Organisations across the world are losing money because their employees aren't fully engaged. An insight into what the recent Gallup and other studies reveal on the importance of employee engagement…
It's nothing short of an obsession. Workplaces, conclaves, seminars, industry gatherings, you name one, and you would invariably find an obsession with employee engagement - everything seems to link to it. The reasons are simple, engaged workers are more productive, perform better, motivate others and, perhaps most importantly – stay.
Deliberations apart, what is the ground reality. Gallup, as it does unfailingly, has once again come up with its employee engagement scores, and as expected, it paints a not so rosy picture. Though the survey results are for the American workforce, its reverberations are equally true for other economies too. Entirely consistent with other, equally downbeat, employee engagement surveys, Gallup’s data shows 30 percent of employees as engaged, 52 percent as disengaged, and 18 percent as actively disengaged. Simply put, the findings indicate that 70 percent of American workers are ‘not engaged’ or ‘actively disengaged’ and are emotionally disconnected from their workplaces and less likely to be productive.
Can we put to a cost to it? Yes! Gallup estimates that these actively disengaged employees cost the U.S. between $450 billion to $550 billion each year in lost productivity.
What is it in India? According to an April 2012, Gallup study India does not have enough engagement to spare. As of 2012, 32 percent of employed Indians are actively disengaged and 60 percent are not engaged. Only 8 percent of all Indian workers are engaged - or involved in, enthusiastic about, and committed to their work. The disengaged employees, actively or otherwise, are more likely to steal from their companies, negatively influence their co-workers, miss workdays, and drive customers away.
A recent study by Towers Watson further reveals that only two in five workers (39 percent) in Asia Pacific are highly engaged at work. The rest, three-fifths of the workforce, are struggling to cope with work situations, do not provide adequate support and emotional connection. The study goes on to state that organisations with highly engaged employees report loss of an average of 7.6 workdays per year, whereas organisations with disengaged employees lost 14.1 workdays, or almost twice as many workdays per year. Significantly, disengaged employees are more likely to leave their organisations. Research shows that 58 percent of disengaged employees compared with 17.1 percent of employees with high engagement, are high retention risks. And this comes with a huge cost- the bureau of National Affairs estimates that U.S businesses lose $11 billion annually due to employee turnover.
But who are these disengaged lot? The recent Gallup study provides a few interesting insights. Women are more engaged than men – 33 percent women were engaged, 50 percent not engaged, and 17 percent actively disengaged; while 28 percent men were engaged, 53 percent not engaged, and 19 percent actively disengaged. Remote employees were 32 percent engaged, 50 percent not engaged, and 18 percent actively disengaged. On-site employees were 28 percent engaged, 51 percent not engaged, and 20 percent actively disengaged. At a time when there is a lot of talk on millennial, the study finds that the most engaged generations are those leaving and entering the workforce. Traditionalists (defined as those at the oldest end of the spectrum, comprising 4% of the working population) were 41 percent engaged, followed by millennial at 33 percent. The study notes that more educated employees were not necessarily more engaged, perhaps because higher education levels bring with them higher expectations.
What does an engaged workforce mean for an organisation? David MacLeod and Nita Clarke in their seminal work, 'Engaging for Success: enhancing performance through employee engagement' for the UK government found a compelling correlation between employee engagement and operating income. Their study reveals that companies with low engagement scores earn an operating income 32.7 percent lower than companies with more engaged employees, while companies with a highly engaged workforce experience a 19.2 percent growth in operating income over a 12 month period. A study conducted by Corporate Leadership Council, that studied the engagement level of 50,000 employees worldwide concluded that engaged employees grow profits as much as 3x faster than competitors and that engaged employees are 87 percent less likely to leave the organisation. Further studies conducted by the likes of Tower Watson, Kenexa and LSA Global Learning Solution too have findings on similar lines. In this context McLean & Company's study states that a disengaged employee costs an organisation approximately $3,400 for every $10,000 in annual salary.
A simple cost benefit analysis makes a strong case to have an engaged workforce. As Kevin Kruse, author of Employee Engagement 2.0, would have loved to state - high engagement among employees improves morale, reduces turnover, and improves profitability. For once, now I understand why employee engagement is an obsession.
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