Harnessing the Power of Change: Why Now is the Best Time to Invest in Employee Engagement
When facing change and economic uncertainty, it’s not uncommon for CEOs to cut spending, reduce headcount, and batten down the hatches to ride out the storm.
But this storm isn’t going to pass anytime soon. This storm is transformative and will only continue to grow. This storm is unlike any recession or technological advancement in the last two decades. And there is no going back to the world of work that we once knew.
Waves of change in the workplace
Ready or not, the beginning of a dramatic "new normal" is quickly approaching. The convergence and synchronization of mega workplace and technology trends have created giant waves of change—and they’re currently crashing directly into those C-suites still operating under organizational structures and management methods of the industrial era.
As the waves of change continue to roll in, the old structures, models, and processes we once knew are being washed away. Organizations that refuse to adapt are unable to stay afloat in today’s fast-moving and volatile environment. Today’s work environment demands organizations and leaders that are quick to adapt—whether that’s to a hybrid work environment, the integration of artificial intelligence, or simply adopting new leadership skills.
What’s one sure action that leaders can take right now to capitalize on the waves of change?
To capitalize on today’s rapidly-changing workplace, leaders must double down in support of their most critical strategic and competitive advantage—their people. Successful leaders will take action to harness the power, passion, and engagement that can only be gained through building high-performing teams.
In today’s environment, investing in the development of leaders will help them:
Feel empowered to move with agility and embrace experimentation
Learn to maximize team contributions from a “true hybrid” organizational structure
Aggressively apply and test various AI strategies to create new ways of working faster and smarter
Better tailor the employee value proposition to close the gap between employee desires and company needs
Improve their self-awareness, as they show up as leaders or team members to inspire networks of teams
Focus on optimizing organizational health and individual well-being, for the benefit of all
(Source: McKinsey)
What is the ROI on learning and development?
Leaders don’t want to invest time and effort into new programs and initiatives if they can’t expect to see reasonable outcomes and a positive ROI. But it doesn’t take much effort to find evidence in support of learning and development initiatives.
Here are just a few studies that clearly show the financial benefits of investing in learning and development initiatives:
Increased profit margins
The (ATD) found that companies that invested significantly in leadership development experienced an average of 24% higher profit margins than those that invested less.
Increased operating income
A (CLC) study found a direct link between leadership development and financial performance. Organizations with effective leadership development programs were shown to achieve a 17% increase in operating income compared to those without such programs.
Increased employee retention
A 2021 study by Nguyen, Cuong, and Duong found a positive correlation between training and development and employee retention. Job satisfaction and job performance, both of which are supported by training efforts, also positively affect employee retention.
Increased shareholder value
Under the leadership of Jack Welch, General Electric (GE) invested heavily in leadership development programs, resulting in significant business growth and increased shareholder value.
Increased revenue growth market share
The Institute for Corporate Productivity (i4cp) found that organizations that are identified as high performing were more likely to invest in leadership development, and these organizations outperformed their peers in revenue growth and market share.
Investments in Employee Engagement Development Are Proven to Increase Revenue and Earnings Growth
The financial benefits of Investing in employee development programs are well-documented in the most recent release of the book “Culture Shock: An unstoppable force has changed how we work and live. Gallup's solution to the biggest leadership issue of our time.”
Gallup’s research over 25 years, including the results from its Global 2023 workplace study, continues to confirm the direct and positive correlations between high levels of employee engagement with creating high customer engagement, revenue and profit growth, and ultimately share price and valuation. Gallup’s Path shows that relationships and feelings also play a role in keeping customers and driving financial outcomes.
Highly engaged organizations have 17% higher productivity, 20% higher revenues, and 21% higher profitability than their competitors. (Source: Gallup)
Organizations with engaged employees out-perform other organizations by 200% and shareholder returns are 20% higher. (Source: Dale Carnegie Training – A Managers Guide to Sustainable Employee Engagement)
As leaders adapt to dramatic changes and settle into their new normal, they must prioritize employee engagement. It is essential to respond, adapt, create, and innovate in order to meet the demands of today’s workplace.
The research shows that engaged employees are more motivated, committed, and willing to go the extra mile to achieve company goals. Their increased level of dedication leads to improved performance among individual contributors and teams, supporting revenue generation increases.
Attracting and retaining top talent
Investing in employee engagement development programs also promotes a culture of continuous learning and skill enhancement. Organizations committed to empowering their employees to acquire new knowledge will find it easier to attract and retain top talent. Engaged employees are retained employees. And higher retention rates reduce the need for frequent hiring and onboarding. Organizations with engaged employees will have more time and resources to allocate to initiatives that support the waves of change in today’s workplace. Those with higher turnover will struggle to stay afloat.
Improving efficiency and cost savings
Further, the more skilled and passionate employees are, the better equipped and motivated they are to innovate, solve complex problems, and deliver exceptional customer experiences. Together, all of these things help drive revenue growth. Engaged employees are also more efficient, which translates to improved operational effectiveness and increased cost savings.
What happens when leaders don’t prioritize investing in learning and development?
When leaders fail to see the value in learning and development initiatives and focus only on reducing budget and headcount, they will soon see the negative impacts of their choice across the organization.
The cost of losing talent
A large-scale study of 34,000 exit interviews by Employee Benefit News revealed that 22% of employees leave due to a lack of career development—making it the number one reason employees choose to look for new roles. In addition, 21% of employees reported leaving due to a lack of growth opportunities.
According to the Society of Human Resource Management (SHRM), the cost of hiring an employee can easily equate to 33% of the annual salary of the position seeking to be filled.
When employees leave, it takes time to fill their roles with the right talent. And it takes new talent time to get up to speed. Employers simply can’t afford to avoid learning and development in today’s fast-paced work environment.
The new nonstop job hunt
A recent study conducted by Workplace Intelligence and Amazon found that 74% of Millennial and Gen Z employees are likely to quit within the next year. Why? These employees cited a lack of skills development opportunities. Among them, 78% felt that they lacked the skills to advance their career.
These employees are looking for higher pay, leadership opportunities, and a future that includes work-life balance. If they’re required to move to other employers to acquire new skills and opportunities, they aren’t hesitant to do so. In today’s job market, employees feel more empowered than ever to seek out an employer who can help them achieve long-term career goals. The companies that recognize this trend are dedicating time and resources to skills development opportunities and better learning benefits. In the end, they will reap the rewards of attracting and retaining top talent.
Dramatic changes require action
With the simultaneous convergence of breakthrough AI technology, the growing increase in hybrid work, and the demand for work-life balance, every business—in every industry—is facing dramatic change.
Over the decades, learning and development investments have repeatedly proven to provide a strong ROI on both time and money. However, the types of development programs that organizations need to implement today must address the new structural, technological, and leadership challenges that mirror the external forces pushing on the organization.
The most impactful development programs will be those proven to elevate employee engagement and company pride. When employees are engaged, committed, and proud of the work they are doing, customer satisfaction increases—along with revenue and profit growth.
What are the core questions that help leaders measure employee engagement?
Gallup's Q12® survey asks the questions that get to the heart of what your employees need to really succeed and feel engaged. When measuring engagement using the Q12 survey, you’re really measuring employees' involvement in and enthusiasm for, their work and workplace.
Armed with this data, managers can now have coaching conversations that drive change within their teams.
The Harvard Business Review report, "The Impact of Employee Engagement on Performance", states that the key to engagement is defining and articulating what constitutes a “successful” employee and communicating success clearly to all. Ensuring that every employee knows what they’re supposed to do and how it impacts your company’s performance is the essential first step.
Then, during periodic reviews, ensure that there is effective and consistent coaching by asking questions like these:
Do you know what is expected of you at work?
Do you have the materials and equipment you need to do your work right?
At work, do you have the opportunity to do what you do best every day?
In the last seven days, have you received recognition or praise for doing good work?
Does your supervisor, or someone at work, seem to care about you as a person?
Is there someone at work who encourages your development?
At work, do your opinions seem to count?
Does the mission or purpose of your company make you feel your job is important?
Are your associates or fellow employees committed to doing quality work?
Do you have a best friend at work?
In the last six months, has someone at work talked to you about your progress?
This last year, have you had opportunities at work to learn and grow?
At work, are you treated with respect?
Does your organization care about your overall wellbeing?
Have you received meaningful feedback in the last week?
Does your organization always deliver on the promises made to its customers?
Source: Gallup
Kern and Partners is committed to supporting the development of positive, productive, and innovative leaders. Our development programs and consulting services are designed to help managers and leaders tap into the natural strengths of their employees to build stronger, more engaged teams. We look forward to hearing from you. Please call me at 818-264-8480 or click here to schedule a call.