A Business Case For Employee Engagement
A Hard Business Case For Engaging Your Employees
For the past four years I’ve been working to convince business leaders that focusing on their people — inspiring them, teaching them, letting them lead — is the surest path to sustainable revenue growth.
Sometimes the conversation felt “fluffy” and emotional. But only recently has the market undeniably proven this out…
How then can HR leaders begin to calculate the financial effect of engaging employees on their own businesses?
A Business Case For Change
Employee engagement isn’t a fluffy, feel-good thing. It drives top-line revenue through improved quality of work, productivity, and customer satisfaction, while reducing bottom-line costs through more efficiency and higher retention — all by inspiring and motivating your people.
The business case begins with a simple metric: Revenue Per Full-Time Employee (FTE).
Imagine a company with 10,000 full-time employees and annual revenues of $1 billion. Using simple math you can calculate a revenue per FTE of $100,000.
Top-line Drivers:
The company can increase its Revenue/FTE by increasing:
- Productivity: How much you contribute (revenue/expense)
- Quality: How well you contribute
- Customer Satisfaction: How much value your contribution creates
Bottom-line Drivers:
The company also increases Revenue/FTE by increasing:
- Efficiency: How quickly you contribute (or decrease cost of your contribution)
- Retention: How long you contribute (and don’t contribute somewhere else)
- Advocacy: How positively you speak and write about the Company
Let’s look at just one of these variables — Retention: A CAP study found average costs to replace an employee are up to 213 percent of annual salary for highly educated positions.
If the company can increase Revenue/FTE by just 5% by inspiring the right talent the effects are substantial:
- Increase in Revenue/FTE: $5,000
- Total Increase in Revenue: $50,000,000
Even conservative increases in drivers result in substantial value. Now just imagine if drivers were increased by 10%.
Employee engagement isn’t a fluffy, feel-good story. It’s the new path to growth. Only companies with an army of engaged of employees who believe in what they’re doing can turn a profit in this disruptive new world. Stop looking for the silver bullet — it’s in the office next to you.
ABOUT ANDREW OSTERDAY
Andrew is a founding partner and the Chief Creative Officer at Local Industries. His career spans both agency and client-side, crafting marketing solutions and digital experiences for some of the world’s most popular brands, such as Airbnb, Coca-Cola, The Home Depot, Delta, Porsche, and Jack Daniels before moving to Coca-Cola’s Global group where he led Cannes award-winning digital creative for Coke Zero.
His work at Coca-Cola also included real-time social content and production for the 2014 FIFA World Cup in Brazil, leading the world’s largest user-generated photo contest ever and crafting Coca-Cola’s employee engagement program spanning all 206 countries Coca-Cola serves.
Andrew is a pioneer of Change Marketing and a frequent mentor, writer, and speaker.
