Technologies and processes continue to evolve, but how companies manage and develop employees hasn’t improved over the past decade. As a result, companies miss out on unprecedented opportunities for growth.
Gallup has discovered four (4) human capital strategies that combine in a powerful way to add up to 59 percent more growth in revenue per employee, and using them together leads to gains that more than double the effect of using any single strategy on its own.
They call this the “additive effect.”
Strategy 1: Select managers with natural talent
The most critical strategy is selecting and deploying the right managers. When you get this decision wrong, nothing fixes it.
Bad managers drive talented employees away and ultimately damage customer relationships. However, naturally talented managers play an essential role in creating an engaged workforce, explaining at least 70 percent of the variance in the engagement of their teams.
But Gallup found companies pick the wrong manager 82 percent of the time. The key to hiring the right managers is selecting candidates based on their specific talent to manage others, not their years of seniority or standout performance as an individual achiever.
When companies pick the right managers, they can achieve 27 percent higher revenue per employee than average.
Strategy 2: Select the right individual contributors
Companies that select and develop employees based on their natural talents have an opportunity to accelerate business growth. But companies tend to concentrate on candidates’ education, skills, and work experience while overlooking whether each candidate has the right natural talent to excel in a role.
The additive effect of selecting naturally talented individual contributors is 6% higher revenue per employee, for a combined gain of up to 33 percent higher growth potential.
Strategy 3: Engage employees
Creating a culture of employee engagement demands a strategy, accountability, great communication, and manager and employee development plans that are aligned with performance outcomes. However, less than one-third of American workers are engaged, compared with 52 percent who are not engaged and 18 percent who are actively disengaged.
Worldwide, the situation is even worse: Among the 142 countries in Gallup’s global study, only 13 percent of employees were engaged in their jobs, while 63 percent were not engaged and 24 percent were actively disengaged.
Still, many companies have bucked the trend and engaged their workforces, seeing up to 147 percent higher earnings per share compared with their competitors.
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With the additive effect, a culture of employee engagement can lead to up to 18 percent higher revenue per employee, for a total of 51 percent higher growth potential when combined with selecting the right managers and individual contributors.
Strategy 4: Focus on strengths
Companies get the most from their workforce when they help employees identify and use their strengths. These strengths serve as employees’ — and the company’s — greatest opportunities for success, and building on employees’ strengths is more effective than trying to improve their weaknesses.
Gallup found when managers focus on employees’ strengths, 61 percent of workers are engaged and only 1 percent are actively disengaged — a dramatically different result than what surveys find of employees generally.
When employees use their strengths, they’re six times more likely to be engaged, perform better, and are less likely to leave their company. This produces an additive effect of up to 8 percent higher revenue per employee, for a total of 59 percent higher revenue growth potential.
It all adds up
Each strategy pays off and puts a company on the path to maximizing its human capital capacity. If a company isn’t using these four strategies, then its workforce isn’t operating at full potential, and the business is likely missing opportunities every day.
However, each manager-led team that maximizes the additive effect puts the organization in an incrementally better position to win.
The post originally appeared in a somewhat different form on OCTanner.com