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Engaged Employees = Compelling Business Results

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Jathan Janove, Director of Employee Engagement Solutions, Ogletree Deakins

Assume you are a member of your company’s executive leadership team.

Your CEO is unhappy. Markets have tightened. Competition has increased. Costs have risen while revenue has declined.

The CEO presses you and your fellow executives for ways to increase profits. Suggestions include launching a new marketing campaign, shortening sales and product cycles, and conducting layoffs.

“I’ve got a solution,” you say.

All eyes turn to you.

“Let’s increase employee engagement!”

What’s the most likely reaction from your CEO?

A. Silence;
B. Laughter;
C. Derision; or
D. Handing you your final paycheck?

And yet the evidence continues to mount that your suggestion, if taken seriously, may provide the best prospect of righting your company’s financial ship.

Make the Business Case for Employee Engagement

Gallup’s 2013 State of the American Workplace report has received a great deal of attention for its finding that only 30% of U.S. employees are engaged, i.e., enthusiastically committed to their employers’ goals. The rest go through the motions (“I put in my time and collect my pay”) or are actively disengaged (“I hate my boss … and this job … and this company!”)

What’s less often reported but perhaps even more important are studies Gallup has conducted comparing companies and business units with high engagement scores to ones with low engagement scores using business metrics. Differences between high and low engagement companies:

22% in profits

21% in productivity

10% in customer ratings

41% in quality (defects)

37% in absenteeism

48% in safety incidents

28% in shrinkage

25% in turnover (high turnover organizations)

65% in turnover (low turnover organizations)

Gallup also studied EPS (Earnings Per Share) in 49 publicly traded companies over 2008-2012. It found that low engagement companies had 2% lower EPS than competitors while EPS in high engagement companies was 147% higher than competitors.

Here you can find research other organizations have done showing the connection between employee engagement and key business metrics.

In future posts, I’ll share steps organizations have taken to increase employee engagement and improve business results.

The first step is to make the business case for developing and implementing an employee engagement program or initiative.

The ROI Institute asked Fortune 500 CEOs what they most wanted to know about the learning and development programs conducted at their companies. Of the 96 CEOs that responded, 92 said “business impact.” Yet despite that information being most desired, only 8% of the CEOs said they actually receive this information at their companies.

Fortunately, abundant evidence exists to make the business impact case. David Novak is the CEO of Yum! Brands, Inc., the world’s largest fast food restaurant company with over 40,000 restaurants in over 125 countries. Named “CEO of the Year” by Chief Executive magazine in 2012, and one of Harvard Business Review’s “100 Best-Performing CEOs in the World,” Novak sums it up best: “It’s the soft stuff that drives hard results.”

So connect the “soft stuff” to the “hard results,” develop an employment engagement plan and get going!

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{ 2 comments… read them below or add one }

Linda Galindo January 5, 2015 at 7:26 pm

I love the challenge. Increase profits by improving employee engagement. What CEO would not want to be involved in that brainstorming session? Does a CEO see him or herself as accountable for the engagement level of his or her employees? Unthinkable that a CEO would say “no”. And, who is best to hire? The person who says I am totally personally accountable for my level of engagement here whether the CEO acts accountable for engagement or not. That’s a win/win! Great article…so much potential to hire and retain the best when you understand the connection between profit and engagement.

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Paul Falcone July 31, 2014 at 8:18 pm

Outstanding article! Employee engagement encompasses so much — appreciation, recognition, and respect — and those are the keys to happy employees. As the saying goes, happy cows produce more milk, yet so many companies overlook this simple but critical aspect of their organizational leadership strategy. It starts by simply asking front-line leaders what’s important to their teams and by listening to those folks in the trenches–the ones who are closest to your customers and who serve as organizational ambassadors in all they do. I can’t wait for Jathan’s future blogs on this topic!

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