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Engagement: Increasing productivity by gaining the commitment of the workforce

Neglecting your staff can seriously damage your wealth. More than 30 studies in the UK and USA since the early 1990s leave little room for doubt: how organisations manage and develop their people has a powerful (perhaps the most powerful) impact on overall performance, including the bottom line. Consider the results of these studies:

The Sheffield Effectiveness Programme - Sheffield University / LSE (1)

The biggest study of organisational performance ever conducted in the UK. The study was carried out across over 100 medium sized companies over a 7year period. The researchers compared each firm’s performance in terms of productivity and profitability with any changes in working practices. The results showed that two particular HR strategies had the biggest impact on performance and accounted for an average 18% increase in productivity and 19% in profits:

  • the acquisition and development of new skills
  • job design involving increased variety, responsibility, flexibility and team work.

Conversely, those organisations which introduced working practices which were contrary to these HR practices (for example a firm which decided to de-skill the workforce in order to reduce all jobs to a cycle time of three minutes) were facing economic instability.

Surprisingly, the study found that quality initiatives accounted for only a 1% improvement in productivity where the initiatives were not supported by more enlightened people development practices.

The Gallup Studies (2 & 3)

Questionnaire surveys of 1.7 million employees using the highly regarded Gallup Q12 survey which evaluates organisational culture and its impact on staff performance identified the following key findings:

 

% of workforce

Absenteeism
(Days per ann.)

Annual staff turnover costs (1)

ENGAGED
Loyal and productive

17%

4.67

£6.97M

NON-ENGAGED
May be productive but not bonded to the organisation

63%

5.95

£11.48M

DISENGAGED
Unproductive / destructive influence

20%

10.68

£31M

1) Staff turnover costs based on an organisation with 20,000 front line employees @ an average replacement cost of 0.41 times salary.Total cost of lost days work in the UK by disengaged employees estimated at £39 - £48 Billion per annum.

The staff turnover results are particularly significant in financial terms. The Corporate Advisory Board of Washington DC has identified the cost of replacing a technical expert in IT, project management or marketing as 1.75 times the individuals salary, perhaps £40K - £60K. For front line staff who are selected and trained to provide good customer service, the cost is still nearly half of annual pay, say £6K - £8K. With staff turnover often exceeding 50% in Call Centres, employers are haemorrhaging money.

The Swedish Experience (4)

Call centres are big business in Sweden, accounting for 1% of the total workforce. Staff turnover is between 3% and 10% and correspondingly low recruitment costs make Swedish call centres highly cost effective and the envy of their British counterparts - which are sometimes referred to as the sweatshops of the 21st Century. In Sweden this is far from the case and the results in terms of productivity and staff turnover are impressive.

Working practices in Swedish call centres tend to reflect those identified as the key performance drivers in the Sheffield Effectiveness Programme - the acquisition and development of new skills plus job design that promotes variety, responsibility, flexibility and team work. Swedish call centres are also relatively small - SAS’s Stockholm site has only 120 work stations in a 2700 square metre space, and are often in relatively isolated areas, thus encouraging a greater sense of community. Call handlers are trained to a high level, are given a great deal of autonomy and encouraged to handle technically demanding customer enquiries - thus increasing the sense of responsibility and potential for job satisfaction. Many Swedish call centres also boast a range of other benefits - from crèches, designer kitchens and ergonomic workstations to flexible and part time working. One common feature is the relaxed, unstressed working atmosphere.

The evidence suggests that the more people in an organisation feel actively engaged in their work, the more productive and least wasteful that organisation is likely to be.

No Such thing as "Corporate Culture"?

Those organisations who figure well in the Gallup research need not rest on their laurels, however - recent research has also uncovered another feature of the Gallup Q12 data - there is more variation in scores within companies than between companies! (5) In each of more than 200 organisations analysed, were some of the most-engaged and least-engaged. The lesson is that corporate culture does not cross all internal organisational barriers - companies are an amalgam of many cultures - defined at local and departmental levels. This carries strong implications both for those involved in developing organisations, and suppliers of training and development programmes with a "one-true-way" approach - organisations are complex because the people within them, and the interactions of those people, are complex.

Bibliography

1. ‘Impact of people Management Practices on Business Performance’, Malcolm Patterson, Michael West, Rebecca Lawthom, Stephen Nickell, CIPD 1998
2. 'Same indifference’ Marcus Buckingham, People Management, 17.2.00
3. ‘What a waste’ Marcus Buckingham, People Management, 11.10.01
4. ‘Baltic exchange’ Chris Taylor, People Management, 26.7.01
5. 'Marcus Buckingham thinks your Boss has an Attitude Problem' , Fast Company Issue 49, page 88 August 2001


Articles in this section:

Intellect, Will and Passion: The Art of Facilitating Outdoor Development Training

Putting Fun Into Work

Developing a Learning Organisation

Hearts & Minds Wins Latest Work Force Battle

Principle Centred Leadership

Becoming an Employer of Choice

The Half Hearted Virus: A trainer's tale of despair

Leadership: Death of the Hero?

Engagement: Increasing productivity by gaining the commitment of the workforce