Tuesday, November 26, 2013

Why should we take employee engagement seriously?

There are lots of surveys showing that employees are not engaged at work. It varies a bit by country, but as a rough guide only a third of employees are fully engaged.  So what?

The consultancy Blessing White regularly surveys 30,000 people across the world and measures levels of engagement from fully engaged to fully disengaged. The figures for Europe show that 31% are engaged and a further 24% are almost engaged.  But that means that just under half the workforce are not even ‘almost engaged’.

Should we care? Does some theoretical measure of engagement actually matter to employers? Are we aiming to keep people happy or do we have a business to run? Why should leaders worry about this when there are more pressing issues to manage?

To answer these questions it’s worth taking a moment to look at the relationship between engagement and business results.

One example is is employee turnover. 81% of engaged employees definitely intend to stay with their employer for the next 12 months compared with 23% of the disengaged. Plus a mere 2% of the engaged are definitely planning to leave compared with 32% of the disengaged.  So an employer with a demotivated workforce is likely to have an employee turnover 16 times that of a fully satisfied one.

Measurement of the cost of employee turnover is an inexact science. Because it’s not as visible as a direct expense it tends to be underrated. And it varies a lot between jobs, depending on the ease of replacement. But if you make a very conservative assumption that people take three months to get up the full productivity, during which time they are at an average of 80% of output we can work out some figures.

In this case the engaged organisation loses 20% of productivity for a quarter of the year on 2% of the workforce; a hit of 0.1% on output. However, the same calculation for the disengaged workforce at 32% turnover gives a 1.6% hit. That doesn’t look like much until you consider that a labour-intensive business with a 5% profit margin is potentially putting a third of the profit at risk just through high turnover.

But the real problem with disengaged employees is not the ones that leave, it’s the ones that stay. They are not just going to be below average performers for a few moths they are likely to be permanently low performers. And they are also quite likely to bring others down as well. It’s interesting to see from the Blessing White data that 34% of engaged employees stay in the job because they like the work they do, compared with 16% of the disengaged.  But in contrast, 11% of the disengaged stay because they are ‘comfortable’ compared with just 7% of the engaged.
So however you measure it, engagement is likely to result in higher performance for the business. It’s not just some arbitrary concept invented by HR; it’s a real business measure. It should be right at the top of the priority list for senior management. But because it’s not as tangible as the financial results it rarely is.

If leaders actually cost the impact of low engagement they will take it much more seriously. They will reduce the need to replace talent and get more out of the people who stay. It will directly improve output, value for money and profits. So they should all remember– A COMPANY IS ONLY AS GOOD AS THE PEOPLE IT KEEPS.


Robert Jacquet said...

Thank you, Peter, for sharing this survey and for your comments which highlight the need for a real business oriented attitude. Employees’ engagement, in terms of business results, has to become a top management priority, I fully agree with you.

In the same way, stakeholders’ engagement already is essential for a successful project manager.

In my opinion, there are two basic options which can be retained to measure engagement; a passive option which measure employees’ turnover rate coupled with company attractiveness e. g. through spontaneous applications; and a more active which puts in place an iterative communication plan favouring an esprit de corps mindset, enhancing engagement and mitigating the ‘comfort zone’.

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