How many of your employees can answer these seemingly simple questions: What is my job? What components of my job are most relevant? How well am I doing? What part do I play in my company’s overall success?
Not sure? Then consider conducting an informal investigation of your employees. Talk with a few and ask those four simple questions. The responses may surprise you. Studies show that less than 20 percent of managers and employees can answer these questions with any measure of confidence.
“An ‘engaged’ employee is one who is fully involved in and enthusiastic about his or her work and will act in a way that furthers his or her organization’s interests,” says Mark Brown, a strategic partner to JRG Advisors, the management company for ChamberChoice. “Engaged employees will not only answer these questions with absolute confidence, but live it every day of their professional lives.”
A lack of employee engagement has an impact on your company’s bottom line. Regardless of company size or industry, the impact could be huge, adds Brown.
Smart Business spoke with Brown about employee engagement and what employers can do to improve it.
Why is employee engagement so important?
A recent study concluded that companies excelling at employee performance management post earnings that are 15 percent higher than companies where talent management is lacking. In addition, companies with engaged employees show 22 percent improvement in net profit margin, and spend 6 percent less on HR overall.
All employers spend large amounts of time and money analyzing their financials, since it is necessary in order to survive and prosper. Why isn’t the same level of attention given to analyzing and monitoring their most valuable asset of all — employee performance and focus? The small percentage of companies that do understand and have implemented formal employee engagement programs and tracking systems are able to reduce business costs and show hard dollars being contributed to the bottom line.
How does employee engagement boost a company’s bottom line?
Employee engagement boosts a company’s bottom line in three key ways:
- Increased employee productivity — A landmark study of Performance Management Effectiveness by Hewitt Associates demonstrated a 35 percent employee productivity benefit from utilizing employee performance management systems as a result of staff working on projects and tasks that they should be working on. With clearer visibility of goals and how they will be monitored, employees work harder and focus their efforts on appropriate tasks. A conservative 5 percent increase in overall productivity results in a weekly gain of two hours per employee.
- Reduction in absenteeism — According to Gallup (2008 and 2010), engaged employees average 37 percent less absenteeism. Employees with preset, time-sensitive objectives are less likely to take unscheduled time off, unless truly necessary. If each staff member understands they are part of a larger team and their performance is crucial to overall success, unnecessary/unscheduled time off will be reduced.
- Reduction in undesirable turnover — In the same study, engaged work groups show 25 percent less turnover in high turnover organizations, and 49 percent less turnover in low turnover organizations. Replacing those departed employees has a negative impact on a company’s financial resources. Engaged employees are loyal employees and loyal employees are less likely to leave. Continuous feedback through performance tools helps employees improve, succeed and feel valued.
Where can an employer begin?
There are four steps to engaging employees — planning, communication, execution and tracking progress to completion. Yogi Berra, one of the great philosophers of modern time (pretty good baseball coach as well), once said, ‘You’ve got to be very careful if you don’t know where you are going, because you might not get there.’ As bizarre as it sounds, Yogi was right with regard to employee performance management. If we do not plot a course for each of our employees that blends into the company’s ‘big picture,’ how will they, or the company, succeed?
Company goals and objectives need to be clear, well thought out and visible to every member of the organization. Once you define ‘the plan,’ it has to be clearly communicated to every team member regardless of position. The company’s president, the line worker, the person answering the phones and the one emptying the waste cans are all critical to the ‘big picture’ success. Everyone needs to hear it, understand it, embrace it and own it. Once the entire team understands the overall objectives as well as their individual roles and expectations, it is time to begin the performance management game.
Once the plan is in place and communicated, what’s the next step?
You can’t stop there. Once the plan is in action, progress and individual performance have to be constantly monitored and adjusted to stay on track to reach the objectives. The bottom line is this — when each team member is focused and understands that their successful execution is in conjunction with the same effort from all other team members, you will achieve the desired ‘big picture’ outcome.
Many will feel as though strategic planning and performance evaluation are not new or unique concepts. If this approach is not new or revolutionary then why are fewer than 13 percent of U.S. companies increasing their bottom line profits by engaging in employee performance? Is your company included in that 13 percent? If not, maybe it is time to walk a different path. As Yogi put it: ‘If you come to a fork in the road, take it.’
Mark Brown is a strategic partner to JRG Advisors, the management company for ChamberChoice. Reach him at (412) 456-7000 or email@example.com.