The Obvious Business Case for Employee Engagement

The controversial talk about cost cutting has been relentless in the lengthy aftershock of the financial crisis. Most worryingly for organisations in general is the apparent fact that what are wrongly referred to as the “soft skills disciplines” including training and development; internal communication/employee engagement; brand engagement and culture development are constantly under threat  just when they’re needed the most.

A large part of the reason for this is that these disciplines are wrongly seen as discretionary spend, easily subject to cutbacks.

But there’s a flipside to the cost argument.

Market research leader Gallup asserts that, in 2008, the cost of disengagement to the UK economy was between £59bn – £64bn and an IES/Work Foundation report found that, if organisations increased investment in engagement practices by just 10%, they would increase profits by up to £2k per employee per year. (source Employee Engagement Today, vol 2, Autumn 09).

As someone who has first hand experience of the impact disaffected staff can have on business performance and brand management, I believe these to be conservative figures, but they still make a very strong point.

David Bolchover, in his book The Living Dead*, states that in the UK alone, doctors receive over 9 million “suspect” requests for sick notes per year. This is equivalent to the entire population of Sweden.

His book came out during the good times.

In addition one in three midweek visitors to a major theme park are reputedly “pulling a sickie” from work. Great news for the entertainment industry but worrying for HR departments. It also begs the question where do the theme park employees go when they fancy a duvet day?

A 2006 study by ISR found that a 5% improvement in the overall level of employee engagement converts into a 25-85% increase in profits for service oriented organisations.

Jack Welch, legendary former CEO of GE, identified employee engagement as the most important barometer of organizational performance (Business Week, May 3, 2006 “A Healthy Company).

The CBI reports that apparent sickness absence costs the UK economy more than £13bn a year.

The Chartered Institute of Personnel and Development’s 2010 report, Creating an Engaged Workforce found that just under a third of employees are actively engaged with their work at any one time. The 2010 Putting it in Perspective report from ORC International found that although levels of job satisfaction have increased slightly across the UK, organisational pride and the confidence of employees to speak up and make their voices heard has dropped.

Business case for employee engagement at an individual business level aside, recovery of these figures alone would go a long way towards solving the national debt problem.

Yet, encouraging people to “go the extra mile” is a key goal of the new government-backed employee engagement task force and there is widespread acknowledgement that increasing levels of engagement across the UK could really help to boost productivity.

We need our organisations to function if the economy is to function. There are no organisations without people. Performance is not sustainable without engagement.

Take great care where the axe falls or you may just be cutting off your proverbial “nose to spite your face”.

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7 thoughts on “The Obvious Business Case for Employee Engagement

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