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The Irrationality of Employee Engagement

by

ultimatum2


paul hebert[The Irrationality of Employee Engagement From Paul Hebert-VP Solution Design. Read more about him on our Leadership page.]


I’ve watched as employee engagement has become almost a singular quest by HR and HR-adjacent executives.  Employee engagement will cure all ills, lower interest rates, make bald men hairy, increase SAT scores and reverse global warming.  Employee engagement is the MAN!

And we (corporate ‘Merica) are spending all kinds of money to reach some level of engagement nirvana that we still can’t define (is it 70% engaged? 80%? 65%? – who knows.)  This disconnect between what we want – engagement – and what we’ve been getting – continued disengagement, is where I’m spending more of my thinking time.  It seems to me that to fall in line with the rest of the engagement evangelists that speak in tongues about empowerment, autonomy, recognition, benefits, flattening the organization, involving the C-Suite, etc., etc., is the surest path to “me-to” programs with a lot of flash and little true results.

Something isn’t working and that is where we should be focusing our time and energy.  Why, even after a decade-long focus on driving engagement, are still showing lackluster results?

That’s the research I want to see – not the weekly whitepaper suggesting (through correlation not causation) that ACME Company has the answer.  They don’t.  If they did we’d all be buying it and it would be working.

And it just isn’t.

Some Thoughts

Over the past few weeks I posted a few theories/thoughts about why employee engagement is still elusive…

We don’t believe it works…

We focus too much on high tech and not enough on high touch…

We try to automate what is essentially a people problem, not a process problem…

We don’t walk the walk with respect to discretionary effort…

Well – let me add one more to the mix.

We can’t decide where the “fairness” line is when developing the engagement equation.

Is It Fair?

I believe that engagement is at its core an equation – company on one side of the equal sign and the employee on the other.  Each party has needs, wants, and desires.  The closer we can come to balancing that equation the more we are engaged and the more we care about each other’s success.

So far, I think companies have been adding to their side of the equation with greater work flexibility, a bit better benefits (here and there – healthcare is an issue – and will become a bigger one), more focus on “recognizing” employees.

Employees have been adding to their side of the equation by working more with less, working for less and doing more, being thankful they didn’t get laid off.

The one thing missing in this equation is any idea of what actually makes it “balanced.”  Without balance – without the “equals” you don’t really have an equation.

What both sides are looking for is a fair and balanced equation.

But we don’t really know what that is.

The Ultimatum Game

I started thinking about this issue when I read a refresher on the Ultimatum Game.  The Ultimatum Game is one of the most studied and researched social psychology experiments of all time.  It is simple in construction but provides some really interesting outcomes.

The game is played by two people who are deciding on how to split a fixed amount of money.  There are specific rules they must follow.  The first player suggests how much to split the pot and the second player can either accept or reject that split.  If the second player says no to the deal neither player gets any money. If the second player accepts the offer, the money is split according to the proposal. There is no negotiation – just a simple offer/acceptance round.

The interesting thing is that from a “rational” point of view any sum offered to the second player should be accepted since it is “found” money.  From the offerers point of view they would expect any offer to be accepted.  So the “logical” result would be to offer $1 and it would be logical to accept it.

But that doesn’t happen.

The most common offer during the first runs of the experiment showed a fairly even 50/50 split.  The questions from the researchers were why would anyone offer up to half the total if the second player would (should?) clearly take any amount of free money? What the researchers found was that an even split was most common AND that offers of less than 20% were very often rejected.

Think about that – someone offers to give you $20 bucks and because they get to keep $80 you say no to the $20.  Not very rational.

But Paul – what does this have to do with engagement?

This…

If we can agree that engagement is about balancing an equation – then in my mind it is ultimately about fairness.  Just like the Ultimatum Game.

What the employee thinks is “fair” is what really drives the game.

Employers offer up a split of company resources – some go to the company in the form of bonuses to executives (‘cuz we don’t really think executives are employees), more polished mahogany and perks for a select few – and some resources go to “employees” in the form of salary, benefits, future security, meaning, etc.

And here is where the Ultimatum Game comes into play…

The company is offering the split – a split they think is rational and valuable to the employee.  But the employee is looking at the split just like the subjects did in the Ultimatum Game.  They aren’t being rational.  The split isn’t fair – therefore they reject the offer – they don’t give their discretionary effort.  They don’t work harder or become evangelists for the company.

Regardless of whether you think it is a “good” exchange – that is the logical side speaking – the decision is being made irrationally.  That is a problem you need to factor into your equation.

Not A Perfect Analogy

I realize that this isn’t a perfect analogy because in the real Ultimatum Game the recipient of the offer does not have to do anything to get the split.  In the case of engagement the employee is actually doing something for the offer so there is the little issue of what they think the value of their time and energy is in relation to the company’s offer.

But if in a situation where people would turn down 20% of a total for doing nothing – what is the ratio that people would think is “fair” when there IS effort required.  Seems like companies are starting in a hole.

Net-Net

Finding that perfect balance of what to offer is difficult and it requires more communication, more engagement between the company and the employees.  Do your due diligence.  Assess where you’re starting from.  Are employees already feeling like the equation is unbalanced?  If so – no amount of “give” by the company will be acceptable.  You may have to do some catch up work.

And remember – sometimes it makes no rational sense at all.

Hey – that’s because we’re human.  We aren’t rational.

 

6 Responses to “The Irrationality of Employee Engagement”

  1. Twin31s says:

    Brilliant!

  2. Mary Jo says:

    I have been reading your string of posts on employee engagement, and I was particularly fascinated by this post on fairness and the Ultimatum Game. I am the library director of a small library district (2 libraries, 27 people on staff), and I have been confounded at times by people’s views on what’s fair – this post has offered great insights for me! The way I have approached it with our staff, somewhat successfully, is that we aim for family-fair. We try to give people what they need – some people need more sometimes, and when it is your time to need something, you will be cared for too.

    This is a viable approach when your organization is family-size, but the larger the staff grows, the less time I have to connect to individuals, so I am sometimes connecting through team leaders. If we were really big, I don’t know how I would be able to make sure that everyone’s needs were met – some managers are going to be better at this than others. To accommodate for these differences, checks and balances would have to be built-in. Now my head starts to hurt.

    So here is a string of questions for you…

    · It would seem that the larger the organization, the greater the potential for under-engaged employees. If under-engagement affects the corporate bottom-line, then where is the break-even point?

    · At what point is a company so large that employees begin to feel like numbers? At what point does that affect productivity? At what stage of growth does Amazon go from being a great place to work to being a place that sucks?

    · Is there an optimal size for a company (probably this would vary industry to industry, as economies of scale vary industry to industry)? As a widget manufacturer, you need to market and you need to distribute – if you bring those functions in-house you may expect a cost-savings, but if your employees become less engaged and less productive because administration is farther-removed, if you end up with greater staff turnover, then aren’t you better off to outsource those functions?

    · Is an organization with a narrower focus likely to have greater engagement than an organization that is doing lots of different things?

    · While improved management techniques could improve employee engagement levels, could changing the organizational structure be a more direct approach? Large companies, like large countries, value obedience. Engagement is messy!

    · When we use productivity as a measure of employee engagement, do we miss out on the long-term effects of engagement – if we increase engagement we may not see a big increase in productivity now, but happy employees who are more committed to the company vision may bring exciting innovation in the future that less-engaged employees may not.

    · I would like to think that the drive to increase engagement is not just about profits but also about improving life for our fellow human beings – is that too much to hope?

    I could probably keep going, and I should probably read a few books on the subject! You have provoked much thinking this Sunday morning!

  3. Symbolist says:

    […] The Irrationality of Employee Engagement (symbolist.com) […]

  4. Andrew_MTL says:

    Very good article. Like you said, if someone can bottle the
    solution to this issue, they’d be rich.

    I have some issues with this premise however. The main being that
    if employees perceive the equation to be balanced with the employer,
    that engagement *should* be there. This completely ignores the
    principles of intrinsic motivation, and intangibles such as personal
    pride, work-ethic, etc.

    I have 5 employees, all being paid exactly the same… levels of
    engagement are all over the spectrum. I have some who’ve made it
    their life’s work, who can’t even tell me how much they’re being paid
    as love what they do and take so much pride from it On the
    other end of the spectrum I have someone who constantly complains
    about salary, counts hours to the minute, and sees the work as
    a means to an end.

    Now, if your equation theory is correct, all of these people
    should be motivated (assuming the equation is adequately balanced).
    Or the employer has to custom create individualized “equations”
    so each employee feels the equal balance matched to their
    expectations and values.

    If you need to customize equations in order for this to work,
    disclosure of these (which could happen officially in organized
    labour situations, or unofficially as water cooler gossip) would be
    sure to cause disengagement, as overpayment of less-engaged employees
    would be seen as unjust for those with higher levels of intrinsic
    motivation and/or a better work ethic… doesn’t stack up.

    • Paul Hebert says:

      Thanks for the comment. First – I realize this isn’t perfect but I think it speaks to the fact that our reactions to our work and how we are compensated (both with money and other stuff like benefits) can be more emotional and therefore irrational to a degree. How do we define fair and is that different for each person?

      I think that there is a ton more things that go into the equation than compensation – you focused in on “if they find out people make more than me then it is unfair.” I challenge that … I can get paid less but get a bit more latitude in when I come in to the office or get to work a bit later than someone else. In other words we can play with with various elements to get to “balance.” Balance isn’t just about compensation – it is about the sum total of the relationship.

      Agreed this may not be a union solution – but that is becoming less of a part of the workforce each year – good or bad – no comment.

      Motivation isn’t the issue – it’s about engagement – I’d submit those are different issues with different levers…

      As to custom engagement… I do believe that managers SHOULD be looking at how they can treat employees as individuals. We shouldn’t be looking to create flat, unmoving and non-negotiable “contracts” with employees – that is why we get disengagement. Yeah – it’s tough. But it is what managers should be tasked with that.

  5. Paul Hebert says:

    My pleasure – and thank you for engaging and listening. Appreciate the readership!

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