Winning by placing the smart bet on people

A couple of years ago, I had lunch in New York with the publisher of one of my industry’s leading trade publications. In between conversations about client campaigns and new business wins, the publisher shared a compelling correlation between high employee engagement and growth in top-line revenue and bottom-line profit at the nation’s public relations firms.

This was no coincidence. Side-by-side comparisons of two independent online surveys sponsored by the trade publication — one measuring employee engagement and the other measuring financial performance at these same firms — revealed the same firms sitting atop each of the two surveys.

Looking beyond my industry, the Gallup organization regularly sponsors its “State of the American Workplace” report, which looks at employee engagement and its financial impact on organizations in different industries, geographic locations and size of workforce. Gallup’s recent study is consistent with the correlation between employee engagement and financial performance.

Of those employers ranking in Gallup’s top quartile for employee engagement, organizations achieved an average:

■ 41 percent reduction in absenteeism

■ 17 percent higher productivity

■ 24 percent lower turnover in low-turnover industries (below 40 percent annually)

■ 59 percent lower turnover in high-turnover industries (above 40 percent annually)

■ 10 percent increase in customer ratings

■ 20 percent increase in sales

■ 21 percent greater profitability

Gallup says that one-third of employees nationally are highly engaged. On the flip side, two-thirds are not. Troubling, to say the least.

The factors behind engagement

In defining employee engagement, Gallup makes clear that it’s more than mission, vision and values hanging in a lobby and on conference room walls. Instead, it’s the meta-analysis of four key business metrics: productivity, employee retention, customer satisfaction and profitability.

In its years of reviewing survey findings, Gallup identifies five factors for achieving highly effective employee engagement.

1. It starts at the top with the CEO.

2. Broader leadership is aligned to prioritize engagement.

3. Communicate openly and consistently.

4. It’s important to have the right metrics of success.

5. Hire and develop great managers.

Follow our example

Take a peek under the tent at my firm, Fahlgren Mortine, and you’ll uncover nearly identical results compared with the top 25 percent of Gallup respondents. In the past year, our metrics of success include staff attrition at half the industry average; 8.7/10 client satisfaction rating, an improvement from 8.6; double the industry average for client tenure; an increase of 73 percent in new business revenue year over year; an increase of 17.3 percent in total number of clients; and a record high revenue in our 57-year history.

If you haven’t already, conduct your own meta-analysis by correlating productivity, employee retention, customer ratings and profitability. If you’re not happy with the results, it may be time to invest in your human capital.

 

Neil Mortine is the president and CEO of Fahlgren Mortine, one of the largest Ohio-based communications and creative services agencies, with 11 offices in the U.S. and affiliate relationships overseas. Neil recently was recognized as the nation’s Outstanding PR Professional of the Year and Fahlgren Mortine was named Global Agency of the Year by leading industry trade publications.