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How Employee Engagement Boosts Your Bottom Line

10.31.2016
If your company’s beliefs attitudes and values—your culture—are inconsistent with your company’s mission and goals, you are throwing money down the drain. First, you are probably losing some of your best employees. According to a Columbia University Study, the difference between excellent and poor company culture can make the difference between 13.9% and 48.4% turnover. Even if you retain good employees, a poor culture still comes with an opportunity cost; negative culture and high stress correlate with an estimated 550 million workdays lost each year, according to the American Psychological Association.

If you aren’t worried about the downside of negative culture, you should be motivated by the upside of positive culture; higher levels of engagement are linked with less absenteeism, decreased accidents on the job, higher productivity, and increased profitability. According to a recent article in Inc, the Workplace Research Foundation reports that increasing employee investment engagements by 10% can result in a $2,400 increase in overall profit per employee. Queens School of Business’ Smith Magazine reported that employees’ level of engagement can affect company share price by up to 65%. Senior executives should keep in mind, as best-selling author on leadership and management Simon Sinek says, “Customers will never love a company until the employees love it first.”

A recent article in Harvard Business Review notes that organizations with low employee engagement experience significantly lower productivity, profitability, and job growth. 

Typically, we look at a company’s rise and fall of revenue to gauge its successes or failures. That, of course, begs the question, “Why?” One of the critical questions management should be asking is: “Do our employees like working here?”

In 1955, Fortune Magazine published its first list of the now famous Fortune 500, which ranks corporations in terms of total annual revenue, and is a useful tool for investors. However, when a person considers a career change or new position, there is another list from Fortune that bears far much more weight: The Fortune 100 Best Places to Work. Landing a coveted spot on this list is an integral step for companies seeking to increase employee quality and productivity.

When it comes to talent attraction, positive company culture is a strong competitor to more conventional reasons to join a company, perhaps even beating out higher compensation. This is especially true with Millennials. According to 2015 survey conducted by Fast Company, “Sixty percent of the class of 2015 said they would prefer to work at a company with a positive social atmosphere and earn a lower salary than make more money someplace where it's less fun to work.”

According to a Monster.com’s senior executive’s slideshow at the 2015 Social Recruiting Strategies Conference, 93% of employees would consider leaving their current jobs if offered a role with a company that had an excellent corporate reputation. Furthermore, 76% of Americans would not take a job with a company that had a bad reputation, even if they were unemployed.

Let’s take a closer look at the elements that create a positive corporate culture. 

The Perks

Perks can range from benefits, compensation incentives, all the way to ping pong tables. Some companies have an extremely creative response to the “Rise of Perks.”  
 
• AirBnB, a company that connects people who want to rent out their homes to travelers, gives out travel vouchers to its employees so that they can benefit from the company they work for.

• Twitter and Facebook both offer fully paid parental leave for all full-time employees (male or female).

•Salesforce scattered meditation spaces and “mindfulness zones” throughout its office, stating that “employees can't guide customers to success if they aren't first taking care of themselves.”

• Southwest Airlines grants employees the right to go above and beyond in order to achieve customer satisfaction, empowering them to do what is necessary to meet that vision.

• And Google lists among its many perks world-renown speakers, on-site massages, and free food for employees.
 
Leadership Development and Engagement

Umair Haque, author of Betterness: Economics for Humans and The New Capitalist Manifesto: Building a Disruptively Better Business, was ranked by Thinkers50 as one of the world's most influential management thinkers. He is quoted as saying “Each and every one of us is a leader. Some of us just don’t know it yet.” A company that is recognized as a great place to work trains and develops its employees. According to the same survey by Fast Company, 77% of college graduates entering the workforce expect their employer to provide training, yet only half report that they received training. Hiring managers, can you really blame Millennials for jumping from job to job with this kind of statistic?

Deloitte rarely, if ever, has to worry about its talent pipeline. In fact, in 2015, Deloitte received 1.9 million applications, an average of 151 applicants per position. Potential candidates know that through services like Deloitte University and extensive coaching, they will receive the training they need to succeed in a culture that values growth. Companies like Deloitte and (in some cases) Amazon even subsidize certain advanced degrees in exchange for an extended period of time working at the company. Clearly, these are companies that care about the development of its employees.

Employee development programs do not guarantee employee engagement. Organizational engagement could be the result of coaching, feedback, incentives, and communication to name a few. But the effects of employee engagement cannot be overstated. Gallup conducted a study from 2008-2012 which found that companies with a higher average of engaged employees outperformed their competitors the following year by approximately 150%.

The cost of disengagement is high: According to the Workplace Research Foundation, companies that fostered engagement in their workforce reported an average of 2.69 sick days per employee per year, versus weak engagement efforts at other companies, which yielded an average of 6.19 sick days. According to an article in Chief Executive, one disengaged employee can potentially cost a business over $8,000 per year.

Take Pride in Your Organization

Many of the companies on the list of the top companies to work– whether that’s the Workforce 100, Linkedin Top 40 Attractors, Glassdoor Best Places to Work, or Fortune 100 – are focused on creating a contagious energy, a set of values that everyone understands. To get in the club, you have to learn, and love, the rules of the game.

Take, for instance, Southwest Airlines. Southwest takes its employee’s behavior so seriously that when candidates fly out for an interview, gate and flight crew report back to hiring managers about the candidate’s attitude and conduct.

REI has another guiding principle: common interests. When you hire people who are passionate about the work that they do, the culture isn’t only a result of the foresight of senior leadership, but is propelled by its employees.

At Zappos, the initial cultural interview alone carries half of the weight of whether or not that candidate gets hired. Then Zappos truly makes a bold move: after new hires’ first week of training, employees are offered $2,000 to quit if they feel they aren’t in the right position.

What Can My Company Do?

You don’t have to support a Silicon Valley startup culture to have a thriving culture. Trusting and investing in your employees starts with how you treat them and how they see themselves as a valued asset in your company. As Richard Branson is quoted as saying, “Business has to be involving, it has to be fun, and it has to exercise your creative instincts.” 

How can you get your employees more involved and engaged? Do like Warby Parker does: always have an event that your employees can look forward to. Maybe create competitions with fun rewards to find improvements to sector challenges within your organization. As long as you get creative, these fixes don’t need to put a hole in the company wallet. You should never have to turn off the light at the end of the tunnel because of budgetary considerations. So be cultured, and aim for good culture.
 
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