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Employee engagement is no longer just a buzzword

Eric ShealyEric Shealy·

In theory, employee engagement makes perfect sense. Engaged employees are far more likely to put in the extra effort when dealing with customers, working on projects and adapting to the changes affecting all organizations today. However, until recently it’s been difficult to quantify exactly what affect engagement has on business success.

That’s starting to change.

Examining the impact on the bottom line

There are now numerous studies examining the link between engagement and its impact on a business’ bottom line. For instance, in their 2014 Engagement Report Aon Hewitt found:

  • Organizations in the top quartile for engagement (where more than 7 in 10 employees are engaged) saw a 4% increase in sales growth compared to an average company. By contrast, bottom quartile engagement companies were down -1%.
  • Operating margin was also affected; top quartile companies saw +2% increase, versus -3% for bottom quartile companies.
  • As for total shareholder return, top quartile companies saw a +4% increase while bottom quartile were down -8% compared to average companies.

With statistics like these, it’s no surprise that CLC found that 70% of business leaders now believe employee engagement is critical for their business.

It’s not just growth and shareholder returns that are affected, however, Engage for Success have demonstrated the link between engagement and reduced absenteeism (2.69 average sick days versus 6.19 for disengaged employees). In 2010, the CBI estimated the cost of absence at £17bn in the UK.

Engaged employees are also more likely to stay with an organization. The CLC suggested that engaged organizations can reduce staff turnover by 87%. Considering UK talent acquisition costs stood at £5,311 per hire in 2011, that’s significant savings.

Customer Service is also impacted. In their ‘Nailing the Evidence’ report, Engage for Success also point out that the top five scoring companies for employee engagement were the same as the top five ranked by customer satisfaction.

With statistics like these, it’s no surprise that CLC found that 70% of business leaders now believe employee engagement is critical for their business.

So where are we today?

Aon Hewitt’s 2014 report suggests global engagement increased by one percentage point to 61% last year. While Europe remained unchanged on 57%, North America (up 2% to 65%), Asia Pacific (up 3% to 61%) and Africa and the Middle East (up 8% to 61%) saw increases in engagement. Latin America dropped 4% to 70%.

What’s obvious is that engagement is a global challenge for organisations. As the global economy continues to slowly recover, companies will need to do more to engage their employees.

So what can be done?

Effective employee engagement strategies

Ensuring employees understand the organization’s goals and values (intellectual understanding), and how their own work contributes towards achieving those (emotional buy-in) is vital. Leadership IQ point out that only 34% of global employees claim to know their employer’s goals. Just 17% can articulate them clearly.

It’s an area where leaders and internal communications teams can have a major impact. Being able to frame a strategic narrative through simple story-telling techniques that everyone can (and wants to) understand is crucial.

However the growing focus on Employee Voice means that storytelling can’t just be one-way; employees want to help shape the narrative. It means that organizations are going to need to get much better at listening, and taking meaningful actions if attempts to increase engagement are going to stick. Particularly considering that only 46% of UK employees feel they’re heard.

Technology can and will play a major role. The introduction of social media, ‘social’ intranets and smarter email software can provide a platform for employees to find their voice and share ideas.

Building the capabilities of internal champions can also play a major role. Providing training and ways for them to connect can have a major impact on influencing other employees across the organization.

Moving beyond the annual survey

What’s obvious is sending out an annual survey is not enough. Employees want to play a part in shaping the companies future, and those organizations that embrace this are going to be far more likely to succeed. The statistics are now there to prove it.

As Mark Mitcheson, Talent and Organization Capability Lead at Pfizer points out: “We work hard to avoid falling into the trap that some other organisations make – assuming that doing a survey is doing engagement – it’s an important part of the process, but only part of it. There is a danger that you can spend too long looking at and analyzing the figures, rather than engaging with staff on how to improve.”

For more on Employee Engagement, download our Whitepaper on Driving Employee Engagement through Internal Communications.


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