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Jack Welch, the legendary CEO of General Electric who turned GE around says, “There are only three measurements that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow…. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it”.
Employee engagement is the term routinely heard in consistently high-performing, well-managed organization. What is employee engagement? and why is it so important?
Employees engagement is defined in many ways. My own concoction is that ‘it is a state in which an employee is physically, mentally, and emotionally engaged with the organization’. Physical engagement is about giving the highest level of energy, mental engagement is about using the greatest amount of intellect, and emotional engagement is about relating to company values, culture, and goals, and feeling good about it.
Employee engagement is related to many benefits according to many surveys.
- Higher than Expected Results – the organizations with high level of employee engagement perform better than their competitors and beat their own expectations. Business2Community reports that high employee engagement organizations outperform those with low employee engagement by 202%.
- Higher Profitability – Smarp, which is now Haiilo, reports from Gallup that companies with a high level of engagement are more profitable by a factor of 21%. Workplace Research reports that employee engagement programs can increase profits by $2400 per year.
- Low Turnover – Fewer employees opt to leave the organization. The turnover according to Gallup decreases by 15% or more.
- Great Teamwork – Engaged employees make great teams, they support one another, take care of one another, and ensure that everyone performs.
- Good Culture – Engaged employees believe in core values of the organization, promote these values, and live the values through their work. The level of goodwill and the number of conflicts drops sharply.
- Customer Loyalty – Engaged employee do not stop at gaining customer satisfaction, they go a step ahead and try to win customer loyalty. Aberdeen reports that companies with engaged employees see 233% greater customer loyalty and a 26% increase in revenue.
Let us have a quick look at some statistics where employee engagement is low or almost absent.
- The industries with the most disengaged employees are hospitality, government, and light manufacturing – Modern Survey Report
- Disengaged employees cost organizations between $450 and $550 billion annually in the US – The Engagement Institute Report
- 56% of non-engaged, and 73% of actively disengaged employees are looking for jobs or are open to new opportunities – Gallup Report
- 53% of workers in the US are non-engaged – Gallup Report
- Nearly 66% are all employees are disengaged – Gallup Report
- Globally, only 15% employees are engaged in their work, 85% are non-engaged or actively disengaged. UK has a low-level engagement of 8%, Western Europe statistics reveal that only 10% of employees are reportedly engaged – Smarp Report
- All US employers spend a total of $1.1 billion yearly looking for replacement workers in their various businesses – Zenfits report
The disengagement issues may be summarized as follows.
- Low Performance – non-engaged or actively disengaged employees always perform at less than their peak. Their performance graphs also show wide variations which may be related to their daily moods. If on a particular day, they are feeling good for any reason, they may perform extraordinarily well; on a bad day their performance nosedives.
- Poor Customer Engagement – The customers have become more discerning and demanding. Disengaged employees do not offer customer service which would lead to customer engagement and loyalty.
- Complaint Culture – Complaints are rife in disengaged culture. From lighting to seating, to workload, to colleagues, to management, to policies; any and all things become complaint points. The work is done but gingerly, and much time is wasted on useless talks about complaints.
- Spreading Discontent – A few actively disengaged employees can affect the morale and passion of many colleagues. They create toxicity around them which spreads to others insidiously.
- Conflicts – Any small event may become a flashpoint leading to big conflict. Once a conflict develops, the disengaged employees hide behind it to prolong it rather than defusing the tension.
- High Turnover – More people keep leaving causing serious financial cost to the organization. Worldwide consulting company – Deloitte – estimates that the cost to replace senior managers is 1.5 to 2 times their annual salary. SHRM report that replacing leavers in general cost 50 – 60% of their annual salary. This alone is a big burden on the company.
- Increased Corporate Losses – Losses are mainly contributed by loss of customers, interrupted work towards achievement of business objectives, below par work by disengaged employees, and replacement costs for constantly filling vacancies.
The summary is that the presence of employee engagement accords so many tangible benefits, while absence of employee engagement causes loss of above benefits and incurs more losses in various forms. Therefore, it becomes a situation of double jeopardy.
To be Continued……
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