CORPORATE HEALTH GROUP

FINDING THE PATH and taking you

there

Employee Engagement: Does It Really Add Value?Catherine Baumgardner, Corporate Health GroupBrandon Melton, Lifespan

ASHHRA Annual ConferenceOctober 16, 2006

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The Context for Employee Engagement

• A key part of the organization’s overall customer experience strategy

• Not stand alone• Leadership must understand the connection

How do you define employee engagement?

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Definitions

• Employees feel a strong emotional bond to the organization that employs them

• People demonstrate a willingness to recommend the organization

• People are willing to commit time to help the organization to succeed

Source: Wikipedia

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Why Should We Care?

Strong relationship between employee satisfaction, customer loyalty and store profitability. Source: Harvard Business Review (1998)

Sales force engagement linked to physician loyalty. Source: PeopleMetrics (2002)

“Fully engaged” employees had higher portfolio holdings. Source: PeopleMetrics (2004)

Employees who were “fully engaged” produced significantly fewer “defects” than those who were “disengaged.” Source: PeopleMetrics (2005)

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Relevance to Today’s Workplace

• Increased employee, patient satisfaction• Engaged employees mean a better bottom line • Enhanced employee retention• Identifies key drivers of employee engagement

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Is it enough to have satisfied employees?

Traits of a Satisfied Employee

PleasantSatiatedContentGratifiedLow absenteeismLow turnoverLow substance abuse

Source: Leadership Excellence, August 2006

Traits of an Engaged Employee

• View their work as a part of enhancing the overall organization

• Are willing to do what it takes to exceed customer expectations

• Believe in their organization• Want to make it work better• Trust their managers

Behaviors of an Engaged Employee

• Build relationships• Anticipate customer needs• Support co-workers to provide excellent service• Take initiative• Find answers

Source: Leadership Excellence, August 2006

Today’s Objectives

• Share practices most highly correlated with engagement

• Discuss where to best expend resources to impact engagement

• Show correlation between employee engagement and organizational performance

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Today’s Deliverables

• Criteria for calculating engagement index

• Categories of effective people practices that drive engagement

• Measurement tools

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Case Study--Lifespan

• Health System Founded: 1994

• Hospitals (Founded):• Rhode Island Hospital (1863)• Newport Hospital (1873) • The Miriam Hospital (1926) • Bradley Children’s Psychiatric Hospital (1931)• Hasbro Children’s Hospital (1994)

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Lifespan Facts

Employees: 11,400

Physicians: 2,519

Residents: 510

Patient Discharges: 52,680

Emergency Department Visits: 198,447

Revenues: $1.26B

Research: $66.8M

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Why Did Lifespan Pursue Engagement?

The mission of Human Resources is to assist Lifespan and its Partners to become the Employer and Provider of Choice in the communities we serve.

Our vision is to be at the forefront of human resources practice to achieve the sustained success of Lifespan and its Partners.

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Lifespan Employee Engagement Initiative

People Practices

Worklife

Values

Leadership/Management

Supervision

Career Development

Employee Engagement

Advocacy

Retention

Job Satisfaction Organizational Performance

Patient Satisfaction

Financial Performance

Employee Retention13

Participation

• All but one Lifespan location conducted the Employee Engagement Survey in August and September 2005

• All five Lifespan locations used the same core questions – allowing comparison across the health system

• More than two thirds (69%) of Lifespan employees participated in the Employee Engagement survey

• All but one location has an Engagement Index of 70% or higher – fully engaged and engaged employees

• All Lifespan locations have the same top overall driver of engagement – “Lifespan cares about its employees”

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Measuring Employee Engagement

• Response Scale (Likert )• An engagement index includes respondents

answering 4 or 5 on all three outcome questions

1 2 3 4 5

Strongly Disagree

Disagree Neutral Agree Strongly Agree

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Engagement Index

• Advocacy: I would recommend Lifespan as a great place to work

• Retention: I intend to be working at Lifespan two years from now barring retirement

• Satisfaction: Overall, I am satisfied with Lifespan as a place to work

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Engagement Segment Definitions

• Fully Engaged “5’s” on advocacy, retention and job satisfaction

• Engaged “4 or 5” on advocacy, retention and job satisfaction (but at least one “4”)

• On the Fence “3, 4 or 5” on advocacy, retention and job satisfaction (but at least one “3”)

• Disengaged At least one “2” on advocacy, retention or job satisfaction

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Engagement Index Results

Engagement Index (% favorable on Adv.,

Ret., Sat.)

Advocacy (% Favorable)

Satisfaction (% Favorable)

Retention(% Favorable)

BH 71% 89% 93% 75%

LCS 71% 83% 91% 80%

NH 72% 83% 89% 82%

RIH 61% 69% 81% 80%

TMH 70% 84% 89% 78%

Overall 69% 82% 89% 79%

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The Not So Good News…

Almost 1/3 (31%) of Lifespan employees are “On the Fence” or “Disengaged”

Segment Percentage

Fully Engaged 26%

Engaged 43%

On the Fence 20%

Disengaged 11%

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The Unengaged: Who Are They?

• Employed 1-2 years• Under 40 years of age• Work nights and evenings• Mostly knowledge workers, not production workers

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Categories of Effective People Practices

• Work Life Balance• Values• Leadership/Management• Immediate Supervisor• Career Development

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Top Engagement Drivers

• Bradley Hospital Bradley Hospital cares about its employees My immediate supervisor demonstrates a positive leadership style I feel my career is developing at Bradley Hospital

• Lifespan Corporate Services Lifespan Corporate Services cares about its employees Lifespan Corporate Services treats employees with respect I have confidence that senior management is leading Lifespan Corporate Services in

the right direction• Newport Hospital

Newport Hospital cares about its employees Newport Hospital is a socially and ethically responsible organization I am able to maintain an appropriate balance between my personal and work life

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Top Engagement Drivers

• Rhode Island Hospital The Rhode Island Hospital cares about its employees There are excellent job opportunities available for me at Rhode

Island Hospital Rhode Island Hospital provides quality patient care

• The Miriam Hospital The Miriam Hospital cares about its employees My contributions are appropriately rewarded and recognized The Miriam Hospital provides quality patient care

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EMPLOYEE ENGAGEMENT

(71%)

SatisfactionRetentionAdvocacy

1. Work Life

3. Immediate Supervisor

Overall Engagement Model

4. Career Development

5. Leadership/ Management

2. My immediate supervisor demonstrates a positive leadership style 78%

3. I feel my career is developing at Bradley Hospital 65%

9. Bradley Hospital takes employee interests into account when making important decisions 58%

2. Values

* Sections are listed in the order of their impact on Employee Engagement** Survey items are listed in order of individual impact on Employee Engagement Items that score below 65% are highlighted in Red and Bold text.

Survey Item** % FavorableSection*

1. Bradley Hospital cares about its people 83%

4. My contributions are appropriately rewarded and recognized 60%

5. I have the resources to get things done at Bradley Hospital 79%

6. I feel comfortable in reporting issues concerning patient safety,including patient care errors

88%

7. In my department, we take time to discuss how we can do things better

81%

8. Bradley Hospital provides quality patient care, as compared to other healthcare organizations

91%

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Follow-up/Action Planning

• Communicate survey findings to executive management and governing boards

• Distribute site and department level reports to middle managers

• Communicate survey findings and next steps to employees

• Clarify major issues and concerns with employees– E-Focus Groups– Department Meetings

• Develop action plans to address issues with key milestones, accountabilities and timelines

– Overall site plans– Department specific plans

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Follow-up/Action Planning

• Implement needed improvements – site and department specific

• Communicate specific follow-up actions taken to employees

• Measure progress through employee ‘pulse’ surveys

• Conduct Correlation Study

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Gap to Perfection

Baseline1999

Gap toPerfection

Results2001-2004

Results2005

Absolute Change

Site Weighting (1)

Gap Reduction

Bradley 4.0 1.0 4.5 4.5 0.5 6% 50%

LCS 3.8 1.2 4.3 4.2 0.4 6% 33%

Newport (1) 4.0 1.0 4.3 4.3 0.3 8% 30%

RIH 3.2 1.8 3.9 4.0 0.8 60% 44%

TMH 3.4 1.6 4.4 4.3 0.9 20% 63%

Average 3.7 1.3 4.3 4.3 0.6 100% 46.4%(2)

(1) Newport Hospital Survey was conducted in Nov, 2004.(2) Weighted Average Based on number of Full-Time and Part-Time employees at each Lifespan Site. Straight Average: 44%

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Correlation Study

• Relationship Between the Level of Employee Engagement and Organizational Performance

• Organizational Performance Measures– Patient Satisfaction– Labor Costs

» Overtime Usage» Contract Labor Usage

– Employee Retention/Turnover

• Engagement Levels– Lowest Engagement (<50%)– Middle Engagement (50%-70%)– Highest Engagement (>70%)

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% Overall Rating of Care by Engagement Index

65% 66%

73%

0%

20%

40%

60%

80%

100%

Lowest Middle Highest

Note: All percentages on this chart indicate a top box score. That is, a 5 (very good) on a 5-point scale.

Engagement Index

% H

ighe

st C

are

Rat

ing

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Percentile Rank Overall Rating of Care by Engagement Index

50%ile

65%ile

95%ile

0%

20%

40%

60%

80%

100%

Lowest Middle Highest

Note: All percentages on this chart indicate a top box score. That is, a 5 (very good) on a 5-point scale.

Engagement Index

Per

cen

tile

Ran

k

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% Likelihood to Recommend Hospital by Engagement Index

65% 65%

75%

0%

20%

40%

60%

80%

100%

Lowest Middle Highest

Note: All percentages on this chart indicate a top box score. That is, a 5 (very good) on a 5-point scale.

Engagement Index

% H

ighe

st R

ecom

men

datio

n R

atin

g

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Percentile Rank Likelihood to Recommend Hospital

by Engagement Index

50%ile 50%ile

90%ile

0%

20%

40%

60%

80%

100%

Lowest Middle Highest

Note: All percentages on this chart indicate a top box score. That is, a 5 (very good) on a 5-point scale.

Engagement Index

Per

cen

tile

Ran

k

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21%

15%

12%

0%

10%

20%

30%

Lowest Middle Highest

% Overtime by Engagement Index

Engagement Index

% O

vert

ime

RIH Total Overtime Budget: $22,178,510

Potential Savings*: $5,544,628

Note:Potential Savings assumes all employees move to the Highest Engagement Level.

This 3 percentage point difference costs an additional $1,386,157

This 9 percentage point difference costs an additional $4,158,471

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% Contract Labor by Engagement Index

Engagement Index

% C

ontr

act

Lab

or

22%

18%

11%

0%

10%

20%

30%

Lowest Middle Highest

RIH Total Contract Labor Budget: $11,343,926

Potential Savings*: $4,003,738

This 7 percentage point difference costs an additional $1,557,009

This 11 percentage point difference costs an additional $2,446,729

34Note:Potential Savings assumes all employees move to the Highest Engagement Level.

10.1%

9.0%

5.8%

0%

5%

10%

15%

Lowest Middle Highest

Engagement Index

% V

olu

nta

ry T

urno

ver

% Voluntary Turnover by Engagement Index

Total Voluntary Turnover during time period: 694

Potential Savings*: $1,645,120 (based on 40 employees)

Note: Potential Savings assumes employees that would have stayed if Hospitals were in the Highest Engagement Level. Each Nurse has a replacement cost of $42,400

55% increase

in turnover 74% increase in turnover

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Next Steps and Tools• Agree upon an organizational motivation and commitment to

employee engagement• Determine what you would like to achieve• Define the goals of your effort and how to measure• Develop engagement questions based around the criteria for

measurement• Conduct Correlation Study: Employee Engagement and

Organizational Performance Measure• Build accountability into the performance appraisal process,

starting with leadership• Develop an action plan to address issues

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Employer of Choice Objective• Engagement: Increase percentage of respondents in “disengaged” and “on

the fence” categories to the “engaged” and “fully engaged” categories in the Employee Engagement Survey.Minimum: 2.5% Midpoint: 5% Maximum 7.5%

• Diversity: Decrease the gap of racial/ethnic diversity between RI population and Lifespan employees in Technical, Professional, and Managerial Job Categories.Minimum: 15% Midpoint: 25% Maximum 35%

• Retention: Increase retention rates in first 12 months of employment of full and part time employees (voluntary separations only).Minimum: 5% Midpoint: 10% Maximum 15%

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Management Scorecard

• Purpose– Measure Progress– Recognition and Reward– Accountability– Best Practices

• Retention, Diversity, Engagement

• System, Site, Division, Department

• Distributed Quarterly

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Resources

Brandon Melton Jonathan HonibalSr. Vice President, Lifespan Research Directorbmelton@lifespan.org PeopleMetrics, Inc.401.444.3774 jhonibal@people-metrics.com

215.979.8032Catherine BaumgardnerAssociate ConsultantCorporate Health Groupcbaumgardner@corporatehealthgroup.com717.285.2240www.corporatehealthgroup.com

Sean McDade, Ph.DPresident & CEOPeopleMetrics, Incsmcdade@people-metrics.com (215) 979 – 8040www.people-metrics.com

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FINDING THE PATH and taking you

thereCORPORATE HEALTH GROUP1-888-334-2500www.corporatehealthgroup.com