The Gallup Company® just released their annual report, The State of the American Workforce ~ 2013, and once again, employee engagement levels are woefully low. Sadly, this isn’t news. This has been consistently reported upon for at least ten years. Addressing employee engagement represents the most cost effective way a company can improve productivity and profitability. Here’s a few strategies that can make a difference in a few short months.
It’s an issue we’ve been discussing for years. I first began addressing this issue in 2008 when I began writing my book, and in fact, one of my earliest blogs on our leadership development site explored this very topic. While we speak with business leaders and HR executives every day, we hear them expressing their desire to improve on collaboration, innovation, productivity and performance. None of these objectives can emerge without first engaging the workforce, both cognitively and emotionally. Yet, for some reason, the disconnect remains. The recent Gallup study identifies only 30% of employees are engaged, 20% are actively disengaged (meaning their spreading discontent and working at cross purpose with their employers…actually destroying value), and 50% are disengaged, meaning they’re sleepwalking through their day. Our additional research identifies the fact that upwards of 50% of many firms’ payrolls, their single largest expense line, is delivering little to no return on investment.
When we consider that in today’s New Economy, value creation in business emerges through the efficient commercialization of intellectual property, we must understand that human beings are the new raw material of production. Now, if Henry Ford had been experiencing a scrap rate of 50% on steel, his raw material of the day, I think he would have found his way down to the factory floor and addressed it in relatively short order. Yet, the Gallup study reveals this endemic situation has been steady since 2001. Eleven years of leaving value lying fallow on industries’ floor.
How important is this issue for businesses, hospitals and our economy overall? Let’s take a look…
The Business Case for Employee Engagement ~
Actively disengaged employees cost the U.S. economy an estimated $450 billion to $550 billion in lost productivity every year.
For a small to medium size company, with 100 employees averaging (on the low end) $45,000 in salary and benefits, actively disengaged employees are costing the business owner $1,350,000 in wasted compensation and, conservatively, another $500,000 in destroyed productivity of fellow associates. Giving the sleepwalkers the benefit of the doubt, that they’re contributing something at least half of the time, are also costing the business owner $1,125,000 in wasted compensation. As a business owner, can you afford to keep tossing approximately $3 million a year out the window?
Looking at the comparisons between companies in the top quartile of reported engagement, versus those in the bottom quartile of engagement, higher engaged firms:
~ Score 10% higher in customer ratings
~ Are 22% more profitable
~ Have 65% lower turnover rates
~ Enjoy 37% lower absenteeism
~ Incur 48% fewer safety-related accidents
~ Experience 28% lower shrinkage
~ Create 41% fewer quality defects
~ Hospitals incur 41% fewer patient safety incidents
After twenty five years of leadership experience, in both corporate and entrepreneurial settings, and five years of research, application and validation of our philosophy and approach at Performance Transformation, LLC™, we know how to solve employee disengagement in five, relatively easy, and very cost affordable steps (you’ll actually lower your training and development expenses by following our suggestions while unleashing remarkable breakthroughs in productivity, creativity and innovation):
1.) Address the broken, traditional leadership development approach. Over the past 20 years, corporations and institutions have invested upwards of $1 trillion in leadership development programs. The results? Thanks to Gallup’s study, we’re staring them right in the face…and McKinsey & Company reported in July, 2011 only 1% of “C” level and “one-step down” executives scored excellent in eight key leadership competencies. Nearly 90% scored below average. Leadership development based in the theories of behavioral psychology simply don’t work. If you disagree, please show me the proof. We must migrate to an approach based in neuroscience to address the underlying causation of behaviors in the workplace. We must conduct leadership development around tangible business outcomes. Experiential learning and immediate application, framed by an educationally-based coaching process is essential. Demand a clear ROI to be reported on every developmental investment from your vendors.
2.) Help HR bring their focus and practices into the landscape of the 21st Century. While line management is playing to win, based upon their historical charter of responsibilities, HR has little choice but to play not to lose. Due to this, many HR practices have naturally evolved to be highly risk-averse at a time when boldness and leadership is most needed. As an example, traditional Diversity & Inclusion training (another $8 billion per year expense with no discernible ROI) is archaic and typically a vacuous exercise lacking context, strategic communication, or business application. D&I training needs to transform into Collaboration & Innovation learning. We’re already diverse (companies are very multi-cultural and multi-generational, but still far too homogenous at the senior levels), but real inclusion cannot emerge without engagement. Also, resist automating misaligned HR practices still rooted in the Industrial Age with Talent Management systems that are little more than CRM platforms turned inward. First, process map your procedures and competency models to see if they’re actually in alignment with the rapidly changing needs of the business. Then, and only then, migrate to systems that enable predictive analytics through the use of machine learning technology. It is through this application that insights into the future will emerge rather than simply accelerating and duplicating the broken processes of the past.
3.) Stop spending money on foolish Team Building workshops. Get down off the ropes courses, stop building toy boats in resort swimming pools, put the paint gun pistols down, and leave the trust falls to adolescent summer camps where they belong. Many of these so-called team building activities are exclusionary to older workers, workers that may have physical limitations, or workers that have differing cultural concerns. Want to cultivate collaborative behaviors? Focus on cultivating relationship-based skills (i.e. Emotional Intelligence) and only conduct Team Building within the direct and immediate context of the business. Invest in employee development using meaningful and science-based learning modalities. The recent discoveries from the neurosciences provides us with rich insights into what truly matters and provides us with a roadmap for sparking lasting, meaningful neurological change in perspectives and orientations of one’s self, of others, and how we can engage in positive communication and open collaboration.
4.) Create an organizational culture that embraces and celebrates intrinsic values (authentic relationships, purposefulness, personal and professional development, being a part of something larger than one’s self, service to others) over extrinsic values (money, power, prestige). Intrinsic values are core to human happiness while extrinsic values are anchored in culture and conditioning. We were all born to care for one another; it’s part of our primary survival mechanism. No other mammal on the planet is born more vulnerable or develops more slowly than human beings. Without empathy and compassion, our natural, inborn attributes that enabled us to evolve over the past 80,000 years, we never would have survived as a species. Leveraging intrinsic values engages the entire human continuum, transcending the superficial differences of cultural perspectives and generational orientations.
5.) Align and optimize transformational leadership, enlightened strategy and a highly engaging and inclusive organizational culture. This is the primary theme of my book, The Transformational Entrepreneur ~ Engaging The Mind, Heart & Spirit For Breakthrough Business Success, published in February, 2011. Companies that thrive follow this path. This isn’t conjecture, the book provides historical facts and was cited by the academic Journal of Economic Literature in March, 2012.
It truly is this straight forward. But if you want to thrive, and going forward, simply survive in business, the first step is up to you. You have to want to make the change, awaken and take a few steps forward, and stop simply talking about it.
© 2013, Terry Murray.