Why leaders can’t ignore employee engagement

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Most business leaders and owners are doing everything they can to reduce costs and increase profits. If you fall into this category, one factor you cannot afford to overlook is employee engagement. Why should you care about employee engagement? Because it directly impacts employee productivity and retention, as well as financial metrics like earnings per share.

What is employee engagement?

Employee engagement was first described by a university professor in 1993 as an employee’s involvement with, commitment to, and satisfaction with work. The term became popular later in the decade when Gallup combed through its database of more than 1 million employee and manager interviews to identify the elements most important in sustaining workplace excellence. Gallup’s findings, covered in its bestselling book, “First Break All the Rules,” were that a cluster of elements add up to a measurable state that significantly correlates with financial success. Gallup used the term employee engagement to describe this state.

A decade later, numerous experts have refined the definition of employee engagement to “a heightened emotional connection that an employee feels for his or her organization that influences him or her to exert greater discretionary effort to his or her work.”

Measuring employee engagement

The most common method for assessing engagement involves conducting surveys to determine an organization’s ratio of engaged to not engaged employees. The most popular instrument used to measure employee engagement is the Q12, a 12-item survey developed by Gallup. The Q12 questions are:

Do I know what is expected of me at work?

Do I have the materials and equipment I need to do my work right?

At work, do I have the opportunity to do what I do best every day?

In the last seven days, have I received recognition or praise for doing good work?

Does my supervisor, or someone at work, seem to care about me as a person?

Is there someone at work who encourages my development?

At work, do my opinions seem to count?

Does the mission/purpose of my company make me feel my job is important?

Are my coworkers committed to doing quality work?

Do I have friends at work?

In the last six months, has someone at work talked to me about my progress?

This past year, have I had opportunities at work to learn and grow?

The impact of employee engagement

What difference does it make if your employees have opportunities to learn and friends at work? Research by Gallup, Hewitt, and others shows that engaged employees are more productive, more customer-focused, safer and more likely to withstand temptations to leave. Even more noteworthy is that fact that organizations with engaged employees are more profitable.

Gallup’s latest research shows that in the average working population, 33 percent of workers are engaged, whereas in the world’s top performing organizations, 67 percent of workers are engaged. In other words, data consistently shows that engagement correlates directly with the bottom line.

In fact, Hewitt research found a 63 percent differential in total shareholder return for companies with high employee engagement versus those with low engagement. According to a 2010 report by Hewitt, “Organizations with high levels of engagement outperformed the total stock market index even in volatile economic conditions. During 2009, total shareholder return for these companies was 19 percent higher than the average total shareholder return. Conversely, companies with low engagement had a total shareholder return that was 44 percent lower than the average.”

How to influence employee engagement

If you haven’t been measuring employee engagement, there are many organizations that will help you put surveys in place. Even more importantly there are specific actions you can take to improve engagement. Gallup’s latest book “12: The Elements of Great Managing” provides success stories from call centers, hotels, hospitals and other companies that improved their engagement numbers, and as a result, their profits.

With research putting the price tag of employee disengagement at $10,000 per employee in annual profits, you can’t afford to ignore it.

Mack is a Woodland Park-based consultant, speaker and author specializing in leading and communicating change. She can be reached at wendy@wendymack.com.