Forbes guest bloggers John Hagel, Suketu Gandhi, and Giovanni Rodriguez posted a great article on February 9 titled “The Empowered Employee is Coming; Is the World Ready?” I think the answer to their question is yes, but the key will be the ability for companies themselves to measure the return on their required investment. The authors make a compelling case for the empowered employee in exerpts quoted below. Next, I offer a real-life example of a company that made the choice to invest in their employees AND measured the R.O.E.—Return on Engagement. The results are compelling.
“Return on assets for public companies in the U.S. has collapsed by 75 percent since 1965. Businesses have largely responded to this pressure by focusing on the denominator side of the productivity equation – by squeezing out costs wherever possible. … Employees are viewed as costs.
But here’s the problem: focusing on the denominator of the productivity equation – the cost side – is a game in diminishing returns. Each additional increment of cost reduction is harder and harder to deliver. And yet the pressure continues to mount. What to do?
The key answer that defines the post-digital enterprise is to shift attention from the cost side to the value side. Rather than treating employees as cost items that need to be managed wherever possible, why not view them as assets capable of delivering ever increasing value to the marketplace? This is a profound shift in focus. For one thing, it moves us from a game of diminishing returns to an opportunity for increasing returns. There is little, if any, limit to the additional value that people can deliver if given the appropriate tools and skill development.”
Understandably, much of the business world wants to “see the numbers” before they switch its employee strategy from “minimize costs” to “increase value.” The good news is that examples of companies that are leading in this area exist. I had the pleasure of working with a just such a leading company for more than two years. This organization found success investing in employee engagement. It also has the metrics to prove its strategy worked. Here is a summary of the organization’s story:
After seven consecutive quarters “in the red,” senior leaders at this major financial organization decided to build employee engagement through a multi-faceted plan. The plan included a multi-year investment to increase employee value, and in 2009, the company strategically hired an experienced learning leader to spearhead a three-year effort to improve employee value. The organization also increased its training budget by 15 percent each year, resulting in revamped attitudes and increased employment engagement.
This particular financial organization also wanted to “see” the return for its investment. Here are a few of the selected “returns” announced internally at the end of 2011:
- Engaged Branch employees converted 30 percent more customers to primary relationships.
- Engaged Mortgage employees generated 38 percent more mortgages.
- Engaged Private Wealth employees generated 48 percent more in investment sales.
- Engaged Commercial Banking employees opened 49 percent more new primary relationships.
- Engaged Business Banking employees generated 59 percent more revenue.
As a result of the success of the program, the company’s senior leaders tightened their belts in other areas to fund an amazing 300 percent increase in training support for 2012. They were sold on the return for their investment.
Today, there are many companies that include employee engagement as part of their strategic plan. Unfortunately, fewer companies have not made the choice to find the necessary funds and realize the increased value and potential of their employee base. Many organizations operate under the axiom: if it is important, you measure it. In this case, R.O.E. stands for Return on Engagement. As one prominent financial institution determined, it is an important new metric that matters.