Originally posted on Axial, November 28, 2017, https://www.axial.net/forum/improve-business-value-through-employee-engagement-strategies/ 

Companies with high employee engagement level tend to have better stock performance, but not every CEO sees the connection. We suspect the disconnect at the CEO level stems from a lack of awareness, belief in the science of behavioral economics and the perception that the money being left on the table from disengagement must be Monopoly money. 

Many CEOs, CFOs, and CHROs (i.e., CXOs) find it very difficult to find the right mix of financial leadership and people leadership. Companies should balance the need for hitting their financial metrics without ignoring the needs of their people. The company’s shareholders and Board of Directors are always interested in being bigger, better, stronger and they all know that there’s more value they can add.

To increase the business value, the CXOs may reach for one of the three main levers of adjustment:

1.   capital improvement
2.   process improvement
3.   people improvement

The CXOs often find the first two levers provide short-term value that can soon be matched by competitors. The third lever, getting the best out of their human capital, is proving to be the most efficient path to sustainable growth and adding value to an organization.

Where’s your leadership dashboard and what’s on your radar?

CXOs, portfolio managers and board members need analytical predictors in place. For example, employee engagement is a leading indicator of financial performance. In other words, so go your people, so goes your business. The CEOs need to determine what role his staff play in the business’ successes or failure, which is something not many leaders would think about. Leaders intuitively know that people matter, yet, doing something about it is another story. The lack or fail of executing a strategy is a still a bit of a head scratcher sometimes.

Employee engagement on the horizon

Implementing employee engagement strategies has become the norm in many companies, and here comes the one-two engagement punch. On one hand, the new International Standards Organization’s (ISO) 10018 and 9001 certification programs will standardize and improve management quality. On the other hand, the request for new human capital data are being driven by the investment community to the front door of the Security and Exchange Commission (SEC).

Therefore, if it is best practice for CEOs to have financial reports in hand as part of their SEC filing or for a board meeting, then the human capital data should be in the other hand.

Solutions to Low Employee Engagement: Plan & Measure

The employee engagement improvement process starts with an engagement measurement survey, not an opinion or satisfaction survey. The engagement measurement survey will identify disengagement related problems, trends and opportunities for improvement.

The engagement survey needs to be:

1. Tied to your financial metrics and other leadership goals (e.g., turnover, safety, productivity, etc.).
2. Performance-based, so you can measure your return on investment.
3. Scientifically validated, so you can trust the data.
4. A confidential and professional experience, because not all employee engagement surveys are created equal.

Improving Employee Engagement: Post-Survey Activities & Accountability

As stated by The Society for Human Resource Management (SHRM),  post survey activities count the most.

Companies need to plan for:

1. Sharing survey results,
2. Manager and employee engagement training,
3. Quarterly performance/feedback check-ins,
4. Recommendations and action item planning,
5. Accountability tracking,
6. Budgeting for engagement – all for the price of a nice lunch per employee.

Consider an integrated employee engagement program as an underlying management quality process.

What’s your Business Opportunity?  

There is an opportunity for about 50% of companies to create more value and gain a competitive edge if taking employee engagement into consideration.

Many CXOs roll the dice and play the engagement game like it’s Monopoly money they are leaving on the table. The lost opportunity and the costs of employee disengagement should instead be transformed into engagement and more value to the business. This will result in more gratitude to the CXO that has put in all the work in financial leadership and people leadership.

The effort in implementing employee engagement strategies can be led by the CXO and his/her team or it may be best prescribed by the Board, portfolio managers or investors in reaction to poor vitals. As awareness and acceptance increases, it will be interesting to see who will own the fiduciary responsibility, take the leadership role and exhibit the professional and personal integrity to implement employee engagement strategies.