Put on your CEO hat for a moment. Let’s suppose you had an operating margin of 10% and that about 20% of your employees are highly engaged (this is the norm for many larger companies). An expert tells you that if you lift the percent of highly engaged workers from where it is now up to 50% (not easily attained with today’s techniques) you’d expect to see an impact on your operating margin.
How would you estimate that impact? Highly engaged workers are likely to treat customers better, so that would reduce complaints and costs associated with those complaints. Highly engaged workers tend to deliver higher quality output, and that too should have a positive impact on gross margin. Highly engaged workers take less time off than other employees, and they tend to stick around. And highly engaged workers give you their discretionary effort.
A Towers Watson study of more than 50 global companies demonstrated a correlation between operating margin and employee engagement. They discovered that companies with high employee engagement had a 17.5% richer operating margin as compared to companies with low engagement. Gallup’s data also supports this.
As CEO you want to take advantage of this. But years of data shows that all the traditional approaches to engagement (having a communication plan; articulating a intrinsically good vision; establishing your core values and hiring, firing, promoting based on those values; building trust up, down and sideways; having a robust rewards and recognition program; doing career planning and training; using S.M.A.R.T. goals; having a well being program for employee health; and empowering employees) have not lifted the bar significantly when it comes to having highly engaged employees. Getting up to that 50% highly engaged level is rare. Something’s missing.
What’s missing is getting to the root cause of why employees start out highly engaged their first day on the job, and somehow lose that in the weeks and months that follow. The data tells us that the primary cause of employees becoming unengaged is management. First we need to dig to find out what is really going on to cause this bad outcome. And second, we have to fix the problem.
THNK has produced the breakthroughs, which answer these two challenges. We now know what causes this breakdown of employee engagement, and we know how to fix it. That makes getting 50% of your employees highly engaged much easier, in fact, it enables you to go all the way to getting 100% of your workers fully engaged. Even if Towers Watson was only half right, it is still a huge difference in margin, and at least worth having a conversation over. Join the discussion in the webinar. http://thnk2013apr.eventbrite.com