Disengaged Workers Cost Billions: Economics Of Engagement Subject Of Study

by Faye Beauchine

December 21, 2009: Travel Procurement

Good managers know intuitively that engaged employees are good for business. To support that precept, the Enterprise Engagement Alliance has gathered an impressive body of research that squarely aligns employee engagement with business results.

In a recent white paper, The Economics of Engagement, independent research from a number of respected organizations--Towers Perrin, the Human Capital Institute, Sears, IBM and Costco--confirms the positive economic impact of cultivating and retaining engaged employees. The studies provide ample scientific support of the financial impact--and shareholder return--of engaged versus disengaged employees.

With less than one-third of U.S. employees engaged, according to both Gallup and Towers Perrin, the upside is significant. It's possible to reclaim some of the $350 billion lost annually by U.S. companies to employee disengagement.

Highly engaged employees expend discretionary effort and that usually translates to bottom-line results. Employees engaged in their work experience a strong connection that taps into emotional and relational efforts--their hearts and minds. These efforts lead to greater results as measured by traditional metrics (productivity, retention) as well as to different approaches (macro rather than micro, delayed rather than immediate effect).

If you're just showing up at work and not contributing discretionary effort, it could be a sign of disengagement. Even major league brands that have never had morale issues aren't immune. For the first time, they have had pay cuts, leave without pay, layoffs--and they don't know how to grapple with these issues.

Companies understand that they need employees to take care of their customers and that engaged employees take care of customers better. Consequently, they are investing in employee engagement as a remedy to the issues facing most companies today: the economy, layoffs and doing more work with fewer people. It serves as a reminder to employees that they and their contributions are valued and that they can make a difference in business today.

What has accelerated the importance of engagement are concerns that when the economy improves, employees who feel disengaged will jump ship the first chance they get, leaving their employers struggling to maintain an effective workforce.
Some companies and CEOs understand the value of engagement and the new measurement methods. While there is no simple formula to achieve higher engagement, there are some fundamentals. The organization needs a solid culture and value system that supports engagement. Senior leaders have to drive the process. Managers must be selected and developed with employee engagement in mind. And employees must be made partners in the process.

Measurement tools, best practices and techniques also exist. The most important unanswered questions about employee engagement programs are how the various elements of the programs (training, communication, recognition, incentives, etc.) affect the outcome and what is their cumulative effect on engagement.

Decision sciences (analytics) can isolate the variables in specific programs and determine what works and what doesn't. Constant data analysis offers insights that allow us to predict, in any situation, what elements provide the greatest impact--and at what cost.

So engage your employees, measure the impact and grow your business.

Fay Beauchine, Carlson Marketing engagement and events president, serves on the executive committee of the Enterprise Engagement Alliance--a coalition of marketing communication, incentive, media and research firms that sponsored the white paper authored by Human Capital Institute president Allan Schweye. Beauchine also is president of the National Business Travel Association Foundation and president-elect of the Site International Foundation.