The returns on engagement

by 25 Jun 2009

Talent management describes a wide range of activities, and not all positive. Most em ployers have already frozen or restrained hiring and many have downsized their workforce. While both are at times necessary, it is our con tention that the largest opportunity for corpo rate performance improvement lies in engaging the workforce to drive better customer engage ment, better revenue and higher profits. Em ployers that can improve employee engage ment during the downturn will reap immediate and long-term benefits.

The cost of employee disengagement is pro found. In the aggregate, employee disengage ment is estimated to cost the US economy as much as $US350 billion ($435 billion) dollars per year in lost productivity, accidents, theft and turnover. For organisations, the difference be tween an engaged and disengaged workforce can ultimately mean success or failure.

What’s the difference?

The most important difference between en gaged and disengaged workers is productivity. Engaged and disengaged workers of equal skills, knowledge and abilities do not contribute equally. Engaged workers are significantly more productive.

According to a 2008 study by Gallup, about 54 per cent of employees in the United States are not engaged and 17 per cent are disen gaged. Only 29 per cent are engaged. In Decem ber 2008, Towers Perrin’s Global Workforce Study of almost 100,000 employees in 20 coun tries found that only 22 per cent of the US work force is engaged, 66 per cent not engaged and 11 per cent disengaged.

Over the years, credible research based on millions of employees and hundreds of organisa tions has demonstrated the direct link between employee engagement, customer engagement, revenues and profit. Gallup, a leader in engage ment research says the following: “Research has shown that engaged employees are more pro ductive employees. The research also proves that engaged employees are more profitable, more customer-focused, safer, and more likely to withstand temptations to leave. Many have long suspected the connection between an em ployee’s level of engagement and the level and quality of his or her performance. Our research has laid the matter to rest.”

Why engagement counts

So why don’t more organisations do something about employee engagement – particularly now, when every dollar counts?

Employee engagement is driven by the fun damentals in organisations. For it to be high and stay high, an organisation needs a solid culture and value system that supports the ingredients necessary for engagement. Senior leaders have to drive the process, “walk the halls” to demon strate their commitment to employee engage ment. Managers must be selected and devel oped with employee (and customer) engagement in mind and they must be held ac countable, through a total rewards and perform ance management strategy that aligns their de sired behaviours, goals and outcomes with those of the organisation. Employees must also be made partners in the effort.

In most organisations, both the challenges of engagement and the remedies to improve it are daunting. But the payoff is enormous, and, beyond the bottom line, it is arguable that – in the near future, post-recession, beyond the baby-boomer retirements and after the num ber of companies investing in engagement reaches a tipping point – an engaged work force will be a matter of survival. After all, who would continue to drag themselves into work every day for a paycheque when they can have the paycheque and be highly engaged in their work at the same time?

By Allan Schweyer, executive director, The Human Capital Institute

This article is excerpted from a research report by the Human Capital Institute entitled The Return on Engagement. The paper is available at www.hci.org.