Facts and Figures – How Employee Engagement Drives Business Outcomes

Employee engagement drives business outcomesWhen I was writing an article about Measuring Employee Engagement (EE), I was so focused on researching and comparing measurement methods that I completely forgot to mention why Employee Engagement is important to a company!

For me it was obvious, more engaged employees will create a better product and service and this will result in better outcomes for the company. Facts and numbers always look more persuasive, so let’s look at what could support the decision of a top manager to measure and improve Employee Engagement in his company.

Can we take these facts seriously?

Below, I’m writing about some facts and statistics about Employee Engagement. Although there is a lot of information published about EE, we have to be a little bit skeptical about it.

  • How could we really gather any statistics for something that we cannot even measure with accuracy?

I do believe that research organizations did their best to collect the data that will help top managers to make an informed decision. Due to the nature of the subject of research we might not trust specific numbers and proportions, but the idea is clear – higher employee engagement is correlated with higher business results.

Gallup’s “Engagement at Work”

Infographic: Facts and figures about how Employee_Engagement drives business outcomesGallup’s researches are always impressive by both the deepness of the questions and the number of correspondents. In “Engagement at Work” it is stated that “employee engagement strongly relates to key organizational outcomes in any economic climate.”

Gallup has found out that 25% of business units with the highest employee engagement (compared to the rest of the units with lower employee engagement), showed:

  • 22% higher profitability
  • 65% lower turnover (in low-turnover organizations)
  • 48% fewer safety incidents
  • 41% fewer quality incidents (defects)
  • 10% higher customer metrics
  • 21% higher productivity

It is not a surprise that the biggest impact is on turnover – 65%. We could draw a very rough conclusion from this:

  • If you have a high turnover rate (compared to your historical values or to industry values), this might be a sign of a low employee engagement.

Kenexa analyzes influence of EE on net income

Kenexa dedicates its business passion to research and consulting in engagement. On their website they claim to have more experience conducting engagement surveys than anyone.  It is good to see that there is a company focused on EE research and consulting.

In their white paper, “The Impact of Employee Engagement” they give some impressive figures:

  • Annual net income for the top 25% organizations on engagement is about 2 times more than for the bottom 25% organizations on engagement.

Their “The many contexts o employee engagement” is must-read for anyone who is looking for in-depth information on the topic.

Bain & Company – more than just employee engagement

In the “Management Tools & Trends 2013” conducted by Bain & Company it is found that employee engagement is one of the top priorities for global leaders today:
  • “Disengaged employees result in high employee turnover and in the need to invest in hiring, training, compensation and benefits.
  • “A loyal workforce does more than reduce the costs of churn; it also delivers more loyal customers”.

Remove administrative barriers 

Another research house, HayGroup, gives a positive correlation between employee engagement and boosting company revenue.

  • What I believe is more important is that they note that just having a high level of employee engagement is not enough, as employees need to have an opportunity to turn their engagement into actions and results (employees need to be “enabled”).

That is a good advice for any company that is going to analyze and improve EE: don’t just measure it, create conditions for employee engagement to grow and influence real actions by removing administrative barriers.

Improve operating margin

Research by Towers Watson highlights that the average operating margin of companies with a high level of employee engagement is three times higher than in companies with a low level of EE.

Analyzing engagement of the most known secret agent 007

In the end I’d like to share a funny and interesting engagement analysis done by Jeffrey A. Jolton, the Director of Consulting at Kenexa. He is analyzing drivers of James Bond’s engagement. Great example! I think any business consultant that sells the idea of employee engagement should have this example in his or her arsenal.

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Gamification

Gamification to tie employees actions to business performance – tech trends in 2013.  In an article by Antone Gonsalves one can find some interesting research about top tech trends that we can expect to see in 2013. I like the idea that comes under (6) – “Gamification”. It’s worth applying this concept in your business right now!

Why invest in motivation, employee performance measurement and control? There are people addicted to online games, why not use key principles of this addiction to make your business tasks even more addicted? Here are some ideas to start “serious” gamification of your business:

  • Replace boring reports with stylish dashboards, invest in design and layout of your reports;
  • Develop Android / iOs application to access certain parts of your business;
  • Get rid of plain KPIs, instead integrate them with info-graphic (example);

Conclusion

We could question the research methods, survey questions used, etc, but it is clear that Employee Engagement is something that we need to look at regularly and work on its improvement. To implement Employee Engagement in a business management system we need to align it with business objectives and actions, using a Balanced Scorecard as it was described in the previous article, or following some other methods.

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Strategy and KPIs Scorecard Expert | Speaker | CEO. Aleksey Savkin (LinkedIn, @bscdesigner) is helping companies to better formulate their strategies and make the process of strategy execution more tangible with KPIs. New book by Aleksey: 10 Step KPI System

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Posted in Engagement and Loyalty, Facts and figures

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