More and more organisations around the world now have a formal employee engagement strategy. In fact, according to FastTrack360, 71% of executives say that employee engagement is critical to their company’s success. However, many of those organisations struggle to quantify that.
According to Gallup, engaged employees are "those who are involved in, enthusiastic about and committed to their work and workplace". This is what organisations want from every employee but realise that they must put in the effort to get there. However, the results can be highly beneficial as companies with high employee engagement are on average 22% more profitable.
The upside of Employee Engagement
As mentioned above, businesses can benefit greatly from an engaged workforce. This can show itself in many different guises including increased productivity, more sales and less client churn, less time spent on management, less absenteeism, and less employee churn. If businesses can demonstrate a positive increase in all of these, then theoretically their operational costs should be lower and their profits higher.
Companies can attribute a figure to this in several ways. There are a few simple to use ROI calculators available that will spit out figures for you. However, to get a clear look at your ROI you need to have a benchmark to work from and then understand your costs of employee engagement.
What is an Employee Engagement Strategy?
There are many different elements to a broad Employee Engagement strategy. According to a Glass Door survey there are 9 pillars that can be measured:
- Values and purpose – this is when the vision and behaviour (values) of the business properly resonate with its employees. A great example of this is IKEA whose vision and purpose is “to create a better everyday life for people. Employees buy in to this, and it gives them something to strive to achieve every day.
- Communication – communication does not just come from the top – although having a leader who demonstrates great communication such as President Joe Biden, goes a long way to helping engage employees. But companies also need to have the mechanisms and processes in place to facilitate good communication. This can be simple monthly company emails, town halls or virtual meetings, or more sophisticated employee hub that can act as a central function for all employee communications.
- Health and Wellbeing – this goes well beyond providing private healthcare – although that helps. Does your business invest in the mental and physical wellbeing of its employees? From engaging organisations to help with mindfulness to having access to gyms and or fitness lessons, this demonstrates that a business cares about its talent.
- Workspace and Environment – despite the current global Coronavirus pandemic that has meant many people are currently not going to work – this has become increasingly important. Providing an enjoyable workspace not only attracts talent but helps keep them. Google are probably the best know brand for doing this with their helter-skelters, sushi bars and generous space for employees.
- Well-defined Roles – this is not an obvious one and it sounds simple, but when roles are clear, people know what’s expected of them, how to behave and what they need to accomplish. Not only does this help to clarify individuals’ goals but when people see others being focussed and achieve their goals it raises everyone’s game and keeps teams motivated.
- Relationships with colleagues – many people are attracted to an organisation not only due to the role but also the social aspect of the company. Again, despite a whole number of innovative virtual event, this has been hit hard by Covid-19. But companies know the value in the social side of work which is why many companies have bars for socialising after work and include team socialising in their reward and recognition
- Recognition and Incentives – It is not so hard for a company to say thanks you. That is why this has now become a critical part of any business offering when trying to better engage with their employees. Companies can work with expert vendors to implement sophisticated Reward and Recognition schemes that can give more to employees above and beyond their salary and any company wide bonus, Public recognition for their hard work, teamwork or even behaviour that is in line with company values. In addition more organisations are now offering a lifestyle concierge service, employee discounts and health and wellbeing – all acting as an incentive for employees.
- Senior buy in – this is something that we have often written about and many of the companies we work with talk at length about the success of their programmes being down to senior support and buy-in. Employee Engagement is a company investment and there must be board level buy in. Demonstrating a ROI will help get that buy-in, but you need a champion to help drive the success.
- Individual growth plans and goals – last, but not least, every employee, regardless of their role needs to know what they are personally working towards – be it a pay rise, promotion or some sore of bonus and reward. If they do not have a clear path and objectives laid out in front of them, they will lose motivation and become disengaged. Organisations must invest the time and resource into every employee to ensure this happens.
How to calculate ROI
There is no clear-cut way to do this, but a simple approach would be to see the overall cost of the above become over time a smaller fraction of the overall profit each year. This can then be seen as having a positive impact on the overall profitability of company and therefore your Employee Engagement programme will be seen as having a good ROI.