This is the first part in a series, Employee Engagement 101, by guest author Burl Haigwood, a Business Performance Consultant with Evolve Performance Group. In this part, Burl talks about employee engagement and disengagement. Check out the second part on why engagement problems cause companies to fail, and the final part on employee engagement programs!
Employee Engagement 101: Employee Engagement vs. Disengagement
Could you carry on a 10-minute conversation about the definition, cost, benefits, and process of improving employee engagement? Would you even know where to start?
As a former small and medium-sized business (SMB) partner and manager for over twenty years I considered myself an employee “disengagement specialist.” I spent several hundred hours in staff meetings, board rooms, beach chairs, and barstools listening to people talk about their problems with leadership, managers, front-line workers, customers, and vice versa.
Until receiving my education about employee engagement at Evolve Performance Group two years ago, I thought the disengagement problem was simply a cost of doing business, and there was not much that could be done. Having no idea how much disengagement costs, and the negative ripple effects it has on a company, I also thought it must not be very important—that nobody cared.
I was wrong. The real answer was somewhere on the spectrum of lack of information, vendor misinformation, and the perception of “I know what that is and it does not pertain to me.”
Based on the two years of research I have under my belt, plus hundreds of hours conversing with friends, chief experience officers (CXOs) , middle managers, employees, and SMB owners, I can report that about 98% of these people share the lack of knowledge I once had.
Engagement is not a subject taught in college or business school, yet fortune 1000 companies have been using this strategy for decades to gain a competitive edge with their employees. I am determined to share this business strategy with those interested in learning new ways to improve the performance of their business.
One sector that could help the most are the Professional Employee Organizations (PEOs). PEOs are doing an amazing job of taking over the HR functions so SMB owners can get back to work doing what compelled them to start their business in the first place.
Who owns employee engagement? Is there a fit between the PEO and the SMB?
I am going to answer these and similar questions for you over a few articles. Here in part one, we are going to tackle the line between engagement and disengagement, and how to better visualize ways to drive employee engagement.
Engagement vs. Disengagement
Three things are very important to understand about engagement:
- There are real costs and direct impacts of employee disengagement on your business and customers.
- There are direct and indirect return on investment benefits from improving employee engagement.
- There is a big difference between the definition of “employee engagement” vs. an employee engagement program, which provides the “How To” improve employee engagement.
A Google search on “Employee Engagement” will give you about 11 million results in 0.50 seconds. Here is the definition of employee engagement, according to Wikipedia:
“Employee engagement is a property of the relationship between an organization and its employees. An “engaged employee” is defined as one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization’s reputation and interests.”
Most would agree and that’s very clear! In fact, when asked recently, Employers Resource’s experts had very similar answers themselves! What SMB owner or CXO wouldn’t want that for their company or employees?
Over thirty years of research, data, and real-world practice have proven that employee and client disengagement negatively affects an organization’s financial performance, client relationships, employee well-being and shareholder returns. Global surveys show 70% percent of the workforce is disengaged and only 35% of managers are engaged. Research also shows only 1 in 10 managers have the natural talent to manage—much less be expected to lead, mentor, develop and retain talent.
Disengagement is a profit drain with an economic loss to the U.S. economy of $450 billion each year. Unlike your taxes, there are no exemptions. If you are one that believes business is not personal, you might agree that it is personnel. Employee turnover is just one of the many key performance metrics that can be measured and improved.
Using the Society of Human Resources Management data, the true cost of employee turnover is about 60% of an employee’s annual salary. Considering it costs six times more to acquire a new customer than to retain one, if key employees leave and take key clients with them, the loss is even more substantial.
Research shows companies with a highly-engaged workforce experience tend to have:
- 37% less absenteeism.
- Between 25% and 65% lower staff turnover, depending on the industry.
- Up to 41% fewer quality issues.
- 48% fewer safety incidents.
- 28% less shrinkage.
- 10% higher customer ratings.
- 21% higher productivity.
- 22% higher profitability.
Once again, the costs of disengagement and benefits of engagement are very clear. What CXO or PEO wouldn’t want to give those numbers as part of their annual financial report?
Engagement Shopping Mall
Need the big picture? Let’s use the “Engagement Shopping Mall” analogy to give you some context and perspective. I hope this will help create a picture that illustrates different options it can take to improve employee engagement. I hate to be a spoiler, but there are not any one-stop-engagement-shops that will give you 100% of everything you might need in the order you need it, and there are no silver-bullet engagement stores.
On the first floor of the engagement mall you can find the traditional compensation, paid time off (PTO), professional development and insurance/benefits area. These items all help with recruiting, onboarding and the start of the path to engagement.
On the second floor, you will find a “more complex” area that includes adding free-engagement-perks like gym memberships, discounts, recognition & reward programs, snacks, more PTO and all the Red Bull you can drink.
The third floor is a more “exotic area” complete with new HR software systems, phone apps with engagement games, and Google like office amenities like volleyball and food courts, nap rooms, and buses full of teams going everywhere.
The higher the floor, the more vendor misinformation, time and money invested, and complex employee engagement becomes. It’s clear to me that many of these options are not for the faint of wallets SMBs or CFOs. They would not know where to start or stop, and thus, must pay for the cost of inaction.
I hope I was able to give you a more clear vision of what employee engagement and disengagement looks like and possible causes behind each. Watch for the next parts in this series in coming weeks, where we will take a deeper dive into topics about employee engagement.