RSS feedsIn the current economic climate, many organisations are faced with a challenge. How do you manage or reduce costs without compromising an organisation’s ability to power its way out of an economic downturn?
Many organisations find there is little room for manoeuvre. Disruptive strategies, such as relocating manufacturing or production facilities, take time and energy to implement. Cutting headcounts may look good on the balance sheet but could damage growth when the economy improves and employment laws make this complex and costly.
There is a third way, a better way: maximising the productivity of your existing workforce by engaging employees. Engaged employees go the ‘extra mile’ and help improve financial and business performance. Businesses that do this are also likely to be one step ahead of their competitors when the economy improves.
Towers Perrin research reveals the true impact employee engagement can have on financial performance and shareholder value. Our 12-month study looked at the financial results of 50 companies across the globe.
We analysed the impact of employee engagement on three measures of financial
performance - operating income, income growth rate and earnings per-share.
Companies with a highly engaged workforce outperformed those with lower levels.
The most dramatic result was differences in the growth of operating incomes.
Companies with highly engaged employees saw operating incomes grow by an average
of 19.2% over one year. Those with poor levels saw operating incomes fall by an
average of 32.7%.
Engagement is about unlocking discretionary effort from your workforce. Engaged
employees are more likely to drive business success.
These employees are inspired to fully contribute to success. They help achieve goals, rise to challenges set by their leaders, deliver excellence to customers and respond positively to change. Disengaged employees hold back discretionary effort and make a limited contribution. They may be compliant, but they are also often apathetic and lack any real commitment.
Understanding what engages employees has never been more critical. The factors that drive engagement vary, however, some drivers of engagement hold true for the majority of finance professionals.
Company leadership and reputation have a powerful impact on employee engagement. Indeed, the number one driver of engagement for people in finance roles is senior management showing a sincere interest in employee wellbeing. An organisation’s reputation for financial stability and for resolving customer concerns quickly are also crucial.
Professionals want opportunities to develop and advance. Knowing what skills are needed to advance is the second most important driver of engagement for finance employees. They are also motivated by work that helps them broaden their skills and opportunities to develop capabilities.
Although pay helps attract new employees and retain existing ones, our study shows it isn’t a top driver of engagement. Other factors, such as development opportunities, have a far greater impact and are more likely to motivate employees to ‘go the extra mile’.
There are immense opportunities to improve engagement among finance professionals. Firstly, overall levels of engagement are low - only 16% of finance employees are fully engaged for example. Secondly, businesses aren’t always creating an environment that engages employees. Less than a third of employees think their senior managers are sincerely interested in their wellbeing, only 39% think that top performers get higher salary increases then average performers and 54% say they know what skills they need to advance.
There are many issues companies can address to improve employee engagement. Companies that action these successfully are likely to get the best out of their existing workforce, be in a better position to take full advantage of an economic upturn and gain a competitive edge.
Getting employees on board
• Define what engagement means for your business and ensure managers share consistent messages about why engagement is important.
• Measure engagement levels regularly to understand the factors that drive employee engagement in your own organisation and take steps to address any weaknesses.
• Make sure senior managers demonstrate a genuine interest in employee wellbeing and are visible, accessible, seek feedback and respond clearly and quickly.
• Ensure that employees are given opportunities to develop their skills and capabilities.
• Don’t underestimate the role of immediate supervisors to manage, motivate and develop their teams as well as to relay corporate messages and align their own aims and actions with the overall vision and goals of the organisation.
• Enable employees to have the amount of decision-making power they need to do their job well.
• Ensure employees understand the steps senior management are taking to ensure the organisation’s long-term success.
• Make sure that performance, development and pay and rewards structures are fair and transparent.
• Focus on effectively addressing customer and quality issues.
Nick Tatchell is a senior consultant at Towers Perrin
