Does Engagement Really Pay Off?

by Jay Deragon on 04/10/2013

engage usSome executives think this thing called “engagement” is something either  HR needs to manage or marketing needs to do. Few understand the intangible value of engagement converts into tangible  bottom line results.

The Towers Watson 2012 Global Workforce Study — 32,000 employees across 30 countries — makes the most powerful, bottom line case yet for the connection between engagement and corporate performance. The evidence is staggering.

In a broader analysis of 50 global companies, Towers Watson found that companies with low engagement scores had an average operating margin just under 10 percent. Those with high traditional engagement had a slightly higher margin of 14 percent. Companies with the highest “sustainable engagement” scores had an average one-year operating margin of 27 percent.

Forty percent of employees with low engagement scores said they were likely to leave their employers over the next two years, compared to 24 percent of traditionally engaged employees, and just 18 percent of employee’s with the highest “sustainable engagement” scores.

The data from the Towers Watson study alone shows the value of engagement creates a more cohesive culture, less turnover and happier employees. In case that isn’t enough continue reading.

Economic Gains Come From The Intangibles

In a recent Forbes article titled “Google’s Secrets Of Innovation: Empowering Its Employees” Laura He writes: Since its IPO in 2004, its shares have soared over 900%. The company’s success stems from its continuous innovation and it extraordinary management practices.

Laszlo Bock, Senior Vice President of Google’s People Operations, said Google has been keeping the pipeline of innovation going by tapping its employees and letting ideas percolate up, Bock said.

The company has a relatively small group of employees — more than 30,000 workers (excluding 20,000 it gained when acquiring Motorola Mobility). Google is smaller than Exxon Mobil (76,900 employees) and Apple (72,800). It is trying to create an arena where people can be brought together in surprising ways to innovate.

“We try to have as many channels for expression as we can, recognizing that different people, and different ideas, will percolate up in different ways,” Bock said.

Google uses a variety of tools and techniques to constantly stimulate engagement and the reasons are obvious:

  1. It is good for the culture
  2. It is good for the people
  3. It fuels innovation
  4. It is good for the customer
  5. It is good for the business

1 – 5 seem like a good guide for deciding how to improve your bottom line. The irony is what is good for the bottom line isn’t managing the tangible results rather it is enabling and trusting the intangibles. This is true whether you have 10 employees or 10,000+ employees. Size no longer matters, being smarter does..

 Smarter companies know that engagement is not an act, it’s a philosophy.

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