Finally, something new on employee engagement. As the pandemic is teaching us, employee engagement is an even stronger predictor of performance during recessions than in nonrecession times. Companies at the 99th percentile of engagement have nearly five times the success rate of those in the bottom percentile during economic downturns.
What's not new is the crazy search for employee engagement. According to one report, American companies spend more than $100 billion every year in pursuit of it. But the percentage of engaged employees (hovering around 33 percent) hasn't increased by more than a couple of points in a decade. And we're paying the price. Companies lose up to $605 billion each year to disengagement.
Why don't we have more to show for all our efforts?
It could have something to do with how we talk about employee engagement. We know engaged employees improve outcomes like profits and sales, reduce costly turnover, and drive repeat and referral business. In other words, engagement improves the economics of the business. But instead of talking about the economics, we give employees perks and praise, hoping this somehow translates into motivation and money.
Part of the reason some owners and managers don't talk about the economics is that they assume employees don't understand them. And often they don't. People follow orders without understanding how their actions affect the bottom line. They're informed of a crisis only after it's happened. Owners and managers send the message to employees time and again: You sit at the kiddie table.
You might be tempted to offset this parent-child dynamic with bonuses, barbecues, or expensive employee wellness programs. But good company culture doesn't make employees act like partners. Treating them like partners does. And partnership starts with trust.
When we worked with Hillenmeyer Landscape Services, a 200-person family-owned business in Lexington, Kentucky, leaders were looking to increase job margin dollars to stay afloat. They needed all the help they could get, but they were uncertain how to bring employees into the plan. Would shop workers and landscapers even understand what job margin dollars were, let alone how they could improve them?
Management invited all employees to participate--first, by asking them to write down one thing they could do to boost job margin dollars in the next 30 to 60 days. The ideas, written on small index cards, began to pile up. One offered a new way to ensure jobs started on time. Others suggested how to better maintain equipment, or how to return excess products, like shrubs, to inventory. Leadership listened. Employees were excited to see their firsthand knowledge of the business put to use, and job margin dollars started to rise.
In the past, employees dreaded jobs with long unscheduled hours, like snow removal. But when the workers learned how good the margin was on snow services, they practically rushed to the plows. One driver passed a church parking lot on his way home and saw that it was covered in drifts. He pulled over and knocked on the rectory door. When it opened, he said, "Pastor, I'm with Hillenmeyer Landscape. We've already taken care of all our customers for the day. I'd be happy to plow your parking lot for nothing if you'd be willing to speak with our business office about scheduling future services."
Hillenmeyer found another loyal customer that day, and the driver was recognized by the company for his initiative--all because the economics of the business had come alive.
Engaging your employees in the business starts by sharing critical financial numbers that people can understand and work toward, like job margin dollars. Of course, it helps to tie incentive compensation to the improvement of this number, so everyone has a stake in the outcome. But real engagement comes from helping employees think about the business the way you do.
If your company happens to be one of the many that is spending a ton of money on conventional engagement measures, we've got a suggestion: Stop. Invest instead in your employees. Engage them in the business of making money.