Why should CEOs and CFOs care about employee engagement?
Here’s why: Increased engagement drives bottom-line business results. Towers Watson over the years has done numerous studies showing the impact of increased engagement on operating margins, earnings per share and more.
Research such as this is a good validator and normalizer across organizations and industries, but what does that look like in practice? Kenexa ran a study at Caterpillar and found (quoting this infographic):
High-enagaged stores out-performed the other stores in almost every aspect.
- Met or exceeded quarterly financial targets 40 percent more often;
- Customer loyalty increased by 5.3 percent;
- 4.5 percent higher technician productivity
- 60 percent lower technician related re-work;
- Three times fewer accidents reported/”
How engagement really works
That’s a significant return to Caterpillar’s bottom line from stores where employees not only deliver better quality work product and services to customers, but where they want to do so above and beyond the call of duty.
Lead Change Group explains how this works quite well (quoting):
- “Engagement unlocks discretionary effort. It creates the conditions that encourage individuals to volunteer more of themselves, their time, their creativity, and their talents to the organization. Discretionary effort at its core is a choice people make to ‘go the extra mile,’ a choice based in large part on their level of engagement.
- “Then, discretionary effort plays out in innumerable ways. Greater attention to the needs of customers. Improved sales and service. Innovations and improvements. Productivity and efficiency. Bottom-line results.”
Focusing on employee engagement – more to the point, creating a culture in which employees choose to engage – is a strategic business decision. Engagement is not just a “warm fuzzy HR thing” or the latest HR fad.
Are your chief executive officers behind your employee engagement initiatives?
You can find more from Derek Irvine on his Recognize This! blog.