EX - Why Are You Throwing Money Away?
I doubt I would find one person who would disagree that employee engagement is a key driver of organisational success.
When employees are engaged, they are motivated and committed to the organisation. Productivity and profitability increase.
Engagement pays
The Gallup State of the Global Workplace 2024 report found strong evidence that decreasing the number of disengaged employees drives positive outcomes within organisations.
Their 2024 meta-analysis, the largest study of its kind, which included data from more than 183,000 business units across 53 industries and 90 countries, found that high-engagement business units are likely to see significantly higher employee well-being - as well as higher productivity, profitability and sales - than low-engagement teams.
Some key numbers for organisations with high employee engagement:
· 23% more profitable
· 14% more productive (production)
· 18% more productive (sales)
· 78% less absenteeism
· 21% reduction in turnover for high-turnover organisations
· 51% reduction in turnover for low-turnover organisations
Dichotomy
I can sense heads nodding and people saying, “Of course, employee engagement has positive outcomes. It’s obvious. We know it, and the research supports it.”
If this is the case, why are we reading headlines such as these?
January 14 2025 – U.S. Employee Engagement Sinks to 10-Year Low - Gallup
August 23, 2024 – The Great Regression: Employee Engagement in 2024 – Culture Amp
October 17, 2024 - Double down on engagement before turnover picks up – HR Dive
February 12, 2025 - Australian workplace culture faces a crisis as employee engagement plummets – CXM
August 12, 2024 - Why are UK employee engagement levels at an all-time low? - Insider Media
Why are so many organisations struggling to engage their employees?
It’s someone else’s job
Employee engagement is often seen as a job for HR. However, it must be everyone’s business, starting with organisational leadership.
Touchy feely
It’s touchy-feely stuff that leaders often avoid. They’re not great listeners, and they are not empathetic leaders.
Cloudy
Employee engagement is a broad and ambiguous term. You can’t simply say, “Fix employee engagement.” That’s like saying, “Build me a skyscraper”, without a plan, instructions, or tools.
Copycat
Organisations frequently observe what other organisations are doing and imitate them without understanding their own employees’ needs.
Band-aid
Stopgap and point solutions are implemented but have little or no lasting impact. There is no holistic approach.
Reactive
Action is only taken when a serious problem arises, such as talent attrition. It is too little, too late.
Wrong reasons
Investing in employee engagement is driven by the desire for enhanced productivity and profit rather than the necessity to address employees' genuine needs.
Not listening
Leadership does not know what needs to be done as they are not actively listening to employees.
Wrong messages
When efforts to improve employee engagement are piecemeal and passive, employees receive the message that their well-being is a low priority for the organisation. This increases disengagement and makes further efforts even more challenging to achieve desired outcomes.
The cost to you
According to the Gallup State of the Global Workplace Report 2024, disengaged employees cost the world US$8.9 trillion, or 9 percent of the global GDP.
Gallup also suggests that each actively disengaged employee costs your company roughly 18% of that employee’s annual salary. That number is on the low side, as some estimates suggest, as high as 34% of the yearly salary. Gallup research shows that 17% of employees are actively disengaged.
So, what does that mean to you using Gallup figures?
The average annual salary in the US is $59,436
If you are a US company with 1000 employees, 170 are actively disengaged.
Disengagement costs 18% of an employee’s salary = $10,698 per employee.
Total cost per year = $10,698 x 170 = $1,818,741.
The average annual salary in Australia is $73,474.
If you are an Australian company with 2000 employees, 340 are actively disengaged.
Disengagement costs 18% of an employee’s salary = $13,225 per employee.
Total cost per year = $13,225 x 340 = $4,496,500.
The average annual salary in Germany is €59,246.
If you are a medium-sized business in Germany with 250 employees, 42 are actively disengaged.
Disengagement costs 18% of an employee’s salary = €7,064 per employee.
Total cost per year = €7,064 x 42 = €296,688.
Use the Gallup figures and plug in your employee headcount and average wage to calculate the cost of employee disengagement.
<number of employee> x 17% = <number of disengaged employees>
<average yearly salary> x 18% = <cost of disengagement per employee>
<cost of disengagement per employee> x <number of disengaged employees> = <cost of employee disengagement to you>
Now that you know what it costs you, it’s time to take action. Start by measuring.
Measure
If you can’t measure it, you cannot manage it. This is where you must start.
This is not about measuring employee satisfaction, which is a point in time that a fleeting experience can influence. Employee engagement is much more profound. It measures how committed employees are to helping an organisation achieve its goals. The commitment is demonstrated by the employees' thoughts, feelings, and actions. It is influenced by employee relationships with the organisation, their work, and their team.
But it doesn't stop there. Measuring engagement alone is not enough. It does not give a holistic picture of all an employee’s daily experiences throughout their lifecycle.
We must measure the employee experience (EX), the lived story. This means that measurement is more than just an annual or bi-annual survey; it is about gathering feedback and listening throughout the employee lifecycle.
Qualtrics suggests that five EX Key Performance Indicators (KPIs) should be measured.
· Engagement
· Intent to stay
· Experience vs. expectations
· Inclusion
· Wellbeing
They also say you should understand the key drivers that influence the five KPIs.
Source: https://www.qualtrics.com/en-au/experience-management/employee/employee-engagement/
Qualtrics offers comprehensive guidance on designing, running, and analysing EX surveys, so I will not reiterate that here.
What I will do is take us beyond the survey.
Surveys can cover a wide range of topics and aid in understanding the key drivers of a great employee experience, but they are only a point in time. There are many other avenues to listen to employee feedback on their experience.
Pulse checks
A pulse check or a pulse survey is a short and quick survey sent out on a regular basis. These surveys fill the gap between the annual or bi-annual EX surveys. Just as you would check the health of your bank account more than once a year, you should do the same with the employee experience.
Significant changes can occur between the annual or biannual EX surveys, so there must be ample opportunities to address any critical issues or concerns your employees may have.
In addition to using pulse surveys to quickly capture employee feedback and continuously gauge overall sentiment about their workplace experience, you can use them to ask targeted questions about a particular change that has taken place or follow up on actions taken after the annual or bi-annual employee experience survey.
One-on-ones
People leaders who are active listeners can tune into feedback on the employee experience during one-on-one meetings.
The lines of communication between people leaders and whatever area is responsible for collating and analysing feedback should always be open. Whether the responsible function is HR or a Director of Employee Experience, the message to people leaders is that no piece of feedback should be ignored. Whilst a particular employee experience may initially seem isolated, it could soon become widespread. Incorporating related questions into surveys can uncover how isolated or pervasive a concern is.
Team meetings
People leaders can also use team meetings to garner information about employee engagement and experience at a given point in time.
At the start of a team meeting, the leader can ask, “How are you feeling today?” and give each attendee a sheet of faces expressing various emotions from which they can choose
Each team member can be asked to explain their choice, and the people leader can explore in more depth responses that raise a concern to be addressed or an opportunity to seize. Remember, gathering employee feedback is about positive and negative experiences with action taken to build on the positive and eradicate the negative.
Employee lifecycle event triggers
The employee experience can be measured throughout the employee lifecycle with a survey triggered by a lifecycle event. Events could include (but are not limited to) recruitment, onboarding, development, promotion, and offboarding.
Suggestion box
The old-fashioned suggestion box is still a great way to obtain feedback. Employees may feel safer using a physical suggestion box where their suggestions are anonymous and have no digital footprint.
However, if you have an environment of psychological safety where employees have no fear of retaliation or retribution for sharing their thoughts, the suggestion box could be online and available to all employees regardless of their location,
Exit interviews
Exit interviews provide an opportunity to gather feedback before a departing employee leaves. Various reasons for their departure should be explored. The interviewer can explore the employee experience and gain insights into what could be improved.
Exit and stay interviews are only of value if action is taken with the information received.
Stay interviews
Stay interviews resemble exit interviews but are turned on their head. These conversations occur with employees who have not expressed a desire to leave or announced their intentions to do so. People leaders should engage with employees to discover what they appreciate most and least about their experience with the organisation. What do they love? What would they change?
The subjects covered in the stay interview are similar to those covered in the exit interview, but the key difference is who conducts the interview. Usually, HR conducts the exit interview, whereas a stay interview should be conducted by the employee’s people leader.
The exit interview aims to uncover issues that may lead to employee attrition, while the stay interview focuses on gathering information to enhance the employee experience.
Culture Amp has a good guide on stay interview questions.
Summary
A lack of employee engagement is costing you dearly. It doesn't have to. Collect the feedback and act accordingly. It really is that simple!