Tricks for Improving Employee Engagement and Performance
How engaged employees can improve the profitability and performance
of your business
We would all like to have our employees happy and engaged. Naturally, we want our employees to feel positive about us and our business, aligned to the same values and goals.
It is also nice to know that they LIKE their job, LIKE the company and LIKE us as managers. But Engagement is not just about feeling good about the ‘popularity’ of us as an employer, it has real, significant benefits to profitability.
Let’s look at the key factors:
1. Lower Sick Leave
Unplanned sick leave can really disrupt business activities. However, engagement levels can help you reduce the disruption to your business. Engaged employees are less likely to take sick days than disengaged employees. A Gallup study on employee engagement found:
Engaged Employees take an average of 2.7 days of sick leave per annum
Disengaged Employees take an average of 6.2 days of sick leave per annum
That’s an average of 3.5 days additional productivity per employee per year! Imagine across your group of 20 employees, another 70 days of business activity per annum? 560 extra hours!
How much would 560 hours be worth to your business? It’s already worth the investment into Employee Engagement with that statistic alone!
2. Staff Turnover
Recruitment of a replacement can have a significant cost to your business, many studies say that it is the equivalent cost of between 6-12 months of salary, which seems a bit excessive. Until you start to add up the costs:
Actual costs of recruitment activity. These are the direct costs associated with recruitment, such as advertising or Recruitment Agencies (and these can be up to 20% of the annual salary already!)
Lost Productive Time for managers undertaking recruitment activity such as screening, interviewing, pre-employment checks etc. Even using a Recruitment Agency, you will still lose on average between 10 – 35 hours productivity from the Managers involved in the recruitment activity.
Lost Productive Time between hires. Unless you have a particularly exceptional process, often there is the downtime of between 2-6 weeks between the departing employee and the incoming employee which can have a significant impact on the productivity of your business
Cost and Lost Productive Time of onboarding. These are the cost associated with onboarding, training and management time while bringing the new employee onboard. At a minimum, it would equate to between 3-8 days of lost time.
Lost Productivity. It is estimated that a new employee can take up to a year to be as productive as their departing, experienced counterpart. This is the time needed to get up to speed with the company, customers, services or products and systems. Errors occur more for new employees and they have less experience to solve or proactively prevent problems.
Adding it all up, turnover can have a significant cost to your business which can be avoided with an engaged workforce. The same Gallup study found businesses with a disengaged workforce averaged 31% - 51% more employee turnover.
If you could reduce your staff turnover by 50% and reduce the significant cost and lost time associated with it - you would, right? Looking into your employee engagement can certainly help.
3. Stock Shrinkage
An engaged workforce can prevent the issues surrounding loss, theft, damage or incorrect stocktake which can result in stock shrinkage. The cost implications for stock shrinkage can have a significant impact on the bottom line of your business. Inventory shrinkage is 51% higher in businesses with low engagement in comparison to business with engaged employees.
Imagine if you could halve the amount of stock shrinkage in your business?
4. Innovation
Innovation is a huge part of business these days. The competitive edge your company has over competitors can be the make or break of your business. Does it surprise you that an engaged employee is more likely to bring innovative and creative ideas to your business? I’m sure by now, as you are becoming more of an ‘Engagement Expert’ it doesn’t surprise you at all. 59% of engaged employees say they bring out their most creative ideas for their job compared to 3% of their disengaged counterparts.
Imagine if 56% more people brought innovative and entrepreneurial ideas to your business? How would that impact the competitive edge of your competitors?
5. Productivity
An engaged employee is “someone who sees their job as worthwhile or interesting and is, therefore, more likely to be fully involved in and enthusiastic about the things they do” in the workplace. Engagement means they are more likely to put in “additional effort” and go the extra mile.
Base salaries or wages only pay for the bare minimum of effort. To ask someone to go the extra mile or put more effort in, engagement is key. The higher the engagement level, the more productive the employee will be. Studies show an increase of productivity by 22% from an engaged workforce.
Imagine if your entire workforce was willing to go the extra mile? How productive would your business be? How amazing would your customer service be?
Let’s look at all these factors and breakdown how an Engaged workforce can improve your profitability:
Lower Sick Leave = An average of 3.5 days more attendance per employee
Reduced Staff Turnover = 50% less turnover and the associated cost of 6-12 months salary per departing employee
Stock Shrinkage = 50% less shrinkage of your stock
Innovation = 56% more innovation
Productivity = 22% more productivity
There are so many further untold benefits of an engaged workforce that haven’t yet been fully investigated. However, the correlation between profit and engagement is an absolute fact.
Even businesses who are pretty confident with their levels of engagement, who feel they already do pretty well and don’t have issues with absenteeism, productivity, shrinkage should still consider the impacts of employee engagement in their business.
Even if it is good now, the question should be “Can I afford for any of these areas to drop off?”. Can you afford to have a high staff turnover? Can you afford to lose 3.5 days per employee per year?
If not, consider how to keep your engaged employees engaged. You have insurance for situations you cannot afford and invest in engagement is no different. It is also much easier to maintain an engaged workforce than it is to turn a disengaged employee into a productive engaged employee!
