The ROI of employee engagement
At a time when technology is evolving at a rapid pace, businesses often find it difficult to retain their best staff. With the evolution of new technologies comes an explosion in the number of vacant jobs, with employers all competing for people with new or in-demand skill sets.
Investing in employee engagement is often overlooked by executives despite the fact that is cheaper than the cost of finding new talent and training them to an adequate level. While it is hard to quantify the return on investment of HR initiatives that focus on employee engagement, the cost of lacking engagement with low productivity, many sick days and loss of business due to sub-standard customer service can threaten a company’s very existence.
This is why new starters at Michael Bailey Associates will witness the company’s strong emphasis on employee engagement: “In the first 18 months after hiring we spend over €9,000 on new employee training and team building”, says James Furlong, Director Talent Acquisition at Michael Bailey Associates.
These efforts could be a blueprint for many European businesses as they face an increasing need to improve employee engagement. According to the Employee Engagement Index survey in 2014 by global research firm ORC International with 7,000 employees from 20 countries, UK employee engagement has decreased (49) and is now on 18th place, with only Japan and Hong Kong worse. Employee engagement in Germany (58) and the Netherlands (60) is only close to the global average (59), while India (74) came out on top.
“Encouraging innovative ideas, creative thinking and providing an environment where employees feel that managers act in their best interest are just some aspects to improving engagement, which ultimately have a positive effect on overall business outcomes and client satisfaction,” said Kate Pritchard, head of employee research at global research firm ORC International.
Addressing the rise of the millennials
Employee engagement needs to be redefined for the growing proportion of the global workforce that are millennials, workers born between the 1980s and the 2000s.
This generation are typically more liberal than older employees and have their own expectations for the world of work. A study from Deloitte focussed on millennials found that just 28 per cent of them believe their existing organisation is making maximum use of their abilities.
As well as this, a majority of millennials believes that organisations have a positive impact, this should focus on the advancement and well being of society and not just on their own agenda, whereas 53 per cent have expressed aspirations to become a leader or a senior executive within their organisation.
Many millennials want to make a difference, rather than just earning large amounts of money and interaction is vital in order to get the best out of them. Businesses who respond to this yearning and provide their employees with meaningful projects and the autonomy to make their mark will see happy, productive and content employees, even without a pay rise.
The importance of recognition and reward
One of the key factors managers should consider is the significance of recognition and rewards for employees.
In a study published by the Harvard Business Review, 71 per cent of respondents suggested that employee engagement is very important to achieving organisational success, whereas 72 per cent ranked recognition as having a great impact on staff’s engagement.
The researchers found that while most leaders understand the importance of engagement, three-quarters of those surveyed said that most employees in their organisations are not highly engaged.
“A significant gap showed up in the views of executive managers and middle managers in this area,” the report read.
The study identified that many businesses find it difficult to measure engagement and relate the impact to financial results, with fewer than 50 per cent of businesses saying they are efficiently measuring it against business performance metrics including customer satisfaction and market share.
How to measure engagement
Of course, one of the key metrics for engagement is turnover. If it turns out that you are losing most of your staff after short tenures, it is clear you need to improve the opportunities you give employees.
Perhaps introduce the chance to enrol on different post-graduate courses or an improved career progression scheme and try out flexible working. Over time, you may find that your turnover decreases and more people stay.
If this is not the case, address why and ask your staff what they would like to see implemented. At the end of the day, your employees have the best insights of your business and if they have a say in how their company is structured, this could boost their performance.