Happy staff, happy clients, happy shareholders
A company’s biggest asset – as the saying goes – is its people.
It’s a truism that applies equally to the largest corporations and the smallest suburban businesses. Despite this, many smaller business owners often see the formal process of people (HR) management as something that is not only beyond their capabilities but worse still, a distraction, or a secondary priority, believing it to be a ‘warm and fuzzy’ that doesn’t have a direct link to business revenue. A proactive focus on staff engagement is thus seen as taking valuable time away from running a business.
In reality, nothing could be further from the truth. There is an extensive body of research linking staff engagement with a range of key business performance metrics, including:
- Staff turnover
- Productivity
- Absenteeism
- Revenue, and
- Customer satisfaction.
Furthermore, ‘people issues’ can be more important for small businesses than larger ones, because their impacts are magnified.
A small business is more dependent on its individual employees, and so their performance, absence, and interactions and relationships with other team members and clients can have a much bigger impact on the bottom line.
Staff engagement should therefore be a key business priority for all financial planning practices.
What is staff engagement?
In simple terms, engagement is an employee’s commitment to helping their organisation achieve its goals. Engaged team members share a passion for the business and its clients and will independently work hard to reach the group’s goals – even when you’re not there. It means your staff care as much about your business – and its success – as you do.
Why does it matter?
The myriad benefits of engaged staff – far from being ‘warm and fuzzy’ – are evident in the numbers. Consider these for a moment:
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Increased performance and productivity – research[1] shows engaged employees are more likely to help the company achieve its goals
- Better staff retention – a survey[2] by Oxford University researchers found engaged employees are 87% less likely to leave their organisation, which means reduced costs in having to recruit new staff, train them and wait for them to ramp up to full productivity
- Increased revenue – a global study of workplaces by the Gallup Group[3] found highly engaged teams are on average 21% more profitable, and those teams in the top engagement quintile realise a 41% reduction in absenteeism, and experience 59% less attrition
- A better customer experience – the same Gallup study found that highly engaged workplaces see a 10% increase in customer ratings and a 20% increase in sales.
The cost of getting it wrong can be substantial. According to the employer body Australian Industry Group[4], the cost of replacing an individual employee can be up to 150% of their annual salary. The direct and indirect costs include:
- Termination costs for the employee who leaves
- Recruitment and advertising costs
- Lost productivity of business covering for that vacancy
- Lost productivity of managers involved in recruiting process
- Impact to morale of remaining staff if they have to pick up extra workload
- Potential loss of clients served by that employee
- Poor client experience due to incomplete ‘handover’ of files
- Newer employees may demand higher salary
- Lost productivity of personnel required to training new team member
- Lower productivity amongst new starters while they ‘come up to speed’.
Putting time and money into initiatives that improve employee engagement may seem like a luxury – especially during a pandemic – but, in fact, investing in your team will pay significant dividends now and into the future.
Measuring staff engagement
Whilst in a simple sense measuring staff engagement involves the assessment of data captured from employee surveys, the complexity lies in what questions are actually asked. Asking a question as direct as ‘are you engaged’ is unlikely to provide meaningful insights, either because people don’t think in terms of ‘engagement’ or they aren’t sure what it means. (They may also be reluctant to provide the answer although that’s more related to confidentiality, which can be challenging for smaller businesses.)
Typically, staff engagement survey questions are framed more in terms of the underlying drivers of engagement. Respected engagement specialist Qualtrics[5], for example, measures engagement as a composite measure of 5 factors, designed to understand intended behaviours like intent to stay, likelihood to go above and beyond what is required of employees, and willingness to recommend a company. The 5 specific factors are:
- Intent to stay – the likelihood that people will still be with the company in the next 2 years
- Work involvement – the psychological and emotional contribution people apply to their work
- Discretionary effort – the level of effort above the minimum required that people are willing to put into their work
- Pride in the company – the extent to which people feel proud to work there
- Willingness to recommend their organisation – how likely people are to recommend their organisation to friends and family
Each of these items provides a score which, when combined, gives an overall metric of employee engagement.
A variety of downloadable, free, staff engagement surveys can be found online.[6]
Relying on your own ‘finger in the air’ assessment of team engagement – “we’re a happy team here at ABC Financial Planning” – is not a robust way of tracking staff engagement. And those who do take the time to measure it more scientifically may be surprised by the results.
Gallup examined employee engagement across the world in its 2017 ‘State of the Global Workplace’ report[7] and found engagement levels alarmingly low.
Australian workplaces were found to be amongst the worst in the world when it comes to employee engagement and satisfaction, with employees reporting a lack of respect and little opportunity for collaboration.
The Gallup report found on average only 14 per cent of employees in Australia and New Zealand are engaged in their jobs. An overwhelming 71 per cent are not engaged and as many as 15 per cent are actively disengaged.
The report saw Australia rank seventh out of 11 global regions, trailing behind Sub-Saharan Africa and Eastern Europe!
The good news is that as an employer, there are practical steps you can take to improve staff engagement (or maintain existing high engagement levels).
The even better news is that the drivers of engagement, which include a sense of empowerment and involvement – ‘making a difference’ – can actually be easier to influence in a small business than a large one.
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[1] https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-and-expert-views/documents/employee-engagement-commitment.pdf
[2] ‘Oxford Handbook of Positive Psychology and Work’, P. Alex Linley, Susan Harrington, Nicola Garcea, Oxford University Press, 2010.
[3] https://fundacionprolongar.org/wp-content/uploads/2019/07/State-of-the-Global-Workplace_Gallup-Report.pdf
[4] https://www.aigroup.com.au/resourcecentre/hr/hr-strategies/downloads-templates/average-approximate-cost-of-turnover-calculator/
[5] https://www.qualtrics.com/au/experience-management/employee/engagement-engagement-guide/
[6] https://www.qualtrics.com/marketplace/employee-engagement-survey/
