Measuring employee engagement and wellbeing – why bother? That was the question posed by HR analytics expert Nick Court at a recent conference hosted by Crown Workforce Management.
In short, it makes good economic sense - employee engagement and wellbeing initiatives have found
to have a positive impact on productivity, profitability and safety, he outlined.
Nick, the CEO of Cloud 9 People, said that when considering the cost of such activities, leaders needed to look at the bigger picture which could result in the impact and loss of its most valuable resources – people
He cited Alex Edmans, Professor of Finance at London Business School, who has undertaken a study of 27 years’ worth of data for the Fortune 100 companies, He analysed the engagements scores of employees from those companies - a huge data set - and found those with high employee satisfaction, out-performed their peers by around 2.3 to 3.8 per cent every year. Cumulatively, that's around 184 per cent over that time.
“One of the things he found was that it’s actually employee satisfaction that causes good performance, not good performance which allows a firm to invest in employee satisfaction, and I think sometimes companies get it the wrong way around,” said Nick.
He believes that organisations fail to invest in engagement because they consider it a budgetary expense but ultimately, the investment makes good economic sense.
“When you look at the cost of leavers, the cost of replacing those leavers, and attrition in the workplace, the costs start to mount up."
"The result is that productivity dips, there’s a curve for people to get back up to 100% performance levels, the cost of interviewing, the cost of replacing those people. They're quite big numbers.
“If you look at a sector such as retail where we're talking about a fairly low-cost base for employees, we're still talking about £20,000 loss across the business for each person that they’re replacing.”
He outlined that wellbeing is about more than just physical health – financial and psychological factors also add to work pressures that employees face.
“A recent study undertaken by the University of California this year has shown that where there is a wellness programme in a workplace, it's increased productivity by five percent. It's not massive, five per cent is not a huge number but if you think about it, it's equivalent to one additional day of productive work per month for the average employee.
“The International Labour Office outlined in 1957: ‘The worker is a human being first and foremost and a producer second, that his working efficiency is so much affected by the environment in which he has to work. Unhealthy and unhappy workers, doing their job under conditions of physical or mental strain are inefficient producers.’
That was more than 50 years ago and today we still have business leaders that don’t appreciate that engagement and well-being are linked productivity.
Nick encouraged the audience to harness the power of analytics to help them see the bigger picture and identify issues resulting in better business decisions. Sharing and managing data effectively across the organisation is essential to ensure that there is sufficient data to inform and “tell the whole story”, he stated
“Look at the systems that you have in place because they're holding a wealth of data and don't forget it is your data. It's your people, so make sure that you have access to the right information to make the correct decisions,” he said.
Crown Workforce Management has captured Nick’s keynote presentation and is now making it available – free to view.
The 20-minute session can be viewed HERE