Does Employee Engagement Impact the Bottom Line?

“Everyone talks about building a relationship with your customer. I think you build one with your employees first.” – Angela Ahrendts

When Angela Ahrendts, now Apple’s head of retail, was new as CEO at Burberry in 2006, she put together an ambitious strategy to turn around the struggling company. An independent consulting firm hired by Burberry’s board gave her strategy a 5% chance of success. She proved them all wrong and achieved all of the goals in her strategy a year ahead of schedule. What she knew and the consulting company didn’t account for was the power of an engaged and empowered workforce. By focusing on engaging and empowering her workforce, rather than focusing primarily on the customer or the bottom line, she more than doubled sales during her time at Burberry.

Ms. Ahrendts isn’t the only leader to share this belief that employees should come before customers. It is one that is becoming more commonly embraced by leaders.  Southwest Airlines, for example, often takes an employee is always right approach to customer service rather than the customer. In fact, founder Herb Kelleher once famously fired a customer, who continuously sent letters of her complaints about the airline and its employees.

What these two leaders showed was that by focusing on their employees, engaging and empowering them, they’re also focusing on their customers. However, it seems like these stories are the exception with regards to employee engagement rather than the rule. The latest Gallup State of the Global Workforce Report showed that as many 87% of employees around the globe may not be engaged in their jobs.

Forum’s definition of employee engagement is when employees have a deep sense of ownership in the organization and strong feelings of involvement and commitment in one’s own work. This results in a strong contribution of discretionary energy from employees. That last part is the most important. The willingness of employees to spend extra time, energy and mindshare on their jobs, is what really differentiates a highly engaged workforce. It’s what has helped turn around Burberry and given Southwest Airlines loyalty numbers that seem unreal for a company in an industry as despised as commercial air travel.

Unless you’re employees are that 13% across the globe that are engaged (and if they are, bravo!), there are steps you can take to engage and re-engage your workforce. Forum’s research shows that there is not just one facet of employee engagement, and it’s way more than just social outings and an annual survey. Real engagement has three facets:

1. A positive team climate. Climate is simply what it feels like to work somewhere, and that is influenced by everything from politics, history and fellow employees to the physical office space and computer operating systems. Research shows that the most important climate factor for employees is their leader.
2. Trustworthy leaders and managers. Tying in closely with climate, trust is a huge aspect of engagement, and disengagement, in the workplace. We conducted a survey last year of over 1000 business leaders and employees on the topic of trust. Three clear characteristic emerged as to what makes a trustworthy leader: ability to listen and understand, walking the talk and encouraging new ideas and suggestions.
3. Engagement needs being met. There are six main engagement needs, and while employees need all of them met, most people have one to two dominant engagement needs in their jobs. It takes a highly skilled leader to recognize that different people need different things out of their jobs. These needs are accomplishment, recognition, enjoyment, belonging and advancement.

By focusing on employee engagement instead of the bottom line, leaders will probably find that the bottom line improves anyway.

Interested in employee engagement? Forum is conducting a survey on how accountability impacts employee engagement, and we would love to get your thoughts. You can take the survey here, and we’ll send you a copy of the results.