Want Engaged Employees? Unlock the Full Potential of Human Capital Through Sustainable Buildings

Businesses love to talk about employee engagement. In fact, an increasing number of businesses see employee engagement as an essential strategy for achieving their goals. Current attempts to engage employees take many forms, including volunteer programs, competitions, cash incentives, games, and giveaways, as well as award and recognition programs.

But what is employee engagement, exactly? It is not employee happiness or satisfaction but rather “the emotional commitment the employee has to the organization and its goals,” writes Kevin Kruse in Forbes. Engaged employees are those that care about their organization; they use discretionary effort and work on behalf of the organization’s goals rather than just for a paycheck or promotion.

Despite an increasing focus on employee engagement, research suggests businesses are not capturing the full potential of their workforce. A 2013 Gallup report found that only 25–30 percent of the U.S. working population is engaged in their work. This suggests that organizations need to develop new ways to engage employees.

So how can we make progress capturing the full potential of human capital? How can employee engagement move beyond a hodgepodge of programs, games, and prizes to instead become a central business strategy that creates value?

Companies’ employee engagement campaigns are at their core an effort to change employee behavior; they aspire to get employees to do something new. Every choice—including an employee’s conscious and subconscious choice to emotionally commit to an organization and its goal—takes place with a context … physical, social, cultural, institutional. It’s therefore the building, as the physical context, that serves as one fundamental underpinning of employee engagement. This is not only because it helps answer the basic question, “Is the building/work environment a place I want to be?” but also because it influences how the overarching context of choice aligns with rather than clashes with the desired outcome. For example, if you’re an ad agency that cherishes highly creative employees that in turn value inspiring, creative environments, does your building reinforce that engagement? Companies of all shapes and sizes must consider the extent to which their buildings reinforce the goals and the workplace environment they seek, especially when those goals and environment are changing.

One important dimension of this reinforcement is in some ways the most basic: making buildings healthier and more comfortable for employees with improved thermal conditions, air quality, ventilation, and lighting. Not only obvious players—like healthcare leader Kaiser Permanente—but others, like Google, are focusing deeply on comfort and health in their buildings.

Improving physical comfort

Deep energy retrofits—projects that achieve superior energy savings over conventional retrofits, sometimes reducing a building’s energy consumption by 50 percent or more compared to its pre-retrofit baseline—can be a meaningful part of an employee engagement strategy. They improve thermal comfort, air quality, ventilation, and lighting quality in buildings. How? Whole-buildings transformations result in buildings that have a sealed envelope, increased daylighting, new HVAC systems, highly effective and adaptable controls, and more. A 2012 study is one of many demonstrating that greater use of natural light improves comfort (and thus “dwell time”) among users of the space. There were several findings from a study from 2007 about the sensitivity of employee work performance based on changes in the physical office environment, placing particular emphasis on comfort associated with temperature. Another study (from 2007) found that lighting and equipment affect thermal comfort—mainly in terms of overheating—which in turn affects employee work performance. Even changes in comfort across a single floor of an office building can lead to variations in work performance. It sounds obvious (and in reality, it should be): if you feel too hot or too cold at work, your performance and engagement will suffer.

Comfort and health equal engagement

Change such as employees becoming more engaged happens, and is reinforced when the work situation concretely changes. A 2009 paper suggests that habits like those pertaining to an employee’s day-to-day activities change only when there are significant changes to the context of choice. A paper from 2008 argues more specifically that physical, social, cultural, and institutional contexts must be accounted for because they shape and constrain people’s choices. Other research contributes to the emerging scientific consensus in behavioral fields about the direct link between context and behavior.

According to a 2012 report by Engage for Success, buildings and the physical work environment form the larger context within which the other contextual factors operate, suggesting that a physical change like that achieved by a deep energy retrofit increases employees’ physical comfort and health, creating a context conducive to employee engagement. This is something businesses increasingly value in their decision making. For example, Sydney-based Stockland sought to improve employee comfort and health at its headquarters by refurbishing eight floors of an existing building. And as Bernice Boucher—lead of JLL’s workplace strategy practice in the Americas—writes in a recent article about workplace evolution, more efficient and intelligent building infrastructures are not only lowering energy bills, but “are creating a higher degree of workplace comfort and wellness for employees.”

The catch is that despite how obvious and common sense this may seem, and despite science confirming as much, it is still seldom done. So to significantly advance and accelerate progress, RMI is tackling the issue head on. In addition to describing a methodology to account for both the energy and non-energy benefits of deep energy retrofits, our Deep Retrofit Value practice guide presents a comprehensive collection of studies showing ways that deep retrofits create a new context conducive to employee engagement. The practice guide cites, for example, various studies showing that improved indoor air quality, lighting, and ventilation in green buildings increase productivity by reducing both absenteeism and presenteeism. Moreover, a company’s investment in a deep retrofit may also demonstrate to both current and prospective employees a visible commitment to sustainability, leading to cost savings for recruitment and retention.

Engagement drives company profits

When employees are more engaged, they are more productive. An employee that does not have a headache from an office’s outdated lighting system will have more mental capacity to come up with the next great innovation for the company. Employees not distracted by how cold or warm they feel will want to take the time needed to collaborate and develop a solution to the issue holding back the company’s latest product. Employees that are healthy and at work in the office rather than sick at home will have a better ability to care about their work and their organization’s goals. In turn, organizations are more likely to retain employees that are engaged in their work.

Engaged employees further the goals of an organization. For example, research findings from 29 studies indicate a correlation between employee engagement and service, sales, quality, safety, retention, and profits. Engaged employees provide better service, quality, and productivity that improve customer satisfaction. Higher customer satisfaction then leads to increased sales—including repeat sales and referrals—which leads to higher levels of profits and higher shareholder returns.

Employee engagement as a core business strategy is in its infancy. Nevertheless, it is already beginning to affect the choices of business leaders. A 2012 University of Notre Dame study found that PNC Bank’s 93 LEED certified bank branches boosted the value of each employee compared to those in its 469 non-certified branches because employees in certified branches are more productive and engaged in their work. Similarly, a recent report published by RMI and CoreNet Global suggests that demand for healthier buildings, such as those that result from deep energy retrofits, is driving investment in next generation energy management and performance. More and more business leaders are convinced that better buildings lead to better employees and better company performance. Transformed, healthier buildings help businesses unlock the full potential of their human capital.

Image of the Stockland head office in Sydney, Australia, courtesy of architect BVN Donovan Hill by photographer: John Gollings. Used with permission.