Whose Job Is It Anyway?Nov 13, 2021
Think back to the comment I shared recently that a fellow had made on a LinkedIn article I published, “most CEOs continue to sit on the sidelines and let HR wack away at the problem.” All too often, employee engagement - and anything that’s done within an organization to address it - falls squarely in the lap of the human resources folks. But if employee engagement really does have the financial impact detailed in the Harvard Business Review article I referenced last time, why would any business owner, CEO, or manager at any level not be working to improve engagement in their organizations with their every waking breath?
I believe that’s easy to answer… I think the majority of the operations folks who see statistics cited by HBR look at the numbers briefly but don’t take the time to process the real financial impact each can have on the organization’s bottom line.
Before we look at exactly who should assume complete responsibility for employee engagement on a daily basis, let’s translate a few of those percentages that were presented with a very broad brush into something that’s extremely easy to understand and ties directly back to what every operations profession pays close attention to. The article mentioned a pretty wide range in how employee engagement impacted turnover; from 25% to 65% depending on the organization. Let’s use simple numbers to nail down the real impact this can have on our own bottom line. To stay conservative, we’ll use the low number, 25%. The Bureau of Labor Statistics says the annual voluntary turnover rate in the US is 23.4% so let’s round that to 25% as well so my math doesn’t get too fuzzy… Now let’s consider one more number I’ve seen in various Gallup polls over the years, “It's generally estimated that replacing an employee costs a business one-half to five times that employee's annual salary.” For our purposes here, let’s stick with the low number on this too...
Math equation time… If our company has 100 employees at an average annual salary of $50k, we lose 25 per year due to voluntary turnover, and replacing each of them costs us half their annual salary, what’s the total impact - low numbers? 25 people times $25,000 = $625,000 in turnover costs. Holy crap!
Real quick here, how about safety? HBR’s numbers suggested an organization with high employee engagement would see a 41% reduction in safety incidents. In all the years I worked in safety, the trends I saw showed that the lower the number of total incidents, the less likely you were to have significant incidents. For the sake of time, I won’t go down that path with you here. Let’s keep this simple too. How about we pretend our company typically has ten safety incidents annually, and let’s say all of them are the least (statistically) expensive OSHA reportable incidents; hand lacerations requiring just a few sutures. While I was still in a Safety/HR Manager role several years ago, I pulled some numbers for the owner of the company that showed the average hand laceration in the US at that time ended up costing the company a total of around $10,000 (but around $70k if surgical repair is needed). This included the medical attention, time away from production, time for incident investigation, insurance premium increases (and they always increase), etc. While the initial doctor visit may only be $1,000 or so, the rest is rarely considered in the total cost! This math is easy; if we cut (pun intended) the total number of those incidents by 40%, we reduce our injury costs by $40,000!
When we see percentages alone, regardless of how stunning they may be, few people take the time to dig through all the actual costs so they have a real picture of how much impact they should expect to see. So back to why a CEO would sit on the sideline and let HR wack away at employee engagement… They won’t if they have real numbers, but providing real numbers takes some initiative that far too many people refuse to apply.
OK, Wes… Point taken… Employee engagement has a real impact on the bottom line. But who really has a hand in driving this boat? Here’s what Gallup said about that in an article called Four Steps to Improve Employee Engagement, “Engagement isn't just an "HR thing." Managers account for 70% of the variance in team engagement. There are no quick fixes when it comes to human relationships. It is essential that managers effectively interact with and develop each team member over time.”
Here’s my answer: EVERYONE who has any type of leadership responsibility in the organization! EVERYONE!!! And we’ll start working through how they can do that soon...