Albu On Strategy

Why Invest in Employee Engagement?

If you are a frequent reader of AlbuonStrategy, you know the topic of employee engagement is important to us because of the critical role it plays in successful strategy execution. As strategists, we look for trends and research to support our hypotheses. The ongoing research by Gallup on the State of The American Workplace helps to confirm the value of employee engagement.

  • First, high employee engagement leads to greater overall performance. Gallup reports that when comparing employee engagement in companies in the top 25% with those in the bottom 25%, the top tier companies significantly outperform in key areas of: turnover, safety, quality, customer experience, productivity, and sales. This adds up to the top tier companies realizing 21% higher profitability compared to their bottom tier counterparts.
  • Second, companies with engaged employees enjoy a competitive advantage. Gallup reports that most of the U.S. workforce (51%) are not engaged. These non-engaged employees are indifferent to their job, and represent a risk to the organization’s health. Investing in a business strategy to engage your employees will produce business outcomes that are difficult for competitors to replicate.

Gallup recently published a third State of The American Workplace report. Here are a few key highlights from the report that may be helpful for companies considering an employee engagement strategy.

Only 33% of U.S. employees are engaged, which is alarming. The good news is that this is the highest percentage in the 15 years Gallup has tracked employee engagement. Albeit still a low score, Gallup identified three areas of improvement over the 2012-2016 period that contributed to the latest 33% score:

  1. More emphasis by managers spending time one-on-one with their direct reports, which provides an opportunity for employees to be recognized and heard, and to get feedback about what they need to develop in their role.
  2. Companies are investing in programs and technology to support career development, recognition and feedback. Gallup surveys have shown that increased spending on non-cash rewards, training, and internal social media platforms improve employee engagement.
  3. More cross-functional work– 84% of engaged employees are “matrixed” per Gallup, which provides learning and growth opportunities because they are exposed to new people and functional areas of the business.

Leaders need to understand that employee engagement is a continuous process. Organizations fall short by only periodically addressing engagement, often triggered by the results of “the survey.” To be successful organizations need a strategy that drives improved performance, and it is the ongoing tactical elements of the strategy that leads to improved business outcomes.

In an increasingly complex and changing business environment, organizations cannot afford to have non-engaged employees. Are you measuring employee engagement at your company?  Are you investing enough time and resources engaging your employees? Let us know how you are engaging your employees.

Posted in Leadership, Newsletter.