So you think a focus on people and organizational health is “soft” with no measurable impact on the bottom line? Think again.
There’s a little organization called Gallup, and it has more data than the National Security Agency—and that data is compelling. Those of us with smaller budgets—and a noticeable lack of Ph.D.’s on our staffs—can benefit greatly from Gallup’s work.
Show me the money
First of all, no disrespect intended to good old numbers-driven finance folks. Every organization should be fiscally responsible and ready to challenge requests for expense dollars. I get that.
Sometimes, however, it takes one additional step to calculate the true economic impact of a decision. Investments in culture, employee engagement, organizational health, and leadership often require an additional cause and effect review.
Before you roll your eyes, keep reading, because facts are facts.
Just the facts, ma’am
Gallup has provided a bunch of facts in its Q12 Meta-Analysis study. It found that employee engagement levels correlate directly to key outcomes in every economic climate.
I know bean counters love numbers, so here’s the scope of the study:
Here’s the good part: The results show employee engagement’s impact on a boatload of important performance outcomes. When compared with the least engaged business units, the highest engaged business units have:
Lack of engagement is costly
It’s not hard to take each of these performance impacts and quantify a direct impact to the bottom line. Picking just one might be enough to convert the most skeptical among us.
Take the cost of employee turnover for instance. Losing one good employee due to a preventable reason leads to the spending of big dollars to recruit, select, onboard, train, and push a new employee through the learning curve.
In fact, according to a recent white paper from the CUNA Human Resources/Training & Development Council and numerous other studies, this can easily cost between 25% and 200% of the position’s annual salary.
Even with low turnover numbers, this can quickly amount to millions of dollars.
In short, there truly are quantifiable operational expenses to be avoided through an intentional focus on employee engagement, leadership, culture, and organizational effectiveness initiatives.
While justification through traditional return on investment calculations is always a challenge, the real-world evidence is measurable—and the results speak for themselves.