Engaged Employees Equal Increased Earnings
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Towers Perrin, October 2007
A new study by global professional services firm Towers Perrin, entitled "The Global Workforce Study," finds that businesses with the highest employee engagement are financial winners. These companies also have a higher employee retention rate.
To date, this is the largest study of its kind with input from a survey of almost 90,000 workers from 18 countries. The study was also able to draw on a huge employee normative database that contains over two million employee records and the financial performance records of their companies.
According to the study. companies with the highest percentage of engaged workers make more money. In a 12-month study across 50 companies, companies with the highest percentage of engaged workers had a 19 percent increase in operating incomes and a 28 percent increase in earnings per share. On the other hand, over the same year period, companies with the lowest employee engagement rates showed a 33 percent decline in operating incomes and an 11 percent decline in earnings per share.
A three year study that followed 41 companies showed a 3.7 percent rise in operating margins in companies with engaged workers versus a 2 percent drop in operating margins in companies with less engaged workers.
Engaged employees also think that what they do has an impact on the quality of the products and services offered by their companies. Eighty percent of these workers see a relationship between their jobs and company results. Just forty percent of disengaged workers acknowledge this connection.
The study tested which dimensions had the greatest impact on workforce engagement: personal factors, such as optimism and openness to challenge; work team factors, such as someone's relationship with his or her supervisor; and organizational factors, such as rewards, development and leadership. A key conclusion was that organizations should focus on employee engagement as a way to improve workforce and organizational performance.
The study furthermore suggests senior management work to role model "inspiration, vision, and commitment" as a method to increase engagement. Other ways to increase engagement are to help employees understand what "is in it for them," or in other words, the benefits for the employees, including learning opportunities and career growth. Towers Perrin also reports that employees want to work for leaders, for companies that "strive for excellence."
