case study

By 2003, the Royal Bank of Scotland Group (RBS) was the world’s fifth largest bank, having grown by acquiring several other banks and financial services companies in the preceding few years. RBS aimed to add value for shareholders, customers and other stakeholders through the effective management of the group’s human capital. As a service organization, RBS recognized that it was essential to secure the active engagement of all their employees.

Researching Employee Engagement

RBS sought to identify the key drivers of employee engagement and, in turn, the consequences of engagement in terms of business outcomes such as turnover and productivity. An individual employee’s level of engagement was defined as the extent to which that employee “consistently speaks positively about the organization to others”, “has an intense desire to be part of the organization”, and “exerts extra effort to reach business goals”, a so-called “say”, “stay” and “strive” model of engagement. According to this definition, the engagement concept includes what organizational behaviour researchers have referred to as organizational commitment, intention to stay and organizational citizenship behaviour.

Drawing on academic research and also on the engagement model of their consultants, the company developed a model including the following key antecedents or “drivers” of employee engagement: recognition, performance & development opportunities, relationships, total reward, work itself, product brands & reputation, leadership, and work-life balance.

A large amount of HR data was already being collected by RBS, including HR management information, joiner and leaver surveys, and regular employee attitude surveys. The employee attitude survey was further developed to include items specifically designed to measure engagement and the key drivers of engagement. Engagement itself was measured for each employee by taking an average score across six “engagement” questions. Similarly, each driver was measured using responses to questions in the employee attitude survey.

Key Findings

Key findings from the RBS research include the following:

The drivers of engagement

Correlation analysis provided RBS with information on the relative importance of each of the eight drivers in contributing to employee engagement. For example, it emerged that recognition was a very important factor in building engagement, whilst work-life balance was the least important driver. 

Differences by tenure

Analysis also suggested that the level of employee engagement varies by tenure. Typically, engagement is very strong during the first year of service, but then declines from the second to the fifth year, then rising slowly with additional years of service.

Differences by job level

Perhaps not surprisingly, managerial level staff were significantly more engaged than were clerical staff, with appointed-level staff having a slightly higher level of engagement than clerical staff. Further analysis suggested some differences in the drivers of engagement according to job status. For example, leadership was more important for appointed-level staff, whilst recognition and learning & development were critical for all levels of staff.

Engagement and business outcomes

It was found that employee engagement was correlated with certain business outcomes. For example, analysis of data for the centralized processing centre of RBS found a correlation of 0.30 between employee engagement and employee productivity.

Follow-Up and Action

These findings have informed management action, designed to maximize employee engagement and improve business effectiveness. For example, in the Retail Banking division all HR policies are aligned with the engagement drivers to try to improve engagement levels, and HR interventions are planned and prioritized in line with the findings on the relative importance of the different drivers.

Because the recognition driver has emerged as the most important one, follow-up focus group research has been implemented to try to understand recognition in more detail. Again, the plan is to develop HR and other policies in line with these findings with the aim of improving recognition.

More on Employee Engagement Research

RBS is not the only organization conducting this kind of research on employee engagement, with similar examples in other financial services, retail, hospitality, healthcare and the public sector (see, for example: IDS, 2009; MacLeod & Brady, 2008). Employers are becoming increasingly aware that employee engagement can be a key source of competitive advantage, and that by measuring engagement and by researching how it can be developed, organizations can improve their effectiveness. Typically, employee surveys are used to measure engagement, and this is correlated with key antecedents and with business outcomes such as productivity, quality and sales. Qualitative research is also sometimes used, especially in the later stages of the research to provide a more in-depth understanding of the processes of building engagement.

These organizations understand that employee engagement can bring wider business benefits, since highly engagement employees are more likely to be remain with the organization, and to be exert extra effort and “go the extra mile” on behalf of the organization. All this is likely to help improve the organization’s image, to win and retain new customers, and even help to recruit the best employees. By properly understanding the factors that lead to employee engagement in their organization, and how this links with business outcomes, the organization can more effectively design and target management and HR strategies.  

Discussion Questions

  1. What were the objectives of the RBS engagement research? Judging from the case study, were these objectives met?

Is this “basic” or “applied” research? Why do you say that?

  • Does this appear to be “deductive” or “inductive” research? Why do you say that?

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