American ShipperWarehouse

ROI of employee engagement

On Second Thought

with Tom Nightingale

   In this business, we measure everything. Metrics for this, metrics for that… And, we all agree that our employees are the core of our success. However, despite our obsession with measuring, some companies still do not track one of the most important metrics of all—their staffs’ engagement with the company. 
   “Employee engagement” is a critical metric for companies interested in keeping valued workers who are willing to give discretionary effort and remain with the company over a longer period. Companies are able to improve employee satisfaction and achieve greater performance in cases where the measurement and concept of engagement are embraced and implemented appropriately. 
   The negative repercussion of disengaged employees is lower productivity, weakened morale, and higher costs to serve customers. The most recent Gallup Research report estimates disengaged employees cost the U.S. economy between $450 billion to $550 billion annually in lost productivity. Employees who report low levels of engagement in their jobs are more likely to be absent from work, negatively influence their coworkers, and produce at or below job productivity standards.
   Conversely, companies that embrace engagement strategies experience greater revenue growth. Quantum Workplace, an employee engagement consultancy, reported companies with the highest ratings for engagement experienced on average a 16 percent greater rate of revenue growth than low-scoring companies. Gallup cited companies in the top of the employee engagement scales produce profits that are nearly 4 percent higher than the rest of the companies.

How do you create employee engagement?
   The Quantum Workplace studies found companies with high employee engagement ratings and higher rates of revenue growth had certain characteristics in common:

  • Workers feel valued by organizational leaders.
  • Employees are confident in the company’s direction.
  • Professional growth and career development are clearly defined for all employees.

   Google, rated as one of the “Best Places to Work,” is known for its “fun factor” to attract and retain workers. The offices are open environments with relaxed rules, places to socialize, a mix of business and pleasure, and many team-building activities to nurture collaboration, enthusiasm, and creativity. Aside from the heavy investment in corporate accouterments, Google believes in transparent company objectives and engages each employee to become directly involved in reaching those goals.
   An emotional attachment to a company occurs when employees have a clear understanding of what the goals of the business are and how they personally can contribute to reaching those goals. Similar to the gratification of running your own business—you can visualize your dreams and you are accountable for doing whatever it takes to achieve your goals. Capturing this same spirit in every business empowers employees to reach beyond current assigned duties. 

How do you measure it?   The most common measurement of employee engagement is through the tangible metrics of productivity, absenteeism, turnover, and employee survey results. While this is a traditional method of tying productivity per worker to financial performance, does it measure how the employee feels about coming to work each day?
   When flipping the words to “engaged employee,” the meaning is clearer. Engaged employees look forward to going to work each day, are enthusiastic about the work they do, and actively seek opportunities to learn new skills and contribute more to the company’s success. 

What about the supply chain industry?   The supply chain industry has the opportunity to attract and retain the best talent through employee engagement. This takes planning and executive support, but creating work environments that embrace the excitement of working in a growing, global, and technologically sophisticated industry makes a real difference. As seasoned professionals can attest, the industry is no longer about dirty warehouses and sub-par hourly wages; it is about leveraging data and technology to meet an ever-increasing customer demand to deliver ideal experiences in a complex industry, and to grow a loyal customer base.
   Logistics companies can engage employees by identifying clear goals for the company and the path for the employees to be directly accountable for reaching the aspirations of the organization’s leaders.

How to develop a culture of employee engagement?   You can start by creating teams that include your best and brightest people, who together will become inspired to leverage data to design new processes and systems that will improve quality and productivity. That, in turn, will increase revenues and profits. 
   Promote the supply chain team to a level of leadership to guide the company on new opportunities for efficiencies and differentiation to gain market leadership.
   Ask your suppliers about their approach to employee engagement. The answers will be a window into their ability to provide the best people, solutions, and technology to drive growth and profitability for your company. If your carrier is not measuring engagement, consider switching, as they are ignoring critical key performance indicators.
   The return on investment of an engaged employee is an enthusiastic contributor to the goals of the company, and a great investment with high returns.
   Nightingale is president of GENCO Transportation Logistics and can be reached by email.

This column was published in the April 2015 issue of American Shipper.