Feature Article - January/February 2010

Rising Tides

Are You Prepared?

By Rick Dandes

s the economy begins to recover from the deepest recession in decades, ensuring that your workforce continues to be motivated and engaged is more critical than ever. There are many reasons why this is so, not the least of which is the powerful link between an engaged workforce and profitability.

This link is not just conjecture.

Highly engaged firms, according to a 2008 Towers Perrin study, have an earnings-per-share growth rate of 28 percent. By comparison, low-engagement firms have a decline of 11.2 percent. That's a difference of nearly 40 percent.

Similar results were uncovered by the Gallup organization in an earlier 2006 survey. Gallup researchers found that the earnings-per-share growth rate in the top quartile of companies fostering employee engagement was more than 250 percent greater than below-average companies.

Research has also been done on disengaged employees, noted Peter Hart, president and CEO of Rideau Recognition Solutions, headquartered in Montreal, Canada. "This kind of a workforce costs the American economy anywhere from $300 to $350 billion annually," he said.

"Clearly," he continued, "having people who want to come to work, and who are really performing while at work, makes a huge difference in customer service, which results in an increase in shareholder value. Engaged employees make a difference in that way—they are the people delivering the company's brand. And if they are disengaged, how well are they going to deliver that company's brand?"

Michelle M. Smith, vice president of business development for O.C. Tanner and president of the Forum for People Performance Management and Measurement at Northwestern University, agrees with Hart. "It's almost academic," she said. "Unless business leaders have been living in a cave for the last several years, these studies, and others of a similar nature, have probably reached their desk. But, whether a company chooses to accept it—and more importantly, act on it—may mean the difference between their organizations weathering the current economic storm or being consumed by it."