Employee Engagement: Ask Not What Your Employees Can Do For You

07 Oct Employee Engagement: Ask Not What Your Employees Can Do For You

What makes people passionate?

In the age of knowledge work, employees crave the feeling that comes from knowing that the work they are doing is making a contribution towards the company’s success. Let’s face it, most people don’t want just a paycheck. They want to be a part of something bigger than themselves. This is the essence of employee engagement. Engaged employees care about a company’s success and, when put in right environment, will do what it takes to drive that success. This lays a monumental opportunity at the feet of today’s business leaders, but with that opportunity comes a massive responsibility that is placed squarely on the shoulders of leaders. They must work relentlessly to show employees every day how they fit in and why their work matters. When they do, the results are extraordinary. A culture that fosters employee engagement, coupled with a sound business strategy, will inevitably result in improved profits, customer retention, better processes, and happier employees.

There are three types of employee engagement. First, intellectual engagement refers to the degree to which employees are invested in their work. Employees who are intellectually engaged will go the extra mile, rather than just exerting the minimum effort. They will constantly look for better ways to get things done. They are self-motivated. Disengaged employees think about other things while they are at work, while intellectually engaged employees think about work while they are doing other things. Not only that, but they are happy to expend their discretionary effort because they feel valued and know that their contributions matter.

Second, affective engagement refers to the extent to which employees are engaged with the company’s vision and values. Socially, people seek out those who share similar values and ideals. They choose to spend time with people who have a positive impact on their life. This is also true in their work lives. If employees believe in the company’s vision and share the company’s values, they are happier at work. They are truly present and feel good about what they are doing.

Third, social engagement is about being a part of a community. Socially engaged employees want to be a part of the team. They gladly share ideas without fear of losing credit or not being in the spotlight. To promote social engagement, leaders must provide an environment of trust and safety. Employees must be willing to be vulnerable in promoting ideas and making suggestions.

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The Cost of a Disengaged Workforce

While it is true that an engaged workforce can catapult a business to the next level, it is equally true that a disengaged workforce can break down a company and eat away at business results.

Workers are typically classified as either actively disengaged, not engaged, or fully engaged. Disengaged workers not only don’t care about the company’s success, their actions often detract from it. They are less productive, more likely to steal, have higher absenteeism, are responsible for lost business, and speak poorly of their company to others. Gallup reports that the 18% of the workforce that is actively disengaged place a hefty burden on the US Economy, estimating that the lost productivity of the disengaged costs US businesses $450 billion to $550 billion each year.

Further, McLean and Company reports that disengaged employees can cost a company $3,400 for every $10,000 in annual salary.

These costs take a toll on the financial results of organizations. The good news is that these costs are avoidable if leaders place their focus in the right areas.

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The Positive Impact of Employee Engagement on Business Results

Increased Revenue Growth

In 2009, Hay Group analyzed 400 companies across various industries and found that those in the top quartile in terms of employee engagement achieved revenue growth that was 2.5 times higher than their counterparts in the bottom quartile. They also found that organizations that couple employee enablement with employee engagement achieve 4.5 times greater revenue growth. Employee enablement, which essentially means giving the employees the tools that they need to succeed and allowing them to focus on getting the job done, comes from aligning the work that people do with the company’s business strategy.

Increased Earnings Per Share

In their State of the American Workforce Study – 2013, Gallup found that companies with 9.3 engaged employees for every actively disengaged employee had earnings per share that were 147% higher than their competition. This compared to companies with and average of 2.6 engaged employees for every actively disengaged employee where earnings per share were 2% lower than that of their competition.

Lower Labor Costs

Engagement is a critical factor in employee retention. A study by the Corporate Leadership Council found that employees who are actively engaged are 87% more likely to stay with a company than those who are actively disengaged. Employee turnover can have direct costs of 50% to 60% of an employee’s annual salary, but also has indirect costs that drive up the cost of turnover to 90% to 200% of the employee’s salary. Those indirect costs of replacing an employee include diminished productivity of other employees while a position is vacant, opportunity costs while training new employees, recruiting fees, and hiring and onboarding costs. For companies with lower turnover, the dollars not spent to replace employees who leave fall straight to the bottom line.

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Igniting Employee Passion

To build a culture that breeds employee engagement, you must focus on engagement long before employees show signs that their commitment is fading. Employee engagement starts with the recruitment process and continues all the way through an employee’s tenure with the company.

Employer Branding

A company’s brand is how it sells itself to potential employees. And, the first step towards selling yourself as a company is knowing who you are. Employers who spend the time to develop an employer brand strategy by taking an honest look at both who they are and who they want to be have a distinct edge in recruiting. These companies will attract better candidates who then have a far better chance of success in their journey as an employee.

Recruiting

Recruiting is like dating. You need to find the right person with similar values to fill the open spot. Hiring someone who isn’t a good fit will only cost heartache and money in the long run. Hiring managers shouldn’t be afraid to turn people away at the moment they sense that it is not a good fit. But, they must also balance this with a healthy attitude towards taking risks on people with a high potential for success.

Onboarding

During the onboarding process, newly hired candidates are given their first impression of the company from an employee’s perspective. Poorly planned or nonexistent onboarding programs can set the stage for employee disengagement. On the flip side, when a new employee steps into an environment where there is a clearly defined onboarding plan to launch them on a path to success, they are much more likely to believe in the company.

A key component of the onboarding program is communication of the company’s vision and strategy. Chris Zook of Bain estimated that “In the typical economy, only 40 percent of employees say they know the strategy and its priorities.” Communicating the strategy in the onboarding process is a vital step to ensure that everyone knows where the company wants to go and how it plans to get there.

Managing Employees

Employees with effective managers are exponentially more successful than those who and over or under managed. Often, organizations promote high performing employees into management roles without giving them proper training or expectations about their new positions. Employees are more affected, either positively or negatively, by their relationship with their manager than any other factor in their work life. Great managers do the following:

Provide support.  Managers should ask employees what they need in order to get the job done. One of a manager’s primary functions is to knock down roadblocks preventing employees from achieving their full potential.

Utilize skills of employees. According to the 2015 Deloitte Millennial survey, only 28% of employees feel that their current organization is making full use of their skills. Managers should solicit feedback from and listen to what employees have to say about how they can best help the organization achieve its goals.

Continuous feedback.  Towers Watson reports that 43% of high engaged employees receive feedback at least once a week compared to only 18% of employees with low engagement.  Employees today, particularly Millennials, are accustomed to having real time information at their fingertips. This is especially true when it comes to feedback about their performance. Employees expect to have regular conversations with their managers to exchange information about both what and how they are doing on the job.

Developing Employees

The traditional annual performance review is being abandoned in many organizations today. Performance reviews that judge an employee’s past performance at specified intervals are increasingly seen as more harmful than helpful for many reasons. They are often autocratic, have a halo effect, or only focus on the most recent performance of an employee.

Coaching programs offer a viable alternative to annual performance reviews. Effective coaching programs shift the responsibility for an employee’s development and growth back to the employee. They offer more self directed learning opportunities and change the participants’ roles from that of boss/worker to mentor/mentee, which is a welcome change for employees and managers alike.

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Employee Engagement Strategy

Building an employee engagement strategy is no small undertaking, but it can be started with a few simple steps.

Start with Managers. Trying to build a culture of engagement in an organization where managers aren’t engaged is futile. Gallup reports that “managers account for at least 70% of the variance in employee engagement scores across business units.”  First, engage managers so that they can cascade their passion throughout the rest of the organization.

Create a Baseline. Measure engagement as you begin your engagement efforts. Engagement can be measured through surveys, but also through monitoring behavior that indicates engagement. These behaviors include absenteeism trends, the extent to which employees volunteer for projects, how often employees make suggestions for improvements, and how aligned the suggestions are with the company’s goals.

Create, Implement, and Communicate Changes. Identify which objectives, or key areas where the company will focus their efforts to improve engagement. Define initiatives, which are projects or tasks, that will be undertaken to affect change. Communicate the objectives and initiatives up, down, and across the organization.

Monitor, Refine, and Never Stop. Gather and monitor relevant metrics to identify which initiatives are working and which initiatives need review. Continuously communicate pivots in the strategy to everyone.

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The Bottom Line

A 2012 workplace survey conducted by Harris Interactive on behalf of the American Psychology Association was designed to measure stress in the workplace. The study found that 93% of employees who feel valued by their employer state that they are motivated to do their very best for their employer.

There is no doubt that more employee engagement leads to better financial results. Employers who focus on employee engagement and build a culture where employees’ efforts are aligned with a stated strategy have a significant competitive advantages in today’s business environment.