What is so important about employee engagement?

Gallup says that disengagement costs U.S. businesses over $350 billion annually!

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How much is disengagement costing your business?

 

 

“Employee engagement is the emotional commitment an employee has to the organization and its goals that result in the use of discretionary effort.” Kevin Kruse’s definition. Kevin Kruse shares a list of 29 research studies that show a correlation between engagement and: Service—Sales—Quality—Safety—Retention—Sales—Profit—and Shareholder Returns

 

Below are just 11 of the results from these studies.

Companies with high employee engagement scores had twice the customer loyalty than companies with average employee engagement levels.

Fabick CAT improved “percent of industry net sales” by 300% and improved customer engagement scores by 8%. Gallup

A Fortune 100 manufacturing company reduced quality errors from 5,658 parts per million to 52 parts per million.

MolsonCoors found that engaged employees were five times less likely that non-engaged employees to have a safety incident and seven times less likely to have a lost-time safety incident.   SHRM

A Fortune 100 manufacturing company reduced turnover from 14.5% to 4.1%, while absenteeism dropped from 8% to 4.8%

Engaged employees in the UK take an average of 2.69 sick days per year; the disengaged take 6.19 days.   Gallup

Engaged employees are 87% less likely to leave the organization than the disengaged

In companies where 60 to 70 percent of employees were engaged, average total shareholder’s return (TSR) stood at 24.2 %: in companies with only 49 to 60 percent of their employees engaged, the TSR fell to 9.1%; companies with engagement below 25 percent suffered negative TSR. Hewitt Research Brief

A study of 23,910 business units compared top quartile and bottom quartile engagement scores and found that those in the top quartile averaged 12% higher profitability.   Gallup

Companies with high levels of employee engagement improved 19.2% in operating income while companies with low levels of employee engagement declined 32.7 % over the study period.   Towers Perrin

A study of 64 organizations revealed that organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement.   Kenexa

 

            Shall We Take Action?

OK…now what do we do to develop an engaged workforce? The data is impressive, but what does it take to have highly engaged employees? Here are seven ways that companies have used to increase employee engagement. (Make sure you read to the last section for a surprise!)

Self-directed Employees

Employees who are given the tools to become self-directed are positioned for the successes that are associated with employee engagement: happiness with their position and the organization, motivation to do good work, and confidence in their ability to help the company succeed.

Self-direction focuses on the behaviors that help employees meet not only organizational needs, but also a more personal need for success in all spheres of life. There are six principles of self-direction, which together help develop the kind of person who can successfully bridge the old and the new, contributing to the rapidly changing organizations of today and prepared to fulfill the requirements of tomorrow.

Maintain Productive Tension

Optimal performance occurs when people are between a state of boredom and anxiety, as both of those extremes are dysfunctional. Beyond perks, parties and picnics, the true catalyst to engagement and motivation results from managing the tension level of your employees. Too little tension and challenge can be just as counterproductive as too much tension. Doing more with less can be a stimulant and ignite a fire in the bellies of those who have been mentally snoozing.

Measure the Emotional Connection

Normally, survey questions focus on strategic goals and put an emphasis on performance and outcomes. But when we measure the level of engagement of our workforce, we must also dig into the hearts and minds of our employees. Ask questions that are designed to elicit emotional responses. Do employees love their work? Are they inspired? Do they believe they are adding value to their customers, fellow workers and the community at large? Collecting data and communicating the results is only half of the story. Now that we have the data, we must act on it. Encourage department heads and line managers to incorporate findings into their annual goals and objectives as well as talent development and career planning.

Performance-Based Compensation

Make a greater percentage of compensation performance-based pay, which must be re-earned eachyear. This approach increases a worker’s focus and ensures alignment throughout the organization. Think about holding base pay the same year-to-year and providing bonuses to all employees based on their performance against expected outcomes.

Provide Opportunities for Growth and Development

Ensure that managers and direct reports are having periodic conversations about career goals and the knowledge and skills that are necessary to be developed for advancement. Instead of formalized training programs, maximize informal learning, mentorships, job rotations, and other developmental experiences. This is an important part of creating a learning culture that stimulates personally meaningful engagement.

Earn Trust and Build Confidence

Engagement is not possible unless workers trust the leadership. Be fully transparent, strive to “over-communicate,” and ensure that everybody is in tune with your mission, strategic plan, goals and how each employee affects these elements of success.

Build High Performing Teams

High performing teams create enriched work environments that are also highly engaged. Team members can’t hide in the organization. Members help and support each other. Teams win together and loose together. Organize the entire company around teams.

 

All of these initiatives, and combinations of these noted above, can improve employee engagement at different levels of success. We could actually use 3, 4 or 5 of these interventions to increase engagement levels. Now here is the SURPRISECreate a Coaching Culture. Read on.

My Simpler Way to Creating a Highly Engaged Workforce

By creating a coaching culture we focus on the individual within a team or work group. This culture simplifies the activities mentioned above into one strategic initiative. Creating a coaching culture develops coaching skills at all levels of the organization, and then integrates coaching practices into the existing systems of the current operations. A fully implemented coaching culture integrates all of the aforementioned initiatives.

Enables employees to work with independence to achieve professional and personal goals

Encourages others to take initiative to act and innovate

Get to know co-workers in sincere, caring ways to know their needs and wants

Rewards people with acknowledging their achievements, developing them on a daily basis and using performance-based compensation and bonuses

Develops people to achieve their full potential weekly

Builds trust among the boss/subordinate relationship since corrective action, development and praise is immediate

Enables teams to work more effectively with the leader and teammates.

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Consider taking a giant leap to create a coaching culture. Increase employee engagement with one initiative rather that multiple methods. With the right support, modest budget and clear understanding at all level of what you are creating, you can develop a very productive work environment The coaching culture benefits the individual, work unit, company and the customers.

 

 

 

 

 

 

 

 

 

About Bud Roth

Bud is a seasoned executive with over 25 years experience working with Fortune 500 companies. Roth Consulting Group LLC focuses on team and executive coaching, organizational renewal, expatriate support, and improving leadership performance. Bud's recently published book, Be More Productive – Slow Down, suggests methods of reflection and actions that guide us to regain control of our busy life and reduce stress by slowing down.

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