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Engaging for success: Enhancing performance through employee engagement ●● A Watson Wyatt study of 115 companies suggested that a company with highly engaged employees achieves a financial performance four times greater than companies with poor engagement. They also reported in 2008/9 that the highly engaged are more than twice as likely to be top performers – almost 60 per cent of them exceed or far exceed expectations for performance. Moreover the highly engaged missed 43 per cent fewer days of work due to illness. 57 ●● Gallup found that engagement levels can be predictors of sickness absence, with more highly engaged employees taking an average of 2.7 days per year, compared with disengaged employees taking an average of 6.2 days per year. 58 ●● Hewitt reported that companies with a greater than 10 per cent profit growth had 39 per cent more engaged employees and 45 per cent fewer disengaged employees than those with less than 10 per cent growth. 59 ●● Development Dimension International (DDI) reported that in a Fortune 100 manufacturing company, turnover in low engagement teams averaged 14.5 per cent, compared with 4.8 per cent in high engagement teams. Absenteeism in low engagement teams hovered around 8 per cent, but was down to 4.1 per cent in high engagement teams. Quality errors were significantly higher for poorly engaged teams. 60 ●● Towers Perrin found that broadly three-quarters of the highly engaged believe they can impact costs, quality and customer service; and only 25 per cent of the disengaged believe they can. ●● PricewaterhouseCoopers, who use staff and customer engagement levels as one of their four Key Performance Indicators (KPIs) have found a strong correlation between highly engaged staff and client satisfaction. 57 Watson Wyatt, Continuous Engagement: The Key to Unlocking the Value of Your People During Tough Times, Work Europe Survey – 2008-2009. 58 Harter, J. K., Schmidt, F. L., Kilham, E. A., Asplund, J. W. (2006) Q12 Meta-Analysis, The Gallup Organisation 59 Hewitt Associates (2004) Employee Engagement higher in double digit growth companies. Research Brief. 60 Wellins, R. S., Bernthal, P. and Phelps, M (2005). ‘Employee engagement: the key to realising competitive advantage’, DDI and at: http://www.ddiworld.com/pdf/ddi_employeeengagement_mg.pdf [accessed 1 July 2009] 38
Chapter 2: The Case for Employee Engagement – The Evidence ●● A paper by Harter et al in the Harvard Business Review found that customer and employee engagement augment each other at the local level, creating an opportunity for accelerated improvement and growth of overall financial performance. Analysis of the performance of 1,979 business units in ten companies revealed that those units that scored above the median on both employee and customer engagement were on average 3.4 times more effective financially (in terms of total sales and revenue performance to target and year over year gain in sales and revenue) than units in the bottom half of both measures. 61 ●● IES in their 1999 study From People to Profits found a link between employee satisfaction, customer satisfaction and increases in sales, based on a study of 65,000 employees and 25,000 customers from 100 stores, over two years. Employee commitment acted on sales through three routes: directly on sales, mediated through customer satisfaction, and through reduction in staff absence. They concluded a one per cent increase in employee commitment (using a five point scale) can lead to a monthly increase of nine per cent in sales. 62 ●● Hay Group in their publication Engage Employees and Boost Performance 2001 conclude that engaged employees generate 43 per cent more revenue than disengaged ones. 63 Individual Employers in the Private Sector 15 The Nationwide Building Society has invested considerable effort in measuring levels of employee engagement across its branch network and comparing those results against a number of performance metrics, which are also measurable by retail area. 64 16 Since April 2008, the building society has produced an Area Directors measurement pack that includes information on business performance (i.e. lending; general insurance; protection and investments; banking; and savings), customer experience, operational and regulatory risk, staff performance review results, voluntary employee turnover and working time lost to employee absence. The retail areas are then divided into three categories according to their staff engagement scores, which enables the company to compare 41 areas, where the 14 areas with the highest engagement levels are classed as ‘high engagement’, the next 14 as ‘medium engagement’ and the bottom 13 as ‘low engagement’. 61 Fleming J, Coffman C, and Harter J (2005) ‘Manage Your Human Sigma’, Harvard Business Review 62 Barber, L., Hayday, S., & Bevan, S (1999) From People to Profits Institute for Employment Studies 63 Hay Group, ‘Engage Employees and Boost Performance’ (2001) 64 Information provided by Nationwide to the MacLeod Review 39
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