Employee engagement drives the bottom line
According to the Gallup organization, only 35% of U.S. managers are engaged in their jobs. This shocking statistic therefore infers that 65% are not engaged, or worse, actively disengaged. One of the primary roles of managers is to motivate and engage their employees, however a disengaged manager who doesn’t care about their job or organization has a direct effect on the engagement, or lack there of, of their employees. This cascade effect, as Gallup refers to it, has shown that managers who work for engaged leaders are 39% more likely to be engaged themselves, and their employees are 59% more likely to be engaged. How can employees add value to a company and drive profitability if they are disengaged? Even worse, disengaged employees have higher absenteeism, higher turnover, and dangerous amounts of presenteeism — defined as attending work while sick — all of which can create a huge negative financial impact on an organization. Gallup estimates that this lack of management engagement can cost U.S. organizations up to $398 billion annually.
In his seminal article in the Harvard Business Review, “Putting the Service-Profit Chain to Work”, James Heskett and his colleagues support the argument that customers and front-line employees must be your top priorities if you want to increase market share and profitability. By citing cases from Xerox, Southwest Airlines and Sears, they point out that employee satisfaction, through loyalty, value creation, and customer satisfaction, ultimately drives profitability and growth. The basis for their argument is that internal organizational quality, how employees are treated, creates the employee satisfaction and loyalty that subsequently creates the increased profit margin. So how can an organization succeed with apathetic managers and employees? Ultimately, it can’t. Engaged managers and employees are vital to an organizations success.
Zynep Ton, a professor at the Sloan School of Management at MIT, thinks she has found a way to engage employees and increase productivity and the bottom line. Ton professes that companies that treat their employees well, including higher wages, educational opportunities and a sense of purpose and empowerment, can be just as profitable, if not more so, than those companies that pay minimum wage and have little if any benefits or perks. One example of this “human centered operations strategy” as Ton calls it, is QuikTrip, an $11 billion company with 722 convenience stores in the mid-west. At QuikTrip, managers and employees enjoy significantly higher wages than their competitors, but more importantly they are highly trained, can solve problems autonomously, and make merchandising decisions on their own. These factors raise employee satisfaction and increase engagement. The higher cost for employees results in significantly lower costs elsewhere in the organization.
As is for most organizational initiates, engagement is driven from the top. Leaders must create a culture that makes their employees feel valued, respected, and to most importantly trust them and the organization. This must start with an internal strategic communications plan that is part of an overall strategy to increase employee engagement. Gallup points out that the three most important things leaders can do to drive engagement are; clearly and consistently communicate where the organization has been and where its going; make learning and development a priority; and emphasize managers strengths – hire based on natural talents. To engage employees, as previously discussed, you must have engaged managers that can inspire and motivate their employees. Good management, similar to good leadership, is a critical success factor in organizational success.
The bottom line to increasing the bottom line is therefore creating a culture of engagement through outstanding human resource practices and the creation of a work environment that motivates and inspires managers and employees.
