(LONG! Lots of ground to cover!)
It’s usually not easy to irrefutably link soft stuff like leadership, values and engagement to the bottom line. But a significant body of research from the past 20 years establishes a clear connection between level of engagement and performance improvement, in a broad range of businesses. And there are more and more actionable tactics validated as effective in enabling people to fully engage.
In Time to Supercharge Our Engagement Thinking the case was made that character development and social-emotional learning can logically be considered in the same big bucket as engagement. The attributes are the same. Social-emotional factors and high-engagement enablers are equally relevant in the private sector, community, and classroom. The findings and impact data that follow are mostly from the private sector. It stands to reason that impacts should be equally impressive regardless of demographic.
Research conducted in 1998 by the Gallup organization set out to quantify the relationship between responses to twelve statements (Q12), and productivity, profitability, and retention specifically. The sample was large: 2,500 business units, 105,000 employees. The findings: business units scoring higher on five Power Statements realized 50% higher productivity; 44% more profit; 13% higher retention.
The Power Statements:
- I know what is expected of me at work.
- The mission / purpose of my company make me feel my job is important.
- I have the opportunity to do what I do best every day.
- Someone at work cares about me as a person.
- There is someone at work who encourages my development.
While Gallup’s Q12 is the recognized engagement benchmark, later studies validate those early findings:
- The Global Workforce Study by Towers-Perrin (2007) showed that companies with high engagement levels had an Earnings Per Share growth rate of 28% opposed to low engagement companies which showed an 11.2% decline in EPS in the same period.
- Further Gallup research found that companies with engagement scores in the top 25% had an EPS growth rate of 2.6 times greater than those companies that scored below average.
- The Gallup Management Journal’s 2005 Q3 survey found that 23.3 million of US workers 18 and older (roughly 17%) are actively disengaged. Gallup estimated that lower productivity of these workers costs the US economy about $370bil a year.
- BlessingWhite’s The State of Employee Engagement 2008 found that 29% of the North American workforce is fully engaged, while 19% are actively disengaged. The study also shows a strong correlation between engagement levels and retention: 85% of engaged employees indicated they planned to stick with their employer, compared to only 27% of disengaged employees. The report for 2010 showed little change, same for 2013. Why have we hit a plateau?
How important is retention? The study by BlessingWhite noted above and others all propose that employees are more and more peeking their heads out of the foxhole they’ve been hunkered down in due to tough economic conditions over the past several years. Even high performing, highly engaged people that a company can least afford to lose are getting braver about looking around.
Will they stay or will they go? And in both cases, why? The message is clear: If you manage to land good talent, you’d better do whatever it takes to hold on to it.
Replacing an employee can cost as much as 50-60% of his annual salary, but total costs of turnover can range from 90-200%, according to the Society for Human Resource Management. This is a 2008 report; it’s safe to say the cost has gone up, along with the complexity of replacing personnel. (http://www.shrm.org/about/foundation/research/documents/retaining%20talent-%20final.pdf)
Right Management, the talent and career consulting branch of employment services giant Manpower, conducted a survey the winter of 2009 to identify top actions companies were taking to help manage their workforce through the economic crisis. The top two most important leadership practices for tough times identified by senior leader respondents:
- Engaging employees to ensure organizational alignment and commitment (51%); and
- Clearly defining roles and expectations (21%). (one of the top levers of engagement)
Numerous later studies also validate the importance of engagement. The Right study is significant because of its origin-a top employment service. They know the business of recruiting and retention.
In 2006, 23.7% of American workers voluntarily quit their jobs. (US Bureau of Labor Statistics). Keep in mind the job market has shifted, from a decidedly employer-driven market to talent-driven. Employers are begging for talent and there’s just not enough to go around. Retention is critical, as is recruiting. An employer with a highly engaging work environment is way ahead of their competition.
There are irrefutable numbers everywhere you look. Here’s a little more number crunching….
Revenue: A typical company with $5 billion in revenues in an industry with average revenue growth of eight percent would see revenues increase by $400 million. A company with top quartile levels of employee engagement could expect an increase of $1 billion. And a company in the top quartile on both engagement and enablement could anticipate an increase of a full $1.8 billion.
Turnover: For an organization with 20,000 employees and an annual voluntary turnover rate of eight percent, the cost of turnover is approximately $56 million (assuming an average salary of $35,000). Reducing the voluntary turnover rate by 40 percent would yield annual savings of $22.4 million. But reductions in turnover through high levels of engagement and enablement would yield savings of over $30 million annually, a difference of more than $7.5 million.
Employee performance: For an organization producing $10 billion of product with 20 percent of employees exceeding performance expectations, increasing the percentage of high performers by 1.5 times (by transforming average performers into superior performers) would increase output by $350 million (ie, if 10 percent of population improves performance by 35 percent, overall performance improvement across entire population is 3.5 percent. (The Hay Group: Employee engagement and enablement critical.)
Engagement is good business. Since it is such a good thing, how do you “do” engagement? What things promote an environment of high engagement? What gets in the way?
It’s not possible to provide a Cliff Notes version of an answer to those questions. But here’s couple of teasers: (1) as it is values-based engagement is highly personal. And, (2) engagement drivers are split between process / things and people / relationships. You must address the people issues before you can expect people to fully engage in fixing process issues.
WIIFM Intangibles in the Private Sector
Forward-thinking employers who are deeply involved with and committed to their workforce’s and the community’s success will earn significant payback in return:
- A more highly engaged workforce=bottom-line payback in every area that matters;
- High regard among community members, impacting image and branding;
- Employer-of-choice status: recruiting and retention are both greatly enhanced. Current employees stay, new applicants stand in line to get in;
- Sense of community and a company culture that lasts anchored by social consciousness and a feeling of being a part of something that is truly worthwhile;
- A well-stocked, continuously replenished talent pool—highly skilled and eager job candidates.
Barring economic meltdown or gross mismanagement, investing in people and the community is more than “corporate social responsibility” (CSR). It’s a high-powered strategy that ensures the company’s sustainability.
Kids are People Too: Student Engagement
Gallup and America’s Promise
In 2009 Gallup and America’s Promise defined, measured and implemented a model of student engagement. “The primary application of the Gallup Student Poll is as a measure of non-cognitive metrics that predicts student success in academic and other youth development settings. Gallup’s research (identified three) key factors that drive students’ grades, achievement scores, retention, and future employment.” Follow-up studies and reports noted high-impact, specific improvement opportunities.
CASEL: Benefits of Character Development
CASEL’s meta-analysis (“study of studies”) used statistical techniques to summarize the findings of over 700 studies and found a broad range of benefits for students:
- 9% decrease in conduct problems, such as classroom misbehavior and aggression
- 10% decrease in emotional distress, such as anxiety and depression
- 9% improvement in attitudes about self, others, and school
- 23% improvement in social and emotional skills
- 9% improvement in school and classroom behavior
- 11 % improvement in achievement test scores
…while these SEL programs took time out of the school day, they did not detract from student academic performance. In fact, as noted above, on average, students receiving school-based SEL scored 11 percentile points higher on academic achievement tests than their peers who did not receive SEL, and they also attained higher grades. And even as grades and achievement test scores were improving, classroom behavior, feelings about self, and emotional problems were improving as well.
AJPH Report: Benefits of SE Development
The level of pro-social behaviors in kindergarten, such as cooperating with peers, being helpful to others, understanding others’ feelings, and resolving problems on their own predicted their education and job prospects, criminal activity, likelihood of substance abuse, and mental health in adulthood. Students with higher levels of P-S behaviors did better in all of those areas….they were more likely to have graduated from high school on time, to have finished college, and to have stable employment; less likely to have been in special education or repeated a grade; less likely to need public housing or receive public assistance; less likely to have been arrested or in jail; less likely to abuse alcohol or drugs; and less likely to have been on medication for mental health problems.
- There is a strong relationship between pro-social skills and positive outcomes later in life, regardless of the student’s gender, race, or socioeconomic status, the quality of their neighborhood, their early academic skills, or several other factors.
- The level of aggression that a student showed in kindergarten couldn’t predict whether the student would have a run-in with the law later in life—but his level of pro-social behavior could.
- Feeling socially connected as a kid is more strongly associated with happiness in adulthood than academic achievement is;
- Children who participate in programs designed to strengthen their social and emotional skills simply do undeniably better academically, and in life.
- Gallup Q-12 https://q12.gallup.com/Public/en-us/Features (Gallup marketing but still good background)
- Gallup Well-being Report
- Blue Zones Power Nine, elements that contribute to longevity: https://www.bluezonesproject.com/power9#next
- Gallup/Healthways www.healthways.com/. Well-being indicators: Gallup-Healthways indicators
- Engage for Success June 2014 report: connection between well-being and engagement
- home.ncifcrf.gov/…/gallupresources/Q12-definitions.ppt This is from the National Cancer Institute, a dot-gov. As such, it’s allegedly “copyright-free”. This powerpoint is still Gallup material; they are insanely protective of Q-12 and rightly so. Using Q-12 without express written permission is strictly prohibited. Don’t even think about copying and using this with an “I didn’t know” disclaimer when you get busted. View with care, hardware may self-destruct. I’ve seen sleazy twelve-element models that cleverly re-worded things, but didn’t even change the order. Darwin was right.
- American Journal of Public Health, (Am J Public Health. 2015 November; 105(11): 2283–2290. Published online 2015 November. doi: 10.2105/AJPH.2015.302630 ) http://ajph.aphapublications.org/doi/10.2105/AJPH.2015.302630
- Towers Watson http://towerswatson.com The 2012 Global Workforce Study raises the bar to sustainable engagement. Download the pdf: http://towerswatson.com/Insights/IC-Types/Survey-Research-Results/2012/07/2012-Towers-Watson-Global-Workforce-Study
- 2013 State of the American Workplace report (Gallup): http://www.gallup.com/strategicconsulting/163007/state-american-workplace.aspx