Tuesday, October 19, 2010

Why Should YOU Care About Employee Engagement?

ANSWER: It’s good for business!! It directly impacts shareholder return, financial improvement and competitive advantage. You must read 1. Before you read 2.
1. Making the Business Case for an Employee Engaged Culture:

Hewitt research found a 63% differential in total shareholder return for companies with high employee engagement vs. those with low engagement:
“Organizations with high levels of engagement (where 65 percent or more of employees are engaged) outperformed the total stock market index even in volatile economic conditions. During 2009, total shareholder return for these companies was 19 percent higher than the average total shareholder return. Conversely, companies with low engagement (where less than 40 percent of employees are engaged) had a total shareholder return that was 44 percent lower than the average.”


Gallup research found companies in the top 25% for employee engagement have (as compared to bottom 25%):

• 37% less absenteeism
• 25% less employee turnover in high-turnover organizations (such as retail)
• 49% less turnover in low-turnover organizations
• 27% less shrinkage
• 49% fewer safety incidents
• 60% fewer product defects
• 12% higher customer metrics
• 18% higher productivity
• 16% higher profitability
And that’s just the start. Gallup also found:

• EPS exceeds competition by 28% (top 25% for employee engagement)
• EPS exceeds competition by 72% (top 10%)
• Growth trajectory (for financial improvement): 2.5 times the competition (top 25%)
• Growth trajectory: 3.9 times the competition (top 10%)

What did the level of employee engagement mean to companies during the recession?

• Those in the top 25% that were trailing competition before the recession surpassed the competition in 2008.
• Those in the top 10% were already ahead of their competition in 2007, but widened the gap further in 2008.
• Those in the bottom 25% for engagement in 2007, however, followed the same downward trend as their competition during the recession.

Still think employee engagement doesn’t matter?



2. How The Hell Do You Engage Your Workforce?

This is where the “rubber meets the road”. I receive the Google alerts for Employment Engagement and I’m flabbergasted that I have counted over 50 ways, so far, that authors have suggested as to “How to Engage Your Employees”. If you had 50 employees I guess you try each way on each employee and see what works. This is of course ridiculous.

The fact is that people are different from each other in so many ways, such as upbringing, backgrounds, ingrained conditioning responses, mother and father complexes, basketball players vs. computer geeks, males vs. females, tall vs. short, bulky, physically attractive and those not, maybe a million more influences. That to lump all workers into a stereo type by authoring a lackluster suggestion is senseless, ineffective and maybe having an unintended negative result.

Employee engagement is a personal, hidden behavioral quality that is so internalized that many times even the “employee” doesn’t know why they are motivated. This becomes a good starting point for us to examine how to really measure engagement for the benefit of the employer.

We all know the first lesson is to take the time to measure the current level of engagement of your workforce but with a complete demographic slicing capability. Especially so, you MUST understand the behaviors and impact that CEO’s have on Senior Manager and then on Managers and then on the workforce. This is known as “Vertical Alignment”, The Power of Alignment, Dr. George Labovitz.

How do you fix stuff if you don’t know who or what to fix! I submit this complicated task cannot be, as suggested by some, to simply take the pulse of the people by asking if “They have a best friend at work”, or “talk nicely to your workers”, without a clearly defined way to isolate responses by each demographic in the company. If you have a staff of 1000 people, what CEO in their sane mind would spend the time to ask each of the workers feel they are not “talk nicely to your workers”-get real!

A client VP, who became a friend, was recently laid off from his senior level position because of his conflict in dealing with a new VP that the new CEO brought into the company. This example is important because it underscores the need for every organization to take a baseline pulse of their work force. This VP friend, lets call him “Greg” was the most dedicated, engaged, committed, tireless worker that his ex company ever had working for it. His dedication to drive his ex organization to greater profitability was unmatched by even his ex and current CEO. Had the new CEO been aware of Greg’s level of “engagement”, results may well have been different-for both.

Based on what we now know, what’s the very first step to convert your culture of getting people engaged or committed? The Canadian Conference Board Research identified 28 emotional and rational key drivers of people; each contributed to people giving that extra bit of effort to their work and their leadership that keep them striving to contribute to the company goals. There could be 60 or 100 other emotional or rational drivers, but the fact is that you need to take a shot gun approach in learning key success drivers of each of your workforce demographics.

The second step is the Engagement Survey. Make sure it’s online, use an experienced survey consultant vendor that provides a way for you to x-ray the organizational skeleton, with an analysis means to dissect each of the measures by each work group area. Lastly, the data analysis must allow you to cross tab or use correlations to really see which parts of your workgroup are with you or “agan you”.

Now comes the hard part! Let’s ask, “who cares if my people are happy and committed” if they aren’t engaged in your business. Workers can be very happy doing nothing! So, happy workers who don’t know how to deliver the best to build great customer service, are as useful as bumps on a log. So, you, as the “boss” need to understand what your workers need from you to make their job more effective and efficient in generating profitability. This is the true essence of engagement! It’s a reciprocal relationship: bosses give what people need and people give what bosses need. So take measures based on needs of both!

Let’s summarize: good survey content to measure those important drivers of your workforce for them to work more effectively, great analysis capability of your survey tools to really understand the data so to know what to fix and who to fix, and a clear understanding of what it takes YOUR business to meet YOUR customer needs. Now engagement will be the key to drive your profitability.