Chapter 2

Employee engagement

Engagement is the relationship between an employee and their work, or between an employee and their organisation.

When employees are passionate about their work and feel a real connection to their organisation, they have the power to drive innovation and move the business forward.

Discretionary effort – that is, an employee's willingness to go beyond what they are asked to do, such as looking for ways to perform the job more effectively or volunteering for new work – and intent to stay are also strongly linked to employee engagement.

Like diversity and inclusion, engagement is critical to creating a positive working culture, aligning employees with organisational values, achieving business goals and driving success. It is an important factor in all productive and innovative workplaces, and therefore a clear contributor to improved customer satisfaction.

Employee engagement in the NSW public sector

The People Matter survey measures employee engagement in the NSW public sector. It seeks employees' views on how well their organisations apply the public sector's values and employment practices, and gathers information about how organisations, managers and workgroups operate. The survey report combines participants' responses to five selected survey statements to calculate an averaged Engagement Index.

The Engagement Index represents the extent to which employees feel motivated by, inspired by, attached to and proud of their organisation, and would be willing to recommend it as a great place to work. The calculation is based on the United Kingdom (UK) Civil Service engagement index, which allows PSC to benchmark the score against other public sector jurisdictions.

In 2014, the NSW Engagement Index was 65%, comparing well with other public sectors – including Victoria at 67%, Queensland at 58% and the UK at 58%. The NSW sector-wide results showed a strong association between engagement and employee experiences with senior managers, and between engagement and organisational factors – such as commitment to employee development, organisational involvement in the community and confidence in the way grievances are resolved. These results are similar to the UK Civil Service findings, which showed that good leadership and change management had the strongest connection with positive employee engagement.11

To gain additional insight into the relationship between engagement and other factors, PSC examined the 2014 People Matter survey results beyond the Index itself, to compare responses against statements regarding four areas that are closely connected with employee engagement: senior management, the organisation, managers and workgroups.12 The statements focused on wide-ranging features of the workplace including innovation, efficiency, effectiveness, values, communication, decisions, change management, grievance handling and performance management.

The analysis showed a strong link between all of the statements about senior management, organisations, managers and workgroups: employees who responded positively to the engagement statements were more likely to respond positively about each of these areas of the organisation. This confirms the importance of leadership to engagement in the workplace and the impact on business outcomes.

Not surprisingly, there is a marked difference in the engagement levels of those hoping to continue in their current organisation compared to those thinking about leaving the NSW public sector. Employees intending to leave within a year had a significantly lower engagement score (44%) than employees intending to stay (71%). This pattern remains consistent when tested for factors including age, gender and tenure. As Figure 7 shows, better leadership from senior managers and line managers – more significantly than all other factors – would motivate those intending to leave the sector to change their mind and stay. The numbers below also show that employees want more involvement in decisions, increased recognition and better accountability for performance.

Figure 7: Factors influencing staff retention

Bar chart of 'Figure 7: Factors influencing staff retention'

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Factor Respondents (%) - Intend to leave Respondents (%) - Intend to stay
Senior manager leadership 56 35
My manager's leadership 40 25
Involvement in decision making 34 29
Recognition 46 41
Performance accountability 28 23
Work/life balance 38 38
Flexible working conditions 28 29
Career opportunites 43 46
Location 15 20
Facilities 19 23
Technology and systems 23 29
Passion for work 34 41
Learning and development 34 42
Job security 29 39
Pay and benefits 40 57

Source: People Matter survey 2014

The findings about management and leadership are important for managers at all levels. They highlight the importance of understanding employee engagement within their agency or workgroup, and the factors that they can focus on in their workplaces.

Research shows that organisations often overlook the importance of senior leadership in influencing these factors. A recent global study shows that while employees rank trust and confidence in senior leadership as the third most important driver of retention, employers do not rank this among their top seven drivers. It also found that employers tend to overestimate the impact of front-line supervisors, when in fact senior leaders and local-level managers also play an important role in employee engagement.13

Agency survey findings

The 2015 Agency survey results revealed that the majority of agencies have implemented initiatives in the last 12 months to improve employee engagement. However, less than half of the sector (46%) has taken action to address the wider issues raised in the 2014 People Matter survey. On the other hand, 21% of agencies have developed strong action plans and 16% have started consultation and planning processes. Around 15% of agencies have no plans – or see no need – to address issues arising from the 2014 results. Some of these agencies have low engagement scores – and therefore greater potential to improve employee outcomes relating to organisational culture and practices.

Figure 8: Agency action to address findings from the 2014 People Matter survey

Chart of 'Figure 8: Agency action to address findings from the 2014 People Matter survey'

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No action necessary No plans to address issues arising from the survey results Consultation process is underway and action plans are under development Action plans have been developed to address issues arising from the survey results Action is currently underway to address issues arising from the survey results
4% 13% 16% 21% 46%

Source: Agency survey 2015

Some agencies are setting goals and targets to improve their engagement scores, as they recognise the very clear link between engagement and performance. Others still are planning to include engagement scores in their executive performance agreements.

It will take time for agencies' engagement-related actions to be fully developed and produce strong outcomes. The next People Matter survey should indicate how far agencies have progressed compared to the 2014 results, and will also look more deeply at some other drivers of engagement.

To the next level

Engagement scores in the NSW public sector compare well against other jurisdictions on a sector-wide level but there are marked inconsistencies between different agencies. The sector's strong performance and service delivery depend on consistency across the workforce, so more needs to be done to improve engagement for public sector employees.

The People Matter survey is a rich data source for agencies wanting to understand their own employee engagement drivers and to target their workforce management practices accordingly. With the survey running annually from 2016, agencies will have a more regular source of data regarding employee perceptions, but they will also need to act promptly in responding to the results if they want to use each year's findings to improve their business outcomes.

Some agencies have been transparent in how they have used the results of previous surveys. Recent discussions with deputy secretaries have revealed an intent to focus on three or four areas of engagement, especially relating to performance. These focus areas differ among agencies but generally involve common themes such as change management, communications, employee development, respectful working environments and senior leaders providing a clear sense of direction.

The decision to focus on improving certain areas of engagement often follows lengthy discussions with the workforce. In a further act of engagement, one deputy secretary ran roadshow events across the state, during which she shared her department's People Matter survey results and listened to feedback, to show employees that their opinions had been heard and would be acted on.

Collecting engagement data at lower levels within organisations – and shifting ownership of the results from HR to the executive and then to line managers – is a positive way to improve employee-level awareness of workplace engagement and rates of action.

Some agencies are setting goals and targets to improve their engagement scores, as they recognise the very clear link between engagement and performance. Others still are planning to include engagement scores in their executive performance agreements.

All of these steps – taken from the top down and the bottom up – will send a signal to the workforce that engagement is an important part of workforce management across the NSW public sector.

  1. UK Cabinet Office (2014), Civil Service People Survey: Summary of Findings 
  2. These groupings were designed specifically for this analysis and are not the same as those used in the main findings report of the 2014 People Matter survey
  3. Towers Watson 2015, ‘People Matter surveys Issue’, Engage, Towers Watson, London