to reward your people without breaking the bank.
Set rewarding work – not just reward. People want to be given better quality work NOW not just promised it in the future. While future development and succession planning is also vital, many people are keen to be challenged in their current roles to prove themselves and develop skills in the short term, not only the longer term.
Frequency of recognition is vital. In a nutshell – don’t wait for a 1-2-1, company newsletter or performance review. Recognise contribution frequently. Catching things in the moment (both good and bad) is really important. Little and often is a better way to build an open and honest culture of feedback and constructive challenge and everyday recognition.
Like reward, recognition needs to be customised. Every person in your organisation is different, and will be motivated by different things. Ensuring that those varying emotional, financial and professional needs are met is therefore critical, using individualised ways of communicating recognition to make sure everyone feels seen and heard. Some people may relish the spotlight but others will genuinely not. Some may prefer a physical token of appreciation while others would prefer more challenge and responsibility. Know your people, and recognise them in ways which are meaningful to them.
Lead by example. Setting the tone from the top gives permission to everyone in the organisation to be honest and open too. From high staff turnover to how you receive feedback, the people in your business will be watching what behaviours are demonstrated at the top, so you can expect amplification of the negatives if that’s what’s happening. External perspective can be really useful in this scenario, to get an honest appraisal of how your senior leaders are conducting themselves, and how those behaviours are being interpreted throughout the business.
Tackle the systems, not just the symptoms. From mental health to professional development, people are good at seeing through transparent gestures and sticking plasters. Tackle the systems in your business from a foundational level to create a true sense of engagement and commitment. This recent blog explores this subject further from a mental health perspective.
Show that you care. Emotional intelligence is important in the modern world of business and it’s far from a “soft skill.” On the contrary, it’s what underpins great relationships, honest and constructive communication, and a genuinely authentic connection capability between people. If your people are committed to having better conversations, showing that they care (as opposed to just saying it) and exploring self-reflection and empathy as ingrained approaches, the positive impact on engagement can be truly transformational.
Foster a culture of excellence – not perfection. Constant improvement and incremental gains are far more important than getting it right first time. Creating a culture where people feel supported, valued and heard, so that they have the courage to innovate without fear of recrimination if they fail first time, will deliver far better results in the long term and create real possibility for progress.

“No-one ever quit from too much recognition.” Janina Norton

If you think your people could be among the 91% in the UK at risk from low employee engagement and would like some help exploring ways to create growth-focused structures and processes to address it, we would love to hear from you. Call 0345 646 5201 Book your free 30 minute consultation with one of our trusted people experts and take the first step to a more engaged and productive organisation.

Who were the panel?

Janina Norton: Global Head of Culture, AXA

Claire de Carteret: MD, EMEA at Gallup

Jeremie Brecheisen: Gallup, CHRO Roundtable