The following article was published in the Building Blocks Magazine, Vol. 12, No.4, a publication of the Greater Toronto Apartment Association.

 

In many business articles today, a common topic that is often spoken of is how to keep employees engaged. This is an important question, particularly when considering how competitive business can be and how difficult it can be to find the right talent for your team. There are some strategies that can be adopted to drive employee engagement and which ones to prioritize at any given time will depend upon the opportunities that exist within a business at that time.

However, the question I’d like to explore is why employee engagement matters in the first place. Why should a business bother? Certainly, with all of the demands on a business’ limited resources, including an owner’s time, why focus on this? The answer is simple. Focusing on employee engagement pays off in the long run. Just as a business owner works on financial or marketing plans, incorporating employee engagement into business plans is a smart way to build overall organizational health.

Employee engagement is often defined as the extent to which employees will exert discretionary effort in their jobs.  For example, will they identify and implement improvements to processes? Will they actively connect with customers? Will they go the “extra mile” to solve a problem? Engaged employees demonstrate more dedication, commitment and energy and they are less likely to leave their employer for opportunities elsewhere.

One of the challenges in the past has been that the connection of engagement to financial performance was a difficult link to prove. Many business owners might intuitively agree that engaged employees are more productive and that’s good for the bottom line. However, if a business owner didn’t naturally gravitate to that point of view, they could miss a critical opportunity for improvement. Therefore, a fair question to ask is “What’s the return?” Fortunately, research into the impact of employee engagement has been conducted and the results have been consistent.

In 2012, Towers Watson, a human resource consulting firm, conducted a global study involving 32,000 employees. In their research, they found that among the employers surveyed, those who had high employee engagement enjoyed an operating margin which was close to 3 times higher than their counterparts with low engagement.  In addition, at these companies, the percentage of employees likely to leave within two years was 18%, significantly less than the 40% of employees who were likely to leave the companies who were identified as having low engagement.

Similar findings were shared in the research conducted by Gallup in 2012.  In research which included 49,928 businesses, employing 1.4 million employees, they confirmed the relationship between employee engagement and financial performance. Their results indicate that companies with high engagement have 3.9 times the EPS (earnings per share) growth rate compared with companies in the same industries that have lower engagement scores. While this is a measure used for publicly traded companies, it illustrates that the connection to financial metrics exists.

In addition, the Gallup research also concluded that employee engagement affects several organizational performance outcomes – absenteeism, turnover, shrinkage, safety incidents, defects, customer metrics, productivity and profitability. In all of these performance measures, the departments that had higher engagement scores outperformed consistently.

There are now numerous studies available that illustrate the connection between the levels of engagement in a business and performance in customer service, sales, quality, safety, retention, and ultimately profitability. Once a business owner is comfortable with the rationale for why it’s worth their time to care about this aspect of their business, the next place for the conversation to go is how engagement in their particular department or company can be increased and sustained. Taking the time to incorporate employee engagement into your business strategy is an influential step that will position a business for future success.