We’ve all heard the experts tell us there are definite signs the economy is improving and we’re coming out of the recession. However, many companies are still not seeing a return to the profit levels they experienced pre-recession. What could be the culprit? The latest research shows employee engagement is the lowest it’s been in eight years. Is there a link? Absolutely. Aligning business strategies with employee engagement strategies is a best practice that the world’s top companies are realizing. There is a definite connection between recruiting talent, engaging that talent and achieving positive business results. Here’s what we mean.
The link between engagement and profitability isn’t just a theory. Gallup’s Q12 Employee Assessment is performed every two to four years to gauge how well employee engagement predicts key performance outcomes. The comprehensive research combines 263 studies from 192 organizations and 1.4 million employees, in 49 industries and 34 countries. What was the biggest takeaway from their research? “A highly engaged workforce means the difference between a company that thrives and one that struggles,” said researchers. Companies with highly engaged employees outperform their peers by 147 percent in earnings per share. Here’s a quick summary of their findings.
Companies with engaged workers experience:
- 41% fewer quality defects
- 48% fewer safety incidents
- 28% less shrinkage
- 65% less turnover (low-turnover organizations)
- 25% less turnover (high-turnover organizations)
- 37% less absenteeism
Researchers specifically focused on the effects of employee engagement in a tough economy, and still found it to be a key indicator of a company’s ability to “weather the storm.” In fact, having an engaged workforce was a “differentiator.” Companies with engaged employees regained and grew their earnings per share at a faster rate than their competitors. Companies that scored in the 99th percentile in their employee engagement ratings had four times the success rate of those in the first percentile.
Drivers of Employee Engagement
Just how do you achieve the engagement levels needed to reap business growth? It’s easier to achieve than you might think. Here are three tips to get you started.
- Effective Leaders: Managers and company executives must set an example of the behaviours you want your employees to display. The NY Times reported that in companies where leaders model the desired behaviour, employees are 55 percent more engaged. Effective leadership involves being accessible and approachable. Don’t lock management away in a secret part of the office. Offer guidance and commendation. Recognize employee achievements publicly. Trust employees with sensitive information. Avoid an “us versus them” mentality. In fact, Gallup recommends holding managers accountable for their employee’s engagement. Coach managers on how to implement an engagement plan and track its progress.
- An Appreciative Atmosphere: Employees that feel like their supervisors are supportive are 67 percent more engaged, according to the same NY Times data. Build trust, restore strained relationships, develop pride and dissolve frustration by building an appreciative atmosphere. Empower managers with ways to recognize and reward their employees.
- Open Dialogue. One of Gallup’s suggestions for building engagement is “using the right employee survey.” Use an appropriate survey to open dialogue. Use specific and relevant questions that are actionable. Don’t make the mistake of simply collecting data that is impossible to act on. Each question should relate to key performance metrics. Make engagement a priority by discussing results at regular management meetings. Inculcate engagement into the overall business strategy of the company, so that company leaders realize it is a priority.
Use Available Tools
Implementing those three engagement drivers isn’t automatic. It takes some effort to reform company culture. However, the task is made easier by using available tools. For example, is your intranet strategy designed around developing effective leaders, creating an appreciative atmosphere and providing a platform for open dialogue? Let’s look at those three drivers and analyze how an intranet can contribute to their success.
Your intranet allows you to break down barriers that exist between management and the rest of your staff. A intranet inspires collaboration, encourages open communication with management and simply adds a “human touch” to cold policies. For example, a video from the president of the company about a new policy can have an entirely different effect on employees than simply posting policy documents and requiring everyone to review them. Tone of voice, countenance, and warmth and feeling come through in speech.
Have the president encourage comments and feedback on the video. Let employees know that company leaders care about their opinions. Create forums or online polls to gather feedback before major decisions are handed down. Be sure supervisors contribute as well, encouraging their staff to get involved and erasing fear that speaking out will have negative consequences.
It may sound a little corny, but a recent article in Fast Company summed up multiple studies, including the Gallop one, with these words, “The decision to be engaged is made in workers’ hearts, not minds.” Reach your workers’ hearts by putting to use the engagement tools found within your intranet. What will be the result? According to Fast Company, “How leaders and organizations make people feel in their jobs has the greatest impact on their performance.” A successful leader places priority on the development of his or her team. In fact, the article suggested choosing leaders based on their ability to be authentic advocates for their team. “Bosses predominantly concerned about their own needs create the lowest levels of employee engagement.” A strategically designed intranet is a great way to provide praise and commendation, and not just about company accomplishments. Congratulate employees on life milestones, such as earning a degree or getting married. Invoke feelings of pride by announcing the company’s community involvement and how employees can get involved. “Feeling connected with and genuinely supported by others at work is a surprisingly significant driver of engagement and loyalty,” concluded Fast Company. Do you have an intranet that accomplishes that?
Still Not Convinced?
Are you not quite convinced that employee engagement really has that much impact on profit? With so much emphasis on customer engagement, it makes sense to put employee engagement as a less important initiative. That would be a mistake, however. Consider this. Forbes compiled 28 studies to determine the benefits of employee engagement. According to the Hewitt Research Brief, companies that have 60 to 70 percent of their employees engaged had an average total shareholder’s return (TSR) of 24.2 percent. When engagement dropped to 49 to 60 percent, TSR fell to 9.1 percent. Companies with less than 25 percent of their employees engaged had a negative TSR. Gallop estimates 70 percent of employees are disengaged. That’s a lot of lost profits.
Don’t be satisfied with minimal engagement. Create a strategy that focuses on engagement drivers. Just improving employee engagement by five percent increases a company’s operating margin by .7 percent, according to the Forbes research. Regardless of what turns the economy takes, your company will be better equipped to “weather the storm” with a team of actively engaged and loyal employees. The results include superior service, increased productivity, fewer errors, decreased absenteeism and less turnover, all contributors to your growth and profits. Start with creating an intranet that encourages dialogue, interaction between all levels of staff and overall pride in the company.