We all intuitively know that employee engagement is incredibly important in a business. It's certainly a key part of the framework that's required for sustainable growth in your business.
But even with that knowledge, business investment in understanding and improving engagement often plays little more than a supporting role to investment in "hard" assets. For proof, consider recent research from the Dale Carnegie group showing:
90% of leaders believe an engagement strategy has a positive impact on business success.
But only 25% of leaders actually have an engagement strategy in place.
That's a really telling statistic.
The reasons for the gulf between intent and action vary from business to business. A common theme though, is that it can be a challenge to mount an economic case for investing in employee engagement initiatives.
As we'll see, there's ample evidence to suggest the economic benefits are well worth an investment in enhancing employee engagement. To maximise that benefit, it's important to assess the "engagement investment" on the same grounds as any other - understanding what it is you want to achieve - and why - is key.
What exactly is an engaged employee?
A good way to answer this question is to distinguish between employee satisfaction and employee engagement:
Satisfied employees are generally happy with the terms and conditions of employment.
They turn up, get the job done, go home....no more, no less. And they're usually not too much trouble to manage.
Satisfied employees look after the needs of clients adequately and are rarely the subject of client complaints.
Satisfied employees will be loyal but only until a better offer surfaces.
Engaged employees appreciate the extra mile you go in providing terms and conditions tailored to the individual.
They buy into your business purpose (which is a key attraction to them joining you) and are willing to contribute discretionary effort.
Engaged employees connect with clients and are frequently the subject of client compliments.
They're big contributors to sustainable growth in your business, are tremendously loyal and are strong advocates for your business.
The differences are obvious. A more engaged employee has a much stronger connection with your business. As such, they have the capacity to add enormous value to your business.
On the flip side, they can cost you dearly if that connection is broken.
Why is employee engagement so important to my business?
As we said at the outset, a highly engaged team is a critical part of the framework that supports sustainable business growth.
To support that statement, here's some findings from the 2020 Gallup Engagement at Work Survey. This particular piece of research found, among other things, that highly engaged employees, when compared to not-so-engaged employees (those in the bottom quartile of engagement scores):
help drive 10% stronger client loyalty (measured by client engagement);
contribute to 23% higher profitability;
are 18% more productive (measured by sales);
are up to 43% less likely to leave a business; and
show 81% lower rates of absenteeism.
There's many similar studies that support the intuitive conclusion that highly engaged employees are great for business. If you aspire to sustainable growth, employee engagement is simply too powerful a contributor to ignore.
We again need look no further than the Gallup Survey for confirmation of this. The report authors state:
"The quality of an organisations human resources is perhaps the leading indicator of its growth and sustainability."
This ought to be enough to convince even the hardest financial heads of the benefits of improving employee engagement. But still business leaders seem to put too little effort into creating and executing an employee engagement strategy.
Just do it.
Where do I start with an engagement strategy?
As is true with any other exercise in strategy, there's no point building a plan for the future without knowing your starting point. Which means you need to know current engagement levels across your business and, where necessary because of the size and structure of your business, across different functional areas.
1. Conduct an employee engagement survey
In our experience, this is where some leaders decide it's all too hard. But it's the starting point for a strong employee engagement strategy. To be honest, some service providers in this space don't necessarily help the cause, with complex survey solutions and not much in the way of post-survey support.
While it doesn't need to be complicated, it does require a certain level of commitment. If the exercise is to be successful, there's some steps to follow:
identify your objectives: of course the over-arching objective is to measure engagement. Think, though, about why you're embarking on this mission...what are you going to do with the information once you have it? Are there specific engagement-related issues you want to explore? What are you hearing from employees that might influence the design and coverage of your survey? These are just a few questions to consider and there may be more depending on your circumstances;
design the survey: decide how in depth you want the survey to be. It'll need to be comprehensive enough to deliver quality information but not so detailed that it becomes difficult/too time consuming for employees to deal with. Take care to ensure it doesn't come across as too intrusive. You may choose to outsource this part of the process but don't totally abrogate responsibility - be involved;
communicate with your employees about the survey: before you start, let people know what to expect. Communicate the reasons behind the survey and, most importantly, give them your commitment that you'll provide them with an overview of the results;
be clear on time frames: give people plenty of time to complete the survey and provide a reminder when time is almost up. People are busy so could easily overlook the opportunity to provide their feedback;
take care with timing: give some thought to the best time for employees to complete the survey without being influenced by particularly busy times in the business. They're usually (and understandably) pretty stressful so could skew your results. Think also about how other times in the year could colour the results;
provide the feedback you said you would and work with others to act on it: the worst thing you can do with an employee engagement survey is keep the results to yourself. Sounds crazy, we know...but there are businesses that have been known to do just this. Be open with people about their feedback because if you don't the "water cooler chat" will kick into action. Create teams to work on projects that arise from the results and monitor/report on progress. If there are suggestions you can't act on, be clear on that too, letting people know why.
There's some really sophisticated solutions in the engagement survey space these days. It's a bit like buying a car - the more money you're prepared to spend, the more bells and whistles you'll get. Also like buying a car, you don't need to spend a lot for something that will deliver the basics.
Think, too, about what help you might need post-survey for follow up, design and implementation of initiatives to improve engagement - some outsourced solutions may not provide much in that regard.
2. People analytics
We covered this emerging field in a recent Insights post. In short:
"...people analytics is about making smarter decisions about people. Who to recruit, who to promote, how to structure teams, what kind of development programs and remuneration strategies to put in place."
(Gerhard Diedericks, Owner, Matesis)
It can provide the basis for more continuous listening to employees (keeping surveys in the process) using data to help clarify the extent to which various factors influences motivation and engagement.
People analytics doesn't mean you don't need surveys....it can, though, add to the level of objectivity in the process of measuring and acting on employee engagement issues.
For more details, we suggest having a look at our earlier post.
How will we measure progress on employee engagement?
In a way, this should be a no-brainer. But as we said, it's a question that causes a degree of angst among business leaders.
At the risk of stating the obvious, when you make an investment in a physical business asset, you expect a return on that investment. When you buy or lease a new piece of equipment, you probably know with some degree of certainty the return to expect. It shouldn't really be any different for an investment in employee engagement initiatives.
All you need is the right benchmarks and an appreciation that usually, the benefits of investing in employee engagement initiatives are not immediate. The time it takes for engagement scores to move depend largely on the activity you're undertaking.
That said, here are some useful benchmarking ideas.
1. Client Loyalty (engagement)
There's little doubt that engaged employees contribute to client engagement - according to Gallup, you should expect an uplift of up to 10% if you can shift employees from a very low to very high engagement score. You realistically can't expect to achieve that uplift in one go, so set a target and timeframe that works for you.
You can turn your percentage uplift in client engagement into an estimated dollar return using existing client metrics.
This one's a little harder though by no means impossible.
Setting a profit uplift target that's attributable specifically to employee engagement initiatives is the easy bit - you can pretty much pick a number that's reasonable in the context of available research (again, for example, the Gallup data above).
Measuring the actual contribution to a profit increase that's attributable to a change in engagement is the harder part. That said, you'll have your business as usual uplift target in mind - the increase you'll achieve by basically doing nothing out of the ordinary. Let's say that's a 5% increase. And you'll know the contribution you're expecting from other investment activities. Let's say that's another 5%. In the absence of anything else going on, you can make the reasonable assumption that if you achieve a 12% increase in profitability, the additional 2% could be because of your investment in employee engagement (but being aware of the lag effect mentioned earlier).
The check mechanism for this is the ongoing engagement temperature checks you should be making - if your engagement scores are improving, that helps validates your assumption about your profit increase. If not, you need to think again.
We suggest a really simple approach here. All it really takes is dividing your total profit by the number of employees (averaged over the year) to get to a profit per employee figure. Calculate this every time you measure your engagement scores. You should see a positive correlation, otherwise, something's not working for you.
As you can see, there's no reason to overthink this one.
Also a simple one. The only question you need to answer is whether employee turnover moving as you would expect compared to engagement. That is, in an inverse relationship.
Again, simple....look for that inverse relationship between engagement and absenteeism. If it's not there, you're not treating the right symptoms, so more investigation my be needed.
As you can see, there's some measures that don't require too much effort and others you'll need to think about a little more deeply. What's common to all is the need to conduct regular engagement check-ins during the year to track improvement or deterioration in engagement scores across the business. If you don't commit to that, measuring your progress becomes next to impossible.
6. Annual Leave Balances
Have a close look at outstanding leave balances in your business. They're an excellent indicator of engagement levels and can highlight some clear red flags including burnout and overall wellness.
One more thing...
You'll find that individual engagement scores are spread over a wide range. There'll be those who are highly engaged, some who are at the other end of the spectrum, and a cohort that will be...let's say "undecided". It's tempting to look at this group and think it's ok because they don't identify as disengaged so can't be doing too much damage.
But it's estimated (Gallup again) that an employee who is not "actively engaged" costs the equivalent of 34% of their salary through absenteeism and lower productivity. Their complacency is a major hidden expense that adds to the argument in favour of actively investing in initiatives aimed at improving engagement across the board.
The very clear message is that whatever engagement initiatives you introduce, they need to be targeted across all employees...not just those who are disengaged.
What about your business? How engaged are your employees?
What can you learn from your most engaged employees?
How much do you really know about engagement levels?
Feel like you should be doing more?
GrowthCatalyst can help address these issues and deliver what money can't buy: time.
We invite you to contact us to arrange a conversation, face-to-face or virtual.
Alternatively, you can book a time for an initial discussion here.
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