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How Do I Know Focusing on Employee Engagement Will Help My Bottom-Line?

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I would like to focus on how financial markets value employee engagement as a means of increasing shareholder value.

Back in 1999 Dow Jones launched their “Sustainability Indexes”  as a way of tracking their financial performance of companies around the world that were “sustainability-driven.” Dow Jones has partnered with a Swiss-based investment boutique, SAM, that is “focused exclusively on sustainability investing” according to a recent press release.

The indexes look at a range of criteria that fall under three general categories:

1) Economic – Codes of Conduct / Compliance / Corruption & Bribery

  • Corporate Governance
  • Risk & Crisis Management
  • Industry Specific Criteria

2) Environment – Environmental Reporting

  • Industry Specific Criteria

3) Social – Corporate Citizenship/ Philanthropy

  • Labor Practice Indicators
  • Human Capital Development
  • Social Reporting*
  • Talent Attraction & Retention
  • Industry Specific Criteria

According to Dow Jones, “Corporate Sustainability is a business approach that creates long-term shareholder value  by gearing their strategies and management to harness the market’s potential for sustainability products and services while at the same time successfully reducing and avoiding sustainability costs and risks”.

Dow Jones sees five specific areas where sustainability has a meaningful impact on business performance. It is important to note that while Dow Jones is focused on publicly traded companies, private companies can also benefit from embracing the same factors.

“Strategy: Integrating long-term economic, environmental and social aspects in their business strategies while maintaining global competitiveness and brand reputation.

  • Employee engagement is clearly a “strategic” approach — viewing and training employees as a strategic asset to gain competitive advantage over companies who have yet to realize the enormous business value of increasing performance in the workplace.
  • On the issue of “brand reputation” it is becoming more obvious every day that an organization’s brand reputation is increasingly determined in the cloud, based on what two key audiences (customers and employees) are saying online. The only way to influence what those two audiences are saying is to have highly engaged employees that are delivering an extraordinary customer experience.

“Financial: Meeting shareholders’ demands for sound financial returns, long-term economic growth, open communication and transparent financial accounting.”

  • There are a lot of factors that influence long-term economic growth, and one of the most important is the level of engagement (the amount of discretionary effort volunteered by employees) demonstrated by the workforce. Very few business indices are actually forward-looking — employee engagement is one of the most accurate.

“Customer & Product: Fostering loyalty by investing in customer relationship management and product and service innovation that focuses on technologies and systems, which use financial, natural and social resources in an efficient, effective and economic manner over the long-term.”

  • Extensive research around the world on the issue of customer loyalty has demonstrated that there are very few, and perhaps only one, empirically validated factors that accurately predict customer passion. A relationship at an emotional level between the customer and a company’s brand promise, product, service, people — is the essential. Customer satisfaction alone, is simply a look in the rearview mirror, demonstrating the quality of past experiences. Only a relationship at an emotional level can predict future customer behavior.
  • Such a relationship depends on the quality of the customer’s interaction with the people and the brand, and the quality of that interaction will be largely determined by the level of employee engagement within the organization.

“Governance and Stakeholder: Setting the highest standards of corporate governance and stakeholder engagement, including corporate codes of conduct and public reporting.”

  • Stakeholder engagement obviously includes employees and customers and here again we want to focus on the most effective way to drive these two key audiences to higher levels of engagement and satisfaction. Nothing accomplishes that more quickly and more effectively than a singular focus on employee engagement as measured by our company.

“Human: Managing human resources to maintain workforce capabilities and employee satisfaction through best-in-class organizational learning and knowledge management practices and remuneration and benefit programs.”

  • Here we see the most direct connection to employee engagement as we see it at Engagient. I do think, however, that Dow Jones is making the same mistake many companies are making when they identify and focus on the notion of “employee satisfaction.” Measuring employee satisfaction as a predictive tool of workplace performance is a fool’s errand. For example, you could have a company full of highly “satisfied” employees as measured by many of the assessment tools available — but that does not tell you much about the productivity and actual engagement of your staff. They could be satisfied because they are well-paid and not held accountable. They can be satisfied because they have found a place to hide out, offering little if any discretionary effort, but they’re still well-paid. Measuring employee engagement is much more predictive regarding workplace performance and productivity and of course highly engaged employees are also highly satisfied as a result.

BEST PRACTICE: Stop thinking of employee engagement as a sideline concern or as “coddling” employees.  The level of discretionary effort employees volunteer everyday is much more important than most of the data you look at and live by in your business life.  If you want to see your KPIs steadily increase, focus some of your time and energy on employee engagement.

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The following comments are for Engagient's Employee Engagement Seminar for Managers

We needed to communicate the value of fully engaged employees to our managers and supervisors, and without a doubt, Engagient’s seminar on Employee Engagement clearly told the story. Our entire management staff now understands the value to our business in having a fully engaged workforce. Engagient made sure we had the necessary tools to move forward and we now believe this will help us differentiate ourselves against our competitors.

Don’s delivery is exceptionally engaging, straight forward, and in my experience one of the best facilitators/presenters I’ve worked with. Our junior and mid-level managers were engaged the entire day and they are definitely now on-board with our new initiative. He did an exceptional job in framing the issues, and he was able to link it closely with our company’s core values on this topic.

--Dave Maresca
VP, Administration & Business Development
Perfect Plastic Printing
 
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