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Employee engagement and the bottom line

Posted by: on 12 April 2016 in HR, Innovation & Technology

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What’s happening to employee engagement at the moment?! For managers, the latest literature makes for some scary reading. The Gallup State of the Global Workplace study says that only 13% of employees are engaged at work (1). According to the Quantum Workplace 2015 employee engagement trends report, over a third of workers are either just ‘contributing’ (24.3%) or actually ‘disengaged’ (7.1%) (2). They don’t like their work or their workplace. And you can bet that they will leave as soon as they get the chance.

Employee engagement impacts business performance

This is crazy. We all know how important employee engagement is to overall business performance. But just in case, here are some reminders:

  • Wharton finance professor Alex Edmans in 2011 evaluated the stock performance of companies in Fortune magazine’s annual “Best Companies to Work For” list from 1984 to 2009 and found they outperformed peers by 2-3 percent per year (3).
  • Gallup says work teams rated in the top quartile in employee engagement outperformed bottom-quartile teams by 10% on customer ratings, 22% in profitability, and 21% in productivity (4).
  • US retail giant Best Buy identified a 0.1% increase in engagement among employees at a particular store amounted to more than $100,000 in annual income (5).
  • Companies with improved retention over past three years had significantly more engaged employees (70 percent), compared to organizations where retention declined (59%) (6).
  • Companies with engaged workforces can have up to 147% higher earnings per share than their competitors and 26% higher revenue per employee (7).

Need I go on? A company’s employees should be its best and most trusted advocates, not moaning about the company to anyone that will listen – and with social media a lot of people can hear. An engaged workforce can be the first line of defense for any company’s global reputation. But a disengaged bunch of employees can bring an employer brand crashing to the ground.

Can HR drive employee engagement?

So what’s driving engagement and disengagement and what can we do about it? Leon Vergnes, SVP/GM ADP International EMEA, supported the launch of a pan-European research8 – based on a strong sample of 11,257 working adults across eight key economies: France, Germany, Italy, the Netherlands, Poland, Spain, Switzerland and the UK – and found many employees worry about job security (48%), worsening career opportunities (37%) and a sense that the economy is slowing down (30%). This also indicates the areas where employers need to step up, to help engage the rest of their workforce.

“Use the latest technology and innovations to improve the work-life balance of your staff and your executive team”, suggests Leon. Those innovations include using mobile solutions and self-service tools, reducing administrative workloads, and allowing employees to feel like they contribute to the success of the organisation.

Employee engagement is all about tapping into the human side of business. After all, is there any other kind of business? It’s people who make great companies, not the other way around. Great management, great performance, and great results, all come from highly motivated – highly engaged – happy people. The good news is, we do have the levers to pull to make this happen.

For more HR insights on employee engagement read the latest ADP white paper “Engagement: the key driver of organizational performance”

1 Gallup (2013), State of the Global Workplace
2 Quantum Workplace (2015), Employee Engagement Trends Report
3 Edmans, A (2011), ‘Does the stock market fully value intangibles? Employee satisfaction and equity prices’, Journal of Financial Economics
4 Gallup (2013), ‘How Employee Engagement Drives Growth’
5 Davenport, TH et al (2010), ‘Competing on Talent Analytics’, Harvard Business Review, October
6 Quantum Workplace (2015), Employee Engagement Trends Report
7 Gallup (2013), ‘How Employee Engagement Drives Growth’
8 ADP, ‘The Workforce View in Europe 2015⁄16’, Oct 2015

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TAGS: employee engagement engaged workforce HCM Human resources innovation Workforce View workplace trends

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