Role of Employee Engagement on Employee Performance

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It is certified that the research work contained in this thesis titled “Role of Employee Engagement on Employee Performance in Pakistani Context” has been carried out under my supervision by MUHAMMAD YASIR and is approved for submission in the partial fulfillment of the requirement for the degree of bachelors in business administration. Supervisor: ————– Prof. Muhammad Ilyas Dated: October 27, 2009 Submitted Through Tahir Shabbir Superior University [pic] MUHAMMAD YASIR, Roll No: 6133 student of BBA (hons) session: 2005-2009, hereby declare that matter printed in the thesis titled “Role of Employee

Engagement on Employee Performance in Pakistani Context” is my own research work under kind supervision of our supervisor Prof. Muhammad Ilyas and has not been printed, and published and submitted as research work thesis or publication in any form in any university research institute etc. in Pakistan or abroad. I also declare that this thesis work has not been used for any benefit or advantage elsewhere. Dated Deponent [pic] First of all I express my deep gratitude to Professor Muhamamd Ilyas without whose encouragement, guidance and benign attitude my thesis could not have been completed in the present form.

I take this opportunity to thanks for the guidance & help provided to us for the completion of our thesis by Mr. Mohsin Iqbal, Head Human Resource Management in Hiaer Electronics, My colleagues Ms. Sonia Uroj, Training and Capacity building manager in MITAAS, Ms. Nabeela Malik, Editor Manager Today Magazine. I am equally thankful to all our worthy teachers who inspired and sincerely helped me in writing this thesis. Abstract From last decade the employee engagement become a very hot topic of management in the world.

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Most of companies in the world have realized the importance of employee engagement in their organizations. These organizations are striving from the few years to engage their employees into the workplace. Engagement is defined as being involved or being committed to something. Employees feel engaged when they find personal meanings and motivation in their work receive positive interpersonal support, and function in an efficient work environment. This study attempt to examine the relationship between employee engagement and employee performance in Pakistani Context.

A survey was completed by 111 employees working in a variety of job and organizations. Questionnaire was used to collect the data from the respondents. The respondents were asked to give their opinion about the different statements regarding employee engagement and employee performance on a 5 point likert scale. The results of this study indicate that the employee engagement have the positive relationship with employee engagement and play a major role in employee performance. This study investigate that the engaged employees are more productive than disengaged.

Further this study suggests that still there is lot of research required on this topic. Chapter 1 1). Introduction Organizations count on people as their most valuable asset. It is the most appropriate approach and evidence exists that organizations worldwide are struggling to meet production and service demands knowing that these outcomes are directly dependent on the ability, commitment and skill of a work force that is mostly disengaged. Workplace environment has changed over the past decade and now organizations have to be more competent to survive in the global economy.

The key to survival of companies is their ability to satisfy customer needs, while achieving quality, flexibility, innovation and organizational responsibility, through a sincere engagement and commitment of employees. These days Employee Engagement has become a very hot topic of the management in this global competitive world. Everyone seems to be on the path to get their employees engaged. The claim has been made that engagement is needed for higher levels of firm performance while, consultant studies estimate that only 14 percent to 30 percent of employees are really engaged at work.

In particular, very little attention has been given to the engagement levels of people running organizations. Now the world’s top-performing organizations understand that employee engagement is a force that drives business Outcomes. The best performing companies know that developing an employee engagement strategy and linking it to the achievement of corporate goals will help them win the marketplace. Engagement means the extent to which people value, enjoy, and believe in what they do. Employees are engaged when they are motivated and satisfied.

Engaged employees are committed to their organizations and have the tremendous pride and job ownership and put more discretionary effort in terms of time and energy, and significantly demonstrate higher levels of performance and productivity than those who do not feel engaged with their work. “Engaged” is defined as being involved or being committed to something. Employees feel engaged when they find personal meaning and motivation in their work, receive positive interpersonal support, and function in an efficient work environment.

An engaged employee feels that he or she has as take in the outcome, with a desire to contribute to achieving more than personal goals. In short, a motivated and inspired employee is an “engaged” employee. There are some definitions used by some researchers are given below. Harter, Schmidt and Hayes (2002) define employee engagement as “the individual’s involvement and satisfaction with as well as enthusiasm for work” (p. 269). DDI (2005) uses the definition “The extent to which people value, enjoy and believe in what they do” (p1).

DDI also states that its measure is similar to employee satisfaction and loyalty. Wellins and Concelman (2004) call employee engagement “the illusive force that motivates employees to higher levels of performance” (p. 1) “This coveted energy” is similar to commitment to the organization, job ownership and pride, more discretionary effort (time and energy), passion and excitement, commitment to execution and the bottom line. They call it “an amalgam of commitment, loyalty, productivity and ownership” (p. 2). They also refer to it as “feelings or attitudes employees have toward their jobs and organizations” (p. ). Robinson, Perryman and Hayday (2004) define engagement as “a positive attitude held by the employee towards the organization and its values. An engaged employee is aware of the business context, works with colleagues to improve performance within the job for the benefit of the organization. The organization must develop and nurture engagement, which is a two-way relationship between employer and employee” (p2). They say that engagement overlaps with commitment and organizational citizenship behavior, but it is two-way relationship. They say it is “one step up” from commitment.

Yet, creating an engaged workforce remains to be a challenge for many organizations. It requires effective leadership and other organizational factors to help employees realize their full potential and value. The importance of ensuring employee engagement has been realized and very well focused on all over the world. While, in Pakistan the importance of the concept is still not really understood. The companies operational here are yet not paying yield to improving engagement of employees. Organizations need to concentrate on optimizing employee productivity and available organizational resources.

As a matter of fact, ample revenues can only be realized by an organization through optimal engagement of its employees’ knowledge, skills, abilities, and motivations. It is essential for progress of Pakistani companies as well. 2). Research Goal The aim of the thesis is to describe the relationship between employee engagement and employee performance and what impact employee engagement has on employee performance. 3). Research Question What is according to the literature and research in Pakistani context, the impact of employee engagement on the performance of the employee? ). The sub questions are • What is the definition of employee engagement? • What is the employee engagement according to the literature? • Which factors have the most influence on the engagement of employees and what role plays the employee engagement on the performance of the employee? • Which of the factors that influence employee engagement have the greatest impact on employee performance? Literature Review • What kinds of value systems occur in the organization that impact engagement and employee performance? How do they impact engagement and performance?

Literature Review Chapter 2 Literature Review Harter et al (2002) conduct a Meta analysis study on business-unit level relationship between employee’s satisfaction, employee engagement, and business outcomes. The basic focus of this study was to assess the relationship between employee outcomes of satisfaction and engagement and business outcomes of customer satisfaction, productivity, profit, turnover, and accident. They used the Meta-analysis technique. They conduct a Meta-analytic review of 7,939 business units in 36 companies.

They found that higher levels of both employees satisfaction and employee engagement were associated with greater customer satisfaction, productivity, and profit and decreased the turnover and accident. This study found that the both employee satisfaction and employee engagement have the significant impact on business unit level outcomes. May et al (2004) explore the mediating effects of three psychological conditions – meaningfulness, safety, and availability – on employee engagement in their work. They conduct the field study using survey methodology.

The study was conducted at a large insurance firm located in the Midwestern USA. They used the questionnaire technique to collect the data from 270 employees and managers from different departments to measure the participant’s perception about themselves, their jobs, supervisors and co-workers. This study shows that all three psychological conditions have the significant positive relationship with engagement. Meaningfulness displayed the strongest relation. Job Enrichment and work role fit were positively linked to psychological meaningfulness.

Rewarding co-workers and supportive supervisor relations were positively associated with psychological safety, whereas adherence to co-worker norms and self-consciousness were negatively associated. In this study they found that the relation of job enrichment and work role fit have with engagement were both fully mediated by the psychological conditions of meaningfulness. Salanova et al (2008) examine the mediating role of work engagement (vigour and dedication) among job resources (job control, feedback, and variety) and proactive behavior at work.

They investigate this mediating role using Structural Equation Modeling in two independent samples from Spain (386 technology employees) and the Netherlands (338 telecom employees). Results from in both samples confirmed that work engagement fully mediated the impact of job resources on proactive behavior. In this study they also found that if the employees have the sufficient job resources they will be more engaged and work with full commitment and dedication and behave proactively.

Cabrera et al (2006) conduct a study to investigate the determinants of individual engagement in knowledge sharing. The basic focus of this research was to investigate the psychological, organizational and system related variables that may determine individual engagement in intra-multinational knowledge sharing. They conduct the exploratory research and used the survey method to collect the data from 372 employees from a large multinational firm.

They investigate that the self-efficacy, openness to experience, perceived support from colleagues and supervisors and, to a lesser extent, organizational commitment, job autonomy, perceptions about the availability and quality of knowledge management systems, and perceptions of rewards associated with sharing knowledge, significantly predicted self-reports of participation in knowledge exchange. Bakker et al (2008) conduct a research to provide an overview of the recently introduced concept of work engagement.

The basic focus of this study was to provide an overview of what the work engagement is and what are its antecedents and consequences. They use the qualitative and quantitative techniques in this study. They use the several instruments to measure work engagement. They used the Utrecht Work Engagement Scale for the assessment of three engagement dimensions (vigor, dedication and absorption). They also used the Oldenburg Burnout Inventory (OLBI) instrument to assess the positive and negative burnout phrased items. They found that work engagement can be defined as a state including vigor, dedication, and absorption.

They also found that job and personal resources are the main predictors and drivers of engagement. They found that if the job demands are high than these resources gain their salience. The quantitative studies in this research show that work engagement is positively related to job performance. In this study they found through quantitative study that engaged employees received highest rating from their colleagues on in-role and extra-role performance. They also found that engaged employee perform well and are willing to go the extra mile.

Schaufeli et al (2004) conduct multi sample study to measure the relationship between job demands and job resources with burnout and engagement. The basic focus of this study was to test a model in which burnout and engagement have different predictors and different possible consequences. They used the questionnaire technique to gather the data. They collect the data from 1698 employees from 4 different Dutch service organizations. They used the different instruments to measure the data. They found that the burnout and engagement are negatively related with each other.

This study also shows that the burnout is mainly predicted by job demands but also by lack of job resources, whereas engagement is exclusively predicted by available job resources. This study also found that burnout related to health problems as well as to turnover intentions whereas engagement is related to job commitment. This study also found evidence for a positive Relationship between three job resources (performance feedback, social support, and supervisory coaching) and work engagement (vigor, dedication and absorption). The main limitation of this study is its cross-sectional nature.

Second this study exclusively relies on self-report measures. Bakker et al (2007) conduct a study to investigate that when the job demands are high the job resources book work engagement. The basic purpose of this study was to test the two interaction hypotheses. One hypothesis is to predict that job resources act as buffers and diminishes the negative relationship between pupil misbehavior and work engagement. In other hypotheses he hypothesized that job resources particularly influence work engagement when teachers confronted with high levels of pupil misconduct.

In this study he collects the data through questionnaire which was delivered to all the schools in the East, Northeast, and Southeast districts of Helsinki. In total 805 teachers working in elementary, secondary, and vocational schools participated in this study. In this study they used the Finnish version of the Utrecht Work Engagement Scale (UWES) to assess the engagement. They found that supervisor support, innovativeness, information, appreciation and organizational climate can all be considered important job resources for teachers cope with demanding interactions with students.

Bakker et al. (2006) investigate the success factors among female school principals in primary teaching and to investigate the relationship between burnout, work engagement and performance. They conduct the survey to explore the relationship between burnout, work engagement and performance. They used the questionnaire technique to collect the data form 105 school principals and 232 teachers. In this study they found that there is a significant and positive association between school principals’ work engagement scores and teacher-ratings of school principals’ performance and leadership.

More specifically, results of structural equation modeling showed that engaged principals scored higher on in-role and extra-role performance. In addition, engagement was strongly related to creativity; the higher school principals’ levels of work engagement, the better they were able to come up with a variety of ways to deal with work-related problems. They also found that finally, engaged school principals were seen as transformational leaders – being able to inspire, stimulate and coach their co-workers.

Fred et al (2002) conduct a study on employee engagement and manger self-efficacy. In this study they first examine the theoretical understanding of employees’ engagement. Then they made an empirical investigation is made observe the role that a wide variety of manager psychological state of self-efficacy plays in the relationship between their employee measured engagement and a multiple measure of the manager effectiveness. They observed the 170 managers, each have 16 subordinates and peers.

Results of this study show that the manager’s self-efficacy is a partial mediator of the relationship between his or her employee’s engagement and the managers rated effectiveness. Overall finding of this research suggest that both employee engagement and manager self-efficacy are important antecedents that together may more positively influence manager effectiveness than either predicator by itself. Larry et al (2008) conduct a study to explore the relationship between supportive climate and organizational commitment as mediated by trust and employee engagement.

In this study they conduct the survey to collect the data and they use the questionnaire technique to gather the data from 243 engineers and technicians from a fortune 100 multinational firms. Results of their study shows that the workers perception about their organizations supportive work climate has a positive direct relationship on their effective commitment with their organizations. This study also found that the workers trust on leadership mediate the relationship between the supportive climate and engagement.

This study also found that the worker engagement positively mediate the relationship between workers trust and effective commitment. Ancarani et al (2009). write a research paper in which they describes the interactions among leadership, engagement, and performance. In this paper they apply a case-study approach focusing on a production ward of a branch of an electronic multinational manufacturing firm. In this study the production ward was subdivided into 6 macro-areas, each one corresponding to a different phase of the production process.

In each macro-area there are 4 work / shift units, each one with a different team manager. Hence, 24 work unites have been identified, with a total 496 employees. They used the questionnaire technique to gather the data. The results of this study confirm the role of leadership as antecedent of engagement. This paper also found that the leadership has the significant impact on absenteeism and pro-active behavior. This study also shows that engagement is clearly linked to employee’s positive behavior in terms of both pro-active behavior and presence at work.

This study has some short comings. First of all, the focus is limited to a single production ward. Kenneth N. (2006). Investigate the relationship between employee engagement, job satisfaction, retention and stress at work. Basic aim of This study was to explores the relationship between employee satisfaction and engagement and several specific outcomes in an organization including employee retention, job satisfaction, employee engagement and perceived stress in a large food service company through their annual employee satisfaction surveys conducted over two years.

He conducted the survey in both 2002 and 2004 from 169 employees in a large food service company. He used the single item measure to assess the perceptions of stress, job satisfaction, engagement, perceived sensitivity to work and family issues, and retention likeliness of leaving within the next 12 months. To support the validity of single item measure he used the prior published research studies. He used the subset of 12 questions from the broader employee survey to measure the concept of involvement and engagement.

The three Envisia Learning outcomes measures used in this study. He find out that employees who experience lower engagement, commitment and involvement with his / her organization and job reported significantly higher intentions to leave the organization within 12 months, greater levels of perceived work stress and lower overall job satisfaction and engagement. He suggests that this study provide the hypothesis that employee engagement can have a significant impact on perception of stress, overall job satisfaction and retention.

He find out that the employees who were most engaged were less likely to consider leaving within 12 months, were more engaged and satisfied with work and reported significantly less stress compared to those were less engaged. Oliver & Rothmann (2007). perform a research study to investigate the antecedents of work engagement in a multinational oil company. The basic purpose of this study was to explore work engagement and psychological conditions with the focus on understanding the mediating effects of conditions such as psychological meaningfulness, availability and safety on work engagement in a multinational oil company.

A cross sectional survey design was used in this study. In this study they conduct the survey of 200 employees from a multinational oil company. The respondents were mostly females married and English speaking. The majority of the respondents in this study were fall into the age of 31-40 years age group. The majority of the participants worked for the company for 6-10 years and mostly permanent employees participated in this survey. A Questionnaire was used to gather data in a no-random field survey. Two measuring instruments were used for the purpose of this study namely the work engagement scale and the work experiences scale.

This study investigate that two psychological conditions i. e. meaningfulness and availability medicated the relationship between antecedent conditions and work engagement. This study also investigates the psychological meaningfulness as the significant and strongest predictor of work engagement. This study also confirmed the importance of psychological availability as a predictor of work engagement. This study also investigate that the work role fit, self consciousness act as the predicator of engagement. This study had various limitations.

First, the scale which measured psychological safety was not sufficiently reliable to be used in. More research is needed regarding the measurement of psychological safety. Second, a cross-sectional design was used in this study, which makes it impossible to assess the causality of relationships. It is recommended for future research to include further investigation of the mediating effects of psychological conditions such as meaningfulness, safety and availability on work engagement in other contexts, as well as with larger samples, or even by the use of longitudinal studies to establish causal relations.

This study recommends that the finding of this study have important implications for organizations and managers in terms of design of jobs, employee selection and relations ions with employees. Corporate Leadership Council (2004) conducts a survey study on Driving Performance and Retention through Employee Engagement. The basic purpose of this study was to investigate that how engaged is the workforce? What is the business impact of high engagement? What drives employee’s decisions to commit to staying with the organization and volunteers extra effort on the job? How does engagement differ by employee segment and by organization?

How can organizations establish a high performance relationship with employee in support of business needs? Corporate Leadership Council conduct the survey of 50, 000 employees including heads of HR, HR Leadership, Senior Executive Team and line unit managers at 59 global organizations. The Corporate Leadership Council investigates the top 10 findings from this study. These findings are given below. In this study she found that those employees who are most committed perform 20% better and are 87% less likely to leave the organization—indicating the significance of engagement to organizational performance.

This study also found that while the majority of employees are neither highly committed nor uncommitted, more than 1 in 10 employees are fully disengaged—actively opposed to something or someone in their organizations. This study investigate that instead, dramatic differences between companies suggest that engagement levels are determined more by company strategies and policies than any characteristics regarding the employee segments themselves.

This study also investigate that an analysis of both rational and emotional forms of engagement reveals that emotional engagement is four times more valuable than rational engagement in driving employee effort. She found that Employee retention, on the other hand, depends more on a balance between rational and emotional engagement—as illustrated by the importance of compensation and benefits in driving employees’ intent to stay. She also found that employees’ commitment to their manager is crucial to engagement, the manager is most important as the enabler of employees’ commitment to their jobs, organizations, and teams.

She also found that among the top 25 drivers of employee engagement identified by the Council, the most important driver is a connection between an employee’s job and organizational strategy. Joseph et al (2009). Conduct a study on Employee Retention: A business Case for Engagement in a large Air Force organization. The basic purpose of this research study was to investigate the retention factors impacted their desire to stay with their current organizations, as well as to investigate the factors that indicate the intentions to leave the organization.

In this study about 163 employees participate who belong to the same Air Force organization. In this study the sample size was 68% male and 57% civilians, and 76% were between the ages of 21-30. 163 employees from a large Air Force organization participated in a web-based organizational assessment targeting junior government employees. In this study the participants were asked the questions about the retention factors and turnover factors. This study explores the concept of engagement within the context of employee retention using qualitative techniques.

This research investigate that the factors which lead to engagement remain the employees with the organization in the Air Force organizations. This study explore that the challenging and compelling work factor has the strongest influence on employees on the intentions to remain with the organization. The current study demonstrated that the younger generation of government employees seek to experience this state of engagement, and more importantly; when the conditions to foster employee engagement are absent, so too will be the employees.

Government leaders should listen to their personnel and seek to ensure that all employees are actively engaged in their work. This will promote not only enhanced organizational performance but also retention in a time where every role and every personnel slot matters. Alan M. S. & Joseph L R. (2006) conduct a study to investigate the antecedents and consequences of employee engagement. The basic purpose of this study was to test a model of antecedents and consequences of employee engagement based on social exchange theory.

They collected the data on 6 variables through questionnaire technique from 102 employees who are working in different organizations on variety of jobs. The average age of the participants was 34 and there was the 60% are the females. The entire participants are in current job and have the average experience of 4 years or more than that. They used the multiple regression analysis technique to find out the antecedents of employee engagement through 6 variables like job characteristics, perceived organizational support, supervisor support, rewards and recognition, procedural justice and distributive justice.

They found that all the variables predict the employee engagement and the employee engagement have the mediating relationship with antecedents and consequences like employee satisfaction, employee commitment and intention to quite. They recommends that there are other variables that might also be important for the employee engagement such as human resource practices, training programs and incentives and compensation might also be important for engagement. They also suggest that there are some personality factors that are important for the employee engagement.

The study should be conducted through a large sample size. Hewitt A. (2007) Conduct a study to investigate the factors that define the best employers in Asia. This study investigate that what practices optimize employee performance and enable organizations to gain competitive advantage in a robust labor marketplace. More than 750 organizations participate in this study from 7 countries of Asia like China, India, Australia, New Zealand and Korea, Japan, Singapore and Hong Kong. In this study Hewitt conduct the employee opinion survey of approximately 160,000 employees.

To validate the data, Hewitt conducted four hour long audit of randomly selected participants in each country. Hewitt also interviewed CEOs and collected their views in the process. In this study Hewitt judge the best employers on the basis of five dimensions. These dimensions are 1. Overall effectiveness in human capital management; 2. Employee engagement and alignment; 3. Senior leadership commitment and effectiveness in people management; 4. Customer focus; and business success. This study shows that the best employer had significantly higher employee engagement scores of 87 percent, compared to only 57 percent in the rest.

This study also shows that engaged employees speak positively about their company, don’t want to leave, and willingly put in extra effort to ensure strong company performance. This study investigate that best employer recognize employee engagement as a critical factor for business success. This study shows that career opportunities are a significant driver of engagement in all organizations. This study also investigate that the employee recognition is also a very significant driver for employee engagement into the organizations. Development Dimensions International (2005).

Conduct a research study to predict the employee engagement. She develops an engagement readiness index to predict the employee engagement. The basic objective of this research was to contract and evaluate a measure for predicting employee engagement, examine the effect of engagement on individual outcomes such as job effectiveness and retention likelihood, examine the effect of supervisor engagement on their subordinates. In this study she measures the employee engagement using E3sm, a standardized survey instrument designed by Gallup.

In this research she collected data from more than 3800 employees from 7 organizations spanning a variety of industries and job families. She conducted extensive research across several organizations to link Career Battery scores to employee engagement. In this research study DDI’s identified the personal characteristics of employees which are closely related to engagement. These characteristics are adaptability, achievement orientation, and attraction to the work, emotional maturity, positive disposition, and self efficacy.

These personal characteristics were incorporated into the ERI, in turn; demonstrated strong relationships with E3sm measured employee engagement. This study investigates that a measure (ERI) can be used to strongly predict engagement. This research also supports a substantial relationship between engagement and critical business outcomes such as individual performance and the likelihood of leaving the company. This research also shows that the highly engaged supervisors were less likely to indicate that they may leave the organization.

Fulmer et al. (2003) empirically investigate the relationship between being a great place to work and firm performance. In this study they investigate the 100 best companies of America and also investigate the reason for the best and great place for work. For the collection of data they invite the 365 companies to participate in this research from out of 1000 best companies. They set a certain criteria to participate in this research for example the company must have been existence of more than 10 years and have the 500 employees.

Only 161 companies participate in this research. They use the 55 item attitude survey technique to measure the broad range of attitudes, including credibility, respect, fairness, and pride. This study investigate that the positive employee relations effectively serve as intangible and enduring assets and may therefore be source of sustained competitive advantage at the firm level. This study suggests that the companies on the 100 best list enjoy not only positive employee attitude but also competitive advantages in the market. Schaufeli et al. 2008) conduct a study on how changes in job demands and resources predict burnout, work engagement, and sickness absenteeism. The basic focus of this study was to explore to predict the change in burnout, work engagement and absenteeism by changing the job demands and job resources. They Use the longitudinal survey method to collect the data through questionnaire from 201 telecom managers. They also used the Job Demand-Resource (JD-R) model that postulates a health impairment process and a motivational process. They used the Structure Equation Model for the analysis of the burnout and work engagement.

The results of the structural equation model revealed that increase in job demands (overload, emotional demands, and work home interference) and decrease in job resources (social support, autonomy, opportunities to learn, and feedback) predict burnout. This study also shows that increase in job resources predict work engagement. This study also found that increase in burnout and decrease in work engagement predicts the increase in sickness and absence. This study found that changes in job resources were predictive of engagement over a period of one year.

Specifically, results showed that increases in social support, autonomy, opportunities to learn and to develop, and performance feedback were positive predictors of T2 work engagement after controlling for baseline engagement. Salanova et al. (2005) conduct a study on linking organizational resources and work engagement to employee performance and customer loyalty by mediating the service climate. The basic purpose of this study was to examine the mediating role of service climate in the prediction of employee performance and customer loyalty.

They used the survey method to collect the data about the organizational resources, work engagement and service climate through questionnaire technique from 342 employees working in 114 service units (58 hotel front desks and 56 restaurants) in Spanish restaurants and hotels. They also collect the data from 140 customers of these units about the employee performance and customer loyalty through questionnaire. The results of this study show that the organizational resources and work engagement predict the service climate, which in turn predict employee performance and then customer loyalty.

This study shows that if the employees have the required organizational resources to perform their job, these employees are more engaged which resultantly improve the service climate. This study also shows that the work engagement has the significant impact on service employee performance and customer loyalty by mediating the service climate. Further analyses of this study revealed a potential reciprocal effect between service climate and customer loyalty. Perrins T. (2003). Conduct a survey on Working Today: Understanding what drives employee engagement.

The Towers Perrins (2003) conduct a survey of 35,000 employees working on different positions in U. S. and with 4600 employees working in others countries of Europe. The basic purpose of this research was to understand the lever of employee engagement in US and what are the factors that drive the employee engagement. She asked both groups questions on a variety of workplace factors in their organization. Practices, processes, culture, leadership style and development opportunities in other words, all the key elements typically seen to be the drivers of workforce behavior.

She found a top 10 list of drivers of attraction, engagement and retention. She also found that while there were some similarities between the US and the European reports the key factors were quite divergent in each list. This research shows companies with higher levels of employee engagement outperform their competitors in terms of profitability. She proceeds to state that Managers must first understand what engages their employees and what factors drives engagement in their companies.

This study shows that an engaged employee focuses on customer service, giving the customer a reason to return to the store or business and buy more goods and services. Such employees build customer loyalty and retention over time. But even in a business where there is little direct contact between employees and customers, engaged employees can still indirectly affect revenue growth, for instance, by supporting other employees who do have direct contact or by pioneering an innovation that boosts sales. This study also shows a positive relationship between employee engagement and company revenue growth.

The study shows that the more the employee engaged the more the company will generate the revenue. The study also shows that the companies with high engaged employees outperform than the companies with low engaged employees. This study also shows that the high engaged workforce is more stable workforce. This study shows that the high engaged employees do not have the plan to leave the organization. Finally, and perhaps least surprisingly, Towers Perrin found strong linkages between what the customer focus employees expressed about their organization and revenue growth.

There is also an inverse between customer focus and the cost of goods sold. It is interesting to note that the analysis also showed a direct correlation between employee engagement itself and revenue growth. The implications of the Towers Perrin study is quite apparent. The power of discretionary effort by highly engaged employees on multiple levels can be seen for example in the service business, an engaged employee is proven to focus on customer service and excellence and by doing so improves customer loyalty and retention. Business indirectly benefits and revenue grows and behavior modeling and performance culture improves.

Blessing white inc. (2008) conduct a study to investigate the State of Employee Engagement in 2008. In this study Blessing White Inc. conduct a survey of different countries which are North America Region, Continental Europe, UK/ Ireland, Southwest Asia, Australia / New Zealand, India / China. In this study Blessing White Inc. conduct the interviews with 40 HR manager and line Leaders and conduct an online survey of 7508 respondents from different regions. Questionnaire was used to gather the data from the respondents. This research investigate that the engaged employees are not just committed. They are not just passionate or proud.

They have a line-of-Sight on their own future and on the organization’s mission and goals. They are “enthused” and “in gear,” using their talents and discretionary effort to make a difference in their employer’s quest for sustainable business success. The results also show that there is a clear correlation between engagement and retention, with 85% of engaged employees indicating that they plan to stay with their employer through 2008. Moreover, engaged employees stay for what they given (they like their work); disengaged employees stay for what they get (favorable job conductions, growth opportunities job security).

This study have some recommendations that the companies should pay attention to increase the manager engagement, align, align, redefine career, pay attention to culture, survey less, act more. Harter et al (2002). Conduct a Meta analysis on Employee Engagement, Satisfaction and business unit level outcomes. Basic purpose of this Meta analysis was to investigate the relationship between employee workplace perception and business unit outcomes, based on the prior research studies by Gallup. The focus of this study was on the thirteen (13) statements included in the Gallup Workplace Audit (GWA, i. . , the Q12 and Overall Satisfaction). These 13 items — which were selected because of their importance at the business-unit or workgroup level — measure employee perceptions of the quality of people-related management practices in their business units. The overall study involved 410,225 independent employee responses to surveys and 13,751 independent business units in 82 companies, an average of 30 employees per business unit and 168 business units per company. One hundred seven (107) research studies were conducted across the 82 companies.

In this meta-analysis lot of different were selected so that each company was represented once in each analysis. For several companies, multiple studies were conducted. In order to include the best possible information for each company represented in the study, some basic rules were used. If two concurrent studies were conducted for the same client (where GWA and outcome data were collected concurrently, i. e. , in the same year), then the weighted average effect sizes across the multiple studies were entered as the value for that company.

If a company had both a concurrent and a predictive study (where the GWA was collected in Year 1 and outcomes were tracked in Year 2), then the effect sizes from the predictive study were entered. If a company had multiple predictive studies, then the mean of the correlations in these studies was entered. In this meta-analysis Pearson correlations were calculated, estimating the relationship between business-unit average measures of employee perceptions and general business outcomes.

Correlations were calculated across business units within each company, and these correlation coefficients were entered into a database for each of the 13 items. The researchers then calculated mean validities, standard deviations of validities, and validity generalization statistics for each item for each of the five business-unit outcome measures. These studies have indicated a directional relationship from employee engagement to outcomes such as employee retention and customer loyalty/engagement, and a directional and somewhat reciprocal relationship between engagement and financials.

They expect that in most healthy business units, a reciprocal relationship exist, in which engagement fuels better management and better management fuels ownership and engagement (involvement and enthusiasm). These studies have also indicated that, there are differences across business units in the way employees perceive their work environments, environment and these differences relate to differences in performance. Such differences represent substantial utility to businesses and other organizations Hakanen et al (2006).

Conduct a study to investigate the burnout and engagement among teachers. In this study the Job Demands–Resources Model was used as the basis of the proposal that there are two parallel processes involved in work-related well-being among teachers, namely an energetically process(i. e. , job demands – burnout – ill health) and a motivational process (i. e. , job resources – engagement – organizational commitment). In addition, some cross-links between both processes were hypothesized. In this study they used the Structure Equation Model to test the hypothesis.

The basic focus of this research was to investigate the drivers that lead to burnout and engagement in Finnish teachers. They conduct a survey to collect the data from 2038 Finnish teachers. They used the questionnaire technique to collect the data. They used the Maslach Burnout Inventory–General Scale (MBI– GS to measure the burnout. Work Engagement was assessed with the Utrecht Work Engagement Scale (UWES) in this study. Results of this study shows that job control, information, supervisory support, innovative climate and social climate were all positively related to work engagement.

This study shows a positive relationship between job resources and work engagement. The results of this study also confirmed the existence of both processes, although the energetically process seems to be more prominent. More specifically, (1) burnout mediated the effect of high job demands on ill health, (2) work engagement mediated the effects of job resources on organizational commitment, and (3) burnout mediated the effects of lacking resources on poor engagement. Bakker et al. 2006) conducted a study to explore the success factors among female school principals in primary teaching. They conduct a study on burnout, engagement and performance. They used the survey method to collect the data through questionnaire technique from the sample size of 105 school principals and 232 teachers. They used the Structural Equation Model to measure the hypothesis among principals. Their study showed significant and positive associations between school principals’ work engagement scores and teacher-ratings of school principals’ performance and leadership.

More specifically, results of structural equation modeling showed that engaged principals scored higher on in-role and extra-role performance. In addition, engagement was strongly related to creativity; the higher school principals’ levels of work engagement, the better they were able to come up with a variety of ways to deal with work-related problems. Finally, engaged school principals were seen as transformational leaders – being able to inspire, stimulate and coach their co-workers. Chapter 3 Theoretical Framework Theoretical Model

Role of Employee Engagement on Employee Performance Theoretical Foundation A stronger theoretical rationale for explaining employee engagement can be found in social exchange theory (SET). Social exchange theory argues that obligations are generated through a series of interactions between parties who in a state f reciprocal interdependence. A basic principal of theory is that relationships evolve over time into trusting, loyal, and mutual commitments as long as the parties abide by certain “rules of exchange (Cropanzano and Mictchell, 2005).

Rules of exchange usually involve reciprocity or repayment rules such that the actions of one party lead to a response or actions by the other party. For example when individuals receive economic and socio emotional resources from their organization, they feel obliged to respond in kind and repay the organization. This is the two way relationship between employee and organization. One way for individuals to repay their organization is through their level of engagement. That is, employees will choose to engage themselves to varying degrees and in response to the resources they receive from their organization.

Thus in summery social exchange theory tells that the employees choose to engage more or less with the organization on the basis of what resources they receive form the organization. This theory provides the theoretical foundation and explains that employees are more likely to exchange their engagement for resources and benefits provided by their organization. Kahn’s personal engagement theoretical framework is helpful in better understanding the concept of employee engagement.

According to Kahn’s (1990) personal engagement theoretical framework, people express themselves physically, cognitively, and emotionally in the roles they occupy; people are more excited and content with their roles when they draw on themselves to perform their roles; and people vary in their levels of attachment to 1-3 their roles. Furthermore, Kahn suggested that people vary their levels of personal engagement according to the meaningfulness of a situation (or perceived benefits), the perceived safety of a situation, and their availability based on resources they perceive they have.

On the other hand, an individual can become disengaged and protect himself or herself by withdrawing and hiding his or her true identity, ideas, and feelings. According to Holbeche and Springett (2003), people’s perceptions of ‘meaning’ with regard to the workplace are clearly linked to their levels of engagement and, ultimately, their performance. They argue that employees actively seek meaning through their work and, unless organizations try to provide a sense of meaning, employees are likely to quit.

The research findings suggest that many people experience a greater search for meaning in the workplace (70 per cent) than in life in general (ibid). There are numerous possible reasons for this, for example, it may be because people generally spend longer at work than on other parts of their lives. Holbeche and Springett (2003) argue that high levels of engagement can only be achieved in workplaces where there is a shared sense of destiny and purpose that connects people at an emotional level and raises their personal aspirations. According to Schaufeli et al. (2002, p. 4) explain that engagement is a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption. ” They further state that engagement is not a momentary and specific state, but rather, it is “a more persistent and pervasive affective-cognitive state that is not focused on any particular object, event, individual, or behavior”. Vigor is characterized by high levels of energy and mental resilience while working. Dedication refers to being strongly involved in one’s work and experiencing a sense of significance, enthusiasm, and challenge.

Absorption is characterized by being fully concentrated and happily engrossed in one’s work, whereby time passes quickly and one has difficulties with detaching oneself from work. In short, engaged employees have high levels of energy and are enthusiastic about their work. Expectancy theory points to the importance of the individual’s expectations of his job in determining Employee Engagement. For individuals who have expectations that their job should give them opportunities for pay, challenge, a failure of the job to meet this expectation will lead to disengagement compared to a situation where no such expectation is involved.

What expect expectation of individuals will have of a job may vary. For a large number of reasons, some is deriving from social others from individual causes. Another theory that has dominated the study of the nature of Employee Engagement is Herzberg? s famous “Two factory Theory? s of Employee Engagement. In this he claims that the factors which cause Employee Engagement are separate and distinct from the factors which job dissatisfaction. The factors causing Employee Engagement, which level factors such as their relating to satisfaction with the job itself.

The factors which cause job dissatisfaction called hygiene factors are more concerned with conditions of work such as pay and supervision. At no time does Herzberg argue a job satisfactory, except may be for a short run. Chapter 4 Data Collection and Methodology. We chose the survey topic relating to the role of employee engagement on employee performance. To collect data, we adopted the ‘Survey Questionnaire Research Technique’. The questionnaire was solved by the sample size of 111 people working in different industries in Pakistan.

We focused on interacting with people from all major sectors in Pakistan, including banking sector, academia, corporate aura and officials from the public sector as well. We used the questionnaire method to analyze the situation because participants’ responses to direct questions always are very revealing that adds value to the research purpose. The famous 5 point ‘Likert Scale’ designed by the psychologist Rensis Likert is used in the survey. This scale is widely used for the collection of data in questionnaire method. The respondents were asked to tell as to what level hey agreed or disagreed on different queries as the 1-5 likert scale ranges from strongly disagree to strongly agree. After collecting the data from respondents we computed the questions into variables through the SPSS software. After computing the question into variables we found the descriptive statistics. In descriptive statistics we have found the maximum and minimum range of the data and we also have found the mean and standard deviation of the data. We used the histogram to check the normal distribution of the data.

We used the scatter plot to check the relationship between our independent and dependent variables. After that we have done the correlation by using SPSS software. We have done the correlation to find the relation between independent and dependent variable to find that the independent and dependent variable have the positive or negative relationship. We used the regression analysis to find the relationship between dependent and independent variables. In regression analysis we found the coefficient of variable and here we check the significance level and the effect of independent variable on dependent variable.

Using SPSS software we have done regression analysis to find the relationship between dependent and independent variables. In regression analysis we found the coefficient of each variable and here we found the significance of each variable and the relationship between the variable is weather positive or negative. We used the t-test to check the level of significance to select the null or alternative hypothesis. We used the R-Square analysis to find the on what percentage the independent variable has on dependent variable.

We used the f-test to check the joint effect of employee engagement on employee performance. Chapter 5 Data Analysis and Interpretation In this part of the study empirical findings have been shown and interpreted. Table 3. 1 presents the descriptive statistics which show the overall picture of the variables. Figure 5. 1 [pic] In this histogram we have the frequency distribution on Y-Axis and the independent variable on the X-Axis. The bell shape in this histogram shows that the data is normally distributed. Figure 5. 2 [pic] Figure 3. In this histogram we have the frequency distribution on Y-Axis and the Dependent variable employee performance on the X-Axis. The bell shape in this histogram shows that the data is normally distributed. Table 5. 1 Descriptive Statistics | |N |Minimum |Maximum | |Employee Engagement |Pearson Correlation |1 |. 690** | | |Sig. (2-tailed) | |. 00 | | |N |111 |111 | |Employee Performance |Pearson Correlation |. 690** |1 | | |Sig. (2-tailed) |. 000 | | | |N |111 |111 | |**. Correlation is significant at the 0. 01 level (2-tailed). | Table 5. 3 Regression Dependent Variable: Employee Performance |Variables |Coefficients |Std. Error |t-test |Significance Level | |(Constant) |1. 582 |. 239 |6. 608 |. 000 | |Employee Engagement |. 619 |. 062 |9. 955 |. 000 | | |

EP=C+B1(EEi)+ Ei EP=1. 582+. 619(EEi)+ Ei Table 5. 3 presents the results of the regression analysis. The results show that the independent variable employee engagement is significantly affect the employee performance as shown by the values of the t-statistic and the corresponding P-Values. t-test is used to test the significance of the individual partial regression coefficients. Null hypothesis in this test is set as the partial regression coefficient is zero. This test shows that the coefficient of employee engagement is statistically significant at less than one percent level of significance.

As the coefficient of the employee engagement has the positive sign so the effect of the employee engagement on employee performance is positive. The magnitude of the partial regression coefficient of the employee engagement is 0. 619, which suggests that holding other factors constant an increase of one unit in this variable would raise the employee performance by 0. 619 units. Our independent variable is employee engagement and its significance level is 0. 00 which is less than 0. 05 its means the relationship of employee engagement and employee performance is positive and statistically significant.

Table 5. 4 Necessary Statistics |Coefficient of |Adjusted Coefficient of |F-Statistic |Sig. (F-Stat) | |Determination (R2) |Determination (Adj. R2) | | | |0. 476 |0. 471 |99. 093 |0. 000 | Table 5. 4 reflects the joint effect of the independent variable’s on dependent variable. Coefficient of Determination R-Square is used to find the percentage that to what extent the independent variable’s affect on dependent variable.

The value of the coefficient of determination (R2) is . 476. This shows that the 38 percent affect on dependent variable employee performance is due to the independent variable employee performance and the other 52 percent affect on employee performance is due to the other variables which are not included in our research study. In 3. 4 the value of F-statistic is statistically significant at less than one percent which exhibits that our independent variable is jointly affecting our dependent variable that is employee performance. Chapter 6 Conclusion and Summery

These days Employee Engagement has become a very hot topic of the management in this global competitive world. Everyone seems to be on the path to get their employees engaged. The claim has been made that engagement is needed for higher levels of firm performance while, consultant studies estimate that only 14 percent to 30 percent of employees are really engaged at work. In particular, very little attention has been given to the engagement levels of people running organizations. But unfortunately the importance of employee engagement has been only recognized by the top multinational organizations.

While, in Pakistan the importance of the concept is still not really understood. The companies operational here are yet not paying yield to improving engagement of employees. Organizations need to concentrate on optimizing employee productivity and available organizational resources. This study has investigated the relationship between employee engagement and employee performance in Pakistani context. It provides the ground basis to organizations that are working in Pakistan and want more productivity with their human assets to gain more productivity by engaging their human assets nd investing on them. This study has the significant implications for the Pakistani organizations to engage their employees on workplace to gain the competitive advantage and more productivity. For this study we use the employee engagement as independent variable and employee performance as dependent variable. To study the relationship of employee engagement on employee performance we used various statistical techniques. We used descriptive statistics and here we found the minimum and maximum range of data and also found the means and standard deviation of variables.

The measure of central tendency (Mean) of employee engagement is 3. 82 which show that most of the respondents agree that they are engaged in their companies. The mean of employee performance is 3. 94 which show that those employees who are engaged in their organizations are more productive. To check the relationship between dependent and independent variable a scatter plot was drawn, the line goes left to right upward which shoes that the independent and dependent variable have positive relationship; it means that independent variable influences employee performance.

A Histogram graph was drawn to find the frequency distribution of data and it was found that the data is distributed normally because it gives us a bell shape. The correlation between employee engagement and employee performance shows that the employee engagement has the moderate positive correlation with employee performance and this relationship is also statistically significant. According to our research model it is statistically proved that employee engagement have a positive impact on employee performance.

Like several other studies (Schaufeli and Bakker, 2004; Sonnentag, 2003) the results of this study suggest that employee engagement partially mediates the relationship between antecedent variables and consequences. The results of this study also suggest that employee engagement can be understood in terms of SET. That is those employees who receive higher organizational support are more likely to respond with greater levels of engagement in their job and in the organization. Further this study provides some implications for the companies who have their operations in Pakistan; a need to focus on employees’ engagement.

This research suggests that the companies should engage their employees on the workplace so that they can be willing to apply extra effort for more productivity. This study demonstrates that the organizations should invest on the engagement of their human assets that will consequently yield more profit for the organization. Limitations: 1. First of all, there is a need for more research in the field of employee engagement and employee performance. Not enough research has been done in order to describe the rel