In a recent study by PeopleMetrics, Engagement Strategies’ preferred research vendor, they discovered that turnover in the highest engaged departments of a financial services firm they surveyed was at 6% versus 10% in the departments with the lowest engagement. According to PeopleMetrics’ data, the cost of turnover is about 1.2 times the average annual salary (to account for recruitment costs, hiring costs, training costs, lost productivity, etc.). In this specific example, the average annual salary was $35,000 for a company of 5,000 employees. That means, a 1% decrease in voluntary turnover equals about $2 million in savings. And, by moving from 10% to 6% turnover through a focused employee engagement strategy, this organization could save around $8 million.Read More
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Certain types of comments overhead throughout a company are red-light indicators that the organization has an employee engagement issue. Have you heard any of these recently at your workplace?
From senior executives:
- Nobody seems to understand where we’re going or why.
- This merger <or change effort, acquisition, buy-out, restructuring, etc.> is not going well.
- My people just don’t get it.
- I sent out the memo and still nothing has changed.
- Employees just don’t seem to care.
- The old ways are not working anymore.
- We keep losing our best people.
- I’m new to this position and have lots of ideas to make things better.
From functional managers:
- My boss keeps pushing me to improve my team’s performance.
- We’re not integrating this new technology.
- It’s really hard to recruit top talent.
- Overtime is taking us way over budget.
- Nothing gets done.
- Morale is really bad.
- There are so many rumors, and no one knows what’s really going on.
- This used to be a great place to work.
- This was once a great company (or division/team).
- Why are we doing this?
- What’s in this for me?
- I’m sick and tired of all the changes.
- Management doesn’t walk the talk.
- Work-life balance — what a joke!
- Who can I trust?
There’s an interesting and informative read from the WSJ this week about the fact that February marked the first time since October 2008 that the number of employees voluntarily quitting surpassed the number being fired or let go (statistic courtesy of the Bureau of Labor Statistics).
Some highlights and quotable quotes from the article include:
- “Employees feel disengaged with their jobs, which is going to lead to a lot of churn as we come out of the recession,” says Brett Good, a district president of Southern California for Robert Half International, an executive recruiting firm.
- Dice.com, a job board for tech professionals, asked members what could persuade them to stay in their jobs if they found another opportunity. More than 57% of the 1,273 surveyed said nothing could persuade them to stay. Of those who said they could be persuaded, 42% said they wanted a higher salary and 11% wanted a promotion.
- A survey conducted last summer for the Conference Board, a management research organization, found that the drivers of the drop in job fulfillment included less satisfaction with wages and less interest in work. In 2009, 34.6% of workers were satisfied with their wages, down more than seven percentage points from 1987. About 51% in 2009 said they were interested in work, down 19 percentage points from 1987.
It’s not too late, engage with your workforce today!Read More
I read an article recently that said that in the three years following the end of the last recession in 2001/2002, approximately 60% of employees voluntarily leaving companies were high-level performers. This does not augur well for companies as we begin to emerge from the current recession, which is infinitely more severe than the last. There are numerous reasons for driving high-performing employees from their organization, a few significant ones being:
A. Disenchantment with how they were treated in tough times given the disproportionate contribution they made relative to mid- and low-level performers—in short, they’re not engaged.
B. They’re highly sought after candidates and are thus aggressively recruited.
C. They don’t believe there are positive and rewarding career and growth opportunities ahead.
Before we explore these reasons more closely, let’s consider the negative impact on your organization. While it is true that as employees leave your company others join, this game of career “musical chairs” is one of business’ costliest.
Attrition costs are estimated at $100,000 plus per employee for mid-level to senior knowledge workers (a conservative figure). This includes the organizational knowledge that departs with the employee, the cost of recruitment, decreased productivity until the position is filled, training the new employee, etc. Yesterday I spoke with an executive that told me her group was currently experiencing 34% turnover—in a tough labor market! What will the rate soar to when the job market improves? What is this costing her company?
Where employee engagement is a key focus, companies can reverse negative attrition trends. For one of our clients, when we deployed a program that led to improved communications effectiveness (employees understood and were aligned with vision and strategy) overall employee engagement increased by 10% and the number of disengaged employees fell by just over 50%. A key outcome was that attrition during that period fell from 24% to 9%. If we assume the above $100K attrition cost per top performer in a knowledge organization, in this approximately 500 person department the improvement in retention saved the company $7m. I wish I could say they paid us that much for our services, alas it was far less—but a phenomenal ROI on the cost of the engagement program we were retained to lead, not including the other benefits that accrued to the division as a result of increasing engagement.
And now back to some of the key reasons high performers leave at the first opportunity after a recession.
A. Disenchantment with how they were treated.
Two of the dumbest things I heard of an executive saying last year were, basically: “I don’t care if they’re unhappy, where are they going to go” and “They get paid to work. If they don’t like it there are people lining up for their jobs.” Unfortunately for this antediluvian cretin, performance within his organization faltered and top people have started to leave. Also, the irony of top performers is that as more and more layoffs have occurred, they’re being asked to do more and more work—precisely because of how well they’ve performed. Unfortunately, others in the organization not as skilled or hardworking have gotten off lightly. Simultaneously, wages have stagnated, bonuses have been stopped or significantly reduced (except on Wall Street which is a blog for another day) and promotions have been frozen. So where does the reward for a top producer believing in meritocracy come from? These folks are highly disengaged and, to quote my friend Judy Bardwick, have “one foot out the door.” (Read her book, “One Foot Out the Door”, it’s awesome.)
During a session I facilitated recently for a senior team focused on developing solutions to address low engagement across their division, one of the participants said we should “focus our energy on the engaged employees, because that’s where our best people are anyway.” Unfortunately it is false to assume your top performers are engaged. Indeed, quite often, top performers are less engaged as they feel the brunt of unfair treatment the most, as we’ve just discussed. Conversely, low performers may be quite engaged as they comfortably do their jobs, don’t stretch and don’t care, yet still get paid while often not being held accountable. This issue of engagement among top performers was borne out in a recent Towers-Watson survey. According to their 2009/2010 Strategic Rewards Report, top performers’ engagement levels fell by 23% in the past year, compared to a 9% decrease for all employees.
B. Highly sought after.
The thing about top performers is they know it. They’re also smart enough to know they have options—after all there are always good jobs for great people, regardless of the economic environment. So, as they’ve been experiencing a negative work environment, they’ve also been active in sowing the seeds for the future—networking, blogging, raising their profile, polishing their resumes, complaining on www.glassdoor.com, etc. Anyone that thinks recruiters haven’t been paying attention to this activity is going to be severely shocked as their best people get recruited into new positions. Those same recruiters that have been licking their wounds during the downturn are beginning to lick their chops at the prospect of another recruiting bonanza.
This too can be addressed by smart executives by focusing on employee engagement. The interesting thing about highly engaged employees is that they are significantly less likely to leave their organizations (they also are strong company advocates, put in extra effort and love working for their companies). The converse is true of disengaged employees—in fact they will often deliberately hurt or sabotage the company if given the chance to do so.
C. Few opportunities ahead.
Unfortunately when times are tough, companies slash budgets, usually in a non-strategic, across the board fashion. How creative. Often, after layoffs, among the first things to be cut are growth and development programs, including education and training. Also curtailed is investment in new business opportunities be it in R&D or new markets. As a result, ambitious employees feel that there are unlikely to be opportunities for experimentation, risk, creativity and innovation—all usually paths to career advancement including promotion. The sad fact is that top performers are more likely to get a fresh opportunity to express themselves at a new company, not to mention a greater likelihood of an enhanced position with requisite increased compensation.
The best organizations (or just those averse to the pain likely to be caused by the departure of good people) will work to retain talent by finding new opportunities for their people and investing in them now. While it may seem counter-intuitive to spend money on employees when things are so tough, the long-term upside potential is tremendous as your competitors will be playing catch up when they realize you’ve kept your best people and they’ve lost theirs—hopefully to you as word has spread that your company has a work environment conducive to employee engagement and performance.
The cliché that organizations are only as good as their people is no less true for being self-evident. Focus on your people by implementing a disciplined employee engagement program that draws feedback and insight based on their needs and perspectives, not your assumptions. A true engagement approach will provide you with a prescription to address issues within your organization’s teams, leading to a motivated workforce easily mobilized to accelerate reaching goals.Read More
A real quote from a real CEO of a Fortune ranked company: “Don’t field an employee survey—we may need to do something.”
You’re doing a great job already of alienating everyone. Here’s how to finish the job:
1. Presume you’re right.
2. Don’t listen.
3. Don’t investigate.
4. Establish more teams and committees.
5. Launch a new initiative to mitigate the failure of the prior initiative.
6. Assume “cascading” will work or that your memo was read.
7. Blame someone else (preferably a large group critical to your success).
8. Ignore reality when the data contradicts your established position.
10. Hire a consultant. (Just kidding, this actually works.)
Historically, in many companies, HR was considered an afterthought—a back-office corporate support function, more a necessity than a value-adding partner. Executive perception of HR’s job was to handle comp and ben, hire and fire and support necessary chores like open enrollment and organize corporate events for employees. This attitude was exacerbated by the perception that “if employees don’t like it they can take a hike—there are 10 others dying to take their place”. While companies may have gotten away with this approach in the past, and may be using the current economic environment to perpetuate this short-term view, it’s an unsustainable position in the long-term for those that aspire to be leaders and win. The reality is that there are always good jobs for great people, even in these tough times, and we must strive to keep our top performers motivated and engaged. Those HR professionals that can counsel executives and guide companies to take an approach based on maximizing employee potential will be best positioned to excel in their current position and/or present an attractive package to a prospective employer.
We all know that in today’s world the competition for talent has become extreme. Sophisticated employers no longer talk of mere workers, but of human capital, where strategic investment in personnel has a demonstrable ROI. People migrate among companies looking for the environment that best suits their needs, and these needs have become increasingly complex. No longer is it simply about money, especially among younger employees. Factors motivating employees to join companies today include work-life balance, job security, safety and environmental policies, etc.
Consequently, an aspect of HR that is becoming more and more critical to the success of businesses, especially in environments where there is robust competition for talent, expertise and experience is Employee Engagement. An engaged employee population is a competitive advantage that results from motivated employees demonstrating commitment and loyalty to their organizations.
Within this new environment HR is being challenged by executive leadership to play a much more strategic role in the business. It is critical to be able to leverage human capital through tools and techniques that will drive efficiency and productivity, mobilizing employees to reach goals faster: this is the principle outcome of an employee engagement program.
The challenge we face is to elevate above the tactical and practical supporting functions of HR to becoming heroes in our organizations. Adding this value by remaining relevant in the larger strategic discussion is not only a means to maximize the contribution HR can make in your company, but it is a sure way to positively manage your career to ensure professional growth, development and advancement.
Some executives will argue that with falling revenue, limited budgets, layoffs, etc., now is not the time to focus on employee engagement. You’ve probably heard from managers “they’re lucky to have jobs at all” or “where are they going to go?” This is a short-sighted and naïve position as employees will remember how they’ve been treated and leave at the first possible opportunity (and it’s usually the best that leave first). However, companies that double down on engaging employees during tough times will emerge stronger and more competitive long-term with a more committed and loyal employee base.
In the past, quantifying employee engagement in business or financial terms that C-suite executives understood was very difficult. Today, significant data exist to quantify the tangible economic benefits to having a more engaged employee group. Simply put, companies with higher levels of engagement outperform their competitors. Additionally, with empirical measurement and scientific analysis, employee engagement researchers can determine not only the level of overall engagement but can also pinpoint pockets of high or low engagement across the enterprise, assessing a team of as few as 5 employees. These data allow us to analyze where we are succeeding in our companies and where our focus needs to be more acute. Keeping your finger on the pulse of employee teams allows HR Professionals to counsel and coach supervisors, managers and executives to maximize team effectiveness and ensure leadership development programs have practical and measurable impact.
The added advantage of creating or working from an employee engagement baseline, is that we can measure the success of HR programs, allocating more resources to initiatives that are working and improving those activities that are not showing expected results. In these difficult times, eliminating guesswork as to what is working and knowing exactly what is amiss in the organization allows us to be surgical in our approach, precisely targeting areas of concern, ensuring efficient allocation of scarce resources.
Finally, having data to support your recommendations to management will boost your confidence to propose bold programs, reinforce your credibility and ensure accountability—all vital factors in eliciting C-Suite support. Most importantly you will be in a stronger position to help drive change across the organization—in good times and bad.
One final thought—change will take time; after all, only Nuns change their habits overnight.Read More