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Tuesday, November 13, 2007

The ROI of Employee Engagement

Several studies over the past few years reiterate the return on investment of strategy-driven employee engagement programs, confirming the importance of an engaged workforce on bottom-line results.

  • The 2007 Global Workforce Study by Towers Perrin established a definitive link between levels of engagement and financial performance. Firms with the highest percentage of engaged employees collectively increased operating income 19% and earnings per share 28% year to year.
  • A 2006 Watson Wyatt study involving 12,750 workers across a range of different sectors demonstrated that the three-year total return to shareholders was 36% higher in organizations with high-employee commitment.
  • A 2005 ISR study (now Towers Perrin) showed that companies with above average employee engagement profits rose by 2.06% and operating margin rose by 3.74% over the same period.
  • A 2004 Sirota Consulting study of 28 multinational companies found that the share prices of organizations with highly engaged employees rose by an average of 16% compared to an industry average of 6%.

BOTTOMLINE: Employee engagement starts with a strategically-aligned recognition system that is directly tied to the strategy (mission, vision, values) of the entire organization. This does not mean motivational posters and a simple pat on the back. Successful engagement programs must be embraced company-wide, supported by senior executives, and executed strategically.

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