Benefits Growth Strategies

Moving employees from enraged to engaged

Engagement = profits

By Kevin Trokey

As you read this article, look at it from two perspectives. First, reflect on how your own agency may be impacted by employee engagement. Second, think of your clients and the impact they are experiencing, as well as how valuable a partner you would become if you could help them improve their current level of employee engagement.

See if this sounds familiar:

AnyCo is a mid-sized business. Things were humming along pretty well; the firm's future seemed bright. Then, almost overnight, the economy seemed to implode around it. Revenues were on a steady decline. Margins were evaporating even faster than revenue. The confidence employees once had in their future started to wane. Further investments to grow the business had to wait. They lost complete sight of the vision that once drove their efforts. In fact, all that mattered was the bottom line—keeping the doors open. Survival became their new definition of success.

To ensure that survival, AnyCo had to lay off all but the most critically needed employees. The budget dollars for training and development were quickly eliminated. Salaries were initially frozen and eventually had to be cut. Employee benefits suffered the same fate. Increases in premiums had to be passed on to the employees, but soon even core benefits had to be eliminated.

These weren't decisions AnyCo management normally would have made, but they had become necessary just to survive. However, as necessary as these actions were, they weren't without consequences. The result was that the remaining employees became frustrated, angry, and more and more disconnected from the business until their level of employee disengagement was at an all-time high.

So, what is employee engagement anyway?

Our working definition is: "The positive connection an employee has to the organization and to the organization's vision. The higher the level of employee engagement, the more positive the employees' behaviors, and the more successful the organization becomes."

More important, why should an employer care about the level of employee engagement?

Recent studies conducted by Towers Watson, and Gallup, have identified that an organization that has an average level of employee engagement has a payroll efficiency of 63%. To translate that to dollars, for every $100,000 being spent on payroll, that employer whose employees are engaged at an average level is receiving only $63,000 worth of work in return. I don't know about you, but after I read that statistic, I had an entirely new appreciation for employee engagement.

Of course, payroll efficiencies will never hit 100%, but think of the bottom-line impact on the organization that can move these points even a littler higher!

So where does the remaining 37% of potential employee efficiency go?

When a company suffers from poor levels of engagement, there are a lot of associated costs, but many are liable to be overlooked:

• Turnover is higher;

• There is a greater demand on HR and its associated resources;

• Communication becomes more difficult and less effective;

• Attracting high levels of talent becomes more difficult;

• Management spends unproductive time with disengaged employees

• Workplace accidents increase;

• Employees are less productive, spending time complaining, looking for another job, not working to potential, etc.

As bad as all of this is, it gets even worse. Lack of employee engagement likely means lack of client engagement.

Dr. Gary Rhoads of Allegiance, a consulting firm specializing in employee loyalty and engagement, recently wrote a paper titled "The Spillover Effect," in which he identifies the correlation between employee and customer engagement as one of the most significant drivers to profitability. The more engaged a company's employees, the higher the likelihood of having engaged, rather than just satisfied, customers. Engagement is contagious. Not only does it spread from employee to employee, it spreads from employee to customer.

Research shows that when customers are engaged, they spend higher percentages of their discretionary dollars with the company with which they feel engaged and prove to be more profitable on each of those dollars spent than are the company's merely satisfied customers. Additionally, a synergy is created when a company has both engaged employees and engaged customers. In fact, they can expect to drive twice the financial results compared with organizations that are able to achieve active engagement from only one key group.

Signs that your employees are engaged

If an organization displays the following characteristics, they are in a good position to have high levels of employee engagement

Employer engagement—The company actively seeks to understand its employees and acts with the expectations and preferences of the employees in mind.

Perception of job importance—Employees have a clear understanding of the importance of their job and how it contributes to the organization's goals and objectives.

Clarity of job expectations—Success in each position is clearly defined, and the resources needed to meet that success are provided. As a result, the employee can focus on organizational success rather than being preoccupied with personal survival.

Career advancement—Each employee has a clear plan of personal development and a realistic path of advancement.

Opportunity to contribute—Employees have clear opportunities to contribute ideas and initiatives that will improve the organization.

Feedback—Employees always know precisely how well they are performing; they receive formal updates on a regular basis. A bonus check is nice, but it will be quickly forgotten (that's not to say it isn't important, but it isn't the complete answer). However, sincere and specific comments on what an employee did well may last forever.

How to improve employee engagement

Based on the list above, you probably have a good idea of how to improve employee engagement when it is poor. However, here are a few specific ideas.

1. Get input from your people. They know why employee engagement isn't as high as it could be and quite likely have ideas of how to make improvements. However, they need to feel comfortable regarding the confidentiality of their responses. Bringing in an outside consultant skilled at drilling down to the core issues will provide the right environment.

2. As you hear negative comments, fight the temptation to become angry with any individual identified as a source of the negativity. Instead, focus on how the negative behaviors can be eliminated and address them directly.

3. Be honest with the organization about what the survey indicated. It's okay to be disappointed with the results and to honestly communicate that disappointment. Fight the urge to sugarcoat the results and to downplay the impact. The employees know what they said, and they talk to one another. They will lose confidence if they believe that their input is being downplayed in any way.

4. Start fixing it! It's too late to turn back now; you have to start implementing change. If you don't follow through, you will make existing problems worse, create new problems, and ensure that any future efforts won't be taken seriously. Publicly state your commitment to implementation.

5. Prepare leadership to implement effectively. Engagement is largely about the culture within an organization, and cultural changes have to start at the top. Spend time with leadership focusing on specific behaviors that they need to demonstrate to make the implementation successful.

Final step

Repeat, but not right away. After you have given yourself sufficient time (a year at a minimum) to implement your initiatives, ask the employees how they are making a difference. Fight the urge to start asking too soon. Cultural changes, including improving employee engagement, take time to take root. Asking for feedback too soon will result in inaccurate feedback.

Employee engagement isn't a project; it's part of the culture. It may take specific projects to improve it from time to time, but we have to work everyday to make sure it is maintained. As levels of engagement improve, you will find that the rewards most coveted by engaged employees tend to change. Make sure your reward system is in alignment with what employees value.

Salary isn't the only motivator. The higher the level of employee engagement, the lower down the list of desired rewards financial compensation moves. Engaged employees tend to value non-compensation types of rewards. They value personal development, a rewarding job environment, and an ability to make a difference, to name a few. Think about it—the things that engaged employees value are the very things that will result in even greater returns for the company.

While employee engagement may seem to be elusive and intangible at times, the impact it has on virtually every aspect of your organization (including customers and bottom-line profitability) makes it something that can't be ignored.

Perhaps the greatest thing about an engaged organization is the exponentially higher return you will receive for continued efforts. You can create an environment that will drive a greater return you receive on investments made through your employees (training, benefit programs, team building, etc.), or you can reinforce a culture that emphasizes wages as the primary reward and continue to just plug the meter with disengaged employees hoping that more money will result in more productivity. Of course, the former takes more of a planned strategy, but the results are well worth the effort.

So, who is AnyCo? Well, perhaps it should have been named EveryCo. There isn't a company out there, whether it's your agency or any of your agency's clients, that can't benefit from very consciously focusing on employee engagement.

As a broker, you're in a unique position; the strategies and experience you gain from working on your own internal employee engagement can easily become a service you take to your clients.