Employee Engagement in 4.0 Industrial Revolution

Muhamad Azis Firdaus

, Hamidah

and Slamet Sutanto

Pascasarjana Universitas Negeri Jakarta, Indonesia

Universitas Ibn Khaldun, Bogor, Indonesia

Keywords: Industrial Revolution, Information and Communication Technology, Employee Engagement.

Abstract: This literature research aims to determine the relevance between the development of information technology

and the existence of human resources as a key in a company. The research was carried out by observing

several scientific articles that developed until 2018. The scientific articles were divided into two topics,

namely industrial revolution 4.0 and employee engagement. Search results on several articles indicate that

employee engagements refer to individual attitudes and behaviors that are significantly influenced by

several factors. Furthermore, employee engagement also affects productivity, performance, and profitability.

In other words, employee engagements determine the success of the company. On the other hand, the 4.0

industrial revolution that combines physical devices with information technology through the internet of

things and the internet of people has the potential to reduce employee interaction with the company's

internal environment, such as the interaction between employees, employee interaction with leaders. The

use of mobile technology connected to the internet allows employees to work from outside the company so

as to reduce face-to-face communication. Based on the factors that influence employee engagement

associated with internet technology, the potential to influence employee engagement is inversely

proportional.

1 INTRODUCTION

The development of information technology,

especially the internet has led the industry to an

increasingly competitive situation. Efficiency in the

use of resources and effectiveness in achieving

company goals are two things that are increasingly

preferred. The use of machines (physical devices) as

part of the previous industrial revolution, faced

challenges from the development of internet

technology. Cisco Systems predicts that in 2014

there are 21.1 billion internet-connected devices, and

will reach 50 billion by 2020. Cisco systems also

estimate that there are 1.5 trillion devices in physical

form, the future 99% of these physical objects will

be part of a network (Greengard, 2015, p. 14). While

Gartner predicts in 2020, IoT (Internet of Things)

will reach 26 billion (I. Lee & Lee, 2015). Other

reports show the use of robots in 1000 workers in

the USA, Europe, China, and Asia. The USA and

Europe show a lot of robot usage compared to China

and Asia. In Europe, German countries are the

countries that use the most robots. China and Asia

show the use of robots which is relatively slower,

until 2015. And the industry that uses robots most is

automotive (Chiacchio, Petropoulos, & Pichler,

2018).

The use of physical equipment as developed at

this time is artificial intelligence is part of the

production process, giving consequences for the

existence of human resources (employees). As a

company resource, employee behavior is something

more complex than machines or other assets (King,

2017). So that the existence of employees makes it

an important resource, and in the current global era,

companies will compete to get employees who have

the skills, knowledge, and abilities that will become

the company's assets in the long run. Information

technology currently allows employees to be able to

freely move anywhere and at any time by staying

connected to the company (Gilchrist, 2016, p. 236).

Thus employees cannot always come to the office

during working hours.

The industrial revolution era 4.0 will

significantly affect work relationships such as

purchasing, production, automation and overall

processes of the company (Prifti, Knigge,

Kienegger, & Krcmar, 2017). Industry 4.0 directs

890

Firdaus, M., Hamidah, . and Sutanto, S.

Employee Engagement in 4.0 Industrial Revolution.

DOI: 10.5220/0009510608900897

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 890-897

ISBN: 978-989-758-432-9

interaction not only between humans, or humans and

machines, but also in machine interactions with

machines (Roblek, Meško, & Krapež, 2016). This

shows the emergence of technology in the form of

artificial intelligence that can replace humans in

creating value, through information and

communication technology. IoT, IoP, IoS, make the

industry become dependent on its ability to use

internet technology. The trend of ICT development

directs the industry to the potential for efficiency

and effectiveness more effectively with its ability to

manage large amounts of data today. Artificial

intelligence will ultimately reduce employee

involvement in the production process.

Thus the industrial revolution indicates that

human involvement is increasingly reduced in the

production process (Wyrwicka & Mrugalska, 2018)

and affects the labor market (Sandrine Kergroach,

2017). The development of ICT in the I4.0 era

changed the dominating industrial environment in

I3.0, namely automation and computerization. I4.0

forms a new environment such as the need for

workers with ICT mastery qualifications, legal

instruments, data security, and infrastructure to

support ICT. Upward integration, downward

integration and horizontal integration in internet

usage makes the industrial environment more

competitive and promises more definite

sustainability, and makes it a smart company.

However, expertise, knowledge, and abilities are not

enough to support the company's performance in the

long run. Need other factors of human resources,

which are greater which can contribute to the

company in the long term, namely the engagement

of employees. A big challenge for managers of

human resources to get, and maintenance workers

who have the ability to use ICT in the midst of the

lack of employee interaction with employees, the

lack of interaction between employees and leaders.

2 THEORICAL FRAMEWORK

There is certainly no agreement on the definition of

the industrial revolution. One definition of an

industrial revolution is a period of time in which

work that was initially started and completed at the

factory, can then be started and completed at home

(Liao, Loures, Deschamps, Brezinski, & Venncncio,

2018). This definition shows a process that allows

industry can carry out the operational efficiency of

the company. This shift requires the existence of a

media or technology that allows employees to

remain connected to the office or by machine.

Another definition is that the industrial revolution is

the stage of the transition of economic development

from domestic to the manufacturing model

(Unyimadu, 1989). In the next development, with

the emergence of the term industrial revolution 4.0,

the definition of the industrial revolution shifted

towards the use of information technology and the

interconnection of various things. Thus the

definition of the industrial revolution will continue

to evolve following the development of technology

in the future. There is at least a characteristic of an

industrial revolution, namely a big change that has a

significant impact on many things.

The development of internet technology

continues to experience development, which in the

21st century is followed by the development of

artificial intelligence, the need, and availability of

large data and connectivity of technology users

(Roblek et al., 2016). The industrial revolution since

its inception, became an intense debate and

controversy among academics and practitioners

(Bertola & Teunissen, 2018; M. Lee et al., 2018).

Industrial revolution 4.0 begins with the industrial

revolution of 3.0, 2.0 and 1.0. The Industrial

Revolution 1.0 was marked by significant changes in

manufacturing, agriculture, transportation and

technology that changed the socio-economic and

cultural conditions. The steam engine began the

industrial revolution 1.0 in the 18th century

(Wyrwicka & Mrugalska, 2018) so that the

manufacturing sector was able to carry out mass

production. The second stage of the industrial

revolution (Industry 2.0) shows the development of

technology for industry, especially steel technology,

electricity which triggers the emergence of

telephone, cars, aircraft followed by a demand for

labor that has expertise in steam engines (Chin,

Juhn, & Thompson, 2004). Industry 3.0 can be said

to be a digital era that changes the way people

communicate, business people and other

practitioners who utilize the results of digital

technology, that is contemporary (Zeng, 2016). The

use of this technology has greatly changed the

industry where there is a shift in the use of labor

towards the use of machinery. Information

technology in the industrial era 3.0 allows humans to

find data, share data with others to improve their

lives (Fitzsimmons, 1994).

The first 4.0 industrial revolution in 2011 by the

German government with a view to creating

efficiency, flexible production, individual

production through the complete decentralization of

production supervision and digital supervision (Prifti

et al., 2017). I4.0 is also called an intelligent factory,

Employee Engagement in 4.0 Industrial Revolution

891

where physical form and decentralization of decision

making can be developed (Morrar & Arman, 2017).

One of the characteristics of the industrial

revolution 4.0 (I4.0) is connectivity and

digitalization which forms a wide network with large

data usage. Transformations in information and

communication technology (ICT) in industrial

systems are key in the fourth industrial revolution

(Karabegović, 2017). Other characteristics of I4.0

are full automation and the process of digitizing the

manufacturing and service sectors through the use of

information and electronic technology (Roblek et al.,

2016). I4.0 can also be called the name of the digital

revolution where the line between physical objects

and the digital field becomes vague, as a result of the

physical transformation to digital (Soares &

Kauffman, 2018). The digital transformation allows

humans to connect with machines, machines with

machines (M2M) and current human connections,

known as the Internet of things (IoT) and the internet

of people (IoP). However, the concept of I4.0 is not

fully known and widely understood by business

people. Based on Fernandez's (2017) research, I4.0

is only understood by the middle management level

and upper management level.

The benefits of the development of information

technology and communication through the internet

of things include the support and stabilization of a

simpler production environment, where employee

involvement becomes less. With the availability of

large data, the computational model with statistics

can help in designing the next framework (Wagner,

Herrmann, & Thiede, 2017).

Every company expects and will continue to

look for employees who are able to contribute

maximally to the company, especially when the

employee has high competence and competitiveness.

This high competency and competitiveness is an

asset for the company. Thus obtaining and

maintaining these employees is important for the

company because one of the competitiveness of the

company is determined by the competence and

competitiveness of its employees. There are four

main elements of the human resource management

strategy model, namely: competitive strategy,

employee behavioral needs that are linked to

company strategy, employee behavior that is

connected with competitive strategies, and human

resource management practices (Schuler & E.

Jackson, 2014). Among the employees' behavior that

the company needs are the employee engagement.

the term employee engagement appears as a big

challenge like management in the workplace

(Osborne & Hammoud, 2017).

Employee engagement in Holbeche (2012, p. 7)

is a feeling of the characteristics of commitment,

desire, and energy that can bring employees to the

highest level. Meanwhile, Thomas (2009, p. 11)

defines employee engagement more simply, that

employee engagement is a degree that shows a

person's activity in his work. These two definitions

show that the employee's engagement is in someone

with whom the employee becomes more potent and

does what he or she desires. There are three things

related to employee engagement, namely that the

employee's engagement involves commitment,

dedication, and loyalty to the organization, to

coworkers and to their supervisors (Marciano, 2010,

p. 40). The difference between Marciano's definition

and the other is the object of the employee

engagement.

Other authors say that employee engagements

have three sides, namely first intellectual

engagement, shown by thinking hard about their

work and thinking how to do their work better. Both

affective engagements, positive feelings in doing

their work, and third social engagements, actively

engage in discussions with others in the workplace

(Armstrong & Taylor, 2014, p. 194). Kahn's

statement means that the employee engagement to

the use of members of the organization for their own

work roles is manifested in the form of physical,

cognitive and emotional involvement in their work.

Referring to Crawford, Armstrong said that to be

able to bring up the employee engagement, first need

to understand several things, namely: job challenges,

autonomy, using different skills, feedback,

suitability, opportunities to develop, appreciation

and recognition (Armstrong & Taylor, 2014, p. 230).

The definition means that employee engagement

is a degree of involvement of an employee in his

work and is strongly committed to his work and

company (Noe, Hollenbeck, Gerhart, & Wright,

2011, p. 277). From Noe's definition of employee

engagement at least two things, namely over-

involvement and high commitment. Albrecht (2010,

p. 4) says that employee engagement as an

individual feeling aims and focuses on energy in the

form of personal initiative, adaptability, and

perseverance in achieving organizational goals.

Albrecht's employee engagement is a reflection of

motivation in the form of a high willingness to focus

on investing in an effort to achieve organizational

goals and success. This is similar to what Schaufeli

et al stated in Albrecht (2010, p. 75). Shaufeli's

statement can mean that engagement is a psychology

statement that has cognitive components and

affective components. A positive state of mind

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

892

characterized by enthusiasm, dedication, and

integration. From these two definitions, it can be

concluded that the engagement of the employee

involves the positive impulse that arises from the

individual, with that, the individual is able to do his

work voluntarily.

Other authors divide employee engagements into

two parts: physical energy and behavioral energy.

As physical energy shows the desire to go further

into the company/organization, struggle, merge with

the organization, focus and feel want to be involved.

As behavioral energy, employee engagements can be

observed from their behavior within the

organization, that employees who have an

engagement to the organization can think and work

actively, and continue to look for opportunities to

achieve organizational goals; Employees who are

bound by their organization, not only rely on the job

description of their work but focus on achieving

goals for organizational success; Employees who are

tied to the organization are looking for methods to

develop their expertise, to enhance their role in the

organization and to achieve the company's mission;

Employee engagement is also evident from

employee behavior towards change. Employees who

have high engagements can easily adapt to

organizational changes (Macey, 2009, p. 9).

Meanwhile, the employee's engagement is an energy

spirit of employees to provide the best to the

organization to serve customers. This concerns the

willingness and ability of employees to provide

business on the basis of their own ideas to help the

success of the organization. The employee's

engagement focuses on the relationship between

employee engagement and service to customers.

Where the degree of engagement of employees can

affect the quality of service of the employee

concerned to the customer (Cook, 2008, p. 3).

Employee engagement shows the level of

commitment and employee involvement in the

company which is related to a variety of positive

activities produced by the company such as

customer loyalty, productivity, profitability and

labor turnover (Agarwal, 2017). Every company,

every industry, and every country has different

determinants of employee engagement. There are at

least three determinants of employee engagement,

namely leadership, job value, and opportunities for

growth (Agarwal, 2017). Differences in these

determinants lead to differences in perspectives on

employee engagements so that the definition of

employee engagement varies (Ahlowalia, 2014;

Kamau & Sma, 2016). However, some academics

attribute employee engagement as an individual

reflection of employees to what they feel while

working. Explanation of employee engagements

according to Khan that employee engagement refers

to three aspects namely cognitive engagement,

emotional engagement and physical engagement

(Guest, 2014). Cognitive engagements include

aspects of trust and perspective on the organization,

and its leaders and organizational environment.

Emotional engagement shows employees' feelings

about the organization, leaders and the environment

that can lead to positive behavior or negative

behavior. Physical engagement shows the energy

that encourages employees to complete their work

(Ahlowalia, 2014).

Based on research (Jena, Pradhan, & Panigrahy,

2018; Kamau & Sma, 2016; Kavya & Padmavathy,

2017) shows that employee engagements are factors

that influence the direct and indirect employee

engagement, including talent management.

Employees with a high level of engagement will

show hopeful behavior, maintain interpersonal

relationships and show high performance.

3 RESEARCH METHOD

This article is a review of the theme of employee

engagement, where the explanation is carried out

descriptively. Some articles and theoretical concepts

are used to be able to find the relationship between

industrial revolution 4.0 and the employees

engagement which is then analyzed the influence of

the industrial revolution on employee engagement.

4 ANALYSIS

Based on research conducted by the Gallup

Management Journal, shows that only 29% of

employees are actively involved with their work,

54% are not tied to their work and 17% are actively

not tied to their work. Likewise, the Hewit

Associates study showed that companies with high

levels of employee engagement showed a 19% share

gain above the average in 2009. While companies

with a low level of engagement gave a share benefit

of 44% below the average. Gallup's 2008 study,

when the financial crisis occurred in the United

States, also showed that companies that were highly

engagement were better able to survive. Wharton

Business School, shows that employees with high

levels of satisfaction encourage profitability for a

long time (Zenoff, 2012, pp. 5–6).

Employee Engagement in 4.0 Industrial Revolution

893

In Stephanie and Gustomo's research delivered

in 2014 at the 6th International Conference on

Innovation, Entrepreneurs and Small Businesses,

concluded that the average employee engagement

score was a score of 3.36 out of 5. Three factors that

influence employee engagement are welfare, career

and social support and work motivation. Employees

who have a high level of engagement to their

organization or company provide their potential for

the success of their organization or company

(Stephanie & Gustomo, 2015). Maniam said that

employee engagements have potentially related to

the company's continuity and profitability

(Kaliannan & Adjovu, 2015). From what Maniam

said, it can be said that either directly or indirectly,

employee engagement encourages employees to

behave effectively and efficiently which will

encourage an increase in company profits and the

continuity of the company. Kazimoto's (2016)

research results show evidence that employee

engagement has a correlation with organizational

performance. Thus the employee engagement

becomes very important in improving the

performance and continuity of the organization or

company through effective and efficient behavior in

generating profit (profit). Likewise, Georgiades

(2015, p. 9) that in terms of organizational change,

employee engagement is a very important thing in

achieving organizational change success.

Several other studies show that there are

significant effects of several variables on employee

engagements. including job satisfaction (Abraham,

2012; Bin, 2015; Taghipour & Dezfuli, 2013),

organizational culture (Jaghargh, Ghorbanpanah,

Nabavi, Saboordavoodian, & Farvardin, 2012; Jiony,

Tanakinjal, Gom, & Siganul, 2015; Kalia & Verma,

2017), work environment (Aliyah, 2017; Chaudhry,

Jariko, Mushtaque, Mahesar, & Ghani, 2017; Mohd,

Mohd Shah, & Zailan, 2016). Likewise, there are

several determinants of the degree of engagement of

other employees which are the results of research in

the aviation industry (Ganguly, 2015).

Employees as a corporate entity have a degree of

employee engagement to different

companies/organizations. Employee engagement is a

concept inherent in an individual (Dajani, 2015).

How do employees have a commitment to their

company, employee loyalty, how are employees

responsible in carrying out their duties, how are

employees involved in the company, how are

employees engaged in company activities outside

working hours, how employee loyalty is a part of

indicators that can describe employees' engagements

to their companies. The difference in doing

'engagement' and being 'engaged' indicates that

employee engagement is a theme that needs to be

implemented, needs to be carried out in common

perceptions, and needs to be developed as a

construct/concept (Truss et al., 2011). Based on the

research (Mulyanti, Sule, & Kusman, 2017; Osborne

& Hammoud, 2017) shows that employee

engagements are part of a series of sequences of

implementation of work centralization policies,

leadership, work-life balance, power awards,

incentives, appreciation, culture, and autonomy. The

next sequence is the achievement of high corporate

performance, loyalty, and commitment through a

high degree of employee engagement. The high

degree of employee engagement also impacts the

comfort of employees in interacting with customers,

thereby increasing customer loyalty (Mehta,

Chandani, Moksha, & Parul, 2016). In addition to

being influenced by determinants of employee

engagement, it also determines other factors of

individual morale, task performance, and

performance of extra roles and organizational

performance (Bailey, Madden, Alfes, & Fletcher,

2017). Other research shows that employee

engagements to elements of reward and talent

management strategies, friend and teamwork

relationships, work environment, can improve

individual and organizational performance (Anitha,

2014; Ongel, 2014). The relationship between

employee engagements and management

performance is also shown in a model (Gruman &

Saks, 2011).

5 RESULTS

From various studies regarding an employee,

engagements will continue to grow along with the

fluctuations in the level of employee engagement as

a result of changes in the world of work (Bakker &

Albrecht, 2018). Changes in the use of technology

have the potential to cause changes in the work

environment. Based on Sumer's opinion (2018),

widespread use of technology can have an effect on

the labor market, expertise, and employment. Some

fields of work that will be affected are technicians,

clerks, service, sales, and factory operators. Thus

I4.0 will change job opportunities with the ability to

master information technology. The use of ICT in

the industry can change the internal environment of

the company to become more competitive on the one

hand, and on the other hand, make it a company with

less use of labor. Human life can be negatively

affected by the development of ICT with reduced

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

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sharing time among employees (Riminucci, 2018).

Another potential that can be affected is the

operational activities of human resource

management. The purpose of human resource

management operational activities is to create

employees who are able to work efficiently.

Technology in I4.0 allows employees to be able to

do activities on two or more jobs at different

companies. This is possible because developing ICT

technology shows high employee mobility. Thus, the

employee engagement to the company becomes

weak. Employees can at any time leave the company

where they work, and of course, this is a loss for the

company.

IoT and IoP technology allows employees to

communicate with the tools they carry. This has the

potential to be an emotional relationship as a

sequence in building emotional engagement can be

reduced. The need as a human being to socialize

with his environment has the potential to be greatly

reduced so that employees can feel unattached with

others (Kavya & Padmavathy, 2017). Technology in

I4.0 also allows customers not to communicate face

to face with their producers through employees, this

is contradictory to what Mehta (2016) delivered. So

that the implementation of I4.0 has the potential to

reduce employee engagements both emotional

engagements, physical engagements, and cognitive

engagements. Therefore, it is necessary to conduct

human resource management activities that can

develop the skills and abilities of employees in the

use of ICT in IoT and IoP frameworks. The use of

organizational structures that are more flexible and

still provide space for employees to improve the

balance between life and work.

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