Reference no: EM132279622

Employee engagement is a popular topic these days. In general, engagement refers to the extent to which an employee feels committed to and a part of the organization. What’s the difference between engaged and disengaged employees? Gallup’s Jim Harter puts it this way: “When you ask people about their intentions during a recession, it’s pretty clear that disengaged workers are just waiting around to see what happens. Engaged workers, though, have bought into what the organization is about and are trying to make a difference. This is why they’re usually the most productive workers.” Best Buy, the giant consumer electronics retailer, has been using annual surveys to track levels of employee engagement since 2003. Best Buy’s strategy calls for providing customers with individualized shopping experiences, and top management realized early on that this strategy depended on the company’s most important asset—the employees who engaged with its customers. It also stood to reason that if its customers were motivated by the company’s ability to respond to their individual needs, then its employees could be motivated by its willingness to respond to their individual needs as well. In 2003, Best Buy thus launched a fairly radical initiative allowing employees to shape their own jobs and define their own career paths according to their own needs and talents. In 2010, an independent study concluded that Best Buy had “doubled the rate of increase in employee engagement.” In the same year, another study linked increased employee engagement to increased productivity: The researchers found that a 0.1 percent increase in employee engagement at a given store correlated with an annual increase in sales of $100,000. Findings like those at Best Buy have been confirmed on a much broader scale by a wealth of independent research. In 2015, for example, Gallup examined nearly 50,000 work units (groups of workers assigned to perform specific tasks) across 192 organizations in 34 countries. The purpose of the study was to provide statistical correlations between employee engagement and performance outcomes. According to Gallup, the study “confirmed the well-established connection between employee engagement and nine performance outcomes” ranging from profitability and customer ratings to absenteeism and workplace theft. Among other things, Gallup found that work units in the top quartile (those that scored better than 75 percent of all organizations in the study) outperformed those in the bottom quartile (those outscored by 75 percent of all organizations) by 10 percent on customer ratings, 22 percent on profitability, and 21 percent on productivity. Units in the top quartile had significantly lower levels of turnover (25–65 percent depending on industry-wide turnover rates), absenteeism (37 percent), safety incidents (48 percent), and quality defects (41 percent). Meanwhile, a study by Towers Watson, a global professional services firm, showed that organizations with high employee engagement enjoyed a 1-year average increase in operating income of 19 percent and 28 percent growth in earnings per share (EPS); companies with low levels of engagement experienced an average decline of 32 percent in operating income and an 11 percent drop in EPS. Gallup translated such data into some bottom-line numbers: Actively disengaged employees—about 26 percent of all workers—cost U.S. organizations between $450 and $550 billion in lost productivity every year. It may seem fairly obvious at this point, but according to Gartner, a consulting firm specializing in information technology research, “the positive correlation between employee engagement and organization performance suggests that there is a substantial upside for organizations that focus on enhancing employee engagement.” More specifically, however, what do all of these numbers mean for top managers when it comes to implementing changes in practices affecting employee engagement? For one thing, they need to appreciate the numbers. “Many executives and line managers,” says Gartner, “still view improving employee engagement as a soft and fuzzy concept,” failing to understand “why it’s important and what a vital role it plays in driving business success.”

THINK IT OVER

1. What might the role of HR be in promoting employee engagement?

2. How easy or difficult would you expect it to be to transform disengaged workers into engaged workers?