Building good employer credit

by 25 Jul 2007

Improving employee engagement is more of an art than a science. Craig Donaldson speaks with American Express managing director Pierric Beckert and vice-president of HR Michelle Thomson about what it took to win the large organisation award in the Hewitt Best Employers survey

The ease with which a company is able to improve levels of employee engagement depends a lot on its size. It’s a lot like steering a boat. If you’re in a nippy little runabout, you swing the outboard’s steering arm and you’re instantly off in another direction. However, if you’re captain of the Queen Mary 2, changing direction takes time, planning and any number of people to carry out the orders.

And so it is within companies – the larger the company, the harder it is to improve engagement, change culture and bring about measurable shifts in organisational behaviour. American Express Australia won recognition for achieving this in taking out the large organisation award in the 2006–07 Hewitt Best Employers in Australia and New Zealand survey. American Express, which was also named a best employer in the preceding three years’ surveys, employs more than 3,000 people around Australia. With offices in Sydney, Melbourne, Brisbane, Adelaide and Perth, it also operates 48 foreign exchanges, 40 business travel centres and 375 travel representative offices, through an alliance with Travelscene American Express.

Employee engagement is not a new concept at American Express, according to Michelle Thomson, American Express’ vice-president of HR for Australia, New Zealand and the South Pacific. “It’s something that we’ve been measuring in different forms and using different tools and surveys since the late ’80s, so it’s something that’s very ingrained in our culture. We moved to a pure engagement model last year, so it’s really just changing the way we focus going forward,” she says.

A culture of engagement

Culture and engagement are intrinsically linked. A great workplace culture contributes significantly to high engagement levels, but a bad culture is a sure sign of potentially lower employee engagement.

Unlike some large modern organisations, American Express has not embarked on any radical culture change programs in recent years. This is because the organisation’s leadership team have been conscious of engendering a good culture over the decades, according to Thomson, and improvements have been made gradually over the many years to the point where it won the large organisation category in the Best Employers study.

“We’re building a culture in innovation and creativity, and we’re very lucky in that we have a culture of being very open and very transparent,” Thomson says. “When the results [of the Hewitt Associates survey] come out, they’re not swept under the table. Employees ask for them because they want to see how they’re faring and what the overall results are,” she says.

Thomson says the values of American Express have played a big part in building a strong culture. American Express refined its values in 2002 after realising that it was changing significantly as an organisation. Employees around the world were consulted and asked to reassess and redefine the values. “We actually added two new values at that point. But what was really nice was the definitions that sat behind the values and how they were really representative of how employees felt and what they experienced in the organisation,” she says (see box).

American Express’ values are representative of the behaviours sought in new recruits and upcoming managers as well. The values are incorporated into leadership behaviours that people are expected to demonstrate, and this is measured as part of the organisation’s performance assessment process. At least 50 per cent of assessment is behaviourally-based, Thomson says. “We measure what you achieve and how you achieve it. It depends very much on the role, but behaviour would be at least 50 per cent for any position in the organisation. As you go up through the organisation, this percentage would increase as behaviour becomes more important.”

Leadership engagement

The process of engendering employee engagement within the company has been made easier through ownership of the process by the leadership team, according to Thomson. “Everybody owns the results and everyone owns the action plans to enhance or change results. The leadership in this organisation, both locally and globally, really believe in the concept of engagement and how that can help drive outcomes for employees, customers and shareholders,” she says.

“The MD and senior executive team drive engagement. They really own it and they really believe in it. So, as their HR partner, my job’s very easy.”

In August or September every year, American Express conducts an internal survey of its leadership in the areas of shareholders, customers and employees. Leaders are assessed on what they’ve accomplished in these three areas, and how they’ve achieved their results. For the employee component, leaders are assessed on employee engagement, diversity and talent. Potential salary increases and bonus payments are determined by individual performance ratings in each area.

American Express differentiators

There are a number of things which differentiate American Express from other companies when it comes to good people management and engagement, according to Pierric Beckert, managing director of American Express Australia.

Customer service is a priority for the organisation, and he says employees are empowered to work with customers effectively, and customers are also empowered in the process. “This is the basis of our servicing strategy. We aim to get as much as we can from our clients – feedback on what works well and also dissatisfaction from customers. We make it easy for them to provide that feedback and we keep them up-to-date with the actions that we have taken to address their concerns,” he says.

“For me this is absolutely critical. It tells customers they are important and employees are empowered, because their direct contributions are important to the overall strategy of the company and we demonstrate this to them.”

Another key differentiator lies in the area of workplace flexibility, Beckert says. It’s important to realise that providing choices for employees in terms of what works for them and what works for the business makes a big difference to engagement, he says. Flexible work arrangements, working from home, part-time work and being sensitive to the needs of new mothers returning to work all need to be considered, according to Beckert. “I’ve approached my direct reports to speak up and be very comfortable in talking about their needs and how they need to manage their work-life balance, and to make sure that both the company and I can meet these needs,” he says.

The third differentiator within American Express is leadership quality and communication, Beckert says. “Leaders really need to be self-aware, so they can read the signals that they get from their employees and recognise that their actions, whether they be verbal or non-verbal, really impact upon employees. So there has been a big push over the past 18 months to get the right level of sensitivity at all leadership levels.”

Engagement results

While American Express does not publicise employee engagement results, both Beckert and Thomson say that high employee engagement levels are paying healthy dividends in a number of ways.

“Our financial results speak for themselves. It must be like the 21st quarter of double-digit growth. The last time we didn’t hit double digit-growth was the fourth quarter of 2001; because we had severe impact with September 11, when our headquarters was significantly damaged, unfortunately. So we had to go into some reserves for real estate.”

Thomson says that while it’s great to show high employee engagement levels, the story they tell and how they drive better business outcomes is more important. “What we’re doing is asking our employees and leaders to look at the numbers and build a story from them. So, what are the levers that you need to pull within your business unit to really increase engagement? Whether that’s enhancing strengths or bringing up some lower numbers, engagement results are important in that they signal drivers of the business outcomes you want to achieve,” Thomson says.

Beckert says there is a strong correlation between high employee engagement and business results. While it’s difficult to pinpoint an exact business matrix which links engagement and hard business results, “I can tell you that the satisfaction of our customers is significantly increasing, and I strongly believe that a big driver behind that is the level of engagement of our employees. So there clearly is a correlation, and we see the impact in terms of our customer matrix,” he says. “Both go hand-in-hand, and this in turn translates into improved shareholder returns.”

Lessons learned

Improving employee engagement doesn’t happen in isolation, according to Thomson. Rather, it takes the active participation of leaders and managers across multiple business units. “HR can’t do it alone. Your leaders have to buy into this,” she says.

The flip side of this is managing expectations around speed of change. “In some ways it would have been fantastic if we could have done some of this sooner or done it faster. But that doesn’t necessarily mean we would have had a better outcome. For people to buy into change, you have to recognise that this takes time. They have to internalise it and they have to really believe in it,” Thomson says.

“While our approach may not have been as fast as that taken by some other organisations, our culture is strong. By really inculcating this process of engagement, this means that we’re really in it for the long-term. I think that gives us an advantage.”

American Express is fortunate in this regard in that is a very strong marketing organisation, she says, and Thomson had partners within the business to assist her in this process. “We’re good at doing segmentation and looking at where we can get the biggest return on the investments and changes that we make.”

Beckert says that one of the key challenges has been the fact that culture change is not a science. “It’s much more of an art than a science, and there’s no exact recipe for culture change. I think it’s more a question of focus and priority from all levels of the organisation,” he says.

Any real and lasting culture change takes time, and this in turn takes consistent and sustained work from an organisation’s leadership. “Can you physically keep that level of focus over the long-term? You don’t see results from day-to-day, so it’s challenging to keep and maintain the right level of focus.”

Improving engagement

There are a number of steps to improving engagement within large organisations, according to Pierric Beckert, managing director of American Express Australia. "The way you communicate to your employees is one key. You have to be transparent and balanced in your communication. Adapt it to audience so that you can talk about what they care about. You have to have the right communication style," he says.

Employee feedback is also important, according to Beckert. A two-way feedback tool that makes it easy for employees to provide feedback to leaders or to the business as an entity is vital. "We measure the effectiveness of this, so that when we are given feedback about something, we follow through and we have to follow through in a timely manner." Communication and feedback go a long way in culture change, he says.

American Express values

Customer commitment: We develop relationships that make a positive difference in our customers' lives.

Quality: We provide outstanding products and unsurpassed service that, together, deliver premium value to our customers.

Integrity: We uphold the highest standards of integrity in all of our actions.

Teamwork: We work together, across boundaries, to meet the needs of our customers and to help the company win.

Respect for people: We value our people, encourage their development and reward their performance.

Good citizenship: We are good citizens in the communities in which we live and work.

A will to win: We exhibit a strong will to win in the marketplace and in every aspect of our business.

Personal accountability: We are personally accountable for delivering on our commitments.