Building a culture of high employee

Building a culture of high employeeengagement
Gary Tomlinson
Abstract
Purpose – This paper aims to examine the key drivers for employee engagement within an organization.
It seeks to answer the question: what are the keys to improving the level of employee engagement?
Design/methodology/approach – A case study illustrates a strategy for employee engagement that
was based on research on the key drivers of engagement.
Findings – The paper presents practical case study material from Kia Motors – the South Korean
automotive manufacturer. It shows how Human Resources (HR) worked to develop a strategy to address
very poor levels of employee engagement. A clear set of engagement measures was developed to
assess the impact of the engagement strategy.
Originality/value – This paper ascertains some of the key drivers of employee engagement as
illustrated by the case study. It demonstrates a number of practical tools HR professionals can utilize to
build employee engagement within their organizations.
Keywords Employee development, Employee attitudes, Automotive industry,
Human resource management
Paper type Case study
K
ia Motors is part of the Hyundai-Kia Automotive Group – the fourth largest
automotive manufacturer in the world – with its headquarters in Seoul, Korea. The
company employs over 40,000 employees in over 167 countries. This case study
centers on Kia Motors (UK), which is a wholly owned subsidiary of Kia Motors Corporation
that is based in the south of England and employs over 2,500 people through is HQ and
dealership network.
The engagement strategy that was formulated in the UK is now being be rolled out on a
Pan-European level and shared with the global HR team at the company’s HQ in Seoul. To
support the development of the employee engagement strategy HR utilized the marketing
communications tools SOSTAC. This tool consists of six parts and forms the structure for
presenting the case study. SOSTAC stands for:
1. Situation. Understanding the challenge facing HR.
2. Objectives. Setting the engagement objectives for Kia Motors.
3. Strategy. Becoming a true employer of choice.
4. Tactics. Introducing the Kia Motors engagement model.
5. Action. Interventions to improve employee engagement.
6. Control. Measuring the success of the strategy.
DOI 10.1108/14754391011040046 VOL. 9 NO. 3 2010, pp. 25-31, Q Emerald Group Publishing Limited, ISSN 1475-4398 jSTRATEGIC HR REVIEW j PAGE 25
Gary Tomlinson is Head of
Human Resources at Kia
Motors, Weybridge, UK.
Situation: understanding the challenge facing HR
During 2006 Kia Motors (UK) went through a very difficult period, with the business
experiencing rapidly falling sales, increased financial losses and very low levels of employee
engagement, with the latter very much seen as both a cause and effect of the poor business
performance. Towards the latter end of 2006, Kia Motors (UK) came under new HR
leadership, with Gary Tomlinson appointed as the new head of HR. The first step agreed with
the board, was to understand the state of employee satisfaction through the use of the
internal employee survey, Your Voice.
The Kia employee survey is based on a five-point, multi-rater Likert scale from strongly agree
through to strongly disagree. The 2006 survey illustrated many challenges including, among
others, internal communications being rated at only 3 percent and awareness of the
strategic direction at 32 percent. The consequences of such poor results were felt in other
measures of HR, including employee turnover reaching an unprecedented 31 percent by the
end of 2006. The resulting direct costs to the business (recruitment, legal and exit costs)
were over £600,000 by 2006 year end.
In January 2007 with the arrival of a new Korean CEO and shortly after a new British MD, HR
was challenged to develop an employee engagement strategy to improve employee morale
and address the high levels of employee turnover.
Objectives: setting the engagement objectives for Kia Motors
Therefore HR agreed with the board some ambitious objectives to address the challenges
the organization was experiencing. These were:
B Increase the average score across the five direct line manager indicators by 10 percent.
The indicators are the support managers provide, their communication, the quality of
feedback to their direct reports at appraisals, the recognition of work well done and the
respect between manager and employee.
B Seek an increase in the employee survey results on the 12 key engagement indicators.
B Aim to reduce the level of employee turnover within Kia Motors, which was 31 percent at
the end of 2006.
B Look to reduce the employee costs of recruitment and exiting of employees within the
organization on an annual basis by 10 percent.
Strategy: becoming a true employer of choice
The strategy agreed with the board for HR was to develop the employer brand as a true
‘‘employer of choice.’’ Since the UK automotive market was very competitive with a relatively
limited pool of talent, it was critical for Kia to be seen as an attractive employer if it was to
attract and retain talent to the brand. An HR strategy was put in place with the aim to achieve
as a marker of progress the Investors In People award by the end of 2008. Longer term the
aim was for Kia Motors UK to be seen as not just an employer of choice in the UK automotive
industry but also more widely on a national basis as an employer brand.
The focus for HR was on improving ‘‘employee engagement,’’ which was about creating an
‘‘emotional connection’’ with employees so that they are passionate and ‘‘live’’ the brand. At
Kia Motors, employee engagement consists of three parts – the belief (mental), the feeling
the brand generates (emotion) and, most importantly, the generation of discretionary effort
(behavior).
The strategy was developed after triangulating three sources, our employee satisfaction
survey results, comparison of the results with certain competitor companies, which was
accessed via automotive networking groups and a review of secondary data on best
practice in employee engagement. The strategy was focused on three distinct but
PAGE 26jSTRATEGIC HR REVIEWjVOL. 9 NO. 3 2010
connected themes: leadership, internal communications and employee development,
based on research conducted into the drivers of employee engagement – see Figure 1.
Tactics: introducing the Kia Motors Engagement model
The employee engagement strategy consisted of five interventions that were distinct but
interconnected for symbiosis and greater impact – see Figure 2.
Action: interventions to improve employee engagement
1. Leadership development
Based on the research on employee engagement, the organization knew that senior and
middle management were the key drivers in building engagement in the workforce. So a
significant focus was on developing the people management skills of Kia’s managers who
had line management responsibility.
Figure 1 Research into the drivers of employee engagement
Figure 2 A five-pronged strategy
VOL. 9 NO. 3 2010 jSTRATEGIC HR REVIEWjPAGE 27
All members of the management team were sent on a series of training courses to improve
their management skills. In order to measure their behavioral change, all managers were
tested through a 360-degree assessment tool before and after attending the training. To
support the implementation of the training all managers received a management ‘‘toolkit’’
that included a set of management techniques built around the core competencies required
of the role.
To gain buy-in to the training, it was sponsored by the CEO, all delegates signed up to
learning contracts and the chosen training partner, Techniques For Change, provided a
dedicated learning support center. The focus was very much on doing rather than knowing,
built around Kia Motors’ framework of five core behavioral competencies that are applicable
for all employees, each of which has positive and negative indicators. The five core
behavioral competencies at Kia Motors are delivering results, customer focus,
communication, managing self or others and teamworking.
2. Employee recognition
The employee survey illustrated that employees felt there was not enough recognition for
staff contributions. Kia was keen to ensure that employees were rewarded for their efforts
and in 2007 introduced the ‘‘outstanding awards’’ for employees that were presented on a
quarterly basis at a companywide town hall meeting. These awards were presented by the
CEO and were for either individual or team contributions. To ensure the awards gained
employee support, the nominations came direct from employees, rather than purely from
senior management.
The winners were provided with a certificate and a gift, which provided them with a range of
choices, from days out to balloon flights or a pampering weekend at a health spa. In
addition, employees are rewarded with the ‘‘Kia thank you’’ – a simple card and a little
present for a job well done. This is informal recognition coming from the respective line
manager, with the employee returning to their desk to find a thank you card and present. The
idea was inspired by the brand tagline of ‘‘the power to surprise,’’ something Kia wanted to
reflect internally.
3. Internal communications
To support the improvement of internal communications, a number of tools to facilitate
greater organizational communications were introduced. These included quarterly
employee briefings and a more rigorous use of performance management to ensure
appraisals were completed 100 percent across the organization by all employees –
something that was achieved for the first time in 2007.
A new corporate intranet, Kia Vision, was also launched. This was very much positioned
around being an enabling tool to improve communications across the organization. The
content was a combination of key business information, presentations and provision of some
more lighthearted commentary to help build a sense of togetherness across the various
departments.
Following some focus groups with employees, it was also decided to set up an employee
forum that consisted of at least one representative from each department. This in particular
has proven to be a useful tool to support employees in raising items of concern. To further
ensure transparency the minutes and agreed conclusions of the meeting are published for
all to see.
4. Organizational development
This intervention was in many ways the most-wide ranging. One of the most significant
changes made in early 2007 was the removal of all employee bonuses. HR led the
negotiations with the relevant employees, gaining universal support for the removal of
bonuses with a collective offer of a fixed rate percentage increase to employees’ base
salary.
PAGE 28jSTRATEGIC HR REVIEWjVOL. 9 NO. 3 2010
The rationale behind this was the belief that the bonus culture within the organization was
creating an environment of short-termism and leading individuals, on occasion, to place
personal gain over the long-term interests of the company. The organization was very much
following the maxim of Goodhart’s law – when a measure becomes a target, it ceases to be a
good measure, i.e. the incentive itself distorts the behavior making the measure itself an
unsatisfactory way of assessing performance. Given the economic experience of the credit
crunch and allegations directed at the banking and finance industries, Kia believes it was
very much ahead of the curve in eradicating the bonus culture.
It also completely re-wrote the employee handbook and all HR policies and procedures to
ensure they were aligned with the cultural values. Other changes made included improving
employee benefits by introducing child care vouchers, increasing holiday allowance and
introducing a dress down Friday to support a more relaxed culture.
5. Employee development
The organization also ensured that non-management employees received training to
support them in both their role and career development. Through Kia’s appraisal process,
training needs analyses were collected across the organization and utilized to create a clear
training plan for each employee, aligned with their career aspirations as expressed in their
annual appraisal. Previously training was handled on a more ad hoc basis based on the
requests of the respective employees concerned.
Control: measuring the success of the strategy
Between the launch of the engagement strategy in March 2007 and October 2009, Kia
experienced for three consecutive years improvements across all four of its key objectives:
1. Increase the average score across the five direct line manager indicators by 10 percent.
Kia includes the five indicators that measure direct line manager performance within its
employee survey. From the time the leadership program began, to the completion of the
course, there was a 14 percent average increase from 64 percent to 78 percent in the
measurement scores. What is most encouraging is that over one year after this program
ended the improved scores have remained – demonstrating the sustainability of the
intervention.
2. Seek an increase in the employee survey results on the 12 key engagement indicators. In
the survey utilized by Kia Motors (UK) there are 12 key indicators that the company
utilizes to measure engagement across the business. These indicators cover a broad
range of engagement drivers including senior management, internal communications,
pride in the organization and relationship with the direct line manager.
The aggregate score is calculated by combining the total percentage points (shown
inside the bar chart – see Figure 3) and then dividing across the 12 key indicators. The
average score has grown significantly, from 39 percent in 2006, to 51 percent in 07, to 65
percent in 08 and 71 percent in 2009. Overall since the engagement strategy was
launched, there has been an average increase of 32 percentage points.
3. Aim to reduce the level of employee turnover within Kia Motors, which was 31 percent at
the end of 2006. The fundamental challenge for the board that required addressing was to
reduce employee turnover. From the high point of 31 percent employee turnover in 2006,
‘‘ [. . .] the organization knew that senior and middle
management were the key drivers in building engagement. ’’
VOL. 9 NO. 3 2010 jSTRATEGIC HR REVIEWjPAGE 29
there have been significant reductions to 15 percent 2007, 5 percent in 2008 and below 2
percent of the total workforce by October 2009.
Therefore the strategy implemented in the UK has proven to have a positive impact in
reducing the initial high levels of employee turnover. Clearly the credit crunch has
reduced the potential of employee turnover for all companies, however even pre-credit
crunch the significant reduction in employee turnover demonstrated the value of the
adopted strategy.
4. Look to reduce the employee costs of recruitment and exiting of employees within the
organization on an annual basis by 10 percent. Between 2006 and 2007, Kia Motors (UK)
experienced a HR cost reduction of over £400,000, a 71 percent reduction in employee
costs. These cost savings included both recruitment and employee related costs. This
has been achieved in addition to recruiting a whole new senior management team in
2007, including a new managing director.
In the subsequent years of 2008 and 2009 the effects of the engagement strategy have
brought additional significant cost savings to the organization. As testament to the progress
made, in 2008 the organization committed to attempting to gain the Investors In People
employee recognition, which was achieved in quarter four 2008.
The keys to success
Resistance from the CFO to make the investment
Aspects of the senior management team had reservations about investing in employee
engagement, most notably the then CFO. However, in March 2007 HR presented to the
board the substantial evidence of the link between high employee engagement and
business results. This was based on wide-ranging research that the author had conducted
on best practice and the relationship between highly engaged workforces and business
performance.
What added leverage was the organization’s own (at the time) poor performance and low
levels of employee engagement. Having presented to the board and liaised with many of the
Figure 3 Measurement shows improved engagement
PAGE 30jSTRATEGIC HR REVIEWjVOL. 9 NO. 3 2010
senior management one to one, eventually HR gained full support for the engagement
strategy.
Initial distrust of employees – overcome by the communications strategy – or resistance to
change
Central to the success of this strategy were two key factors. Firstly was the buy-in of the
board. The public commitment from the CEO to improving employee morale within the
business was fundamental to ensuring employees knew this was a major business initiative
and not simply about HR pushing its own agenda. Secondly, the organization both used and
sought to improve internal communications channels to build engagement, thereby ensuring
that there was consistent communication with management and employees so everyone
understood progress and the next steps. This has proven to be a real key driver in the
success.
About the author
Gary Tomlinson is the Head of HR at Kia Motors UK. He is also Head of Learning and
Development for Kia Motors UK and leads the Kia Academy, which manages, develops and
delivers learning across the Kia dealer network and HQ for over 2,000 delegates. He is a
fellow of the CIPD, has an LLB (Hons) in law and is currently studying for a Masters focused
on his subject of passion – employee engagement. Gary Tomlinson can be contacted at:
[email protected]
‘‘ Between the launch of the engagement strategy in March
2007 and October 2009, Kia experienced for three consecutive
years improvements. ’’
VOL. 9 NO. 3 2010 jSTRATEGIC HR REVIEWjPAGE 31
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