Companies with higher levels of employee engagement are more productive, profitable, creative and efficient. They also have higher levels of customer satisfaction—a proven competitive advantage.

Most companies’ engagement efforts fail due to lack of vision, poorly articulated strategies and management communications that are ineffective and don’t lead to increased engagement. In these difficult economic times, as companies make tough decisions, keeping employees engaged becomes even more critical. As customer satisfaction is highly correlated to employee engagement, the first step in building customer loyalty is in ensuring employees are engaged. Then a comprehensive customer engagement program (marcomm, sales, PR, etc.) can begin to drive sales, as there will no longer be any disconnect between brand promise to customers and delivery on that promise by employees.

To build strong customer loyalty, it is vital to first deploy an approach that builds employee engagement and sets the stage for a customer engagement program that delivers results that have a positive financial impact on the company.

The key steps to accomplishing this outcome are:

• Achieve greater employee engagement
• Obtain real-time customer feedback
• Build an Employee Engagement/Customer Satisfaction bridge
• Create a “burning platform” for internal change that stresses the vital connection between employees and customers
• Prepare company leadership and sales/support teams to more effectively improve customer relations
• Build a practical executable program and realize quick wins

This proven approach is distinctive in that it goes beyond traditional communication programs by a) ensuring leaders are properly equipped to lead employee engagement activities/drive needed organizational change and b) focusing specifically on an empirically based situation analysis that identifies connections/gaps (correlation) between company and customer, prescribing solutions to drive engagement of both stakeholders

Employees, from top executives to sales leaders and customer support personnel need to develop an enhanced understanding of the importance of employee engagement and how it relates to and builds customer engagement and the financial advantage increased engagement will bring to their companies and customer relationships. This is not an instinctive process—management needs to develop the knowledge of what specific process steps are required to lead an effective program to support an employee/customer engagement initiative.

ADDRESSING CULTURAL COMPATIBILITY IS KEY TO SUCCESSFUL M&A:
ENSURING EMPLOYEE ALIGNMENT, ENGAGEMENT & PRODUCTIVITY
Investment bankers, company directors and senior executives, commentators and analysts are constantly developing rosy scenarios for mergers and speculative strategies for acquisitions. The current landscape, while quiet recently due to the economic turmoil of the past few years, is beginning to change with increasing IPO/company stock offerings, aggressive acquisitions by cash-rich corporations and accelerated IB, hedge fund and VC investment activity. This trend indicates that the reticence for deal making is abating, reflected by M&A activity picking up steam.
Be it AT&T-T-Mobile (now abandoned), Scripps-Medco, Google-Motorola Mobility or Microsoft-Skype, catastrophic failures such as Time/Warner-AOL and a litany of disappointing mergers such as HP/Compaq, seem a distant memory to those orchestrating new deals. Refreshed optimism, however, has not changed a fundamental truth: most mergers and acquisitions fail to produce the expected synergies, increased profitability and explosive growth touted during the courting and announcement process. Much of this failure is attributed to overly optimistic predictions, untenable valuations, flawed strategies, executive egos blind to reality, unrealized operational efficiencies and botched integration. Rarely do we hear of failure as a result of employees not being aligned with expectations or performing to meet the promise of the integration. It must take hold where it matters most—in the trenches. Fundamentally it is cultural incompatibility that fosters disillusioned employees who are not aligned to the corporate vision, become quickly disengaged and thus lack the motivation to meet the demands and expectations of the new entity.
Once the investment bankers have pitched the idea, executive teams have decided to merge and the lawyers have drafted an agreement, managers and employees hold the key to ensuring success. This success depends on how well the two employee groups are integrated—not only operationally, although that is vitally important, but culturally. Much due diligence is conducted to determine financial, operational and strategic advantages to both companies. Unfortunately the same level of investigation is rarely if ever done to determine whether or not the distinct cultures are compatible. This is not to say that the two cultures need to be identical, only that some scenarios are more likely to produce success than others. For example, if bringing together a staid and consensus-driven culture with one based on aggressiveness and brusqueness (HP-Compaq), the reality is that the incompatibility of distinct cultures and the powerful resistance legacy employees have to change are usually grossly underestimated. Consequently it becomes very difficult to mobilize the collective employees to deliver what executives had promised.
So, what about me?
M&A is a major source of employee stress as they reconcile their feelings about the change and how they will be affected? They understand there will be changes…but the big questions remain, “will I lose my job?” and “what does this mean to me?”
Employee engagement and communication is never more important than during times of significant change. Companies often do a fine example of business due diligence, but on the human side they drop the ball (or hide it). The management of human capital is always important. However, during the merger/acquisition process, employee needs and concerns are too often not fully considered and potential problems ignored until they fester into major issues. Sophisticated research tools exist to identify these trouble spots, allowing for the mitigation of potential problems, including the establishment of a cultural compatibility index that shows where gaps exist and affords leadership and the integration team the opportunity to develop programs to address potential issues in a constructive and positive way.
From the perspective of culture and communication that build alignment, enhance employee engagement and ultimately lead to sustainable performance, three key failings that need to be avoided are:
1. Diverse cultures and their differences aren’t understood
How valuable would it be if a cultural audit of both companies were conducted as part of the investment analysis due diligence before the decision was finalized and the deal announced? At worst, executives charged with integration and motivating the new behaviors required of employees would be aware of the challenges that lay before them and could, proactively, define policies and programs to mitigate potential problems. At best, a decision could be made to not do the deal, recognizing that the challenges may be insurmountable—a decision that recently led to Zynga losing out to EA for the acquisition of PopCap, even though Zynga offered $200m more in cash!
2. Inarticulate vision and strategy do not define new expectations
Beyond the excitement of the merger or acquisition news, it is vital that the vision and strategy be clearly defined and articulated. Also key is recognizing and understanding the perspective of the employees and their likely response to the news and further ongoing communications. Executives focus most of their time and energy with their counterparts from the other company and with outside stakeholders, from board members to investors, customers and media. Employees are often left wondering what is expected of them and, more importantly, “how does this affect me?” Most of those outside the company, particularly customers, touch the organization through personal interaction with employees. Imagine how powerfully positive (or destructively negative) an employee’s words could be during conversations and meetings after the merger or acquisition is announced. When handled appropriately, by bringing the employee clearly into the picture—meaningfully explaining the rationale and strategy around the M&A activity, and ensuring clarity and understanding of the role the employee plays and the advantage to them and the company as a result—they become the most powerful of brand ambassadors. Furthermore, when employees understand and believe, they will diligently apply their efforts in support of the vision, implementing with passion and commitment based on a strategy with which they are aligned.
3. Insufficient employee dialog that is not action-driven
In many cases, the first employees hear of the news is when they read it in the newspapers the morning after the announcement. Few activities are as damaging to employee engagement and morale as feeling excluded from what their company and their leaders are doing. The more included employees feel the more likely they are to support management decisions. It is vital that leadership-employee dialog (not merely one-way corporate to employee communications) is continuously and regularly maintained to ensure M&A success—what employees say in response is as important as what they hear and allows for real-time program adaptation. Transparency is also a vital element in building trust; and an ongoing dialog, regularly measured and assessed to determine how employees are responding to developments, messages and, most importantly, their perception from the battlefield of what is really going on, must be religiously adhered to. There is one audience with whom “spin” will not work and that’s an employee. They know the truth and anything said by leadership that doesn’t resonate in this context will be dismissed, having a potentially fatal impact on successfully reaching the vision. Understanding how employees will respond to messages delivered by the company and its leadership is the essence of recognizing what needs to change.
Our perspective therefore, is that understanding the employee and cultural aspects of M&A compatibility is as important as the other traditional due diligence elements and provides a perspective that is invaluable in defining any solution to potential issues. The reality is that many of the common mistakes many companies make can be avoided simply by following the three simple precepts outlined above. The expected outcome can then be largely assured of a significantly increased probability of success.
By embracing this approach, those responsible for advocating, deciding on or implementing M&A scenarios, can produce an expected outcome that beats the historical odds of failure, avoiding the cultural incompatibility that spells integration disaster.

This is the continuation in a series of articles focused on the changing work environment and the utilization of space. This paper follows up on an earlier blog on changing workplace demographics (see Is your office space disengaging your people?) and dives into how technology is changing the way employees interact. These changes create an urgent imperative for organizations to modify the way office space is designed so that the space provides employees with the ability to be more collaborative (both inter-personally and through technology) and to create space that leads to higher performance and increased productivity–all vital factors for organizations looking to achieve competitive advantages as well as sustained business growth and profitability.

Collaboration, teamwork, knowledge sharing, etc., remain key areas of focus for leading companies because of the proven positive business outcomes that result. Flat organizations continue to replace hierarchical ones, because collaborative environments are more effective than those that promote individual achievement. A collaborative, team-oriented culture is the future of the workplace and any work environment that increases the opportunity for workers to come together will increase their productivity and allow for greater personal growth and development that leads to improved learning, faster decision making and more innovation.

Although most workers feel and believe they need to work together and partner with others to get work done efficiently (a message they also continuously hear from their leadership), their work environments (conceived, designed and built for a different operating model) are typically not conducive to that thought process. For example, an oft-heard frustration is the inability to get a conference room for teams to meet. This is an outdated approach. Creatively designed space which encourages collaboration and team work has proven to be successful in engaging employees and driving high performance which is very different from the traditional office-cubical-conference room setup that does not foster interaction amongst employees. One of the changes that will have to occur for true work collaboration leading to higher performance is a strategic shift in corporate thinking in how space is designed, organized and ultimately built.

Another complicating factor to consider is the distributed and/or alternative workplace and how to effectively bring collaboration into an environment that is forcing its workers to be outside of the office. This reality is also being driven by changing employee demographics where younger populations are the norm and these workers have very different expectations for how to most effectively and efficiently reach goals faster. Technology is enabling this trend—iPads and smart phones are beginning to displace even the laptop (itself a disruptive technology of the past decade or two); video conferencing (often on these same devices) no longer requires video conference rooms; social media is the preferred method of communication for large and growing portions of the employee base, etc. As companies continue to push for cost reductions there will be continued pressure to reduce the amount of space by leveraging technology.

And younger employees are demanding more of a voice in where, with whom, and how they work. Organizations will have to involve their employees in creating solutions that meet these expectations as well as foster collaboration. To gain maximum advantage from space utilization executives and corporate real estate managers need to re-evaluate how work gets done, who is doing it, where it’s being done and involve their employee teams in the evaluation and development process of space utilization and design. If collaboration in the workplace is the goal then companies will need to collaborate with their employees to create the best possible work environments that ensure business success.

Engagement Strategies is seeking a dynamic, charismatic, self-starter to provide employee communications support for a key Bay Area (San Jose) technology client. As the local client representative of the extended Engagement Strategies team, you’ll contribute to the success of this key relationship working onsite with the client several days a week. You will also have the opportunity to drive activities on other Engagement Strategies clients and support the overall growth and development of existing and new client relationships.

In your 5-7 years of experience you will have developed the ability to think creatively, act with passion and intelligence, adapt to changing circumstances and help ensure the success of the client team. Consulting/agency experience and having worked in the corporate communications department of a public/med-large company is a plus.

The ideal candidate will have experience in and the ability to navigate, design and manage programs in most of the following areas: strategic organizational communications, Intranet communications, employee engagement and employee communications.

You have superior program development, project management and consultative skills (including effective questioning, critical thinking, client relationship management and communication methodology application).

You should have a bachelor’s degree in a related field, a proven ability to independently manage projects, function comfortably onsite as a daily client contact, as well as develop and execute plans to meet client expectations, including:

• Strong writing skills and excellent general business written and verbal communication skills
• Good all round experience and skills in the communications discipline
• Strong appreciation of the role of internal communications in the context of marketing communications and the overall corporation
• Ability to link communications recommendations with business/corporate strategy
• Strong partnering skills, excellent team player, proactive in recommending internal communications actions, projects and programs
• Excellent project management skills, and experienced at developing and driving programs
• Ability to communicate at all levels of the organization, including executives
• Able to self-manage and multi-task, managing to deadlines in a fast-paced environment
• Highly accountable for delivery of high-quality, on-time end product
• Judgment in handling confidential data

In addition to these direct client responsibilities, you will have the opportunity to support the overall success of Engagement Strategies through marcomm and business development activities, sharing in the success of your efforts.

For more information or to apply for this position, please e-mail Warren Egnal: wegnal@engagementstrategies.com.

Engagement Strategies helps companies accelerate the achievement of corporate goals. Our primary expertise is in building change and communication programs that increase employee engagement — a proven competitive advantage, especially in today’s business climate.

From our financial industry partner Marsh Communications’ experience and extensive work with community bank clients, it is quite apparent that employees are making a key impact on market share and profitability. Recent studies of the banking market support our view, showing banks with motivated employees outperform their peers across a wide range of financial and customer preference metrics including revenue growth, ROE and EPS.

Surveys by PeopleMetrics Inc. (Engagement Strategies’ preferred research partner), demonstrate that in all financial metrics analyzed, financial institutions with high customer engagement outperform the industry average. Conversely, institutions with low customer engagement are more likely to underperform the industry average.

The average annual Return on Equity (ROE) rate for retail banks with high customer engagement is 4 percent above the industry average, while low-performing institutions yield, on average, a ROE that is 1 percent below the industry average. In addition, the annual revenue growth for high-performing retail banks is 6 percent above the industry average, while the average for low-performers is 11 percent below the industry standard.

Most importantly, the studies show that customer engagement is largely driven by the degree to which employees are engaged. Engaged employees go above and beyond to meet customers’ needs and ensure customers have a consistent, positive experience, which impacts overall customer engagement — and profitability.

Indeed, PeopleMetrics conducted another survey of customers of a single banking company that owned several branches that had an active employee engagement program and other branches that did not. Customers consistently scored the branches with high engagement as substantially better, despite all other factors (products, services, etc.) being equal. Customers rated overall service, whether or not they would consider the bank for a next loan or deposit, and whether they felt the bank was better than other financial institutions.

So how do you get your employees more engaged?  In our experience, effectively changing employee behavior must begin by empirically identifying employee attitudes towards several important factors, from compensation to career advancement opportunities to what they think is expected of them. You also can survey customer opinions about service, brand image, etc.

These surveys often identify issues that previously were unknown to management, and they enable the company to address the specific roadblocks that hinder employee performance. Such insight cannot be gained from simply conducting a subjective message development session with top executives.

Once you have that data, you can begin to develop specific programs that close gaps in employee performance and attitudes. This can range from executive and internal communications programs to leadership development and strategic change management initiatives. The data also gives you a benchmark to which you can measure progress, identifying which programs are most effective and which, if any, are underperforming.

Suffice to say, bank employees have a significant impact on the performance, brand identity, public perception and ultimately the profitability of their institution. In a market of low loan demand, high competition for deposits and low interest rates, employees are the key to gaining a competitive advantage.

Employee engagement is the most important factor in enabling organizations to inspire and mobilize their people. Engaged employees are motivated to succeed, take pride in their company, are committed to the success of the enterprise and are more adaptable to change.

As companies constantly reevaluate and change business strategies, employees need to migrate through organizational shifts – including adjusting to change and adopting new initiatives and/or programs, from new strategies to restructuring/operational shifts, new processes, technology deployment, HR benefits changes, etc. To build acceptance and alignment is it is essential to engage employees through the change to ensure success.

To keep employees informed of new initiatives or corporate offerings and engaged through change is one of the most important functions and responsibilities of executives and managers. As difficult as the process is of defining what is to change and developing the change management program—the hardest piece is ensuring employees “buy in” and change their behavior to reach the expected outcome. Announcing the program on Day 1 is easy. It’s Day 2, Day 20 and beyond that are much more difficult in maintaining momentum and getting the desired results, including getting employees to embrace new programs, adapt to change and adopt new initiatives.

Strategic communications must be an integral component of the initiative or program rollout with those deploying the new product, process, offering, etc., taking the responsibility to communicate changes and imperatives in a way that motivates employees to do what is necessary for the change to take effect. The change communications continuum; from Awareness to Acceptance, Alignment and ultimately Action is the process by which traction is gained and the initiative/program adoption ROI is realized.

In evaluating employee readiness for adopting new initiatives or programs, it is important for leaders to ask some core questions:

• Regarding your intent to roll out something new or maintain engagement in existing activities, what is the level of employee understanding and do they know why it is in their interest to embrace the initiative/program?
• In driving adoption, are your people fully engaged in the program?  Are your employees aligned with the benefits being touted and understand how it serves their needs?

If not or you’re not sure, do you know what to do about it?

Keeping employees engaged through organizational change is one of the most important functions and responsibilities of executives and managers. As difficult as the overall change process is, the hardest piece is ensuring employees “buy in” and alter their behavior to reach expected outcomes. Announcing the program on Day 1 is easy. It’s Day 2, Day 20 and Day 200 that are much more difficult in maintaining momentum and getting the desired results.

In evaluating employee readiness for successful change, it is important for leaders to ask some core questions:

• Regarding your vision and strategic priorities, what is the level of employee understanding and do they know what it will take to reach success?
• In driving change, are your people fully engaged in the program? 
• Are all of your critical employees “on the bus”?
• If not or you’re not sure, do you know what to do about it?

Strategic change communications must be an integral component of the overall change management program with leaders accepting their individual responsibility to communicate business changes and imperatives in a way that motivates employees to do what is necessary for the change to take effect. The change communications continuum – from Awareness to Acceptance, Alignment and ultimately Action – is the process by which traction is gained and the change ROI is realized.

Companies have significantly altered approaches to the physical work environment provided to employees over the past few decades. These changes range from reconfiguring office space to allow for more creativity and collaboration to deploying advanced networking technology to enable telecommuting.

As these and other workplace changes increase employee mobility and reduce the time workers spend at their desks, the average amount of space allocated by companies for each employee has dropped dramatically. According to a recent New York Times article, in the past 25 years the square footage allocated to each employee has dropped from 400 square feet down to 250. Within 10 years, that is expected to drop further to 150 square feet or less. Making matters even more challenging, many companies want to allocate as many as three employees to that single space!

Rethinking workplace configurations for maximum profit and productivity is a business imperative in today’s economic climate. The reality is that every company has a unique set of circumstances based on legal/regulatory requirements, business model and strategy, values and culture. Consequently each strategic solution must be developed company-by-company within the context of these factors. In addition, strategic office space considerations must be an integral component of the overall workplace philosophy with site location, building design and space configuration decisions driven by a goal of creating an environment most conducive to productivity and high-performance, two key business outcomes of an engaged and motivated workforce.

Success in changing office environments, however, ultimately depends on involving employees in the decision process and ensuring they’re being considered in a way that motivates them to embrace the new environment and to do what is necessary for the change to take effect. Employee involvement also leads to fresh thinking and new ideas often not considered by those typically assigned the responsibility for leasing, office moves and workplace design. Not only does this ensure a smooth transition to a new workplace, it also guarantees an increased ROI as employees are consequently more engaged and thus more effective in moving the company closer to reaching its objectives.

One Engagement Strategies client, a division of a large company, recently took this approach toward an office move and in doing so, significantly reduced management time dedicated to the change because employees:

• Took ownership of the process
• Materially changed the plan
• Eliminated certain aspects that were unappealing to employees
• Introduced new ideas management hadn’t considered
• Ultimately created a more positive, productive environment for the employees.

Some months after the move, the company’s annual employee survey revealed the division which moved offices earlier in the year had the highest employee engagement level of any group in the company. Coincidence or not?

Employee engagement is the most important factor in enabling organizations to inspire and mobilize their people. Engaged employees are motivated to succeed, take pride in their company, are committed to the success of the enterprise and are more adaptable to change. But what about flex-force staff – those that are temporary, contingent or contract workers?

Many companies are focused on the importance of keeping their full-time employees engaged and recognize the direct correlation to high performance, efficiency, retention and ultimately, customer satisfaction that leads to increased revenue and profitability. These companies often make meaningful investment in employee programs, such as surveys to understand and act on employee perspectives, change management initiatives to address issues, and internal communications to ensure awareness of and alignment with corporate vision, values, strategies and objectives. Few, however, recognize the importance of similar programs for the flex-force.

Increasingly, over the past few years as layoffs, restructuring and a lingering economic recession persist, companies have relied on non-full-time labor as a human capital strategy. The reasons are myriad and often beneficial including:

• Flexibility in allocating resources to short-term projects.
• Bringing in expertise for specific needs where it is unfeasible to assume long-term employment commitments.
• Reducing salary overhead, benefits cost and other infrastructure support expenses.
• Saving valuable management resources (e.g. reviews, etc.).

While these savings may make perfect sense on paper, there are two very significant engagement pitfalls to the trend of relying on significant numbers of non-full-time resources, not to mention the potential co-employment risks. These are:

1. The core full-time employee base may resent this new class of workers. They miss their friends and colleagues that were laid off and feel those individuals should be brought back before alternative hires. They also worry that as the company focuses on further cost reduction they may be the next casualty. Fearing the trend is permanent, pressure is placed on their ability to gain promotions, increase compensation, learn and grow and build a career. They further are challenged to build the close personal and professional relationships with a contingency workforce essential to effective teamwork.
2. The flex-force workers on the other hand, while relieved in this economic environment to be working, may not necessarily be committed to the company but rather to the agency that placed them there, knowing their next job is likely coming from that organization. As a result, they are less likely to be invested in the long-term health of the company. Also, without the rights and benefits of full-time employees, and frequently being shut out of positive employee activities, they are much more likely to be disengaged with resultant performance and productivity deficiencies.

It is vital to company success that the flex-force be treated with an eye to keeping them engaged for as long as they work for the company, regardless of capacity. Specific employee engagement tools and practices should be implemented to ensure this workforce is contributing maximum value to the company rather than damaging vital stakeholder relationships. Finally, these workers may end up being part of the full-time team in the future. Getting them engaged now will enable stronger performance over the long-term.

PR practitioners speak to quality media coverage as a business driver that enhances reputation and builds positive brand identity. Advertising executives talk about brand as a promise and advocate advertising to reach customers. Marketing is constantly seeking that special promotion to connect the company with the target audience on a one-to-one basis. All are effective tools in a disciplined, integrated strategic communications and marketing program that sets expectations with customers as to what their experience and expectations should and will be — best product, fastest service, superior customer care, etc.

Despite this fact, companies too frequently fail to recognize and take advantage of a unique and recurring opportunity to consolidate and leverage the aforementioned marketing activities in a regular, consistent and natural activity — employees interacting with customers. Ensuring employees are fully aware of the promises that have been made and the consequent customer expectations that have been set, can make the difference between keeping a happy customer and pushing business to the competition.

When companies fail to adequately communicate external messages to employees, they set up an inherent disconnect that may be costly not only to a carefully crafted and maintained reputation, but to the bottom line business. Significant costs and aggravations in customer support and managerial involvement arising from this disconnect could be saved by simply explaining to employees in advance what is being communicated externally, how it ties to corporate strategy and what they can do to live the brand promise in every customer interaction.

Too often, employees hear about changes to corporate strategy, new products and even major financial news after the fact – and at the same time as the general public through an article in a newspaper, TV broadcast, etc. RSS feeds and other real-time technologies have ensured that employees see company news as soon as it hits the web, and in the worst cases, before they are told by their managers.

As a rule, communicating to employees via the news media is not effective and undoubtedly breeds resentment among the rank and file that “management doesn’t care about its people.” The unfortunate byproduct of excluding internal stakeholders from previews of outbound communication is a lack of employee engagement – a recognized and proven indicator of efficiency, productivity and competitive advantage.

The bottom line is: Don’t forget about employees. Depending on how engaged they are in their job, they can make or break your communications strategy, your brand reputation and your overall business.