The 110 Percent Solution: Engaged Employees Create a Company's Competitive Edge

Corporate Human Resources professionals have increasingly developed a strategic focus in order to become active partners with the management of the businesses they serve.  In light of current and future demographic and productivity trends, the concept of engagement should be at the heart of the discussion when considering how HR professionals can best fulfill this function. 

Towers-Perrin ISR, a leading employee research and consulting firm, defines engagement as “the extent to which employees believe in the values of the company, feel pride in working for the company, are motivated to go the extra mile, and are committed.” 

In a white paper titled, “Employee Engagement: The Key to Realizing Competitive Advantage,” Richard Wellins, Ph.D., cited The Gallup Organization to emphasize this point. According to Gallup, “…business units that reported employee engagement above the median had a 70 percent higher likelihood of success than those below the median.  Success was a composite measure combining customer loyalty, turnover and financial metrics.” 

The ISR study further documented a net profit margin of 2.06 percent for high engagement companies compared to -1.38 percent for low engagement companies. The Bureau of Labor Statistics projects a shortfall of 10 million workers in the United States by the year 2010. The crisis of falling productivity coupled with a talent shortfall is not a far-off problem. At the same time, 80 percent of corporate assets are categorized as intangible (i.e. brand, intellectual property and the quality of the workforce), 30 years ago intangible assets accounted for only 60 percent of corporate assets.

The correlation between engagement and productivity, as shown in the statistics cited above, highlights the significance of a problem known as “presenteeism,” which has increased by 70 percent, for employees who are moderately engaged or actively disengaged at work. In its broadest definition, “presenteeism” describes a loss of productivity even when employees are present and on the job. The limited productivity levels indicated for these employees pose significant disadvantages in a highly competitive business environment.

In addition to the challenges of recruiting talented workers who fit an organization’s culture, the problems of retaining those employees become critical. Creating a climate that promotes employee engagement is central to the solution. 

Furthermore, in order to meet these challenges and demonstrate the effectiveness of these efforts, sound metrics will need to be developed to validate any HR initiatives.  How can HR meet the challenges that are facing companies today? 

Here are 10 factors to consider (based on concepts documented in recent studies and articles) for increasing 21st century productivity levels through employee engagement:

1. Effective recruiting will be critical. In addition to recruiting for skills, knowledge, and cultural fit, companies will need to recruit for characteristics that indicate the propensity for engagement.  Traits such as an interest in the work, competency, a desire to achieve and adaptability often predict the likelihood of engagement.
2. Engagement is not a program; it is an outcome and requires a top-to-bottom commitment.  Engagement is not a “flavor of the month” training initiative; rather it a commitment throughout the organization that ensures that all human capital efforts — from recruiting, to supervision and reward programs — align to support the employees’ development and productivity levels.
3. Effective leadership is a necessity, not a nicety. Investments are needed in Training and Development programs to ensure a high standard of leadership, this includes training, mentoring and coaching of supervisors and managers
4. Effective employee “on-boarding” efforts are needed to increase retention and productivity.  The old approach of a formal orientation and a few weeks of on-the-job training are insufficient to aid a new employee in the transition from new hire to productive employee.  On-boarding involves a longer process and seeks to integrate the new hire socially, as well as professionally, into the culture of the workplace.
5. Talent management program address the complexities of global competition for talent.  In highly engaged organizations, supervisors and managers are reviewed on employee-retention and engagement-performance measures, as well as on traditional productivity standards.
6. Recognition programs need to reward engagement and a willingness to learn and innovate.  To ensure continued performance, engaged employees need to know that their efforts are recognized.  Non-monetary rewards can be as important as merit pay or other compensation-based rewards.
7. Organizations must encourage empowerment of employees in their jobs.  The more an employee feels competent and in control of their work product, the more likely he/she will demonstrate a high level of engagement.
8. Personal and professional development programs for employees are critical to engagement and retention.  In addition to training opportunities, job enrichment programs serve to prepare employees for future assignments and to make current positions more rewarding.
9. Engaged employees need to feel that their position contributes to the success of the organization.  They need to understand the alignment of their efforts to the business results of the company.
10. Engagement metrics’ tools, such as surveys and formal impact studies will be required to measure current states of engagement and chart effectiveness of HR practices and the impact on business results.

In these difficult economic times, organizations are striving to maximize resources. Employee engagement is a key driver in achieving consistent business results.

How can HR meet the challenges that face companies today? Creating a climate that promotes employee engagement is central to the solution.