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ANTECEDENTS OF EMPLOYEE ENGAGEMENT AND THEIR IMPACT ON
EMPLOYEE PERFORMANCE
ABSTRACT
Purpose
The paper aims in identifying key factors that contribute to employee engagement through a
wide literature survey. These variables were identified based on the key outcomes of
employee engagement. Further the paper aims in finding the strength of relationship between
employee engagement and employee performance.
Methodology
The methodology consists of a thorough literature review after which a model was framed for
employee engagement. An instrument measuring the various factors was built and tested for
reliability using a pilot data of 60 employees. The validated tool was used for final data
collection of about 180 employees. Simple random sampling was used to select the
employees from a large scale organisation, as the study started as a case-study of this
organisation regarding employee engagement. Regression analysis was used to validate the
model and to find the impact of employee engagement on employee performance. The data
was tested for the assumptions of regression namely, normality, linearity, homoscedasticity
and independence of residuals and found fit for the technique. Multiple relationships were
examined using structural equation modelling technique, visual partial least squares
regression and the path validity was determined.
Major Results
Upon regression analysis, the various factors to predict employee engagement resulted in a
significant R2 value (67.2%) that indicates that all factors are significant in predicting the
dependent variable. However the t values were analysed that resulted in identifying two
variables, namely, working environment (t = 5.503) and team and co-worker relationship (t =
3.623) as they had a high and significant moderation on employee engagement. It was also
found that employee engagement has a strong positive relationship with employee
performance as the R2 value was 59.7 % which is highly statistically significant. The SEM
model gave still uplifted values of about 75 % impact on employee performance due to
employee engagement.
Implications
The study implies that enhancing working environment in all its aspects including physical
and emotional environment, effective leadership along with improved team and co-worker
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relationship results in employees having a healthy engagement with their work. Thereby his/
her performance also increases that contributes to the effectiveness of the organisation.
Suggestions
As many studies along with this study has proved the strong relationship between employee
engagement and employee performance, it is high time for organisations to note that
employee engagement has to be improved for which the identified factors may be used as
means to achieve the same. This will result in enriched employee performance as the study
has confirmed that nearly 65 % of employee performance is influenced by employee
engagement.
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INTRODUCTION
Employee engagement is the level of commitment and involvement an employee has
towards their organization and its values. An engaged employee is aware of business context,
and works with colleagues to improve performance within the job for the benefit of the
organization. It is a positive attitude held by the employees towards the organization and its
values. Employee engagement is defined as a positive emotional connection to an employee’s
work. Engaged employees are inspired to go above and beyond the call of duty to help meet
business goals. Engagement at work was conceptualized by Kahn, (1990) as the ‘harnessing
of organizational members’ selves to their work roles. In engagement, people employ and
express themselves physically, cognitively, and emotionally during role performances. There
are a number of factors that defines an employee as an engaged employee. The concept has
evolved from existing positive factors that make an employee positively productive. This
paper identifies the key variables that describe employee engagement through a thorough
literature survey and identifies the strength of impact of employee engagement in employee
performance.
Employee Performance is outcomes achieved and accomplishments made at work. It
is aimed at results as planned. Although performance evaluation is at the heart of
performance management (Cardy 2004), the full process extends to all organizational
policies, practices, and design features that interact to produce employee performance. This
integrative perspective represents a configurational approach to strategic human resources
management which argues that patterns of HR activities, as opposed to single activities, are
necessary to achieve organizational objectives (Delery and Doty, 1996). One variable that has
been receiving increasing attention as a key determinant of employee performance is
employee engagement (Macey, Schneider, Barbera, and Young, 2009). Studies (Mone and
London, 2010) suggest that fostering employee engagement will lead to higher levels of
performance. Along these lines, we argue that the performance will be enhanced by focusing
on employee engagement as a proximal outcome and fundamental determinant of job
performance. The paper aims at studying the impact that the variable engagement along with
its antecedents makes on the variable performance of employees. The instrument used to
measure employee engagement and employee performance was validated and data was
collected from 181 employees at lower and middle managerial levels to analyse the above
objective.
LITERATURE REVIEW
Employee Engagement
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Every organization wants to gain competitive advantages over others and employee
engagement is the best tool for it. In fact, employee engagement is considered to be the most
powerful factor to measure Company’s vigour according to Baumruk (2004). Kahn (1990),
one of the foremost researcher to introduce the concept, defines employee engagement as
“the harnessing of organization members’ selves to their work roles; in engagement, people
employ and express themselves physically, cognitively, and emotionally during role
performances”.
He also added that three psychological engagement conditions are necessary for an
employee to be rightly engaged: meaningfulness (work elements), safety (social elements,
including management style, process and organisational norms) and availability (individual
distractions). Another popular definition was by Gallup’s Buckingham and Coffman (1999)
who defined engagement in their book as “the right people in the right roles with the right
managers drive employee engagement” (p. 248), which has been described as causing an
overnight sensation amongst business people (Shuck and Wollard, 2010). Buckingham and
Coffman (1999) also argued that a fully engaged employee is one who could answer yes to all
12 questions on Gallup’s workplace questionnaire.
Hewitt Associates LLC (2004) defined employee engagement as the state in which
individuals are emotionally and intellectually committed to the organisation or group, as
measured by three primary behaviours: Say, Stay and Strive. This is explained as that the
engaged employee will say positively about the organisation to his fellow employees and the
potential employees of the company; he will be eager and has a intense desire to work in the
organisation in spite of various opportunities available to him; the employee exerts extra
effort and exhibits behaviours that contribute to business success.
During this period, employee engagement was also defined as emotional and
intellectual commitment to the organisation (Baumruk 2004, Richman 2006 and Shaw 2005)
or the amount of discretionary effort exhibited by employees in their job (Frank et al., 2004).
Although it is acknowledged and accepted that employee engagement is a multi-faceted
construct, as previously suggested by Kahn (1990), Truss et al., (2006) define employee
engagement simply as ‘passion for work’, a psychological state which is seen to encompass
the three dimensions of engagement discussed by Kahn (1990), and captures the common
theme running through all these definitions. DDI or Development Dimensions International
(2005) defines engagement as "the extent to which people value, enjoy and believe in what
they do". Its measure is similar to employee satisfaction and loyalty. Robinson, Perryman and
Hayday (2004) argues that engagement is "a positive attitude held by the employee towards
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the organization and its values. An engaged employee is aware of the business context, works
with colleagues to improve performance within the job for the benefit of the organization.
The organization must develop and nurture engagement, which is a two-way relationship
between employer and employee".
Rothbard (1999) defines engagement as psychological presence but goes further to
state that it involves two critical components: attention and absorption. Attention refers to
“cognitive availability and the amount of time one spends thinking about a role” while
absorption “means being engrossed in a role and refers to the intensity of one’s focus on a
role.”
A fully engaged employee is intellectually and emotionally bound with the
organization, gives 100 percent, feels passionately about its goals and is committed to live by
its values. This employee goes beyond the basic job responsibility to delight the customers
and drive the business forward. Research shows that engaged employees perform better, put
in extra efforts to help get the job done, show a strong level of commitment to the
organization, and are more motivated and optimistic about their work goals (Fleming and
Asplund, 2007; Rich, LePine, and Crawford, 2010; Richman, 2006, Macey and Schneider,
2008). Numerous studies suggest that the presence of higher levels of employee engagement
significantly reduces turnover intention (Maslach et al., 2001; Saks, 2006).
According to the Gallup there are three types of people. Engaged employees who are
builders, want to know the desired expectations for their role in their organisation so they can
meet and exceed them. They're naturally curious about their company and their place in it.
They perform at consistently high levels and are passionate about their work and moving
their organisation forward.
Not-engaged employees tend to concentrate on tasks rather than the goals and
outcomes they are expected to accomplish. They want to be told what to do just so they can
do it and say they have finished. They focus on accomplishing tasks vs. achieving an
outcome. Employees who are not-engaged tend to feel their contributions are being
overlooked, and their potential is not being tapped. They often feel this way because they
don't have productive relationships with their managers or with their co-workers.
The actively disengaged employees are cave dwellers who are "Consistently against
Virtually Everything." They're not just unhappy at work; they're busy acting out their
unhappiness. They sow seeds of negativity at every opportunity. As workers increasingly rely
on each other to generate products and services, the problems and tensions that are fostered
by actively disengaged workers can cause great damage to an organization's functioning.
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Academicians depicted interest in the concept to a larger extent only from 2006 (Mary
Welch, 2011) during when a number of studies extended the concept of employee
engagement to job engagement, work engagement and organisation engagement. Saks (2006)
used Khan’s definition (1990) and developed the construct including job and organisation
engagement. According to Saks the antecedents of employee engagement were job
characteristics, perceived organisational support, perceived supervisor support, rewards and
recognition, procedural justice and distributive justice. And the consequences of engagement
were job satisfaction, organisational commitment, intention to quit and organisational
citizenship behaviour.
Gallup Researchers Fleming and Asplund (2007) presented employee engagement as:
“the ability to capture the heads, hearts, and souls of your employees to instil an intrinsic
desire and passion for excellence”, thus adding a spiritual element to Gallup’s established
cognitive and emotional aspects of engagement. Schaufeli and Bakker (2010) defines work
engagement as ‘the psychological state that accompanies the behavioural investment of
personal energy.
Six management functions emerged in order of importance as critical determinants of
Executive's Engagement according to Joshi and Sodhi (2011), namely, Job Content
(autonomy, challenging opportunities for learning), Compensation/ Monetary Benefits
(attractive salary vis-à-vis qualifications and responsibility, adequate compensation for the
work and intra- organization parity), Work Life Balance (appreciative of personal needs, able
to spend time with family), Top-Management Employee Relations (approachability of top
management, their values and ethical conduct, equality in treatment, respecting the views of
subordinates, providing an environment of working together), Scope for Advancement and
Career Growth (well designed policy, adequate opportunities for career growth and
advancement, clearly laid down career growth paths; implementation of the promotion policy
in a fair and transparent manner, help to the employees in achieving growth) and Team
Orientation/Team Work (importance, cooperation in inter and intra department teams). They
also found that seven policies and practices have emerged as the drivers of employee
engagement for the non-executives, supervisors and workers of which four of them i.e. Work
Life Balance, Job Content, Monetary Benefits and Team Orientation are similar to those of
the executives. Three other drivers of engagement for the non-executives comprises
Union/Association Management Relations (working together, sorting disputes in an amicable
manner, appreciating each other's point of view, constructive contribution of unions/
associations), Recognition and Rewards (reward for honest, sincere hard work, policies
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administered in a fair manner, creative ideas rewarded) and Welfare facilities (facilities for
rest and recreation, working conditions, similar in similar companies).
Taking the perspectives from above literature and more, this study consolidated a
number of factors that contributed towards Khan’s psychological conditions of employee
engagement and employee engagement in general. Various factors that facilitate these three
dimensions of employee engagement were identified and were empirically tested and found
to be valid antecedents of employee engagement. The factors are represented in figure 1.
Figure 1 – Factors facilitating Employee Engagement
Work environment is one significant factor that was identified in this study that
determines employee engagement. Studies (McCashland 1999, Miles 2001 and Harter et al.,
2002, Holbeche and Springett, 2003) prove that employee engagement is something that is
produced by aspects in the workplace. According to Deci and Ryan (1987) management
which fosters a supportive working environment typically displays concern for employees’
needs and feelings, provides positive feedback and encourage them to voice their concerns,
develops new skills and solve work related problems. According to Robinson (2006),
employee engagement can be achieved through the creation of an organisational environment
where positive emotions such as involvement and pride are encouraged, resulting in
improved organisational performance, lower employee turnover and better health. Similar
Team and Co-worker
Workplace well-being
Leadership
Work environment
Organizational policies
Training and Career Development
Compensation
Employee Engagement
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view was given by May et al., (2004) and Rich et al., (2010). Therefore a meaningful
workplace environment that aids employees for focused work and interpersonal harmony is
considered to be related to employee engagement.
Leadership was the second main factor identified to be a fundamental factor to imbibe
employee engagement. Effective leadership is a higher-order, multi-dimensional construct
comprising self-awareness, balanced processing of information, relational transparency, and
internalized moral standards (Gardner et al., 2005, Walumbwa et al., 2008). Research
(Wildermuth and Pauken, 2008, Wallace and Trinka, 2009) shows that engagement occurs
naturally when leaders are inspiring. Employees feel engaged when their work is considered
important and meaningful. The task of leadership is therefore to ensure that employees see
how their specific task contributes to the overall business success. Authentic and supportive
leadership is theorized to impact employee engagement of followers in the sense of
increasing their involvement, satisfaction and enthusiasm for work (Gardner et al 2005,
Schneider, Macey, and Barbera (2009). The leadership factor comprised indicators on
effective leadership and perceived supervisor support.
Team and Co-worker relationship is another aspect that emphasises explicitly the
interpersonal harmony aspect of employee engagement. Kahn (1990) found that supportive
and trusting interpersonal relationships as well as supportive team promotes employee
engagement. Organizational members felt safe in work environments that were characterized
by openness and supportiveness. Supportive environments allow members to experiment and
to try new things and even fail without fear of the consequences (Kahn, 1990). According to
May et al., (2004) relationships in workplace was found to have an impact on
meaningfulness, relates to engagement .Thus if the employee is having good relationship with
his co-workers, his work engagement is expected to be high. Locke and Taylor (1990)
recognised the relatedness needs individuals possess, arguing individuals who have
rewarding interpersonal interactions with their co-workers also should experience greater
meaning in their work.
Training and Career Development is another important dimension which is to be
considered in the process of engaging employees that helps the employees in concentrating
on focused work dimension. According to Paradise (2008), Training and development is an
important factor for improving employee engagement. Training improves service inaccuracy
and thereby impact service performance and employee engagement (Keaveney, 1995). When
the employee undergoes training and learning development programmes, his confidence
builds up on the area of training that motivates him to be more engaged in his job. Alderfer
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(1972) emphasized the importance of the chance to grow, as rewarding people. He
emphasised that ‘satisfaction of growth needs depend on a person finding the opportunity to
be what he or she is most fully and become what he or she can’. Employee should have the
feeling that there is an environment where he can see himself in better role in future. The role
of management in this is critical. If employee gets timely opportunities for growth and
development then the level of engagement is expected to be high.
Compensation or Remuneration is an indispensable attribute to employee engagement
that motivates an employee to achieve more and hence focus more on work and personal
development. It involves both financial and non-financial rewards. Compensation is most
impressively delivered through a combination of pay, bonuses and other financial rewards
and also through nonfinancial rewards like extra holiday, voucher schemes. A study by Saks
and Rotman (2006) revealed that recognition and rewards are significant antecedents of
employee engagement. When employees receive rewards and recognition from their
organisation, they will feel obliged to respond with higher levels of engagement (Saks and
Rotman, 2006). Kahn (1990) reported that people vary in their engagement as a function of
their perceptions of the benefits they receive from a role.
Organizational policies, procedures, structures and systems decide the extent to which
employees are engaged in an organization. Most researchers agree that congenial
organizational policies and procedures are extremely important for employee engagement and
the ultimate achievement of the business goals. Important policies and procedures include fair
recruitment and selection and flexible work life practices. Studies (Vance, 2006 and
Schneider et al., 2009) show that the recruitment policy of an organisation conveys certain
messages that attract future employees’ engagement and commitment. According to Richman
et al., (2008) an organisation’s flexible work-life policies have a significant positive impact
on employee engagement. Various other research (Pitt-Catsouphes and Matz-Costa, 2008,
Woodruffe, 2005, Rama Devi, 2009, Pollitt, 2008) have emphasized the importance of
organisational policies and procedures that best supports them in balancing their work and
home environments are more likely to have engaged employees. To have higher level of
engagement, organization should also follow policies which provide flexible work
arrangements.
Workplace well-being is one more important measure that enhances employee
engagement. Gallup’s global data suggest that there is no metric that captures more variance
in human behavior than wellbeing. When defined as “all the things that are important to how
we think about and experience our lives,” wellbeing becomes the most important measure for
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gauging the influence organization has on employees. The importance of wellbeing is further
reinforced by researchers at Towers Perrin (2003) who found that the most important driver
of engagement was senior management’s interest in employee wellbeing.
Employee Performance
Employee performance is all about outcome of the employee which may be financial
or non-financial. However all measures will be ultimately linked to the success of the
organisation through the employees. Studies show that an important way to enhance the
employee performance is to focus on fostering employee engagement as a driver of increased
performance. Empirical evidences (Christian et al., 2011; Fleming and Asplund, 2007; Rich,
LePine, and Crawford, 2010; Richman, 2006, Macey and Schneider, 2008, Holbeche and
Springett (2003), Leiter and Bakker, 2010) also suggests that the presence of high levels of
employee engagement enhances job performance, task performance, and organizational
citizenship behaviors, productivity, discretionary effort, affective commitment, continuance
commitment, levels of psychological climate, and customer service. Therefore it was
intended to study the strength of impact employee engagement has on employee
performance.
Based on a review of a number of theories, Demerouti and Cropanzano (2010)
concluded that engagement can lead to enhanced performance as a result of a number of
mechanisms. Their conclusions are supported by a growing number of studies demonstrating
a positive relationship between engagement and individual performance (e.g., Xanthopoulou
et al., 2008, Halbesleben, 2010, Mone and London, 2010). In spite of the same being proved
in various researches, this study aims in identifying the impact of the key factors of employee
engagement, recognized in this study, on employee performance.
OBJECTIVES OF THE STUDY
To identify various factors that predict employee engagement
Though there are a number of factors that have been identified as those that influence
employee engagement, this paper attempts to consolidate them and present a comprehensive
picture of attributes to employee engagement. Therefore the identified factors through a
thorough literature review are studied for their predicting strength on employee engagement.
This gives the null hypothesis as follows:
H01 – There is no impact of the identified factors Workplace wellbeing, Compensation
program, Team and Co-worker relationship, Leadership, Working environment, Policiesand
Procedures, Training and Career development on Employee engagement
Ha1 – There is statistically significant impact of the above factors on employee engagement.
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Though each of the factors may be framed into seven different hypotheses, the above is
framed for simplicity purpose and the impact of the different factors are analysed in detail in
the discussions.
To study the strength of impact of employee engagement on employee performance
The impact of employee engagement on employee performance in terms of the strength
of the relationship was of interest to the authors. Therefore it was intended to study the
impact of employee engagement on performance. Therefore the second null hypothesis
framed for this paper is:
H02 – There is no statistically significant impact of employee engagement on employee
performance
Ha2 – There is statistically significant impact of employee engagement on employee
performance
METHODOLOGY
Instrument development and validation
A survey questionnaire was designed to study the impact made by the above
identified factors on employee engagement. Thus the instrument measured working
environment, leadership, team and co-worker relationship, training and career development,
compensation program, policies and procedures and workplace wellbeing and Employee
Engagement. Employee performance was also measured so as to identify the impact of
employee engagement on employee performance.
The respondents were asked to rate each item on a 5-point Likert scale, ranging from
Strongly Agree to Strongly Disagree with regard to the various statements that measured the
variables. The instrument was validated using a pilot data of 60 respondents. Reliability of
the various factors through the instrument was found to be statistically significant as in Table
1.
Table 1 – Reliability analysis
1 Working Environment 0.868
2 Leadership 0.948
3 Team and Co-worker relationship 0.907
4 Training and Career development 0.862
5 Compensation Program 0.905
6 Policies and Procedures 0.883
7 Workplace wellbeing 0.704
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8 Employee Engagement 0.861
9 Overall reliability 0.975
Sampling and Data collection
As the reliability coefficients were statistically significant, the instrument was used
for the main data collection. Simple random sampling was used to select the employees from
middle managerial level and lower managerial levels from small scale organisations who
have registered in Coimbatore District Small Industries Association. About 183 valid
responses were collected, consolidated and analysed using SPSS software. Data analysis was
done using the regression technique to identify the level of prediction made by the various
factors on employee engagement. Regression was also used to identify the level of impact
made by employee engagement on employee performance. These two separate models were
then represented in a path diagram and estimated using a Structural Equation Modelling
technique. The co-efficient of determination values that depict the strength and level of
influence of the exogenous constructs on the endogenous constructs were found to be highly
statistically significant.
RESULTS AND DISCUSSION
Influence of various factors on employee engagement
The various factors identified through the above literature were used as independent
variables to study their prediction level on employee engagement. The data was tested for the
assumptions in Multiple Regression and was found fit to perform the analysis.
Evaluating the variate for the Assumptions of Regression Analysis
a) Normality: Conditions of normality and linearity are presented in Figure 2 and Figure 3
through the plots. As shown in Figure 2, the values fall along the diagonal with no substantial
departures, thus the residuals are considered to represent a normal distribution. Thus the
regression variate is found to meet the assumption of normality.
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Figure 2 – Normal Probability Plot: Standardised residuals
b) Linearity: The linearity is assessed through an analysis of residuals and partial regression
plots. Figure 3 does not exhibit any non-linear pattern to the residuals, thus ensuring that the
overall equation is linear. But since more than one independent variable is used, each
variable’s relationship should also be checked for linearity which is done using the partial
regression plots. Figures 4a to 4g shows the partial regression plots that depict that all the
plots do not represent any non-linear relationship with the dependent variables, thus meeting
the assumptions of linearity for each independent variable.
Figure 3 – Analysis of Studentized residuals
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Figure 4a – Standardised partial regression plot for the variable Working environment
Figure 4b – Standardised partial regression plot for the variable Leadership
Figure 4c – Standardised partial regression plot for Team and Co-worker relationship
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Figure 4d – Standardised partial regression plot for Career development opportunities
Figure 4e – Standardised partial regression plot for the variable compensation
Figure 4f – Standardised partial regression plot for the variable Organisational policies
and procedures
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Figure 4g – Standardised partial regression plot for the variable employee wellbeing
From the above figures 4a to 4g, we can see that the relationships for Work
environment and Team and Co-worker relationship is moderately defined than the other
variables. This implies that these two variables have strong and significant effects in the
regression equation.
c) Homoscedasticity: Apart from satisfying the norms of linearity and normality, the data
has to be checked for the presence of unequal variances (heteroscedasticity). Diagnosis is
again made with residual plots. Plotting the studentised residuals, (Figure 3) against the
predicted dependent values and comparing them to a null plot (that exhibits a random pattern
and is indicative of no identifiable violations of the assumptions underlying regression
analysis) shows no pattern of increasing or decreasing residuals. This finding indicates
homoscedasticity.
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d) Independence of the Residuals: This assumption deals with the effect of carryover from
one observation to another, thus making the residual not independent. When carryover is
found, then the potential sequencing variables should be identified and the residual has to be
plotted by this variable. But no such consistent pattern is found in the data that is collected.
Here the residuals need to be used in analysis and not the original dependent variable values,
because the focus is on the prediction errors and not the relationship captured in the
regression equation.
The above conditions of regression variate is analysed based on theories of Hair,
Anderson, Tatham and Black. (2006)
When regression was performed, it was found that all the factors were identified as
predictors with an adjusted r2 value of 67.2%, as in Table 2, which is highly statistically
significant. Proportions of variance above 25% are considered substantial (Heiman 1998).
The ANOVA, Table 3, generated in this test also shows a significant probability value (p =
0.000) and signifies that all the factors of Workplace wellbeing, Compensation program,
Team and Co-worker relationship, Leadership, Working environment, Policiesand
Procedures, Training and Career development are significantly moderating employee
engagement.
Table 2 - Model Summary
Model R R Square Adjusted R Square
Std. Error of the
Estimate
1 .829a .687 .672 .23849
a. Predictors: (Constant), Workplace wellbeing, Compensation program, Team
and Co-worker relationship, Leadership, Working environment, Policiesand
Procedures, Training and Career development
Table 3 - ANOVAb
Model
Sum of
Squares df Mean Square F Sig.
1 Regression 17.765 7 2.538 44.620 .000a
Residual 8.076 142 .057
Total 25.841 149
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a. Predictors: (Constant), Workplace wellbeing, Compensation program, Team
and Co-worker relationship, Leadership, Working environment, Policies and
Procedures, Training and Career development.
Table 4 - Coefficientsa
Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) .818 .210 3.887 .000
Working environment .463 .084 .530 5.503 .000
Leadership .065 .091 .074 .710 .479
Team and Co-worker
relationship .316 .087 .360 3.623 .000
Training and Career
development .002 .090 .003 .023 .982
Compensation Program -.056 .044 -.101 -1.261 .209
Policies and Procedures -.040 .080 -.049 -.498 .620
Workplace wellbeing .053 .049 .055 1.069 .287
a. Dependent Variable: ENGAGEMENT
Therefore 67.2% of variance in employee engagement is influenced by factors-
working environment, leadership, team and co-worker relationship, training and career
development, compensation program, policies and procedures and workplace wellbeing.
Therefore the null hypothesis H01 is rejected and the alternate hypothesis is accepted. The
following regression variate is derived from Table 4.
Employee Engagement = 0 .463*working environment + 0.065*leadership + 0.316*team and
co-worker relationships + 0.002*training and career development - 0.056*compensation
program - 0.040*policies and procedures + 0.053*workplace wellbeing
The above result indicates that these independent variables do have a significant
impact in determining the engagement level of the employees. From table 4, we can see that
the t-values which implies that working environment (t = 5.503), team and co-worker
relationship (3.623) are the most influential factors on employee engagement. This signifies
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the importance of a healthy work atmosphere and good interpersonal harmony with fellow
members in the organisation for anyone to be engaged positively at work.
A healthy work environment in terms of both physical environment and emotionally
safe environment helps an employee to be focused and motivated to be engaged with the
work. As per Holbeche and Springett (2003), people’s perceptions of ‘meaning’ with regard
to the workplace are clearly linked to their levels of engagement and, ultimately, their
performance. They argue that employees actively seek meaning through their work and,
unless organisations try to provide a sense of meaning, employees are likely to quit. This
study also argue that high levels of engagement can only be achieved in work environments
where there is a shared sense of destiny and purpose that connects people at an emotional
level and raises their personal aspirations. Therefore it is evident that employees personal
perception of their working environment shapes and directs how engaged an employee are.
To have a positive perception, it is important to have a supportive working environment.
Similarly the factor team and co-worker relationship is also significantly influential
on employee engagement. Collegial and Professional skills play an important role in the
success of freshers (Hertzog Pensavelle and Lemlech 2000). The result explains that higher
order needs, such as achievement and collaborative decision making, that reflects team and
co-worker relationship, leads employees to take on greater responsibility to achieve shared
goals and visions. Studies (Kahn, 1990) also suggest that client relations for some individuals
like camp counsellors, may play a role in providing a meaningful work experience. Hence
nurturing teamwork and enhancing collegiality or co-worker relationship is an important
factor to enrich employee engagement.
Prediction of Employee Performance using Employee Engagement
Performance management is a critical aspect of organizational effectiveness (Cardy,
2004) and should be a top priority of managers (Lawler, 2008). Contemporary challenges
facing organizations have led many of them to refocus attention on their performance
management systems (Buchner, 2007) and explore ways to improve employee performance.
The dynamic, multifaceted nature of modern jobs, in the contemporary work environment
achieving increments in performance often involves less “management” of performance than
“facilitation” of performance (Das, 2003), by creating the conditions for performance to
improve. One important way to enhance the employee performance is to focus on fostering
employee engagement as a driver of increased performance. Consideration of how employee
engagement contributes to employee performance is a development in the performance
management literature that is consistent with recent trends in the organizational sciences.
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Focus on employee engagement in the performance management process may foster
performance improvement beyond that achievable through a conventional focus on
performance itself.
Therefore, the cause and effect relationship between employee performance and
employee engagement was identified using regression. It was intended to study the strength
of influence of employee engagement on employee performance.
Table 5 - Model Summary
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
1 .774a .599 .597 .30376
a. Predictors: (Constant), ENGAGEMENT
Table 6 - ANOVAb
Model
Sum of
Squares df Mean Square F Sig.
1 Regression 20.417 1 20.417 221.274 .000a
Residual 13.656 148 .092
Total 34.073 149
a. Predictors: (Constant), Engagement b.DependentVariable: Performance
Table 7 - Coefficientsa
Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) .525 .248 2.118 .036
ENGAGEME
NT .889 .060 .774 14.875 .000
a. Dependent Variable: PERFORMANCE
The regression analysis shows that the variance in dependent variable, employee
performance, is influenced by the independent variable, employee engagement, by 59.7% as
21
shown in Table 5. The ANOVA result as in Table 6, shows a statistically significant p value
(p=0.000) that confirms that the relationship is significant. Hence the null hypothesis H02 is
rejected and the alternate hypothesis Ha2 is accepted. Table 7 generates the following
regression variate:
Employee performance = 0.889* employee engagement + 0.525.
The coefficient table depicts a highly significant t value that emphasises the strength
of employee engagement in producing satisfactory employee performance (t = 14.87). The
validated model with the statistical significant values are shown in figure 3 This is in line
with a recent meta-analysis which found that engagement is significantly related to a number
of consequences including commitment, health, turnover intentions, and performance
(Halbesleben, 2010). Mone and London (2010) suggest that performance management,
effectively applied, will help you to create and sustain high levels of employee engagement,
which leads to higher levels of performance. It is evident that the energy and focus inherent
in work engagement allow employees to bring their full potential to the job. This energetic
focus enhances the quality of their core work responsibilities. They have the capacity and the
motivation to concentrate exclusively on the tasks at hand. Thus, the linkage between
engagement and performance is consistent with engagement models, theory, and research.
Figure 3 – Validated model on Impact of employee engagement on employee
performance
Team and Co-worker relationship
Workplace well-being
Leadership
Organizational policies
Training and Career Development
Compensation
Employee Engagement
Work environment
Employee Performance
R2 = 0.597 R2 = 0.672
(t = 5.5)
(t = 3.6)
(t = 14.87)
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The paper thus elicits the key antecedents of employee engagement which can be
nurtured by the managers and employers to provide an amicable environment for the
employees to get positively engaged. Hence this study widens the scope of identifying
measures that will enhance organisation factors like work place well being, working
environment and policies and procedures. Also the company has to invest in building a
harmonious environment that will produce a conducive environment for team and co-worker
relationship, effective leadership, training and career development and attractive
compensation programmes.
To ensure the combined effect of the identified factors on employee performance
through the measure of employee engagement, is done through PLS. Structural equation
modeling is a multivariate technique combining aspects of multiple regression and factor
analysis to estimate a series of interrelated dependence relationships simultaneously. All
relationship in the path diagram can be estimated to quantify the effects between dependent
and independent variables even if interrelated (Hair et al., 2003).
Analysis through Partial Least Squares Regression shows that the factors Working
environment (t = 4.363), Leadership (t = 2.370), Team and co-worker relationship (4.256)
and Employee Wellbeing (t = 2.664) are the major factors that impact employee engagement
and hence employee performance. It can also be seen that the path validity of employee
engagement leading to employee performance is t = 23.347 which is also highly statistically
significant at 0.05 level of significance. Hence the paper suggests a strong influence of these
factors on the endogenous factors.
23
Studies (Islam and Shazali, 2011; Celia Kemsley, 1991) show that physical working
environment leads to better service to customers and achieve higher output. These studies
also reveal that working envt comprise good culture, working with good team, good boss,
physical surrounding, job security, sustainable compensation package, availability of food
and drink in the workplace. An employee’s retention relies heavily on the leadership of the
organisation (Benjamin and Gilles, 2012). High performance teams enrich engagement
through factors including talent, team climate, collective pride, leadership, purpose, team
ethics, team bonding (Bhogle and Bhogle, 2011). Towers Perrin studies (2003 and 2007)
shows that most important driver of engagement is senior management’s interest in employee
well being
Apart from general output of the study where focus is to be increased on all the above
factors to enhance employee engagement and hence employee performance, it should also be
noted that there needs to be a special focus and effort specifically on the factors Working
environment and Team and co-worker relationship as they have shown significantly higher
impact on employee engagement.
According to Celia Kemsley (1991), in the long term the physical working
environment has much to contribute towards provision of good service to the customers and
employees; and this is seen as an important aspect of the internal culture in creating the
atmosphere in which the relationship can flourish. As per Islam and Shazali (2011), a
favorable working environment, such as working with a good team, having a good boss, and
liking the physical surroundings in the workplace, is a contributory factor for motivating the
workforce towards higher output. Indeed, job security, a sustainable compensation package,
and the availability of food and drink at the workplace, are also considered to be principal
indicators of a favorable working environment. The presence of all these factors in the
workplace could gear up the morale of workers and contributes to increased manufacturing
productivity.
Therefore organisations and employers should concentrate on improving the working
environment of the employees in different ways including appreciating the right efforts,
communicating the success and accomplishment of the organisation with the employees
thereby inculcating ownership among employees, provide them a balance in work and
personal life, providing required information and resources for effective output and providing
a safe environment.
Similarly focus is required in the area of team and co-worker relationship that has a
statistically significant impact on employee engagement. Factors including talent, team
24
climate, collective pride, commitment, leadership, purpose, communication, continuous
improvement, team ethics and team bonding play a major role in building effective high
performance teams (Bhogle and Bhogle, 2011). These factors call for special attention from
the employers’ angle to improve the team and co-worker relationship. Therefore it is essential
for the organization to facilitate enhanced co-worker relationship and provide an ambience
where collegiality would thrive.
LIMITATIONS OF THE STUDY
• Clear strategies based on the findings is not yet explored and presented
• Data is not collected widely and is restricted to one organisation
• Sample is biased towards age group 30-40 whereas employee engagement needs to be
measured in older employees too, who have experiences in the organisation for longer
duration
• The study was limited to Staff and executives only. The operatives/ workers were not
studied
FUTURE SCOPE
This study was started as a case study analysis of a particular organisation and hence the
data pertains to only one organisation. But the well responding model motivates research on
validating this model for a generalised population too. Hence there is wide scope for the
study. Similar studies can be conducted at various levels of organisation – MSMEs, Large
scale and MNCs to strengthen the model. In depth analysis on the specific factors identified
may be done which can give rise to individual effect of each factor on employee engagement
and hence employee performance. Comparative study may be also be made with previous
models of employee engagement
CONCLUSION
The above study emphasizes the importance of employee engagement and also
identifies various aspects that have a significant moderating effect on it. It also proves that
there is a strong relationship between employee engagement and employee performance that
further insists the significance. Regression analysis predicts that, out of the various important
factors that have an overall moderating effect on employee engagement, there are two factors
that came out with significant path validity or t value. Working environment and Team and
co-worker relationship is found to have significant t value in relating with employee
engagement. The paper also quotes previous studies and suggest measures on factors that
improve working environment and team and co-worker relationship.
25
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The paper may be modified in the initial phase of analysis where the regression variate is
checked for its assumptions, namely normality, linearity, homoscedasticity and
independence of the residuals. Comments and suggestions are sought in this area.
Comments are also sought for testing multicollinearity to suit the regression technique.
Dr. J. Anitha, Associate Professor, GRG School of Management Studies, Peelamedu,
Coimbatore – 641004
Email: [email protected]
Handset: 9942081079