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Employee Engagement


 

The Power of Employee Engagement

Part 1 of 2

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By now, many of us have heard the buzz on employee engagement – so much so that the buzzword is loosing its value. Talent management and employee engagement, just like other buzzwords and business fads, really do have value – if we understand their true meaning and don’t let them get diluted with misconceptions.

Engagement goes beyond the good employee or the good company citizen. Employee engagement is the extent to which employees put discretionary effort into their work, in the form of extra time, energy and brainpower.

Think about it… When companies are often trying to improve performance with fewer people and decreasing resources due to cutbacks and financial pressures, discretionary effort is the grail managers are seeking. Employees who freely give that extra effort are of tremendous value.

General studies show that a 5% increase in employee engagement results in a 2.5% increase in growth. Growth measured by company value, which in the public sector is measured by stock value.

The relationship between employee engagement, high performance, and company growth is compelling to say the least. Unfortunately, national surveys of company managers show an overall dissatisfaction with employee engagement levels and measures of employee engagement show a very distressing picture...

The Three Levels of Employee Engagement

Highly Engaged employees are builders. They want to know the desired expectations for their role so they can meet and exceed them. They're naturally curious about their company and their place in it. They perform at consistently high levels. They want to use their talents and strengths at work every day. They work with passion, and they have a visceral connection to their company. And they drive innovation and move their organization forward.

Moderately Engaged to Not Engaged employees are the largest group. Those that put their time in and take a wait-and-see attitude towards their job, co-workers, and employer. They aren’t a negative force at work but neither are they a positive force.

Actively Disengaged employees are those fundamentally disconnected from their jobs. The actively disengaged counter the productivity of engaged and highly engaged employees. They miss an average of 3.5 days more than other employees and cost the U.S. economy between $292 billion and $355 billion per year.

For most businesses, only 14% of their employees are highly engaged and upwards of 24% are actively disengaged.

(I’ve seen these numbers vary – from a low “highly engaged” number of 5% to a high of 17%, and a low “actively disengaged” number of 19%.)

The Cost of Low Employee Engagement

So what is the cost? Let’s assume...

  • A business has a payroll of ten million dollars.
  • Highly engaged employees are 90% productive (probably higher).
  • Moderately engaged and not engaged employees average out at 70% productivity.
  • Actively disengaged employees are 50% productive (probably lower).

And we’ll adjust the breakdown to more favorable numbers (and easier math)…

  • 15% are highly engaged employees and are 90% productive.

                                                                  .15 * .90 * 100 = 13.5% productivity.

  • 65% are moderately engaged employees and are 70% productive.

                                                                  .65 * .70 * 100 = 45.5% productivity.

  • 20% are actively disengaged employees and are 50% productive.

                                                                  .20 * .50 * 100 = 10.0% productivity.

Overall productivity level = 13.5% + 45.5% + 10.0% = 69%.
$10,000,000 annual payroll * 69% productivity = $6,900,000 ROI.
                  or
$3,100,000 lost on unrealized productivity.

However, it gets worse. The 19% to 24% of actively disengaged employees not only give a comparatively low level of effort, they undermine the efforts of others thus decreasing the effective productivity of the entire staff. Furthermore, if these employees are in customer-facing roles, they can cost the company current and new business.

The really scary part is that national averages show the number of actively disengaged employees going up - from a low of 16% in the mid 90’s to a high of up to 24% today.

What Can We Do To Increase Engagement?

The most critical element to employee engagement is the front-line manager.

Managers need to discover and develop employees' talents if they want to keep them engaged.

Employees must have a strong relationship with, and clear communication from, their manager.

Managers have to challenge employees within their areas of talent, and then help them gain the skills and knowledge they need to build their talents into strengths.

Managers should help employees develop ownership of their goals, targets, and milestones, so employees can enhance their contributions to the company and increase their impact.


In this article I discussed what employee engagement is, the cost and consequences of low levels of engagement, and touched on what managers need to do. Next time, we’ll delve into more detail about what managers and leaders must do to measure and increase engagement levels and thus productivity and company growth.

 

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