Employee Engagement - The Real Secret to Growth
- 24 Best Leadership Practices | Part 4 of 24 -
Leaders of any organization have three obligations, specifically: (1) engage its employees by creating an empowered, innovative, and inspired culture, (2) delight customers with world-class service excellence, and (3) deliver strong financial results. If the first two take place the third area (financial results) will take care of itself. As Jim Barksdale said, “We take care of the people, the products, and the profits — in that order.” Accordingly, leaders must focus on employee engagement if they want their people to have the energy and stamina needed to succeed over the long term. Remember, organizations don’t change until people change. In a nutshell, if leaders want raving, engaged customers they first need raving, engaged employees. As such, if you’re not committed to your own people, don’t expect your people to be committed to your customers. This is as simple as the basic law of reciprocity. Accordingly, a domino effect of either growth or value destruction begins internally with employees.
People are a company’s greatest asset – more than its brand, products, or customers. If an enterprise gets the employee element right a great brand, product, and customer base will occur practically automatically. Unfortunately, up to 85% of the reasons for stagnant growth stem from internal organizational inefficiencies and poor employee engagement. Thus, the first step to innovative products, customer advocates, and profitable growth is to create employee advocates that in turn will be inspired to create those “wow” moments for the enterprise and its customers because the company first created those “wow” moments for its employees. Indeed, the days of being successful on merely a differentiated product are over.
The Benefits of HIgh Employee Engagement
We’ve all likely witnessed how companies become so obsessed with their product and/or brand that they inadvertently lose site of the customer and more importantly, the employee. However, without creating a world-class customer experience the product alone will fail. Unfortunately, most companies forget that world-class customer service begins and ends with employee engagement. Consequently, and according to both Gallup and Qualtrics, only 30% of employees are engaged in their work, meaning 70% of employees are either destroying or not creating any value day in and day out (See Exhibit 2). In addition, and according to Bain & Company, only 15% of employees are inspired by their job, a further complication from poor employee engagement. Simply, employee engagement is the precursor to an inspired employee which is where the real value unlocking begins.
While the value erosion from poor employee engagement is clear the case for improving employee engagement is just as well-defined. Firstly, over a course of seven years, companies with highly engaged workers grew revenues two and a half times as much as those with low engagement levels. Secondly, for every $1 invested in improving culture and employee engagement an up to ~$4 ROI is witnessed (See Exhibit 3). Thirdly, engaged employees mitigate toxic cultural issues. After all, and as Jean-Paul Sartre noted, “only the guy who isn't rowing has time to rock the boat.” Thus, perhaps nothing is as important to leadership than driving high engaged, productive employees.
Why Poor Employee Engagement Is So Prevalent
Regrettably, and according to Boston Consulting Group (BCG), only 11 percent of large companies are sustained value creators. In addition, and according to industry studies, one in three companies will cease to exist in 5 years, up from one in twenty 50 years ago. Ultimately, size is not the issue but rather the complexity that creeps in over time, the lost of connection to the front-line, and the eventual demise of employee engagement. For example, over the past 50 years enterprise complexity has increased by 35X and ~50 percent of performance requirements are contradictory. Indeed, most companies have slow decision-making, no clear ownership swim lanes, endless processes, little to know acknowledgement for a job well done, unproductive meetings stacked with far too many stakeholders, and micromanagement from the top down. All of these issues abound in large part because these value destructive elements are hard to quantify, meaning the cost of time wasted in unproductive meetings is harder to quantify than the cost of an inefficient manufacturing facility. While most leaders know that people matter time and time again you see leaders across the enterprise dwelling on rules, processes, and outcomes instead of focusing on helping the heart and soul of the business (i.e., the employees) deliver on those outcomes.
While plans and processes don’t have emotional issues to reconcile and don’t talk back, it’s the people that are the heart and soul of the business, not the processes and rules. While leaders may feel it is easier to deal with processes than address the more difficult, and far more critical, human issues, this is a mistake. As John C. Maxwell noted, “Remember to focus on the team, and not the dream. When you focus on the team, the dream takes care of itself.” Indeed, employee engagement is the engine that sparks everything from innovation, customer engagement, and profitable growth. Without employee engagement an enterprise will not be long for this world. With it, the enterprise will have an embedded competitive advantage that produces a domino effect of unending wins. Merely boosting morale from higher pay, parties, ands snacks won’t embed sustainable engagement because they’re detached from customers’ priorities. Instead, true engagement as well as a strong morale comes from transitioning employees to an ownership mindset via empowering them with autonomy, decision-making rights, mentorship, the runway to innovate, and purpose, all of which drive inspiration and engagement.
The "How" of Improving Employee Engagement
To accomplish this lofty goal, companies must transition their employees from an “employee” mindset, to a “partner” mindset, and ultimately to an “ownership” mindset. This article advocates that an employee first mindset serves as a gateway to product innovation, service excellence, and ultimately sustainable growth. This can be achieved via an "inside-out | bottoms-up" model (See Exhibits 4 and 5). Successfully leveraging an "inside-out | bottoms-up" model begins with looking internally at building a culture that creates raving employee advocates before it can expect to create raving customer advocates or innovative products (i.e., inside-out). Secondly, leaders must focus on frontline obsession where employees (from the bottoms-up) have a bias for action, autonomy, disdain for the status quo, respect for each dollar as if it were their own, and decision-making power to create those “wow” customer experiences. This model indicates a renewed focus on the frontline because the heart, soul, and pulse keepers of the organization live on the frontline. Quite simply, this model advocates that every employee - no matter where in the corporate hierarchy - must be transitioned from an “employee” mindset with artificial alignment to a true “ownership” mindset. This change in thinking ensures that autonomy, empowerment, and a bias for action permeates the entire enterprise from the bottom-up instead of the never-ending maze of red tape, complexity, and low engagement that exponentially grows the further down one goes in many organizations (See Exhibits 4-5). Read more about creating high employee engagement HERE as well as leveraging an inside-out | bottoms-up approach HERE.
Want Raving Customers? Create Raving Employees
Inside-Out & Bottoms-Up: The Gateway to Profitable Growth
The Path to Creating World-Class Employee Engagement
Finally, any leader must track in real time how their employee engagement initiatives are moving the needle. This can be accomplished via constant employee and customer surveys such as eNPS and NPS (Employee/Net Promoter Scores). Simply, a firm must keep a constant pulse on both its employees and customers because there is a strong correlation between employee and customer advocacy. Consequently, employee engagement can predict whether customers become detractors or advocates. While critics of NPS and eNPS note its lack of holistic detail, the key is that it provides nearly real-time feedback, driving essentially 80 percent of the value of more lengthy customer and employee surveys but in a fraction of the time.
Remember, winners in today's ever-quickening innovation cycles are not those with size but rather those with speed. This is true in both drawing out real-time insights as well as quickly acting on those insights. Ultimately, constant tracking of customers and employees ensures pulse keeping on two of the most highly correlated data points for service excellence and revenue growth. Such an approach, unlike an OHI which may be done annually with the aggregated results not coming in for another several months, provide real-time input for constant enterprise course correction. Simply, NPS and eNPS caters to this new speed initiative providing any customer and employee transformation with the feedback to make real-time pivots, thus ensuring such initiatives are creating advocates rather than detractors (Read more about tracking employee engagement efforts HERE).
To recap, most stagnant growth occurs not from external forces but rather from internal issues, specifically around employee engagement and culture. In turn, this landscape unknowingly fosters complexity instead of simplicity, artificial harmony instead of real ownership, and chaos instead of focus. Such an atmosphere consequently creates a silo-driven enterprise that is an imitator instead of an innovator, a reactor instead of a disruptor, and a complacent, slow decision-maker instead of a challenger of the status quo. It totality, low employee engagement equates to significant energy leakage and value destruction. While the path to employee engagement is not for the faint of heart perhaps nothing is as vital to an organization’s success as this foundational area - the true heart and soul of a company. As such, leaders must focus on leading from the heart rather from the mind if they hope to not only inspire let alone engage their employees. And, with the potential of 2X to 4X greater revenue growth the ROI benefit for improving employee engagement is not only simple but also vital to leadership and enterprise success.
Read the other best leadership practices HERE.
24 Best Leadership Practices
- Series Overview -
The following article is Part 4 of a 24 part series on leadership (See all 24 best leadership practices HERE). To summarize, leadership is everyone’s business. Moreover, leadership abilities are not some innate talent that some were either born with or not but rather is a highly learnable skill. As such, everyone has the potential to become a great leader as long as one embraces a mindset of continuous improvement. Simply, leadership is not so much about inherent gifts and raw talent but rather the emotional awareness, humility, and perseverance to understand that leadership is a lifelong journey that is never mastered. Indeed, aspiring leaders must acquire the endurance of a marathoner, the musculature of a sprinter, and the mental fortitude to embrace that there is never a finish line but rather an unending goal of continuous transformation.
Ultimately, the leadership journey is not about becoming someone else but instead is about becoming one's best self so that in turn one can help others become their best self. And, while there are many facets that go into successful leadership we have identified 24 best leadership practices all of which are grouped into one of three categories, namely (1) inspire, (2) empower, and (3) innovate (see all 24 practices HERE).
- INSPIRE: To inspire action, great leaders appeal to people's hearts more than their minds. Simply, visionary leaders plan with the mind, lead with the heart, and reflect with the soul.
- EMPOWER: Great leaders empower those they are leading while simultaneously creating a collaborative culture that promotes the notion that together we can accomplish anything as long as we don't care who gets the credit.
- INNOVATE: Visionary leaders embrace change and understand that the term "good enough" is used by the lazy to justify inaction. As such, great leaders disrupt themselves and their companies before others do it for them.
Leadership is the greatest race one will ever run – one without a finish line but also one with an exponential ceiling for those that embrace change, growth, and learning. While the level of employee talent may determine the potential of an organization it is the leader that ultimately unlocks that potential and determines the success of both the organization and its people. Although no leader will be a master at each of the proposed 24 leadership practices, awareness is often the greatest agent for change and continuous improvement. As such, we hope the proposed practices will be of service to you in maximizing not only your leadership potential but also the potential of those around you.
ABOUT THE AUTHOR
Joshua Seedman is the founder and chairman of PNI Consulting, a management consulting firm that specializes in global transformations. He has over 20 years of operating and general management experience with expertise in organizational transformations, customer experience, employee engagement, digital transformations, sales & marketing, operational turnarounds, culture/change management, and high-stakes negotiations. His experience includes executive roles within F500 companies, top-tier consulting leadership (McKinsey & Company), over 10 years of global P&L ownership, and corporate lawyer (Davis Polk & Wardwell). He received his MBA from Kellogg School of Management and his Juris Doctor (cum laude) from Northwestern University School of Law.