How I persuaded my Finance Director to care about Employee Engagement
In 2004 I was Director of Service Excellence at Eaga, and back then my Finance Director (an often intransigent man who believed engagement was the domain of ‘fluffy HR’ and not the accountants), asked me to prove all this engagement stuff – in fact “show me the money!”
I took this as both a challenge and an opportunity to share with him why employee engagement was an investment and not a cost… that the benefits of engagement would be felt directly on the bottom line.
One of the main reasons I felt my FD (let’s call him Bob) reacted negatively to Engagement was that he didn’t see the benefits that I deeply believe manifest when staff are highly engaged. For me, the benefits were difficult to ignore but I failed to get this over to Bob. I knew I was going to have to demonstrate to him what we could achieve for our business. One of the challenges is that it does take time, planning and consistent effort to take the business forward … but anything of value is worth taking the time and making the effort, right? Yes, right!
I knew my task wasn’t easy and I would need to present a convincing, clear and compelling business case, Bob, after all, was no pushover:
How we ‘do more with less’ not ‘work harder for nothing’
One of Bob’s ambitions was to refocus the business on becoming more commercial. He was quite right too as this was entirely necessary if we were to succeed and survive in our competitive market.
But his mantra of we need to do ‘more with less’ was irritating people who thought what Bob really meant was they were to work harder and longer – and for nothing.
Turning this around, on both sides, was going to be essential.
Get half a day’s extra work, for free
Engaged staff are more productive. Usually, they get the most work done and in the shortest time, whilst retaining both quality and service.
According to research by the Hay Group* those teams with highly engaged employees can be as much as 50% more productive. (* Opens in Adobe PDF)
That’s like half a day ‘free’ everyday per team!
Bob was very aware which teams underperformed consistently, failing to meet their targets and were invariably the first ones to make the mass exit from the office at 5pm. In fact, it drove him nuts. At Eaga, by correlating internal performance metrics with employee engagement survey data we were able to identify those teams who were engaged and that these staff hit their targets, often way ahead of expectation.
They were very aware of their goals, and especially aware of their responsibilities and what was expected of them – getting the most out of their time and efforts. They were at least 25% more productive as those teams who were not engaged.
We needed more people like this.
Bob’s eyes showed a flicker of astonishment and then said “but these people would do this anyway, they’re good people”. Exactly! How do we encourage this behaviour and motivate more of our people to ‘be good’?
What we had started was exciting, and we were quickly sensing a change in the atmosphere, the culture at Eaga. It all boiled down to some very basic things:
It wasn’t what you do, it was the way that you do it!
- We listened, involved and then encouraged staff participation in decisions which both affected the business long term and their day-2-day work
- We put mechanisms in place to ensure we had a genuine two-way communication process
- We focused on capability, behaviour and the expectations on our managers. Taking a genuine interest in the future of each person (mentoring, coaching and buddying)
- Examining work-life balance and being flexible about commitments
This is just a flavour. Small gestures went a long way to have a big impact.
The true cost of staff turnover
Organisations with high levels of engagement can benefit from a turnover rate 40% lower than those with low levels of engagement.
At Eaga, we found the cost of replacing staff to be at least 50% of salary. This took into account the cost of recruitment (which included any lost management time for recruitment, induction and coaching and added agency staff costs), training and development, lost knowledge and time to become a fully effective employee.
- 3,000 staff
- Average salary of £17,500
- Voluntary turnover rate of 10%
No one was calculating our turnover cost which was a huge £2.6 million. Bob sat up at this point.
3,000 x (£17,500 / 2) x 10% = £2,625,000
He tested and retested my numbers and eventually conceded. I cruelly pushed the point home that this was free money. Bob winced and I persuaded him to let me have a little of this £2.6 million (and it only needed to be a little) and invest it in an engagement project.
We had more than one approach and a basket of methods, actions and trials. I couldn’t help but think ‘one size fits no one’. We listened to what our people really wanted from their jobs, we focused on the issues affecting them and involved them in finding solutions that were both good for business and for them – driving participation and personal ownership. We improved recruitment, selection techniques and the induction process, increased learning and development which drew on internal skill sharing and buddying. Career development also shot up the agenda as well as the redesign of people’s jobs to make them more satisfying and revised how people were rewarded (and that wasn’t just about money).
Over the next 12 months we reduced turnover to 6% with plans to cut it by half again. We successfully yielded a saving of over £1.6 million in the first year and not only that, the atmosphere was buzzing. Our Finance Director was now sitting up at this year on year saving.
Sickness doesn’t get better
When it came to absence and engagement, we found a significant link between the two. Those who don’t feel comfortable, fulfilled and engaged with their work, are less likely to turn up, increasing the number of days they are absent. Gallup research tells us that an engaged person takes 2.7 days sick per year compared with 6.2 days per year for someone who is not engaged.
Our people were each taking the equivalent of 6 sick days per year and this was high even for our sector. So many people would ask me
who’s taking my share of sicks days then?
which was demotivating in itself. We needed to act not only as a duty of care to those who were sick but for those who were shouldering a burden as a result. Every 1% reduction in our sickness level would reduce a monthly cost of £120,000 (without considering any added costs of temporary staff or overtime).
It wasn’t just about the immediate financial benefit for me, it was very much about building and sustaining a better place to work. Of equal importance we got to deeply understand the reasons why employees were feeling disconnected and disengaged which led to the lack of attendance. The combined effect of our engagement work meant people were more motivated to come to work. Bob was now bright eyed and keen to support our engagement work.
Engagement is infectious
An added benefit to reducing attrition and sickness was also we retained valuable, skilled high performing employees, reducing the need for the huge recruitment drives of the past. According to KPMG, engaged employees are 87% less likely to leave an organisation and our staff were saying it would take a lot for them to leave. (The real value of Engaged Employees, PDF download)
One observation I don’t often see talked about with employee engagement is that the higher the number of engaged staff we had the greater was our ability to attract new, qualified, skilled staff with a set of values and an attitudes similar to ours.
Engagement breeds engagement, it is infectious.
Eaga’s Chief operating officer, Jack Harrison handing out ice cream to celebrate a double win
at the National Business Awards (Employee of the Year and Customer Focus)
We invested considerable effort in on-boarding new recruits in ‘how we do things around here’ and buddied them with those staff we were confident would share knowledge, share the culture and motivate new people.
New people supported in this way were less likely to leave in their first year and become effective and productive much quicker.
Bonus! said Bob.
Having started, I realise this is but a tip of the iceberg! Improved engagement led to reduced complaints, increased customer satisfaction, better collaboration, even less health and safety incidents… Not all benefits can have a £ value attached and neither should they – sometimes the benefit is in wellbeing, the smiles and the warm family-feel.
Creating such a positive culture is impossible to achieve without engaged staff and importantly enabled by good leadership. Our staff took our company’s culture to an entirely new level. This type of forward momentum and success cannot be achieved by those who lack engagement.
By being able to measure (dare I say quantify?) the business impact of a disengaged workforce, and to justify the expense of programmes or initiatives aimed at improving employee engagement the reluctant FD become a supporter. Employee engagement had a new best friend. It made sense to Bob, and he was talking proudly about engagement as an investment in our future. Bob was still a tough cookie, but I knew life was going to be different from now on, and it was.
Paying attention to the drivers of engagement and making a small investment in thinking strategically and practically can make a significant and positive impact on the bottom line.
More than that, Employee Engagement not only makes hard financial sense, it is a nicer way to do business.