Talent Management

Why Your CEO and CFO Should Care About Employee Engagement


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 done numerous 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-enagaged 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):

  • 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.
  • Mohamed Baqer

    Thank you Derek, I like what you have written. To be honest this advice is highly valuable for CEOs and CFOs. I hope they listen to it. They need to!

  • Kevin Sinclair

    Validates the research that coaching, organisational and positive psychology has presented over the last 10 to 15 years. Interesting that organisations continually look at investing in capital equipment – new systems, new software, new plant and equipment, but resist looking at new and more effective ways of investing in their relationship with their human capital.

  • http://thethrivingsmallbusiness.com/articles/ Patricia Lotich

    Great article and so true. If more organizations put time, thought and effort into improving employee engagement they would experience surprising results. Thanks for sharing!

  • Mårten Westberg

    Loads of great research into the fact that engagement works. Less on how.

    One thing these huge US consultancies tend to mention less is how engagement allows corporations to cut expensive control structures, such as several layers of management.

    Knowing employees will do the right thing allows for decisions to be made closer to the customer. The result is a more agile, customer focused and cost efficient organization.

  • Brian Cohn

    This is far more important when you’re trying to drive change and accelerate your business results. If everyone is not engaged in reaching the destination, you will need to row the boat far harder.

    Brian Erik Cohn

  • Lebbaeus Asamani

    Great article! Very resourceful