Back-FranÃ§ois Warlop had no idea he had an employee-engagement problem. The staff at Quadra Chemicals Ltd. seemed happy, and Warlop considered his firm’s corporate culture one of its top two priorities, along with cash-flow management. But when Quadra’s president had a third party measure how engaged his staff were in their jobs, the results came as a shock.
The Vaudreuil-Dorion, Que.-based chemical distributor used the Best Small & Medium Employers in Canada (BSME) program as its measuring stick. A joint venture of Queen’s University’s Centre for Business Venturing and global HR consulting and outsourcing firm Hewitt Associates LLP, the BSME uses a confidential employee survey to calculate an employee-engagement score for each firm entered in the program. This score measures the percentage of staff who agree strongly with statements such as “It would take a lot to get me to leave this organization,” “Given the opportunity, I tell others great things about working here” and “This organization inspires me to do my best work every day.”
Warlop had expected Quadra’s dedication to its employees to translate into high engagement. Instead, its score was merely average — too low to make the 2006 BSME list. Warlop found this deeply worrying, because in Quadra’s relationship-driven industry, it’s crucial to have strong partnerships with clients and suppliers. “If you don’t have highly engaged people in a distribution business, you’re going to be in trouble very soon,” he says. “It’s the biggest driver of profitability.”
Warlop had recently learned from a survey by Quadra’s industry association that its profits lagged by almost 40% behind competitors of a similar size. He also knew that a long-standing gap between senior and mid-level employees was widening, which he now saw as a key factor in its so-so employee-engagement score and weak profitability. Warlop decided to make a big push to get Quadra’s staff more fired up about working there, and to enter the BSME ranking again to track his progress.
If you were to have a third party measure employee engagement at your own company, you might be as shocked as Warlop was by Quadra’s initial ranking. Even among the firms that choose to enter the BSME — often to obtain independent proof that they’re doing well in what they consider an important metric — a substantial share score poorly. Neil Crawford, a Vancouver-based principal at Hewitt, says about 15% of entrants score below 45%, meaning the majority of their workforce is effectively disengaged.
Still, how much does it matter how keen your people are about working for you?
Data from the BSME ranking suggests it matters a great deal. On several business indicators, firms with more than 65% of their staff highly engaged far outperform those reporting moderate engagement of 45% to 65%. Of the 55 publicly traded companies surveyed by Hewitt over the past five years, employers in the top engagement tier boasted annual growth averaging 16.4%, versus 6.1% for the moderate-engagement firms. Engagement leaders had 54% lower turnover and almost twice as many job applicants per advertised position as the middling group. And staff at high-engagement companies averaged only six sick days each year, compared with 12 at moderate-engagement firms.
These numbers might convince you that entering the high-engagement elite would do wonders for your business, yet leave you wondering how to achieve that. Employee-engagement specialists say one thing it’s not about is simply paying your staff more. “I very rarely see compensation as an engagement driver,” says Daphne Woolf, managing partner of The Collin Baer Group Ltd., a Toronto-based HR consultancy specializing in employee engagement. “The only time I’ve hit compensation as an engagement driver is when it’s absolutely out of sync with competitors.”
If not pay, what then? There are, in fact, many ways to get your people more enthusiastic about their jobs. The BSME rankings include many repeat entrants, several of which — including Quadra — have achieved increases in employee engagement ranging from sizable to massive. Here, four of these big movers share the strategies they have adopted and the business results they have attained.
Garo Keresteci and Stephen Brown operate in marketing communications, a sector they say has notoriously low engagement levels. It’s one in which staff tend to be overworked and underappreciated, leading to annual turnover that’s often 20% to 30%. The partners at FUSE Marketing Group Inc., a Toronto-based marketing agency, saw an opportunity to, as FUSE’s president Keresteci says, “create an agency where people want to put down roots and can get really engaged.”
The partners figured that a highly engaged team would be a key competitive advantage. They reasoned that a stable and productive workforce fuels growth by reassuring clients and leading to better and more consistent work and, eventually, bigger and more complex projects. That’s why FUSE hired a full-time HR person in 2006, when it had just 25 to 30 staff, to craft a long-term strategy to become an employer of choice in its industry.
FUSE made the 2009 BSME ranking with a solid if unspectacular engagement score. This year, its score has vaulted ahead by 14% — an impressive feat, given the state of the economy — taking FUSE into the top tier.
Fears among its staff about the recession peaked in early 2009, when the agency lost a major client. That’s when the partners’ recent move to share details of the firm’s strategies and finances at regular meetings with employees started to pay off. “In a really tough year, we told people flat out: This is the reality, this is what we’re collectively having to work towards,'” says Brown, FUSE’s general manager. “If we can get there, we can retain clients, retain jobs and keep going.'”
The partners say they spent twice as much time as they used to on internal communications, but in return succeeded in reassuring their employees during the worst of the downturn. Going transparent had one unforeseen consequence: being grilled by employees. “Our open dialogue meant that when you ask for questions, you have to be prepared for some zingers,” says Brown.