Employee Retention – Incentive Services University

Customer Loyalty, Employee Engagement, Employee Retention, Industry Articles

Economics of Engagement

Article written by Incentive Services University

According to a recent study by MSW Research and Dale Carnegie Training, “employee engagement is important because ‘engaged employees’ are more committed and productive”. Unfortunately, the study also concluded that “. . . only 29% of employees are fully engaged while 26% are disengaged” (Victor Lipman, Forbes website, 12/14/12). But what is employee engagement? Fineman & Carter (2007) define employee engagement as “the willingness of employees to invest discretionary effort on the job”. Vazirani suggests that engagement is “. . . the level of commitment and involvement an employee has towards their organization and its values”. An employee’s level of engagement in an organization can make or break their feelings about work and eventually influence performance.

Engaged employees tend to be more satisfied with both job and company. They have a positive attitude, greater productivity and are less likely to leave their position. Conversely, disengaged employees tend to be dissatisfied with both job and company. They have a negative attitude, higher rates of job turnover and often adopt a “quit and stay” attitude about their job and their company. But employee engagement can mean much more to an organization than just attitude and productivity. Levels of employee engagement can significantly impact a company’s bottom line.

For most companies, payroll is the largest expense. Happy, productive, and highly engaged employees decrease the high cost of turnover, training and even recruiting. “In the aggregate, employee disengagement is estimated to cost the US economy as much as 350 billion dollars per year in lost productivity, accidents, theft and turnover” (Schweyer, 2009, The Economics of Engagement, Human Capital Institute). Companies need to recognize that better talent management can lead to better employee engagement. Highly engaged employees believe they can positively impact the quality of company’s products, positively affect customer services and positively impact costs (2005 Towers Perrin study). Disengaged employees cost organizations money. And the greatest factor is productivity. But what about the “non-engaged employees”?

Non-engaged employees tend to occupy the “middle ground” and are normally the majority in most organizations (Schweyer, 2009, The Economics of Engagement, Human Capital Institute). These employees may feel that their contributions are being ignored and that their potential is being overlooked. These employees may not be disengaged, but neither are they fully engaged in either their position or organization. They are not contributing to their full potential. These employees shouldn’t be ignored by management and organizational leadership.

So how can you positively impact engagement and minimize the economic impact of disengaged or non-engaged employees? One way to directly increase employee engagement is to create a culture of recognition and appreciation. This means recognizing both the “middle” employees and the high-performers to ensure that every employee feels that his or her contributions are recognized and appreciated by management and leadership. Recognition can be a motivating factor in improving employee performance, creating a higher-level of engagement and satisfaction with the company. “Recognition is one of the most powerful, least used management tools” (John J. Oliver, The Rewards of Recognition). Recognition can create a more engaged, committed and productive workforce.

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Employee Engagement, Employee Productivity, Employee Retention, Industry Articles

The Importance of Recognition

Article written by Incentive Services University

“Thank you.” “Great job.” “Congratulations!” Whether adults or children, we all like to receive validation for our efforts, achievements and success. Employers often spend a great deal of time, money and energy recruiting and hiring new employees, optimizing employee performance, and ensuring the retention of talent. But many organizations forget the basic tenet that employees are more engaged, more productive, and more likely to stay with a company when they feel valued and appreciated for their time and efforts. It all starts with the importance of recognition.

What do we mean by recognition? According to Kim Harrison, “Employee recognition is the timely, informal or formal acknowledgement of a person’s or team’s behavior, effort or business result that supports the organization’s goals and values, and which has clearly been beyond normal expectations” (Why Employee Recognition is So Important). In fact, we all have a fundamental human need to be recognized, noticed and appreciated. But according to John J. Oliver, ” Recognition is one of the most powerful, least used management tools. . . It’s not about favoritism, but about recognizing and rewarding all employees who meet well-defined and stated criteria” (The Rewards of Recognition). Recognition in the workplace may be formal or informal, but – when sincere – it is always appreciated.

Informal recognition of employees can be as simple as a verbal “thank you” for a late night at the office or a well-timed email of congratulations on a successful project. Some companies even have websites that make sending a quick note of recognition as easy as clicking a link. More formal recognition programs might include Service Awards to recognize employees for their years of dedicated service or Spot Awards offering spontaneous gifts, cards or points with a monetary value to recognize employees “in the moment.” Helping your managers to understand the value of recognition, and then harnessing that positive power, can lead to significant benefits for your employees and for your entire organization.

In his article, Employers Learning That ‘B’ Players Hold the Cards, author Del Jones points out that ” . . . failure and success [in an organization] might not lie among the weakest and strongest links, but in the solid middle, . . . the 75% of workers who have been all but ignored.” These are the employees who will stick around long after the “A players” have run because the ” . . . opportunities for riches and promotions dry up. . . . loyal B players, still retain the organizational memory to help their companies survive and . . . move forward.” This makes recognizing your “B players” for their efforts that much more important. Spread the recognition across the whole organization.

Recognition, whether formal or informal, can benefit your entire organization. When leveraged properly, it can create higher levels of engagement and satisfaction for your employees and can be a motivating factor in their day-to-day performance. Higher employee engagement can also lead to a more positive, productive and stable organization. And it all starts with a simple “Thank You.”

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Employee Retention, Industry Articles

Generations

When Generations Collide

Article written by HJ Cummins, Minneapolis Star Tribune

The first wave of Generation X recently turned 45, making Gen Y-ers the new youngsters. Traditionalists are wrapping up their careers, and Boomers soon could follow them into retirement – or not. With four generations on the job, employers find that their biggest diversity issue these days is age.

Sheila Gallagher tries to be a sensitive manager. So even though young Frank Brodie, a new Carleton College graduate, had just joined her restaurant sales and support staff at General Mills in August, Gallagher invited him to make a presentation at his very first staff meeting in September.

That’s huge. A Baby Boomer broke company protocol in order to make a Gen Y-er feel included. Gallagher thought to make the gesture because she was fresh from a training session on generational diversity – the biggest workplace diversity issue today, many say.

U.S. employers now count four generations on their payrolls, mostly because people are living and working longer. The leading edge of Generation X just hit 45 this year, and they have issues with Generation Y. Boomers have to start taking Gen Xers seriously enough to talk succession plans. And they all need to figure out how to work with their elders – the Traditionalists – as the U.S. workforce continues to age.

Their differences are more than simply age. They have to do with lifestyles and work styles shaped by forces as disparate as dust bowls and iPods. And unless companies sort it all out, they will be in trouble, said David Stillman at BridgeWorks, a Twin Cities consultant on generational diversity. “What ten years ago was seen as a `fluff’ topic has become a clear, bottom-line issue, a retention issue,” Stillman said. “People who say `I don’t feel understood here’ or `I don’t feel respected here’ go to work for someone else.”

More employers are getting interested in the generations and how they work together – or not. Workplace specialists say it can get complicated. The oldest group, the Traditionalists or Veterans, was born before World War II. Its members tend to respect authority and tradition. And while they prize loyalty, they still may balk at younger bosses’ new ideas – after living through everything from Total Quality Management to Six Sigma.

Boomers are a driven bunch, partly because their sheer numbers mean they always have had to compete for jobs. Trained that asking for help is a sign of weakness, they’re burning out with today’s workloads. And they’re not very impressed with the less-ambitious Gen X-ers.

Generation X is emphatic about balancing work and life, partly because they don’t want to follow Boomers into burnout. Their goal is building careers, which means they welcome new and different assignments at work.“X-ers love lateral moves,” Stillman said. “Boomers see that as being `sidelined.’-” Also, unlike Boomers, X-ers don’t trust companies. “A year-end bonus doesn’t work for X-ers,” said Karen Stinson, CEO of ProGroup, another diversity consulting firm in Minneapolis. “They’ll be thinking, `I may not be here that long. Your company may not be here that long. You all might be in jail by then.’-”

Generation Y – also called Nexters or Millennials – finds Gen X-ers too distant, and X-ers think Y-ers need too much handholding. Parents doted on this generation, so they feel loved and supported and optimistic about the world. X-ers see them as Pollyannas, but their world views connect well with Traditionalists, Stinson said. Also, this heavily scheduled generation worked less than any other while growing up, so they missed basics such as punctuality and dress codes. “I’ve seen huge conflicts over whether they can wear flip-flops to work,” said Stillman of BridgeWorks. “I’m telling their bosses, `Don’t get mad at them. Don’t dismiss them as bad workers. Just back up and teach them.’-”

And one more thing: Understand the difference between generalities and stereotypes. Stillman hears: Oldsters are technophobes. Baby Boomers are workaholics. Gen X-ers are slackers, disloyal. Millennials are too young to know anything. “The point is to get to know and understand the person,” he said.

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Employee Engagement, Employee Productivity, Employee Retention, Industry Articles

Employee Engagement

Employee Engagement: What It Is and Why You Need It

BusinessWeek.com reader Derek Irvine on the importance of engaging employees strategically and authentically

As someone whose job it is to advise companies on employee engagement, I was fascinated to read “Making Employee Engagement Fashionable” by the CEO of Gucci recently on BusinessWeek.com. As I was moved to comment on the column, strategic recognition is the key to fostering a truly engaged workforce. As the recession drags on, company leaders are looking for any solution to boost morale, increase productivity, and help gain competitive advantage. Employee engagement is rapidly becoming the answer for many organizations, though many remain confused about the benefits of employee engagement, what it is, and how to foster it in their organizations. Why should you care if your employees are engaged? The research on the bottom-line benefits of employee engagement is clear: Towers Perrin has found that companies with engaged employees boosted operating income by 19% compared with companies with the lowest percentage of engaged employees, which saw operating income fall 33%. What does that mean in real dollars? For S&P 500 companies, Watson Wyatt (WW) reports that a significant improvement in employee engagement increases revenue by $95 million.

Productivity Boost

The effects of engagement on employee productivity, retention, and recruitment are no less astonishing. Watson Wyatt further found that companies with highly engaged employees experienced 26% higher employee productivity, lower turnover risk, greater ability to attract top talent, and 13% higher total returns to shareholders over the last five years. Additionally, highly engaged employees are twice as likely to be top performers—and miss 20% fewer days of work. They also exceed expectations in performance reviews and are more supportive of organizational change initiatives. So you’re convinced you need to get your employees more engaged. But what does that mean? The definitions of employee engagement seem endless and include increased line of sight, greater commitment, and willingness to give additional discretionary effort. Instead of trying to define employee engagement, I want to know what an engaged employee looks like, how they behave while at work, and how to replicate that in the organization. One definition of an engaged employee is one who gives additional discretionary effort. That doesn’t go far enough. That additional effort, willingly and happily given, must be put toward something that matters to the company. The most worthwhile engagement is seen in employees who happily want to give additional effort and know where to apply it. This combination of action and line of sight results in an engaged employee who willingly works harder to deliver against your company’s strategic objectives in their own daily tasks.

Say “Thank You”

Now that we’ve explained why you should care about employee engagement and defined it, there’s still one catch. Do your employees know your strategic objectives? More important, do they have any idea how their daily work impacts the achievement of those objectives? In my experience very few line employees can even cite the company’s objectives, much less articulate how their work helps achieve them. But it has never been more urgent for every employee to understand precisely this connection. You need to clearly communicate the needs of your company (e.g., your strategic objectives) and show employees how their individual, specific efforts help the company achieve those objectives. How? It’s simple: Say “thank you.” During a down economy, when companies need employees to give more discretionary effort to achieve critical objectives, strategic employee recognition specifically acknowledges actions and behaviors that align with company values and help achieve those objectives, encouraging employees to repeat precisely those behaviors needed for the organization to succeed. Recognition is based on fostering an environment in which employees want to perform, then letting managers and even peers acknowledge exceptional effort and praise deserving employees. All employees need recognition for their efforts and validation that their work is appreciated—now more than ever. If the recognition is for demonstrating a company value or achieving a strategic objective, employees begin to see how their individual efforts contribute to company success. Strategic recognition is by far the most positive and effective way to ensure that employee effort is maximized, aligned with company objectives, and reflective of company values.

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