Author Notes

Excerpts

How Much Money Is Engagement Worth?

For most companies and their managers, engagement is a survey score and nothing more. We intuitively know higher scores are better, or at least we are told that is true. But how much better is a higher score?

Let's start with data from Gallup, which found astonishing differences between organizations that scored in the top 25 percent and the bottom 25 percent of employee engagement. The more engaged organizations showed these improvements:

✶ 22 percent in profitability

✶ 21 percent in productivity

✶ 10 percent in customer ratings

✶ 41 percent in quality defects

✶ 48 percent in safety incidents

✶ 41 percent in patient safety incidents

✶ 37 percent in absenteeism

✶ 28 percent in shrinkage

Additionally, turnover was lower by 65 percent in what Gallup classified as low-turnover organizations and by 25 percent in high-turnover organizations. And Gallup tells us these correlations are highly consistent across different organizations from diverse industries and regions of the world.

How does this translate to the bottom line? Organizations with an average of 9.3 engaged employees for each 1 actively disengaged employee--the lowest on Gallup's 3-point scale--experienced 147 percent higher earnings per share, or EPS, compared with their competition. In contrast, those with an average of 2.6 engaged employees for every 1 actively disengaged employee experienced 2 percent lower EPS compared to their competition during that same period.

Other highly reputable surveys report outcomes in the same direction. Hewitt studied engagement's impact on shareholder returns and found:

✶When 60 to 70 percent of employees were engaged, average total shareholder return was 24.2 percent.

✶ But when only 49 to 60 percent of employees were engaged, returns fell to 9.1 percent.

✶ And companies with 25 percent or fewer engaged employees reported negative shareholder returns.

Towers Perrin found a positive relationship between engagement and sales growth, lower cost of goods sold, customer focus, and reduced turnover.

Kenexa studied a broad range of organizations and found those in the top quartile for engagement achieved twice the annual net income of those in the bottom quartile. Similarly, WorkUSA and Watson Wyatt found companies with highly engaged employees earn 26 percent more revenue per employee. And there are dozens of similar studies that all conclude the same thing: that high employee engagement drives all other important business metrics.

A Northwestern University study brings engagement's power into clear focus on the local, department level: Researchers found that when salespeople give just 10 percent more effort, customers tend to spend 22.7 percent more. That's a lot of bucks.

So your mission is to raise your engagement survey score and more. Your colleagues might see lifting their scores as the end goal, as just another number they have to meet in the big picture of their job performance. Any recognition for their effort requires the unlikely scenario that their managers compare year-to-year scores with even a small degree of accountability. But you now know an increased score means much more than that--it is an indicator of spiked productivity in the department you manage. And you know that score represents a thumbs-up not only for your current performance, but also for your total career.

Excerpted from RAISE YOUR TEAM'S EMPLOYEE ENGAGEMENT SCORE: A Manager's Guide by Richard P. Finnegan. Copyright © 2018 Richard P. Finnegan. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission.

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