"Any company trying to compete … must figure out a way to engage the mind of every employee.” -- Jack Welch

“Employees first” is the de-facto motto for most HR departments. It’s a noble and well-intentioned motto -- after all, no one sets out to make employees miserable.

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In fact, employee attrition has a cost -- recruiting and training employees, only to watch them turn over, costs companies a ton of money -- 10% to 30% of employee salaries, to be precise. Statistics are staggering: 76% of full-time workers would leave their current workplace if the right opportunity came along, says this Careerbuilder.com report, while other studies say that an average company loses anywhere from 20% to 50% of its employee base yearly.

With rampant “talent wars,” especially in technology sectors, companies need to be on their game to attract and retain the best and the brightest.

If you think employee engagement is a nice-to-have that doesn't really concern you, think again. If your employees aren't engaged and aren't reaching their full potential, you are literally leaving money on the table. Let’s consider the ways:

Financial Performance

If you aren’t yet sold on the value of employee engagement, let’s bring out the big guns first -- it’s been proven to drive financial performance.

Studies show that they experience 18% higher productivity, 12% higher profitability and 51% lower turnover than companies with disengaged workforces. [*Source: Gallup Consulting "Employee Engagement, What's Your Engagement Ratio?" 2008]. A recent study by Kenexa found that the most engaged companies have five times higher total shareholder return over five years than the least. 

A study by Towers Perrin similarly linked employee engagement to 6% higher net-profit margins, and Aon Hewitt tied high levels of engagement (65% or greater) to outperforming the total stock market index and posting total shareholder returns 22% higher than average in 2010.

Customer Advocacy

Because a brand voice is a composite of how customers, employees and the rest of the world feels about your brand, employees catalyze through the rest of the ecosystem. Gallup research has shown that engaged employees drive customer engagement, and Constellation Research Group has also agreed that engaged customers are three times more likely to recommend or advocate a product or service to a friend. Reality is a little different for an average company, as employee pride in the company has decreased from 73% to 66%, and desire to recommend the company dropped from 49% to 41 percent.

Thought Leadership Fuels Trust

Buyers aren’t content with buying simple widgets anymore, they are looking for an expert partner. According to the Edelman trust barometer, the employee is the new influencer, and is in a position to be this trusted partner.

To fully maximize the exposure of our employees’ expertise to the rest of the world, we need to give them the tools to keep up to date and hone their skills, oftentimes by bringing them together in communities of practice internally and across company borders. If we allow our employees to constantly learn, and build personal brands on top of their expertise, our companies will stay on the cutting edge, and our customers will trust us and vote with their wallets.

High Performance Teams and Individuals

Every CEO has a vision, and every CEO’s challenge is to enable and inspire employees to carry out this vision. There are two parts to high performance: the desire to perform and the ability to do so.

  • Desire: An engaged employee makes a commitment to reaching the goals of the company and will use discretionary effort to push through roadblocks and to attract the right resources to get things done. While engaged workers use discretionary effort, the opposite is happening in the disengaged workforce. Most employees’ desire to go above and beyond slipped from 58% to 48%.
  • Ability: No matter how committed you are, if you don’t have the tools and the systems to help you thrive, you won’t get very far. Smart companies help employees communicate more effectively across the company by connecting people throughout an organization in a many-to-many dialogue and collective problem-solving -- often through the use of enterprise social technology. By polling our users, we found that 78% communicate more effectively through social technology.

Lower Turnover Saves Money

Turnover is expensive, as is low productivity. Constellation Research found that engaged workers are 37% more likely to stay with their employers. Engagement in internal social networks is a powerful tool to increase overall engagement and employee longevity. A large consulting company has linked higher engagement to lower turnover: a 2% turnover rate amongst frequent contributors, compared with a firm-wide average of 15 to 20 percent.

If employee engagement is so beneficial to both top and bottom line, how come Gallup tells us that 71% of all employees are disengaged? Why does the corporate intent of commitment to employees not seem to make a difference? Are companies not trying to engage employees as hard they’d like us to believe, or is employee engagement really this darn hard?

This is just a theory of mine, but I think most companies don’t really understand engagement. Current engagement systems are developed via a one-size-fits-all approach and are usually monetary. While money motivates us, it will only get us so far. Daniel Pink says that key sources of motivation are autonomy, mastery and purpose. Let’s unpack this.

Purpose: Employee engagement happens when a company successfully taps into individuals’ intrinsic motivations, channeling energy and passion to meet stimulating goals. Engagement happens when people feel motivated to commit their resources and creativity to solving problems that interest them and map to their self-value.

Autonomy has to do with actually being able to execute on goals. There’s nothing more soul-crushing and disengaging for an employee than wanting to contribute to the company vision and not being able to.

Employee engagement happens when he or she is able to innovate in whatever big or small way is available to them to do the job they need to do. Autonomy doesn’t mean that work happens in individual silos -- in fact, it’s much more effective when it happens collaboratively -- what this really means is that employees must be able to choose how, with whom and when to work.

Leaders must be willing to get out of the way of self-directed work, and shift their focus to helping teams and individuals direct this work to the right objectives.

Mastery: By doing things that are important to them, by partnering with others, employees reach mastery, which energizes and further enables excellence. The practice of working out loud helps codify tacit and explicit knowledge from across the organization so that others can benefit from and build upon this knowledge.

Enterprise social platforms play an important role in helping codify knowledge, providing access to expertise, as well as improving individuals’ knowledge through a constant feedback loop. Learning systems also help improve onboarding, learning and development. Centralized access to information and expertise enables new hires to ramp up faster (67% faster we found through a survey of our customers) and continue to develop their skills over time as they learn from peers.

This sounds great -- employees working towards big goals together, perfecting their skills and pushing through barriers. What could possibly go wrong?

The harsh reality is that most companies aren’t set up for employees to take initiative and to learn and co-create together. The legacy industrial-age organization favors standardization and predictability, in favor of pushing the envelope on continuous improvement.

Our CTO Adam Pisoni said something that resonated with me recently: “Companies need to organize around the value they create, not around the process of creating value.” John Hagel refers to it as replacing Push systems with Pull platforms -- ditching predictability and rigidity in favor of creating environments of action, where employees are free to come together to solve problems, innovate and push the company forward.

To stay ahead of disruption in an ever-changing world, Pisoni advises to "empower employees to innovate on how they provide value,” and enable them through a loosely coupled, yet highly aligned, organizational structure instead of erecting roadblocks. 

Image courtesy of Peshkova (Shutterstock)

Editor's Note: To read more of Maria's thoughts on employee engagement see The Employee is the New Customer