Why Your CEO and CFO Should Care About Employee Engagement

Editor’s note: TLNT is continuing an annual tradition by counting down the most popular posts of the year. This is No. 43. Our regular content will return in January.

Why should CEOs and CFOs care about employee engagement?

Here’s why: Increased engagement drives bottom-line business results. Towers Watson over the years has donenumerous studies showing the impact of increased engagement on operating margins, earnings per share and more.

Research such as this is a good validator and normalizer across organizations and industries, but what does that look like in practice? Kenexa ran a study at Caterpillar and found (quoting this infographic):

High-engaged stores out-performed the other stores in almost every aspect.

  • Met or exceeded quarterly financial targets 40 percent more often;
  • Customer loyalty increased by 5.3 percent;
  • 4.5 percent higher technician productivity
  • 60 percent lower technician related re-work;
  • Three times fewer accidents reported”

How engagement really works

That’s a significant return to Caterpillar’s bottom line from stores where employees not only deliver better quality work product and services to customers, but where they want to do so above and beyond the call of duty.

Lead Change Group explains how this works quite well (quoting):

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  • Engagement unlocks discretionary effort. It creates the conditions that encourage individuals to volunteer more of themselves, their time, their creativity, and their talents to the organization. Discretionary effort at its core is a choice people make to ‘go the extra mile,’ a choice based in large part on their level of engagement.
  • Then, discretionary effort plays out in innumerable ways. Greater attention to the needs of customers. Improved sales and service. Innovations and improvements. Productivity and efficiency. Bottom-line results.”

Focusing on employee engagement – more to the point, creating a culture in which employees choose to engage – is a strategic business decision. Engagement is not just a “warm fuzzy HR thing” or the latest HR fad.

Are your chief executive officers behind your employee engagement initiatives?

You can find more from Derek Irvine on his Recognize This! blog.

Derek Irvine is one of the world’s foremost experts on employee recognition and engagement, helping business leaders set a higher vision and ambition for their company culture. As the Vice President of Client Strategy and Consulting at Globoforce, Derek helps clients — including some of world’s most admired companies such as Proctor and Gamble, Intuit, KPMG, and Thomson Reuters — leverage recognition strategies and best practices to better manage company culture, elevate employee engagement, increase retention, and improve the bottom line. He's also a renowned speaker and co-author of Winning with a Culture of Recognition. Contact him at irvine@globoforce.com.


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