15th January 2009
The IPA met David MacLeod, author of ‘The Extra Mile’, to talk about employee engagement, the economic downturn and the government review on engagement he is currently leading.
David MacLeod is not new to the field of employee engagement. In each of the areas he has worked in over the last 30 years, from manufacturing to central government, he has recognised that getting people on board is the key to success.
MacLeod started out in 1974 on the Dulux graduate trainee scheme, moving quickly into marketing. By the time he left in 1989 he was head of European Marketing and had overseen increased sales and market share across a number of brands. This was followed by stints at Melinex, a film manufacturing company where he lead a complete business redesign, returning the company to profitability, and a number of ICI businesses, ending up as CEO of Uniqema following the amalgamation of ICI Surfactants, Uniqema and three other businesses.
After a long career in the private sector, MacLeod took up a post in central government in 2001, working with various government departments and their permanent secretaries as Senior Advisor on Change and Performance. In 2003 he joined the consultancy Towers Perrin as a full time adviser and has worked with both the public and private sector in that role. During much of that time he focused on co-authoring “The Extra Mile” on the theme of employee engagement. It was therefore unsurprising that when the then Secretary of State for Business, John Hutton, was looking for someone to lead a review into employee engagement in September last year, he turned to David MacLeod.
I begin by asking David how he first became interested in employee engagement.
“Like most people, I didn’t use the term engagement to start with. The first period of my career was in managing a consumer brand, and consumer brands are critically dependent on their ability to innovate, and stay relevant. Trying to get innovation out of a bureaucracy is a big challenge, so the people aspects of innovation really struck me as central.
“Then I went to manage a business turnaround, and while all the analytics were right, it didn’t tell you what to do. And at heart, I think the organisation had lost confidence, and by losing confidence, it had lost engagement. So that was really fascinating.
“Thirdly, I led a merger of two global organisations. It’s then you find that the issue of mergers isn’t so much whether you put two factories into one, or what you do with the sales forces, it was more whether those people in those organisations ever wanted to merge. Had we worked at the commitment as to why this future was better than the previous futures? That again got me incredibly interested in engagement.
“Then I did a stint in the Cabinet Office. People said that the public sector and private sector were incredibly different, but frankly, we’re still trying to get organisations to move from A to B, and what moves them? It isn’t the IT systems, it’s the people that move.
“So all those things got me increasingly interested in this very complex area of people and commitment.”
With the growth in interest in engagement and a greater number of voices speaking on the subject, it is often harder to pin down exactly what engagement is. But MacLeod is absolutely clear:
“It is not about work/life balance, although it might touch that; it’s not about happiness, although it might touch that; it is about organisations performing, delivering better what they set out to deliver. The question is whether we are harnessing discretionary effort.
“It is not to be confused with HR – which is good stuff. Let’s have a good performance management system, let’s have a good recruitment process. But having a good marketing strategy is equally relevant to engagement. In fact, I’d say having a good, clear, strategy is as important as anything.”
Given MacLeod’s background, it is perhaps unsurprising that he sees engagement as a priority which all staff within the organisation, from the CEO to the supervisor, must take responsibility for:
“HR has an important role to play, but it is really about how we do things around here. It is not an activity for a Friday morning and it is not just an HR initiative.”
But as IPA research has shown, identifying the need for greater engagement amongst the workforce is common, but working out how to put it into practice is another matter. How do you encourage people to go the extra mile – to exert that discretionary effort?
MacLeod warns against the idea of a golden bullet when it comes to engagement. It takes time and effort, and there is no quick fix. But there are certainly some important principles that need to be in place if engagement is to improve.
“To engage people, to get that discretionary effort, there is a critical question – what are you engaging them in? What has to be in place is a clear strategic narrative that people can hold in their minds.”
MacLeod also talks of the importance of the top team ‘walking the talk’, of being in touch with the frontline, of valuing middle management, unleashing, rather than recruiting, talent, and incentivising behaviour that contributes to engagement.
A critical question is whether the employee engagement agenda is an agenda for all workplaces, from manufacturing to marketing, or is it sector specific? Are those workers on a production line in a meat processing factory as willing to go the extra mile as the finance director, and is it in their interest?
MacLeod acknowledges that engagement may work differently in different sectors, something which the review will look at in more detail. But, adds, “I can’t see where it doesn’t work”.
“Whatever your motivation to work, whether you are working 9-5 to get the dosh, or you want more from work, you still have discretionary effort, and most people want to do a good job. The question is how you get the effort that people are putting in up a bit, whatever your starting point is.”
For many businesses the next year will be particularly challenging. Some may decide that the need to cut costs knocks engagement off agenda for the time being. However, while MacLeod stops short of presenting the economic downturn as an opportunity for improving engagement, he argues that it is not just a matter for boom times and advises leaders to think about how they can “harness the environment positively.”
There are, of course, risks and consequences to letting engagement slip during a downturn. Business may get into a downward spiral whereby costs must be adjusted to match income, often resulting in downsizing, but then the pressured environment that results from the downsizing inhibits innovation and good customer service which then causes the revenue line to slip again. The result? Further downsizing.
“We’ve all seen” says MacLeod, “Or maybe been through, downsizing done well and downsizing not done well and the effect on the remaining employees is critical. The way downsizing is managed will often make the difference between organisations surviving or not.”
So what are the key elements that ensure downsizing is done well, minimising disengagement?
Treating people as adults is important, according to MacLeod, as is good communication of a clear strategy, acting quickly and being fair .
Figures out from the CIPD show that many organisations are cutting bonuses this year, or limiting them to the very highest performers. Can you still maintain engagement when there is no scope for financial incentives and rewards?
“The important thing in rewards is fairness. Most bonuses are between 5 and 20 per cent. There is a wafer thin group that are always in the press who get millions, but for most of us bonuses aren’t life changing. So really it is about the fairness of those rewards. Rewards attract people to organisations, but once I’m there they drop considerably down the list of things that engage me.”
Engagement strategies might seem like a luxury many organisations cannot afford this year, but if MacLeod’s argument is right, that engagement is, first and foremost, about delivering better performance, then it may be that improving workforce engagement is something organisations can’t afford not to do.
The MacLeod Review is due to report in the Spring. Its recommendations have the potential to put engagement high on the policy agenda, and to shape the government’s workforce strategy over the coming years.
To respond to the call for evidence for the MacLeod Review of employee engagement visit the Department for Business, Enterprise and Regualtory Reform website here.
