Chris Ostoich is founder and CMO at BlackbookHR, a software company on a mission to create more engaged and connected workplaces and communities.
I'm often surprised by how many smart, largely successful business leaders don't understand employee engagement. For high-growth companies in particular, employee engagement can't be a side project or an afterthought. It has to be an integral element of the overall business strategy.
To help you understand why, and show you how to make it that way, I've outlined five things you need to know about employee engagement.
1. Employee engagement affects your bottom line.
Employee engagement isn't just a touchy-feely, feel-good thing companies do when they're feeling generous or have extra time on their hands. It's a serious profitability issue and is essential to driving bottom-line revenue.
As our CEO Chris Powell reported earlier this year, researchers from the Wharton School of Business at the University of Pennsylvania and Warwick Business School in the U.K. found that, "employee satisfaction is associated with positive abnormal returns in countries with high labor market flexibility, such as the U.S. and U.K."
Organizations with a high ratio of engaged employees to actively disengaged employees in 2010-2011 experienced 147 percent higher earnings per share compared with their competition in 2011-2012, according to Gallup's 2013 State of the U.S. Workplace report. The report also found that these organizations had higher customer ratings by 10 percent, 22 percent higher profitability, and 21 percent better productivity.
Forty to 80 percent of customer satisfaction is affected by employee attitudes, according to the National Business Research Institute. And the Corporate Leadership Board has found highly engaged employees are 87 percent less likely to leave their employers.
2. Employee engagement is a tool.
Employee engagement isn't your goal--it's the tool that helps your goal. It's analogous to a thermostat where you make adjustments to achieve the goal of reaching a comfortable temperature. In a company, you adjust employee engagement to achieve the business outcomes you're aiming for.
Employee engagement means nothing if it isn't tied to a business outcome. You must choose what you're trying to move in your organization--reducing turnover, making more sales, increasing customer satisfaction, etc.--and work toward that goal through employee engagement.
3. Employee engagement requires a strategy.
Like everything you do in business, working on employee engagement requires a strategy. Before you jump in and start trying to make improvements, you need to step back and create a process and a plan for managing your efforts intentionally.
Doing so takes three steps:
- Design a strategy. Decide what you want to accomplish, who will be involved in the process, how you'll evaluate engagement and when you'll evaluate it.
- Communicate what you're doing and why.
- Execute, share and stick to the plan. You won't help engagement--and will likely hurt it--if you don't follow through on the strategy you've set and communicated with your employees. They need to see you care about the process and the outcomes, and that you're following through.
4. Employee engagement is a local issue.
At BlackbookHR, we work with organizations that range from 25 to 250,000 employees and have found that size has no effect on employee engagement. The ones that really get engagement right are the ones that give ownership of the process to people at the local level--managers, departments and business unit leaders.
When a huge organization tries to employ one-size-fits-all engagement tactics across the board to address a few low scores on an employee survey, nothing happens. When companies give local-level leaders a tool to monitor engagement and the authority to tackle problems under their purview, those organizations see tremendously positive results.
5. Real-time information is powerful.
In every other part of businesses today, we have access to real-time information abut how the organization is functioning--stock prices, budgets, sales, progress toward financial goals, web traffic, social media engagement, clicks, conversions, data security and more. We also need real-time information about employee engagement.
Employee engagement is constantly in flux. There's no time to hire consultants and wait nine months or more for them to gather data, analyze it and present their findings and recommendations. By the time they do that, everything has changed and you've still made no progress toward achieving the business objectives you wanted to pursue through employee engagement.
What are you waiting for?