Growing Profitability for Your Business Through Employee Engagement
Sharon Berglund | Bergland HR Consulting
Aug 6, 2018
If you own or manage a business it is no secret that there is a war for talent. With McDonalds paying upwards of $15 per hour for entry-level high school students it is a major challenge to recruit high quality employees.
High employee engagement is the solution. While serving in my former role as the Chief Human Resources Officer for the YMCA of the Greater Twin Cities, engagement was my highest priority and I studied it extensively. This article will share some of my research with you and provide some solutions. As a non-profit, the Y paid less than many other organizations yet they were able to attract and retain talent and lower the turnover rate by having a robust employee engagement strategy. Word gets around through Glass Door and other organizations about your culture and reputation as an employer.
According to a study conducted by Corporate Executive Board, the companies with a highly engaged workforce had the following results:
- Employees will work 57% harder and are 9 times less likely to leave
- Average three-year revenue growth of 20.1% as compared to industry average of 8.9%
High engagement leads to increased productivity and more profit. Gallup research conducted a study in 2012, which examined about 1.4 million employees in 192 organizations across the globe, and found that companies with a highly engaged workforce are 22 percent more profitable. Gallup found that high engagement results in increased quality of life, wellness, higher productivity and decreased absence and health insurance costs
Additionally, in a recent study, conservatively the average cost of turnover for an entry-level worker is 16% of their annual salary and for a mid-level worker, 20%. That equates to $3,994 for a $12 per hour employee and $10,000 for a $50,000 per year employee.
So, the million dollar question is, how do I achieve a highly engaged workforce? The ideas below are based on my 30 years as a Human Resources executive and extensive research:
- Genuine two-way communications with your employees
- Annual employee engagement surveys
- I recommend the Gallup 12 questions and adding the NPS (net promoter score) question: “On a scale of 1-10 how likely are you to recommend this company as a good place to work to your close friends and family?” A score of 9-10 is a Promoter, 7-8 is neutral and 6 or below is a Detractor. Measure the results of your survey and set improvement goals for your leaders – many times employees leave the supervisor and not the company
- Quarterly Town Hall meetings with all employees to provide the opportunity for them to understand the company’s objectives, celebrate successes, ask questions and connect with colleagues
- Publicly acknowledge their accomplishments and privately speak with them about their mistakes.
- As an HR professional one of the most frequent complaints I received from employees was that their supervisor did not listen to their side of things. When an employee makes a mistake, always ask the employee his or her side of things before imposing any corrective action (this is also highly recommended from a legal standpoint). For example, if you heard from a customer that your employee was rude, give the employee the benefit of the doubt and use open-ended coaching questions. “Bob, I heard that you treated X with disrespect on X date, I’d like to understand from your perspective what happened and why? Listen first and coach the employee in how they can improve their customer service skills. If more complaints occur, listen first and depending on their response follow your disciplinary policy.
- Annual employee engagement surveys
- Have fun and celebrate
- Fitness competitions and challenges, i.e., which department can get the greatest number of employees doing 10,000 steps a day
- Celebrate birthdays and anniversaries – some organizations celebrate monthly or quarterly at the Town Hall meetings
- Contest for each department to make a fun video of what they do
- Chili tasting contest – have employees make their favorite recipes and award a prize for the best
- Be fair and transparent. Employees always know more than you think they do. If you start paying new hires more than your existing team, word will get around fast and existing employees will feel unfairly treated. In this situation you have two options depending on your financial situation:
- Raise your existing employee’s pay to match the new hire’s pay (the best solution)
- If you can’t afford to pay everyone at the new rate, candidly address the issue and communicate with your employees that you realize that this is an important issue but the company is not financially in a position to raise everyone’s pay at this time; however, it is a top priority and you will do your best to equalize pay incrementally over X timeframe
- It’s okay to pay your top performers more or provide one-time bonuses to recognize them but base it on objective performance measures
- Invest in your employees’ training and development. Employees will not stay long in this market if they are not being developed or do not see opportunities for upward mobility. Annual or every other year career discussions are a great signal to your employees that you care about their development.
- Promote work life balance and respect boundaries, i.e., keep after hours emails and calls to a minimum, don’t impose last minute overtime demands (if you must, tell them why it’s important), etc.
In summary, your company will reap many benefits by treating your employees as well as you treat your customers. Employees have basic emotional needs that are universal: feeling connected, respected, fairly treated and appreciated. As a business owner or leader employee engagement must be a top priority for your company to maximize your profitability and beat your competition.