The Engagement Factor:

Transcription

1 The Engagement Factor: An Independent Insurance Agency Employee Engagement Study Project Sponsored By: Project Conducted By: Lead Researcher: J. Lee Whittington, PhD

2 The Engagement Factor: Independent Insurance Agents of Texas September 1, 2015 EXECUTIVE SUMMARY During the spring of 2015 member agencies of the Independent Insurance Agencies of Texas (IIAT) partnered with a research team from the University of Dallas College of Business to conduct an on-line survey of the factors that contribute to employee engagement which also included measures of job satisfaction, organizational commitment, key elements of the organizational processes, job characteristics, and leadership dimensions that contribute to positive employee attitudes and behaviors. Our study examined employee engagement at TWO levels. At the organizational process (macro) level, we asked respondents to evaluate the human resource value chain and the performance management system in their respective organizations. At the individual employee (micro) level, respondents evaluated their: actual and desired characteristics of their job ( to assess the level of fit an employee experienced with their current job) relationship with their immediate manager and the level of trust they felt with that manager manager s leadership style levels of satisfaction with various aspects of their job commitment to the organization level of engagement, and the frequency with which they were willing to go above and beyond the minimum requirements of their jobs (organizational citizenship behavior) In order to provide a comprehensive and thorough assessment of the drivers and consequences of employee engagement, our survey was very long. This was explained in our cover letter to all participants. To encourage people to complete the survey, we offered a chance to receive one of six ipads. The winners were randomly selected and the ipads were delivered in June of this year.

3 We received 260 fully completed surveys. The majorities of the respondents were female (78.1%), white/caucasian (82.8%), and had a bachelor s degree or some college (76.5%). The majority of respondents (54%) indicated they were in customer service or customer service support roles. The next highest group of respondents was in producer roles (18%), and 15% of those who completed the survey were in Management roles, while13% identified themselves as administrative personnel. The results indicate that the employees that participated in the survey are committed, engaged, and satisfied with their jobs. These employees report a good level of fit with their jobs. They reported high levels of trust in their leaders with whom they feel they have a high quality relationship. These leaders are using a full-range of leadership behaviors to create a positive work environment. While there is always room to improve on these measures, the member agencies should take pride in the fact that their employees are generally pleased with their work environment The remaining sections of this reports addresses the following: Summary of key factors measured in the study The Engagement Factor model Detailed report of organization (macro) level measures of engagement Detailed report of individual (micro) levels of engagement Conclusion

4 SUMMARY OF KEY VARIABLES MEASURED IN THIS STUDY The table below provides a summary of the average responses obtained from the IIAT participants. For comparison purposes, the average responses from another multiple-industry sample are also provided. On every aspect measured in this study, the IIAT scores were higher than the comparison group. Variable IIAT Average Response ORGANIZATIONAL-LEVEL DRIVERS: Scale Format Comparison Sample Average Human Resource Value Chain point 3.28 Performance Management System point 3.46 MICRO-LEVEL DRIVERS: Job Characteristics-Actual point 3.69 Job Characteristics-Desired point 4.01 Quality of Leader-Follower Relationship point 5.03 Trust in the Leader point 5.03 Transformational Leadership point 4.70 Contingent Reward point 4.78 EMPLOYEE OUTCOMES: Engagement point 3.94 Job Satisfaction point 4.60 Affective Commitment point 4.19 Organizational Citizenship Behavior point 4.00

5 Micro-Level Macro-Level THE ENGAGEMENT FACTOR MODEL This research was guided by this model. While this research was guided by the model presented below, the IIAT research has the added advantage of incorporating employee s level of job satisfaction and their commitment to their organization. The Engagement Factor: Building a High-Commitment Organization in a Low Commitment World Organizational Strategy (e.g. service excellence, innovation, low-cost provider) Recruitment, Selection, Orientation and Socialization HR Value Chain Performance Planning and Evaluation, Pay and Rewards, Training and Development, Career Development Employee Separation Full-Range Leadership Enriched Jobs Goal Setting ENGAGEMENT Trust Performance In-Role Extra-Role (OCB) Source: Whittington, J. Lee & Galpin, T.J, The Engagement Factor: Building a High Commitment Organization in a Low Commitment World, Journal of Business Strategy, 31, 5, 14-24, 2010.

6 ORGANIZATIONAL (MACRO) LEVEL MEASURES: Evaluation of the Human Resource Management Value Chain (HRVC) The HR value chain is an integrated set of human resource management practices from the sourcing and hiring of talent, through workforce development and engagement, to employee separation which engages people in a committed pursuit of a chosen strategy and a set of core values. HRVC The Human Resource Value Chain Recruitment Selection Orientation Socialization Performance Planning & Evaluation Pay & Rewards Training & Development Career Development & Management Employee Separation Evaluation of the Performance Management System Effective goal-setting takes place in the context of a comprehensive performance management system that links performance planning and performance evaluation. This process is further enhanced by regular and systematic goal-related feedback. Ideally, the performance planning process should clarify for individual employees how their task performance contributes to the overall strategic goals of the organization. This links their contribution to the organization s mission and helps the employee see the significance of their contribution. Performance evaluations should be linked to the goals developed in the performance planning process. Organizational Level Drivers Average Human Resource Management Value Chain 3.44 Performance Management System 3.59

7 EMPLOYEE (MICRO) LEVEL MEASURES: Individual Drivers of Commitment, Engagement, and Satisfaction We also examined the drivers of employee commitment, engagement and satisfaction. That is, we looked at the various dimensions of the job and the relationship employees have with their managers that influence employee attitudes and behaviors. The results of these evaluations are summarized in this table and discussed in greater detail below. Micro-level Engagement Drivers Average Job Characteristics Actual 4.07 Job Characteristics Desired 4.24 Fit: Actual v Desired Job Characteristics 0.17 Transformational Leadership 5.22 Contingent Reward 5.08 Leader-Member Exchange LMX 5.46 Trust 5.79 Job Characteristics: The job characteristics model is an elaborate model of the factors that contribute to job enrichment and the employee attitudes and behaviors that result from job design efforts. According to this model there are five core job dimensions. If these job dimensions are present, employees will experience three critical psychological states: a sense of meaningfulness, a sense of responsibility, and knowledge of results. These three critical psychological states lead to high levels of employee commitment, satisfaction, and performance. Five Core Job Dimensions: According to the job characteristics model, the five core job dimensions are skill variety, task identity, task significance, autonomy, and feedback. 1. Skill variety refers to the variety of skills that are required in order to perform the job. 2. Task identity has to do with whether you do a whole piece of work were just a part. For instance working on an assembly line would have low task identity. However if you built the entire car up from scratch by yourself that would have high task identity. 3. Task significance has to do with how important your job is to the overall organization. 4. Autonomy deals with the amount of control and discretion you have about how you do your work. 5. Finally, feedback refers to information the job itself provides to you about how well you're doing.

8 In addition to these five core job characteristics, we also asked employees to assess the following aspects of their job: 6. Task complexity refers to the amount of challenge and difficulty as well as the requisite level of skill needed to perform the job. 7. Dealing with others is the degree to which a job requires employees to deal with other people to complete the work. 8. Friendship opportunities refer to the extent to which a job allows employees to talk with one another on the job and to establish informal relationships with other employees at work. Job Fit as a Driver of Commitment, Engagement, and Satisfaction In this study, we asked participants to evaluate 8 core job characteristics. This evaluation was based on the employee s assessments of the actual characteristic of the job, as well as the desired level of each characteristic. By comparing the difference between reported actual scores and desired levels of each characteristic, we were able to assess the degree of fit employees are experiencing in their jobs. The fit scores for each dimension are depicted in this chart. Overall, it appears that there is a good fit in terms of actual versus desired characteristics. Although the respondents generally would like more of each dimension with the exception of the amount of dealing with others required to accomplish their task these differences are very small. Dimensions of Job Characteristics Actual Desired Difference Autonomy Identity Friendship Variety Complexity Feedback Significance Dealing with Others Full-Range Leadership Effective leaders engage in a full range of behaviors that encompass elements of both contingent reward and transformational behaviors.

9 Contingent Reward Contingent reward refers to the efforts made by the leader to clarify expectations so that followers will understand what they need to do in order to receive rewards. This was measured on a 7-point scale and resulted in an average response of Transformational Leadership Transformational leaders inspire their followers to transcend their self-interests for the good of the organization. Their followers are transformed by raising their awareness of the significance of designated outcomes. Transformational leadership was measured using 22 questions on a 7- point scale. The average response was Quality of Leader-Follower Relationship (LMX: Leader-Member Exchange) The quality of the leader-follower relationship impacts a wide variety of outcomes. These outcomes include employee performance, overall job satisfaction, satisfaction with supervision, organizational commitment, turnover intentions, perceptions of fairness, trust in the supervisor, and innovative behavior of followers. We measured the quality of the leader-follower relationships using 6 questions on a seven-point scale. The average response was Trust High quality relationships between leaders and followers provide the fertile soil necessary to create trust. Trust, in turn, is a crucial for creating sustainable, high-engagement organizations. In this study we measured trust with 7 questions using a seven-point scale. The average response was EMPLOYEE OUTCOMES: Measures of Employee Engagement, Job Satisfaction, and Organizational Commitment, and Organizational Citizenship Behavior Engagement refers to the investment of an individual s complete self into a role. We measured employee engagement using 18 questions. Respondents were asked to indicate their agreement on a five-point Likert scale, ranging from Strongly Disagree (1) to Strongly Agree (5). The average level of overall engagement in the IIAT sample is 4.21.

10 We also obtained scores for three sub-dimensions of engagement: Physical Engagement refers to the level of energy applied into the execution of the job. The average score for this dimension is Emotional Engagement measures the level of pleasantness, enthusiasm and interest applied into the execution of the job. The average score for this dimension is 4.08 Cognitive Engagement is the level of attention and absorption applied into the execution of the job. The average for this dimension is 4.28 Job Satisfaction is the employee's level of positive affect toward his or her job. Overall satisfaction is a function of satisfaction with different aspects of the job (pay, supervision, the context in which the work is done, and characteristics of the job itself). We measured job satisfaction using 36 questions with a 7-point Likert scale ranging from Strongly Disagree (1) to Strongly Agree (7). Overall job satisfaction for this group is Nine separate facets of satisfaction were also measured. The average scores for these ranged from a low of 4.16 to a high of The highest levels of satisfaction were reported for satisfaction with the work itself (average 5.73), satisfaction with the employee s direct supervisor (average 5.67), satisfaction with coworkers (average 5.42), and satisfaction with benefits (average 5.36). The lowest level of satisfaction was associated with promotion opportunities (average 4.16). Satisfaction Dimension 7 Point Scale Average Satisfaction with Work Itself 5.73 Satisfaction with Supervisor 5.67 Satisfaction with Coworkers 5.42 Satisfaction with Benefits 5.36 Satisfaction with Rewards 5.04 Satisfaction with Communication 5.03 Satisfaction with Operations 4.86 Satisfaction with Pay 4.66 Satisfaction with Promotion Opportunities 4.16 Overall Job Satisfaction 5.10 Organizational commitment refers to the strength of an individual's identification with an organization. There are three forms of organizational commitment:

11 Normative Commitment refers to people staying with her organization because they have a deeply held value about sticking with commitments. When people have a normative commitment to the organization they are staying because they ought to. We measured normative commitment using 8 questions with a 7-point Likert scale ranging from Strongly Disagree (1) to Strongly Agree (7). Normative commitment for this group is Continuance Commitment occurs when people stay because they don't have any place else to go or simply cannot afford to leave the organization at this time. With continuance commitment people are staying because they have to. We measured continuance commitment using 8 questions with a 7-point Likert scale ranging from Strongly Disagree (1) to Strongly Agree (7). The average for continuance commitment is Affective Commitment is based on an individual's desire to remain in an organization because they believe in and support the goals and values of the organization. They have a willingness to put forth effort on behalf of the organization. When people have affective commitment they stay because they want to. We measured affective commitment using 8 questions with a 7-point Likert scale ranging from Strongly Disagree (1) to Strongly Agree (7). The average for affective commitment is Commitment Type 7 Point Scale Average Affective Commitment 5.33 Normative Commitment 4.99 Continuance Commitment 4.37 Organizational Citizenship Behavior - OCB - refers to employee behaviors that go beyond inrole expectations. OCBs promote the efficient and effective functioning of the organization, yet they are neither elicited nor enforced through formal organizational roles. These are voluntary activities engaged in by employees without regard to possible sanctions or incentives. OCB is a multifaceted construct consisting of five factors: altruism, courtesy, conscientiousness, sportsmanship, and civic virtue. A 24-item self-report scale was used to measure OCB. Each of the OCB items was measured using a seven-point Likert scale ranging from (1) Strongly Disagree to (7) Strongly Agree. Overall OCB is 4.21.

12 Courtesy involves those proactive behaviors aimed at avoiding work-related problems that affect others. While altruism focuses on assistance with existing problems, courtesy seeks to avoid problems. The average score for OCB - Courtesy is Conscientiousness describes discretionary behaviors that exceed the minimal requirements of a job. Conscientious behavior is the result of an individual's personal code of conduct, and often results in consequences that are more global in nature than the individual impacts of altruism and courtesy. The average score for OCB - Conscientiousness is Civic virtue is demonstrated by a sincere concern and involvement with the political aspects of the organization. The average score for OCB - Civic Virtue is Sportsmanship is exemplified by employees who avoid petty griping and tolerate the various, inevitable annoyances of organizations. The average score for OCB - Sportsmanship is Altruism includes spontaneous behaviors to provide assistance to a specific individual with a task, problem or issue. Altruism also would include willfully helping those outside the organization such as customers and vendors. The average score for OCB - Altruism is OCB Dimension 7-Point Scale Average Courtesy 4.30 Conscientiousness 4.27 Civic Virtue 4.21 Sportsmanship 4.20 Altruism 4.20 Overall OCB 4.21 CONCLUSION Taken as a whole, the results reported here indicate that the employees who responded to this survey have a positive attitude toward their organizations. They feel good about their jobs, and feel that they have a high-quality relationship with managers whom they trust. These positive attitudes are significantly related to the high levels of employee engagement, overall job satisfaction, and commitment to their agencies.