Shredding the mother of all employee engagement surveys
By Victor Ruiz
When people are financially invested, they want a return. When people are emotionally invested, they want to contribute (Simon Sinek) (1)
What about both, Simon?
Anyway, a lot has been said and written about employee engagement. Indeed, it is one of the hottest topics in the current business world. Although there are some discussions focused on redefining the rules of employee engagement(2), a good start point could be the definition of the concept itself.
Among the many definitions that can be found after a quick search, there is one by the CEO of Employee Engagement Network, David Zinger, that particularly sums up the spirit of the concept: “Employee engagement is the art and science of engaging people in authentic and recognized connections to strategy, roles, performance, organization, community, relationship, customers, development, energy, wellbeing and happiness as we leverage, sustain, and transform our work connections into results(3).”
However, when it comes to measuring the impact that employee engagement has on business, ink dries up and quotes are not so easy to find. Fortunately, recent years have witnessed an increase in the number of studies in this field.
According to a report on this topic from Demand Metric Research Corp(4):
“Yet in many organizations, employee engagement is not a recognized, serious initiative that is viewed as having a measurable return.” This leads to an underestimation of engagement among managers.
To avoid this, how can we translate this philosophy into the managerial universe of statistics, figures and data?
Converting words into numbers
Gallup has been tracking the engagement levels of the U.S. working population since 2000. In 2013, they published the State of the American Workplace(5):
Employee Engagement Insights for U.S. Business Leaders, a comprehensive report which condensed the findings of the study they carried out between the years 2010 and 2012.
The study consisted of 12 key questions asked to nearly 1.4 million employees from almost 50.000 business/work units, statistically calculating the relationship between employee engagement and performance outcomes. They divided workers into three categories: ‘engaged,’ ‘not engaged’ and ‘actively disengaged.’ Engaged employees “work with passion and feel a profound connection to their company”. In the middle of the spectrum, ‘not engaged’ workers are just present, “they are putting time –but not energy or passion– into their work.” Completely opposite to engagement are the ‘actively disengaged’ workers, who “aren’t just unhappy at work; they are also busy acting out their unhappiness.”
The results that the analysis brought are alarming: only 30% of the workers are engaged and inspired in their jobs. This means that 70% of them are either ‘not engaged’ (52%) or ‘actively disengaged’ (18%).
As you can see, the vast majority of U.S. workers are not performing at their best, but what implications does these statistics have for the companies?
Disengagement is costing money
Gallup research found that disengagement is costing the U.S. companies an estimated $450 billion to $550 billion each year in lost productivity, since these ‘actively disengaged’ workers “are more likely to steal from their companies, negatively influence their coworkers, miss workdays, and drive customers away.”
Researchers discovered that companies with an engaged workforce have higher earnings per share (EPS) than the ones with lower engagement levels. In particular, the report states that “organizations with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher EPS compared with their competition in 2011-2012,” whereas “those companies with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during the same time period.”
In addition, the analysis established nine performance outcomes to study its connection with employee engagement: customer ratings, profitability, productivity, turnover (for high- and low-turnover organizations), safety incidents, shrinkage (theft), absenteeism, patient safety incidences and quality (defects).
Those firms with strong employee engagement proved to have interesting advantages compared to lower engaged companies. For instance, 10% more satisfactory customer ratings, while they experience 22% higher profitability and 21% higher productivity. What is more, they are way less likely to suffer from shrinkage –its rate is 28% lower.
The most engaged companies have lower rates in absenteeism (37%) and turnover (25% lower in high-turnover organizations, and 65% lower in low-turnover organizations).
Engagement also goes hand in hand with an improvement in safety and health conditions. For example, higher engaged companies report 48% fewer safety incidents, 41% fewer patient safety incidents, and 41% fewer quality incidents (defects).
Maybe Gallup provides the most important and exhaustive report connecting employee engagement and business performance, but it is definitely not the only one.
In 2012, Engage for Success(6) – a voluntary movement which aims at promoting employee engagement in the United Kingdom– published The Evidence , a paper with the purpose of setting out “the evidence for the effectiveness of employee engagement in raising performance and productivity across the UK economy.”
In order to accomplish this mission, they did an academic research, also using data compiled by research houses such as Towers Watson, Kenexa, Hay, Aon Hewitt and Gallup.
What they found out was that “organizations with engagement scores in the top 25% of those surveyed had twice the annual net income of those in the bottom 25%.” Moreover, “those high engagement organizations also returned a staggering seven times more to shareholders over a 5-year period than the lowest quartile.”
Another research was carried out by The Harvard Business Review Analytic Services when they published, The Impact of Employee Engagement(7) on Performance in 2013. The survey was conducted among 568 executives (mainly senior-level) from organizations of North America, Europe, Asia, Middle East and Africa and South/Central America.
The highlights of this survey showed that almost three-quarters of the respondents agreed that employee engagement is very important to achieve overall organizational success and that recognition given for high performers has a significant impact on employee engagement, whereas only a quarter of them said that employees in their organizations are highly engaged.
What is the reason for this shocking lack of correspondence? Considering the huge benefits for employers, employees and customers, it is nonsense that companies are still struggling to foster engagement.
No wonder that employee engagement offers an enormous competitive advantage that has a decisive impact on the profitability of organizations, but remember that “measurement without targeted action is useless” (Gallup).
There are no excuses to delay the implementation of actions aiming to concede engagement a central role among the strategies of companies. As the introduction of The Evidence states, “it is a must-do, not a nice-to-have.”
So, once and for all, let’s place employee engagement where it deserves to be. Shall we?
1 – Simon Sinek on Twitter: https://twitter.com/simonsinek/status/230815510164545536
2- ‘It’s Time to Redefine The Rules of Employee Engagement’ (article on Forbes): http://www.forbes.com/sites/chriscancialosi/2016/02/01/its-time-to-redefine-the-rules-of-employee-engagement/#4c6896715d62
3 – The Zinger Model: http://www.davidzinger.com/zinger-model/
4- Demand Metric’s ‘Employee Engagement Benchmark Report’: http://es.slideshare.net/demandmetric/employee-engagement-benchmark-report
5 – Gallup’s ‘State of the American Workplace: Employee Engagement Insights for U.S. Business Leaders’: http://employeeengagement.com/wp-content/uploads/2013/06/Gallup-2013-State-of-the-American-Workplace-Report.pdf
6 – Engage for Success’ ‘The Evidence’: http://engageforsuccess.org/wp-content/uploads/2015/09/The-Evidence.pdf
7 – ‘The Impact of Employee Engagement on Performance’ (Harvard Business Review): https://hbr.org/resources/pdfs/comm/achievers/hbr_achievers_report_sep13.pdf