It’s true. I’m a mom. So I would know.
I also know the same can be said for employee engagement. When your employees aren’t happy, guess what… your company isn’t happy either.
What are the differences between a happy employee and a disengaged one? Many. Not only are there differences in attitude and performance, but there are definite differences in their value to your company. Many HR professionals struggle to quantify the business impact of a disengaged workforce, and to justify the expense of programs or initiatives aimed at improving employee engagement. But all is not lost. When companies make the engagement of their employees a core initiative, there is not only bottom line return, but when an employee is happy, the company is happy too.
The Difference Between Employee Satisfaction and Employee Engagement
Employee satisfaction is functional. What an employee is getting out of their company as much as they are putting into it (that is, the employee value proposition). It is a measure of an employee’s happiness with a company, their particular job, or their co-workers among other factors. While an employee’s happiness or satisfaction is important, and can contribute to their engagement, it’s not the same thing as engagement.
Employee engagement is emotional. Employees who are engaged speak positively about the organization to others, are committed to remaining with their current employer, and are motivated by their organizations’ leaders, managers, culture and values to go “above and beyond” to contribute to business success.
What is a Disengaged Employee Costing You?
To determine the cost of a disengaged employee, it’s necessary to make some assumptions about the different returns on salary each level of engagement delivers. In this example, we’re assuming:
- Fully engaged employees return 120% of their salary in value
- Engaged employees return 100% of their salary in value
- Somewhat disengaged employees return 80% of their salary in value
- Disengaged employees return 60% of their salary in value
Then, use an average salary to calculate how much each employee at a given engagement level is returning to the organization. In this example, we use an average salary of $80K.
- Fully engaged: $80K x 120% = $96K or +$16K value
- Engaged: $80K x 100% = $80K or even in value
- Somewhat disengaged: $80K x 80% = $64K or -$16K in value
- Disengaged: $80K x 60% = $48K or $-32K in value
Finally, to determine the estimate cost of disengagement to the organization, you can multiply the return for each level of engagement by the number of employees who ranked at that level.
So if you had 500 employees, and they followed a typical distribution pattern: the 40% engaged, and 12% fully engaged would be adding $960K in value to the organization. While the 39% somewhat disengaged, and 9% fully disengaged would cost your organization more than $4.5 million dollars in productivity.
In this scenario the organization is losing more than $3 Million dollars because of disengagement.
Creating a Culture of Happiness
In their employee engagement research, the Corporate Leadership Council found that up to 76% of employees are “up for grabs” in terms of engagement, and could become engaged or disengaged. The potential financial impact of this could be substantial for your organization.
So what are some practical steps to creating a culture of happiness? Here are some good places to start:
Analyze and Measure. Before you can seek to improve happiness within your organization, you must first have a clear understanding of the current state of employee satisfaction and engagement, the combination of which will provide insight into overall employee sentiment. What your employees currently like and don’t like about the company. Use this information to establish your baseline and create a realistic goal for “sentiment lift” so that you can use future data to measure the return on your engagement programs.
- If you don’t have the internal capabilities to analyze and measure then partner with an external engagement firm. The data and information collected will be well worth the cost.
- Include employee satisfaction, engagement and sentiment to your corporate benchmarking dashboard. If you don’t include it on your quarterly read out and note the percent of change (where you’ve succeeded and where you need to improve) then they easily become a forgotten numbers.
Goals and Performance. As a business it’s essential to establish yearly priorities and business imperatives. As an employee, it’s not always apparent how your individual role contributes to the successes of those priorities and imperatives. Engaged employees understand how their individual goals affect company goals and, ultimately, the bottom line.
- Ensure all employees have clear, SMART goals that are aligned with the organization’s high-level goals.
Development and Innovation. Employees have always sought companies who support and provide resources for professional growth and development — this is not new. But with the rise of social technologies, the method of how we deliver and foster said development is becoming critical to how employees perceive whether a company sufficiently supports them. Just as we don’t want our employees to become complacent, then neither should we as a business. Continually seek new ways to develop employee skills and foster a culture where innovation thrives.
- Provide training and coaching for managers to enhance their ability to motivate and inspire employees which in turn will help improve engagement scores (this is critical since managers have such a direct impact on employee engagement).
- Ensure you support employee development at all levels within the organization. Provide learning and mentoring opportunities and a culture where regular ongoing discussion about career paths takes place.
- Ensure employees get the regular coaching and constructive feedback they need to direct their work and improve performance. Make sure managers have the skills to do that effectively.
Reward and Recognition.Gone are the days where recognition occurred as a once yearly event. Bottom line: Employees need to know that you care about them on a year-round basis. Recognition that is timely, values-driven, and open to all employees builds a more connected and fully engaged workforce. Frequent recognition of every employee – by managers and peers alike – is the most effective way of making the values and objectives meaningful and real in the daily work of every employee. How better to encourage what you want to see more of than by saying “thank you?”
- Reinvent your current reward and recognition program. Let’s face it, most organizations still have recognition programs that are old school and rely heavily on HR and annual reviews. It’s time to start developing programs that deliver continuous recognition and are sensitive to your employees. In essence, make your recognition programs less mechanical and more human.
- Develop tools that make recognition more public and where it can be shared. Old programs tend to be isolated experiences: manager recognizes employee, employee receives e-mail, employee chooses “award” from an online catalog. Leverage the use of social technologies to enable the sharing of this recognition across multiple platforms and allow public acknowledgement.
These suggestions are simply that… suggestions. It’s really up to you, as an organization, to assess the current level of your employees’ happiness and then craft a customized strategy and practical programs to engage your disengaged workforce. But once you do, you will find that when your employees are happy, then your company is happy too.
For more insight, check out this recent blog post and infographic from Halogen Software on the “Dollars and Sense of Employee Engagement.”