Employee disengagement causes business woes

employee-disengagement

When an employee enters a workplace for the first time, he or she is full of initiative, ideas and strategies that could very well improve down the line efficiencies. Yet, a lack of engagement, immediate or otherwise, often results in employee disengagement. And this can have dire consequences for the business and staff member writes Chase Performance CEO Mark Pope.

There are risks inherent in any business. Most company leaders look only to financial burden, cost imperatives and bottom line policy. They expect employees to come in and perform a set task. That is fine if that is all they want for their business, but good leaders will encourage their staff to undertake those tasks and improve on their efficiencies.

A lack of encouragement does the opposite. It disengages employees and when this occurs there is limited innovation and down the line initiative. This is problematic for many reasons; not least is that your bottom line will suffer.     

Look at this problem holistically. There is an equation here: satisfied employees = workplace efficiencies = business profitability.

The takeaway is that if you are worried about your bottom line and the risks associated with cost imperatives, perhaps you should be looking at whole of business solutions, which begin with staff engagement.

I regularly ask employee groups if they have any ideas about how to improve the business they operate in. Typically, 90% raise their hands. And although that 90% doesn’t always generate million dollar ideas, they often produce one hundred smaller ideas that may yield bottom line value while demonstrating greater ownership of their roles.

A study undertaken by the Harvard Business Review, July 2013 found that engagement creates an increase of up to 22% in productivity and a 41% increase in quality.

Meanwhile, disengagement creates staff turnover. Workplaceinfo.com.au suggests that line managers and senior managers who are blasé about people management should be concerned by the costs of lost productivity.

Workplaceinfo.com.au would have you consider the following: “Many managers are shocked to discover the true cost of employee turnover. Some sources estimate that the cost of replacing a salaried and professionally qualified employee is equivalent to a year’s salary or more. Other studies suggest that a typical rate of voluntary turnover (resignations) for organisations is about 10% per year (i.e. excluding dismissals and redundancies).

“Consider the following sample calculation. A business with 500 employees can expect to have 50 resignations per year. Average Weekly Earnings (AWE) figures issued by the Australian Bureau of Statistics (for November 2006) record AWE for full-time employees of $1,058.90. Adding 30% to this for the cost of employee benefits and on-costs amounts to $317.80, giving a total cost of $1,376.70.

“Assuming turnover cost to be a year’s total remuneration for each employee, total annual cost of turnover for this business is $1,376.70 x 52 weeks x 50 employees. That’s a total of $3,579,420 per year. So a retention strategy that was able to reduce employee resignations from 10% to 5% per year would save this business almost $1.8 million per year, less the costs of implementing the strategy.”

The question is: how do you retain staff, engage them and keep them happy?

Research conducted by world-renowned psychologist Dr. Martin Seligman around positive psychology focuses on the scientific study of the strengths and virtues that enable individuals and communities to thrive. The field is founded on the belief that people want to lead meaningful and fulfilling lives, to cultivate what is best within themselves and to enhance their experiences of love, work and play.

Taking this further, and applying it to the workforce specifically, is renowned author Daniel Pink who says the three real drivers of motivation come from having a sense of autonomy, purpose and mastery in our activities.
Combining Dr. Seligman’s research with Mr. Pink’s we find that to lead a more fulfilling life in the workforce requires management to create a culture of autonomy and responsibility.

Culture is delivered from the bottom up. When people take on a new job, they look for money and opportunity. When they leave a new job, it is because of culture, management or lack of opportunity.

Managers need to be more aware of this in their planning. They need to engage; and by doing so, they will retain their top employees, they will encourage new employees to speak about improvements and thus stay with the organisation and they will minimise any damage to their bottom line.

Chase Performance offers a range of workshops designed to facilitate employer/employee engagement. We highlight the importance of having all team members engaged with organisational strategy. A PwC 2013 survey found that over 72% of Australian businesses believe they need to increase their investment in people to be competitive. Chase Performance can help you build strategies that help you make this investment. An engaged workforce is a productive one.
For more information about our Organisational Health Benchmarking Workshops click here.