Boost your profits through people. Here's how....

Engaged employees = Increased Productivity = Increased Profitability

Perhaps the greatest challenge for Chief Human Resources Officers, is to convince their executive teams……and especially their CEOs……that employee engagement scores really matter. Matter in a way that the front - line manager is the major driver of these scores and those leaders who cannot increase their scores over time are likely in the wrong chair.

Improving employee engagement is not simply about improving productivity — although organizations with a high level of engagement do report 22% higher productivity, according to a meta-analysis of 1.4 million employees conducted by the Gallup Organization.

Strong employee engagement promotes a variety of outcomes that are good for employees and customers.

Gallup has gathered employee survey data from more than 25 million respondents in 189 countries and in 69 languages.. In their State of the American Workplace report, Gallup tells us the following about engagement data and correlations to those same metrics most CEO checks each morning.

When comparing engagement levels for the top 25% of Gallup’s survey database to the bottom 25%, the more engaged groups showed the following improvements:

• 22% in profitability
• 21% in productivity
• 10% in customer ratings
• 41% in quality defects
• 48% in safety incidents
• 41% in patient safety incidents
• 37% in absenteeism
• 28% in shrinkage

I sequenced this data based on what I assume are the most important to CEO’s. But if the data only told us that profitability increased by 22%, shouldn’t that be sufficient evidence to convince?

Companies that experience high engagement also experience 147% higher earnings per share (EPS).

Specifically, organizations with an average of 9.3 engaged employees for every actively disengaged employee experienced a 147% higher EPS compared with their competition.

In contrast, those with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same period..

Gallup segments surveyed employees into “engaged”, “not engaged””, and “actively disengaged”, and summarizes with the following:

“Engaged employees are the ones who are the most likely to drive the innovation, growth, and revenue that their companies desperately need. These engaged workers build new products and services, generate new ideas, create new customers, and ultimately help spur the economy to create more good jobs.

Actively disengaged employees cost the US between $450 billion and $550 billion each year in lost productivity. They are more likely to steal from their companies, negatively influence their coworkers, miss workdays, and drive customers away.

Based on these definitions, is it any surprise, then, that clusters of engaged employees create more profitability than actively disengaged employees?

Gallup’s analysis suggests that the most successful organizations effectively engage their employees, leading to higher productivity and better financial outcomes. These organiza­tions appear to move the job market in the right direction.” There seems to be a significant link between engagement and job creation.

Employees, who are enthusiastic and contributing to moving the company forward, feel a stronger sense of purpose and are more likely to stay longer with an organization. They feel better and are able to contribute on a higher capacity.

So where do you begin if you’re committed to improving engagement — but feel intimidated by that laundry list of pitfalls? One way to simplify it is to focus on purpose. Communicate the purpose of the organization, and how employees’ individual purposes fit into that purpose. When employees “clearly know their role, have what they need to fulfill their role, and can see the connection between their role and the overall organizational purpose,”  that’s the recipe for creating greater levels of engagement.

The numbers don’t lie...employee engagement is a sound business strategy to actively implement.

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