I plead guilty to enjoying a cold beer or two, and I’ve watched with amazement as the decade-long bull market in the craft beer industry shows no signs of abating.
Employee engagement — it’s often iterated, but rarely initiated. Review any organization that has earned a “best place to work” designation and you’ll discover a common thread: employees who are highly engaged.
“The intellectual argument in favor of improving employee engagement is irrefutable,” states a new report on the topic from Demand Metric Research Corp. (demandmetric.com), a marketing research and advisory firm. “Whatever definition one chooses, having more engaged employees should lead to better performance and a variety of improved business outcomes. Yet in many organizations, employee engagement is not a recognized, serious initiative that is viewed as having a measurable return.”
The Demand Metric 2013 Employee Engagement Survey polled companies of varying sizes across varied industries, reaching nearly 300 qualified respondents with responsibilities ranging from CEO and marketing director, to human resources, IT and finance/accounting. The survey sought to examine the effects of employee engagement on key performance indicators such as revenue generation and employee retention, productivity, morale and creativity. It also measured engagement’s impact on customer retention.
Analysis provided these key findings:
• Engagement follows leadership — 81 percent of organizations with leaders who emphasize employee engage-ment are getting it, with more than half of their workforce truly engaged.
• Characteristics of more engaged workers include higher levels of revenue, employee retention, productivity, morale and creativity
• 86 percent of organizations with higher levels of engagement agree that an engaged workforce is a key factor in creating loyal customers. Only 54 percent of organizations with lower levels of engagement agree with this effect on customer loyalty.
• Corporate culture ultimately determines the level of employee engagement, and higher levels of engagement occur where the culture is both employee- and customer-centric, not in organizations that are primarily customer-centric.
Measuring and managing engagement
A series of measurement options typically associated with employee engagement were presented to study participants to see not only which ones are in use, but which are relied on more heavily by organizations with higher levels of engagement.
Measurements are important because they let everyone in an organization know that what is being measured is important. “The caveat here is that the measurement must have meaning,” the report states. “If it is not a true indicator or if it lacks accountability, then the measurement attempts will do more harm than good.”
The study’s authors caution that no single metric can adequately indicate how engaged a workforce is, as most of them are indirect indicators. Measurements cited include regular employee surveys, productivity metrics, customer satisfaction scores and “hygiene metrics” such as retention rates, sick days and disciplinary actions.
Ultimately, the report states, a workforce of highly engaged employees is the product of company culture. Simply creating a culture that is primarily customer-centric is not the way to get the perceived benefits of such a culture. The critical missing ingredient in a total customer-centric culture is the workforce, which is the delivery mechanism for service to the customer.
“The formula for creating and nurturing employee engagement is simple, but the execution not always so easy,” the report states. “It requires the intentional wooing of employees to an emotional level of commitment. They must see a connection between the organization’s success and the fulfillment of their own, personal dreams and goals.”
The impact of engaged employees
What impact are highly engaged employees having on the organizations where they work? The study asked participants to consider four key performance indicators.
The analysis is presented in two groups: those above the 50% engagement level and those below. Predictably, organizations reporting higher levels of employee engagement are benefitting at higher levels in each of the impact categories, with differences of at least 15% in each one.
Each of these impact categories represents an impressive standalone benefit, but customer retention promises rewards that often go much deeper. There is a cost to acquire a customer, so it stands to reason that keeping customers as long as possible is at the very least common sense. However, the financial benefit of extending customer retention beyond the average relationship duration has exponential value.
Promoting employee engagement
Some level of nurturing is required to establish and grow an engaged workforce. Most organizations practice a number of initiatives to foster employee engagement.
At the top of the list of initiatives is the venerable performance review or appraisal. As a driver of engagement, the performance review is the most popular instrument, but the way it is played determines how effective it is.
Note the importance of training. It is a fundamental truth that when organizations attempt to change the culture and/or produce certain behaviors, it requires both the powerful expression of a vision and training. The training part is often neglected, yet it is the very thing that motivates and empowers employees to work more fully engaged.
To know if initiatives to nurture engagement are effective, the measurement must occur from the employee side of the equation, not the management side. While management should care deeply about the level of employee engagement, the scorekeeping has to occur from the employee side.
Source: Demand Metric Research Corp. Employee Engagement Benchmark Report