What do powerful brands and successful companies have in common? They are investing in employee engagement as one of their top strategic initiatives.
“It’s a process, not an event,” says Beth Thomas, executive vice president and managing director of Consulting Services at Sequent. “It’s part of their everyday culture.”
She says many companies are missing the boat thinking employee engagement is just another HR “pie in the sky” effort. However, it is being statistically tied to increased key performance indicators.
“HR leaders are banging the employee engagement drum and business leaders are not listening. Employee engagement should be the top goal of all companies, and it is for some of the most successful in the world.”
Smart Business spoke with Thomas about the importance of employee engagement.
Why is employee engagement important?
For years we have been saying employees are a company’s competitive advantage. Treat them right or someone else will. Some $300 billion is lost in productivity each year from disengaged employees. One retail company revealed that for every one-tenth of a point it boosted employee engagement, its stores saw a $100,000 increase in operating income annually, not to mention better customer loyalty. Staggering numbers, encouraging advice, and yet 90 percent of business leaders have no employee engagement strategy or are not actively engaged in it.
Still, many business leaders have no clue what employee engagement is, nor do they see it as something they need to be bothered with. However, experts and companies that are proving them wrong disagree.
Top companies and brands say that employee engagement is the top initiative that helps create their brand, drive success and recruit and retain top talent. If their customers see that their employees are happy, it creates a loyalty to the brand and increases sales. Culture can make or break a business.
What should be included in a company’s engagement effort?
For most executives, success is defined by profit or revenue levels, brand equity or percent of market share. To truly understand the key drivers for business success, however, it’s critical to examine and measure the impetus: employees. They are the ones who make the products and serve customers. They are the face of a company’s brand.
There is one thing all employee engagement efforts have in common: They understand what employees are thinking. That happens not just by using an employee engagement survey, but by creating a sustainable culture in which having a voice matters, where employees feel they can express what they are thinking not just once every year, but every day.
Managers should be trained on how to engage employees every day. Some companies use social media to connect more closely with employees — for instance, through online ‘campfires’.
What can companies expect from improved employee engagement?
Studies measuring the impact of employee engagement have found better results in nine performance outcomes:
- Customer ratings.
- Profitability.
- Productivity.
- Turnover.
- Safety incidents.
- Shrinkage.
- Absenteeism.
- Patient safety incidents.
- Quality (defects).
Employee engagement is not an HR initiative. It is a business initiative. Companies that understand this are the ones that are most successful.
Marketing is also tied to culture and brand because the customer experience is fueled by the brand promise, which is closely aligned to the employee culture.
How to improve employee engagement varies by industry, location, company size, how much money and resources an organization has to invest into developing its culture, and its philosophy around employee engagement. It’s not one size fits all, but if better performance, higher productivity, industry recognized brand and increased profits are important, wouldn’t you want to dedicate time, resources and focus on it?
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