Employee engagement

Employee engagement is a higher form of employee satisfaction; an emotional commitment to the organisation people work for, translated into a willingness to invest discretionary effort in contributing to its success. Most businesses measure employee satisfaction in some form, many already measure employee engagement. There is an established link between employee engagement and financial performance, generally but not exclusively through the impact of engaged employees on customer perception. These employee-customer-shareholder value chains have been well elaborated by a number of companies.

How employee engagement is measured is not critical for the purposes of this laboratory. There are a number of established metrics in use by companies – the Towers Perrin-ISR model is a widely used one. It is the fact that these metrics are used, and linked to the business strategy and the ESG factors that influence them articulated by businesses that is most critical.
Towers Perrin-ISR have also established the factors influencing employee engagement across a wide variety of sectors. There are variations but the evidence suggests a common set of components. These components are well reflected in the ESG factors of our framework.

Lloyds TSB uses the Towers Perrin-ISR metric. Its analysis has identified six primary determinants of employee engagement in Lloyds TSB. These determinants are well represented in the Framework’s ESG factors. They are now measured in a tracked quarterly employee engagement survey; the employee engagement index; completed by over 70% of all employees. Increasing employee engagement in Lloyds TSB is a key part of its business strategy, a corporate responsibility priority and the index score is one of the primary performance measure in the organisation’s Balanced Scorecard.