How Employee Engagement Helps Retain Your Best Workers
Use employee engagement survey data to improve retention.
By Alan C. Lindsay, M.A.
Alan Lindsay is the President and CEO of PLS Consulting. Alan’s 30+ years in human capital management has helped clients throughout North America acquire, assess, develop, and retain critical talent. Following are some of his lessons learned while leading employee engagement initiatives. This is the second article in our series on Increasing The Strategic Value of Human Resources. Find the first article here.
It’s no secret that highly engaged employees stay with their companies longer than under-engaged employees, and have a greater impact on their organization’s profitability and success. So, why is it that as few as 16% of U.S. workers are “fully engaged?” (Source: Modern Survey.)
The fact is, most organizations don’t know how to determine the engagement level of their employees. Of those organizations that have conducted engagement surveys, many don’t know what to do with the data the surveys provide.
In this article, we’ll focus on the benefits of retaining your workers, and the important role employee engagement plays in retention.
The Cost of NOT Retaining Employees
As markets heat up and businesses expand, retention is a key concern for executives. As many as four in five employees are considering a job change. And let’s face it: smart employers don’t want to steal your poor performers, they want your best. Compounded with the numbers of baby-boomers eligible to leave the workforce, the potential losses can be staggering.
SHRM estimates that the total cost of replacing an employee is between 90-200% of that person’s annual salary. So, when we need to replace any employee, we’re spending about a year’s worth of their salary just to find another person to take the job and get on-boarded. It’s likely that the new worker will then still take several months to begin earning the company revenue.
While technology has made publishing job openings easier, finding qualified new employees remains difficult. The Baby Boomer generation (76 million people) outnumbers Generation X (44 million people) by a wide margin. That means that with over 10,000 Baby Boomers becoming age-eligible to retire every day, there are slightly more than half the number of Generation Xers available to fill those positions.
Those workers that are qualified and available are highly sought after. They have the leverage to demand good working conditions, flexible schedules, competitive salaries, benefits, and development opportunities.
Critical employees who do not “feel the love” from their employers are not afraid to look for employment elsewhere. If fact, Salary.com reports that 83% of employees planned to look for a new job in 2014. And, when critical employees start leaving the company, others are sure to look elsewhere, too.
So, employee retention is critical to an organization’s success. The Human Resources department may have little authority over compensation and benefit structures, so what role can Human Resources play in employee retention? The answer lies in employee engagement.
The Benefits Of Engaged Employees
We mentioned earlier that only 16% of U.S. workers are “fully engaged.”
The Workplace Research Foundation reports that employee engagement programs can increase profits by $2,400 per employee per year. Imagine the increased profitability of an organization that has 100 workers, all fully engaged. Using the $2,400 figure, that’s $240,000 of additional revenue per employee per year.
Now, having a workforce that has 100% of its employees fully engaged may be unlikely, but certainly increases can be made to the 84% of employees who are not fully engaged.
The Temkin Group reports that highly engaged employees are:
- 2.5 times more likely to stay at work late if something needs to be done after the normal workday ends.
- More than twice as likely to help someone at work even if they don’t ask for help.
- More than three times as likely to do something good for the company that is not expected of them.
Engaged workers create a strong employee culture. Hard work is contagious. The Temkin Group reports that 91% of highly engaged employees always or almost always try their hardest at work, compared with 67% of disengaged employees.
Additionally, customers notice when a company’s workers are engaged. They are treated to a better experience when dealing with engaged workers. Whether it’s at the checkout, the service center, or the jobsite, engaged workers treat customers better.
Demand Metric reports that organizations with over 50% employee engagement retain over 80% of their customers.
The Role Of Employee Engagement In Retention
Employee engagement plays an important role in employee retention. It’s easy to draw a line directly from engagement to retention. After all, if an employee is happy and engaged, they have little reason to leave their organization.
The Energy Project reports that employees who derive meaning and significance from their work are more than three times as likely to stay with their organizations, reported 1.7 times higher job satisfaction and are 1.4 times more engaged.
So, how do we ensure that employees “derive meaning and significance” from their work? The answer is perhaps more simple than it seems: ask them.
Engagement surveys should be structured to get at the heart of employee satisfaction and engagement.
At PLS Consulting, we begin each engagement survey project by defining engagement “drivers” critical to success. While these engagement drivers can vary depending on the organization, they typically include areas like: leadership accountability, rewards and recognition, future growth, etc.
Once defined, the drivers form the structure for the questions used in the survey, and the way in which the data is reported back to the organization. For example, we show engagement metrics for each of the driver areas. If any single driver area scores significantly lower than another driver area, the organization knows exactly where to focus their engagement efforts.
Additionally, open-ended essay questions are used to get to the heart of issues any individual may have, and illustrate trends throughout the organization. Taken as a whole, open-ended responses shine a light on areas of organizational strengths and weaknesses.
Simply conducting an engagement survey is often enough to show your employees that the organization values their feedback and is committed to creating a positive and successful work environment. However, the survey is just the first step. Equally important is how the organization uses the data.
Beyond The Numbers
Organizations that conduct employee engagement surveys often make a critical mistake. They conduct the survey, analyze the results, and then – do nothing.
Employees need to understand what happens after they take the survey. When employees complete an engagement survey, they understandably expect environmental changes to occur. Otherwise, their feeling is, “why ask how engaged I am if nothing is going to be done about it?”
It’s important to communicate the goals of the survey with employees before they take the survey. And, it’s equally important to let them know what to expect after they take the survey.
Simply keeping employees informed increases their engagement with the process itself. Let employees know that information about the results will be shared with them, then let them know when to expect the results. (You don’t have to show employees specific numeric data; showing trends or themes is often enough.)
Then, communicate with them what the organization is going to do with the data. For example, if the “future growth” driver appears to be an area of concern, the organization can let employees know it is exploring options to strengthen developmental opportunities. When actions are taken, remind employees where the information came from that lead to the change.
One method with a proven track record of success is to establish focus groups. When conducted by an independent third-party, focus groups provide employees with the opportunity to come up with their own recommendations to improve issues and problems. Getting employees involved in policy change increases engagement exponentially. It just makes sense – when people are engaged in finding a solution, they are engaged in implementing the solution, and in “selling” it to their peers and management.
Keys To Engagement Success
- Establish baseline data.
If the organization has never conducted an engagement survey before, use the first survey to establish a baseline. If the organization has conducted engagement surveys before, collect any data available to measure successes and identify areas in need of improvement.
- Survey employees every year to define successes and areas of improvement.
Conduct the engagement survey every year. Once baselines have been established with the first survey, track the results year over year to make improvements and spot trends.
- Hire a third-party vendor to administer the survey.
Employees are often understandably cautious with what they do and say around their supervisors. Naturally, this is often the case with surveys administered by the organization. Third-party vendors have the benefit of being non-biased. When employees understand that the organization never sees any individual’s actual survey response, the fear of reprisals disappears. Employees are often more open to expressing exactly what they feel, believe, and see.
- Communicate, communicate, communicate.
Create a regularly scheduled, pre-defined communication calendar. Be sure to let employees what, why, when, how, and what’s next. When employees know what you are doing and trying to measure, why the survey is being conducted, when it is happening, and how it will be administered (electronically? paper and pencil?) they are more prepared to provide thoughtful responses. Additionally, communicating the survey results and outcomes increases buy-in and adds credibility.
- Take action on the survey findings.
Perhaps the worst mistake organizations can make is to conduct an engagement survey and do nothing with the results. This indicates to employees that the organization doesn’t really care about what they think. Taking some sort of action on the results – actions that employees can see and/or be involved in – shows employees that the organization really does care about them. And, that can be the difference in someone staying or leaving.
Engaging employees in creating an environment in which they feel they have some say in decisions and practices means more then you may think. Identifying and strengthening opportunities to connect managers with their employees also pays huge dividends in retaining your best employees.
Engagement can mean the difference in keeping a key contributor, or spending exponentially more time, effort, and money replacing them. Engagement leads to retention – it just makes sense.
“The State of Employee Engagement – Fall 2014.” Modern Survey. Modern Survey, n.d. Web. Feb. 2015.
Allen, David G. “Retaining Talent: A Guide to Analyzing and Managing Employee Turnover.” SHRM. SHRM Foundation, 2008: 3. Web. Feb. 2015.
Gouveia, Aaron. “More Employees are Job Hunting Despite Being Happier at Work.” Salary.com. n.p. n.d. Web. Feb. 2015.
“Employee Engagement Benchmark Study, 2015.” Temkin Group. Temkin Group, n.d. Web. Feb. 2015.
“Employee Engagement: Revenue Growth Strategy for 2014.” Demand Metric. Demand Metric Research Corporation, Dec. 2013. Web. Feb. 2015.
Schwartz, Tony and Porath, Christine. “Why You Hate Work.” The New York Times. May 30, 2014. Web. Feb. 2015.
For more information about PLS Consulting’s talent management services, please contact us.
Alan Lindsay can be reached at email@example.com.