October 28, 2019

What can employee engagement really tell you about your risk culture?

Assess Culture

by Daniel de Zilva

Leaders have significantly greater access to culture-related measures than they had 20 years ago. Among the most widely used measures are employee engagement surveys. It might seem logical to infer certain risk culture traits or risks themselves from employee engagement results – but what can employee engagement surveys indicate and what are their limits?

While it may be interesting to examine concerns with the validity of employee engagement surveys in general, such as reports of employees feeling pressured to only provide favourable responses, we focus specifically on their applicability to measuring cultural risks.

Engagement can be characterised as a positive motivational state, the opposite of exhaustion and cynicism that culminate in burnout. It seems logical that low engagement can tell you something about risk culture issues related to low motivation.

  • Inattention and carelessness. Most commonly, engagement can indicate the likelihood that attention and care is not adequate for the work demands. Supporting this, as engagement decreases, organisations tend to see poorer safety outcomes such as a greater rate of incidents. Some organisations with staff nearing burnout have also seen uncharacteristic errors and mistakes creep into high performing teams. Wellbeing, on the other hand, is suggested to help make good judgements and serve stakeholders well. It therefore makes sense that the Banking Standards Board in the UK incorporates wellbeing items such as I often feel under excessive pressure to perform in my work in its risk culture survey.
  • Deliberate misconduct. Although the absolute likelihood is probably quite small, low engagement can indicate an increased rate of deliberate misconduct. Across multiple industries, low engagement correlates with behaviours or intentions to cause harm within the organisation, such as through fraud, sabotage and aggression. The increased rate of deliberate misconduct can be found using standard engagement items from the Utrecht Work Engagement Scale such as I am proud of the work that I do. High engagement, on the other hand has been shown to protect against deliberate misconduct in individuals with high-risk personality traits. So engagement can help or hinder the management of risk.

Despite some specific ways that low engagement increases cultural risk, there are many more cultural risks that are unrelated to engagement. Important differences lie in the (1) range of behavioural drivers, (2) level of the organisation examined, and (3) degree of focus on upsides versus downsides.

  • Driver – motivation or broader? There is a limit to what engagement surveys can tell you about risk culture because they look primarily at motivational drivers of behaviour. Some teams with risk culture challenges have been highly committed but not capable, committed but overconfident, committed but myopic towards their area or accountabilities. As an executive sceptical of engagement surveys once explained, employees can be ‘engaged on the wrong thing’. Engagement that is misdirected can heighten cultural risks.
  • Objective – employee experience or organisational effectiveness? Engagement tends to focus on employee experience. Cultural risk measurement is primarily interested in organisational outcomes; the ‘health’ of the organisation. Individual experiences are important insofar as they tell you something about the behavioural norms that help or hinder the management of the organisation’s risk, but employee experience is not the primary interest. Now, you could say that the organisational level is examined by measurement of organisational culture and that risk culture is a part of this. In that case it is important to appreciate a final important difference.
  • Focus – upsides or downsides? While it might seem obvious, one aim of a strong risk culture is to prevent harm. Framing the aim as preventing harm is different from what engagement and organisational culture measures aim to do when they examine behaviour, which generally framed towards identifying and tracking potential upside. This is often illustrated by all the positively worded questions organisations tend to use in engagement surveys. The framing of the exercise (as well as the questions themselves) can create a bias to enquire deeper into the potential upside or the downside.

As a practical example of where framing of the upside can be misguiding, customer satisfaction at the 10 largest retail banks in Australia a year prior to the Banking Royal Commission was above 80% and the large majority of Net Promoter Scores were positive. The positive frame of these measures nudges toward the question, what actions might the bank take to have a more positive result? At the time, this thinking may have overshadowed the unsatisfied minority. In fact, one pattern that emerged was that banks received complaints by customers prior to their submission at the Banking Royal Commission, yet they were unresolved often over lengthy periods. This reflects the idea that preventing harm is a discipline in itself and not always countered by an opposing strength such as satisfaction or engagement.

Overall, low engagement is an indicator of cultural risk, but it’s wise to examine drivers beyond low motivation that might cause harm to the organisation and its stakeholders.