The ROI of employee engagement is something every HR professional, operations manager and company director should be concerned about.
After all, if there is one thing this coronacoaster of a year has taught us, it’s that engaged employees go the distance.
How so?
Well, when the going gets tough, you ideally want to be working with a team that is in it to win it, pulling together as a cohesive unit to keep the boat afloat instead of paddling off in different directions, only intent on saving their own skins.
Think of it as wearing a wetsuit during a tsunami, rather than faffing about in a string bikini when the big waves hit…
But we digress.
Back to the matter at hand – the ROI Of employee engagement and the business case for focussing on employee experience at your place of work.
Let’s talk some hard numbers that really make the business case in terms of actual bottomline-improving rands and cents. This includes numbers that pertain to:
- Earnings per share
- Revenue growth
- Net income
- Shareholder returns
- Operating income
- Profitability
- Employee retention
- Customer loyalty
- Productivity
- The cost of disengagement
Earnings per share
According to a Gallup study, companies with higher employee engagement levels enjoy greater growth in earnings per share. In fact, businesses with highly engaged employees boast earnings-per-share levels that are at least 2.6 x higher than competitors with low engagement scores.
Revenue growth
According to an analysis by Aon Hewitt for every 1% increase in employee engagement, you can expect to see an additional 0.6% growth in sales for a given organisation. This is reiterated by findings shared by Grant Thornton.
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Net income
A study of 60+ organisations found that those with highly engaged employees have at least double the annual net income of those who don’t have optimal levels of engagement.
Shareholder returns
The same study determined that companies with top-notch engagement have total annual shareholder returns that are 7 times that of companies with high levels of disengagement, when measured over the course of 5 years.
Operating income
A study performed under instruction of the government of the United Kingdom in 2008 showed that there was a correlation between operating income and employee engagement. Conducted by academic researchers David MacLeod and Nita Clarke, the results of the study showed that companies where engagement scores were low, had an operating income that was on average 32% lower than those of companies where employees were actively engaged.
Profitability
Highly engaged teams show a 21% greater profitability and companies that actively invest in employee experience are four times more profitable than those who don’t.
Employee retention
Employee churn is an expensive business. This is why retaining top talent is top of mind for every company out there. As such, it is important to note that employees with lower engagement are 4 x more likely to leave their jobs than those who are highly engaged.
Global statistics tell us that 66% of highly engaged employees reported that they had no plans to look elsewhere for employment, while only 3% of them were actively on the lookout compared to 12% and 31%, respectively, for their disengaged counterparts.
Back in sunny South Africa, attrition statistics are equally alarming. Only 9% of the South African workforce is actively engaged, and of the 91% who were disengaged, 45% were actively disengaged (which means they are very negative about their workplace and very likely to spread this attitude to their co-workers.
In fact, over half of young employed South African professionals are hunting for new positions and looking to change employers within the next year.
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Customer satisfaction and loyalty
Companies that excel at customer experience have 1.5 times more engaged employees than companies with poor customer experience.
Productivity
Disengaged workers have 37% higher absenteeism and commit 60% more errors. Companies with low engagement scores also suffer from 18% less productivity. The Workplace Research Foundation also reported that highly engaged employees are almost twice as likely to have above-average productivity.
The cost of disengagement?
According to findings by McLean & Company, a disengaged employee can cost their employer up to a third of their overall salary due to errors, absenteeism, etc. In the long run, this type of thing can cost an economy like the US up to $350 billion annually. Just imagine what that means in SA terms!
We hope you have a clearer understanding of the ROI of employee engagement as explained at the hand of real ‘show me the money’ numbers. Check back soon for more of the good stuff.
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