Organisations can no longer ignore the costs associated with poor engagement. Nor can they deny the financial benefits for having highly engaged and intrinsically motivated employees.
All too often we hear business and public-sector leaders talk about how important their people are to their respective organisations. In fact, I suspect most who read this article would have heard phrases like “our greatest asset is our people”.
Then why is it that so few choose to back up the rhetoric and invest in creating truly great employee experiences? Outside of haphazard onboarding, standardised training, and annual (or if they are lucky 6 monthly) performance reviews – it seems that many employee experiences are left to chance.
What is most alarming is that this appears to be the rule rather than the exception.
The answer, more often than not is that this kind of investment is never seen as urgent, and more importantly, the return on that investment is challenging to calculate.
The reality is investing in your employee experience is likely to be one of the most rewarding investments you could make. The impact on both the top and bottom lines are enormous and should no longer be ignored.
Here are five key reasons why you should invest in developing market leading employee experiences.
1. Radically increased earnings
According to Gallup research, companies with highly engaged workforces outperform their peers by 147% in earnings per share. That is simply staggering.
My guess is that if commercially driven Boards were in possession of that information, one of their first questions would relate specifically to the effort Executives are putting to developing strong employee experiences.
2. Substantial increases in profitability
To back up the research conducted by Gallup, a study by Towers Perrin found that there is a dramatic gap between the earnings of those businesses with highly engaged employees at a 19% increase in earnings per share, and those with the least engaged employees at a 33% decrease in earnings per share. With a gap of 51%, the impact on profit simply cannot be ignored.
3. Greater productivity
As Daniel Pink found in his seminal book Drive, the three factors that lead to better performance and personal satisfaction are Autonomy, Mastery, and Purpose. In fact, these three factors combined account for an intrinsic drive that is stronger, more powerful and more sustainable than traditional extrinsically driven environments. As Gallup found, engaged and motivated employees are 21% more productive than disengaged employees. Further research from McLean & Company found that a disengaged employee can cost a business up to $3,400 for every $10,000 in annual salary!
4. The cost of turnover
The costs of recruiting, hiring, training of a new staff member are relatively common knowledge. There is also the lost productivity before an employee resigns (as they become less engaged), which continues until a replacement team member is found and is able to get up to speed in the organisation. This is a long time without productivity. The problem, however, is this loss in productivity is a hidden cost. You will never see this cost in the P&L of any business, only the cost to hire.
As a result, it is largely ignored.
If every organisation was to allocate a dollar cost related to each voluntary staff member leaving, the decision to invest in developing better, more rewarding experiences for employees would be a no brainer.
5. Better customer experiences
By now most organisations have realised the financial value that a comprehensive customer experience strategy can have. Investments are made in new technology, new store layouts, and extensive customers surveys (too many in my opinion!!). However, employee investment remains largely static, which does not make sense. Employees not only create the most lasting memories of a brand (good and bad), but they are also best placed to identify problems and develop meaningful solutions if only they are given the tools, training, environment, and autonomy to do so.
The evidence is clear, investing in employee experience is great for business. Great employee experiences do not happen by chance – they are deliberated designed and executed.
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