Among all the reports created and research conducted, the reality stands: your workforce is not as engaged as you think. What’s the impact of this lack of engagement for your organization?
According to Employee Benefit News, it costs employers about 33% of an employee’s annual salary to replace them. If you have 500 employees making $45,000 a year and 165 of them leave it will end up costing $2.5 million.
The impact goes beyond financial. This week’s episode shares insights on other ways engagement (or lack thereof) can cost an organization. Listen in to hear John Grover, Chief People Officer and Co-Founder of Endsight, and Adam Weber, Chief People Officer and Co-Founder of Emplify.
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[00:00:04] Welcome back to Insights and Employee Engagement podcast by Emplify. In this episode, we are going to do some. Now, don't worry, I'll make it easy for you.
[00:00:14] We've talked about the factors associated with engagement and the negative effects, if not proactively addressed for many of you. You may be thinking, well, we're growing and we're a business and sometimes things can happen. Yeah, absolutely. I get it. But based on the reports and research we've done, your workforce is not as engaged as you might think it is, which means you're facing turnover for employees. You may have never thought we'd leave. And according to the employee benefit NI's, it costs employers about 33 percent of an employee's annual salary to replace them. So here's where that math comes in. Let's say you have 500 employees making an average salary of forty five thousand dollars a year. If one hundred and sixty five of them leave your company, that will set you back nearly 2.5 million dollars. Now, again, I'm no mathematician, but that's not chump change. Beyond the cost associated with turnover, how else does engagement impact the business? Well, once again, I did the hard work for you. And I asked this question to John Grover, chief people officer and co-founder of EndSight. No, not inside the podcast, but a managed service I.T. company in Northern California. In 2015, he took over a new department and he found a lot of dysfunction within his professional services team. What was happening? What was the impact it created? Because from a business development perspective, they were crushing it.
[00:01:40] And what I discovered was that we were having a really hard time finding people and people that were good and also the good people that we had.
[00:01:52] We're starting to leave. So I thought, well, that's not good. We have a people problem. We don't have an even an execution problem if we don't figure. We had to figure out the people. Paul maybe had an execution problem on recruiting and talent acquisition.
[00:02:05] I said to myself, gosh, I don't I really don't know how to hire people and I don't know how to fix this problem. So at the time, so little background on me.
[00:02:15] I'm from Alabama. I'm from Auburn, Alabama specifically. And I went to Auburn University and big football town. And I like to go back for football games because all my friends come back and they do it up nice. And so I went back just to take some time away and think about what we should do.
[00:02:32] We went back to Alabama. So while I was there, I thought, you know, where I'm from is really world class, world class and a lot of cool ways, like just the school spirit and the fight songs.
[00:02:45] And they treat people really well. And there's this this community, this culture, other than that, not to speak poorly about my home state. There's not a lot of other stuff going on. Get mad at me for saying that. But it's really the people that make it and the community in the culture. So I started thinking like, OK, you know what? What? So I may know how to do this stuff. I may know how to recruit us thinking about being in a fraternity. We used to do a lot of recruiting in a fraternity. When I was in college. And so I started to take some of the lessons from my sweet, dear hometown where the people are so nice.
[00:03:24] And the community is so tight knit.
[00:03:27] And I started really bringing that stuff back and work in some of these concepts into our both our recruiting process.
[00:03:34] But how we manage people thinking about our one on one process and also stuff like career path thing.
[00:03:40] So at the time we were all hands on deck with customer experience and winning new customers business development.
[00:03:48] And there were lots of people focused on that, even at the highest level, the CEO, the owners of the company. So we decided that the other part of growth is not just winning clients, but we also need talent. We need to find new talent and keep the talent we have. So we started focusing on it with the same intensity and intentionality as we were our customer experience folks.
[00:04:13] So I moved over to quote unquote H.R. and I immediately changed the title.
[00:04:18] I call it talent and performance.
[00:04:20] We started really getting intentional about our our recruiting and changing the way we were doing things on that.
[00:04:27] And then also how we're training, how are we developing people? How are we how are we thinking about orientation once we hire people? Right. So we're finding the right people and hire them.
[00:04:36] And that's only one step of a million steps. You need to now get them fit to serve.
[00:04:41] You need to work with them. You need to work with them on the career path.
[00:04:45] And what's next?
[00:04:45] That's how we define H.R. now, or we call it talent performance beyond just the benefits and the state laws around employment. Once we have great people, we need to put them in a system, give them the tools, think about their motivation.
[00:05:03] Factors, things like engagement so that they are able to perform and performing is defined as what people value, specifically our customers.
[00:05:12] Right. If we're doing a good job on creating tons of customer value and we're performing well and we get to hang around.
[00:05:18] So that's the real point of changing that. I wanted to really get away from treating people like a resource, like a collection of skills for profit. Like who likes that?
[00:05:29] Does it feel good that humans are humans?
[00:05:32] They don't want to feel like a resource or a widget or a machine.
[00:05:35] So they want to feel like talent. They want to feel great. And they need to they need to be respected as such.
[00:05:43] So John clearly had to take a step back and get a handle on what was happening with his people. He found himself in the position where they were able to sell but can no longer execute effectively due to what he claimed a people problem. It's a hard balance to strike of growing quickly on the sales side while ensuring your people are being taken care of. John shared the state of where the company was in 2015, but now that it's 20. How have they seen the impact of their shift in focusing on employee engagement? Opposed to a sole focus on business development? And how has that impacted the organization as a whole?
[00:06:20] We think a lot and talent performance about recruiting KPI is right.
[00:06:25] Qualified applicants, by the way, we're talking about gender and like diversity and and specifically gender diversity a lot because I'm an amateur. I'm a tech company. And and we're thinking about that a lot.
[00:06:37] So how many qualified women applicants are we getting? That's an example of a KPI that we're thinking a lot about.
[00:06:43] Other stuff. Say that the support side, we're thinking about user initiated incidents.
[00:06:48] So the people that work for the companies that that hire us, they don't want to be on the phone with broken computers talking to us on the phone.
[00:06:55] They want to be doing their job.
[00:06:57] So we try to drive down the issues for the people that hire us.
[00:07:03] Right. And we measure that by user initiated incidents. That means how many tickets are coming in from the employees or the people that pay us.
[00:07:11] So you eyes that's a big thing. We also think about, well, other stuff in an organization like some of the traditional stuff with professional services like utilization and time build and stuff like that, we we also focus on. And then, of course, we think about employee turnover. We think about customer attrition.
[00:07:34] Right. Those are key performers will tell you quickly where if you're doing a good job or not. That sort of people talk with their feet. So those are big things for us.
[00:07:43] And we keep it tight leash on that stuff.
[00:07:45] And you're moving, not dialing things in and you're trying things and run an experiment. So it's hard to know exactly what leads to what. But I can tell you that our employee turnover is extremely low.
[00:07:59] Right. I think we've we've lost two people in the last 12 months.
[00:08:03] One left for greener pastures and one we had to let go. So and then we add what we own that we got I got it wrong. And that was a tough thing for us. But industry wide, we're proud of that. It's our employee tenure.
[00:08:15] The amount of time that people spend on average at our company is five years.
[00:08:21] And just to give you as the context for this, somewhere like Google or Facebook or LinkedIn, some of these big companies that are destination employers out where we're at. And I know you all have Salesforce here in Indianapolis. They're more like three years or sometimes two and a half years.
[00:08:39] Things like that. So and maybe that's by design.
[00:08:42] Or maybe they're hiring fast and growing faster than than we are. And that sort of thing. But we want employee tenure to be high.
[00:08:49] And it hasn't always been that way for us. So things like employee engagement and paying attention to the drivers of engagement within departments, these are things that can really help you keep your people disengaged.
[00:09:03] Employees leave that no 100 percent.
[00:09:07] John thinks engagement is a core business driver for the success of INSIGHT. Now you know me. I have to play devil's advocate. So I asked Adam, our chief people officer, if someone is not thinking about engagement as a business driver. What do you think? They're thinking of it as well?
[00:09:24] I think there's thing of it the wrong way, because how you view engagement as the motivation of your people to bring their best selves to work every day. If you really believe it's that, how can you not believe it's a core business driver no matter what industry you're in? The idea that your how your people show up in the output that they bring or how motivated they are to bring their best selves. It matters. It matters to the bottom line of the business.
[00:09:52] Jon mentioned some ways he measures engagement and the KPI is that he tracks. But what else? What other KPI should business leaders be looking at to determine where they stand?
[00:10:03] So I think foundationally with measuring. You know, you need to have a good scientific tool that does measure the actual emotion like where people are. But then to layer on that, the key is not just to have a measurement of engagement. So like or a score for the score sake it is. How do we tie those directly back to core business? KPI is for our business. And then you see how those two things travel together. Every business is different. You know, some of the common ones, though, would be voluntary turnover, performance, productivity, unit output, all of those. But in isolation, they don't tell the full story. But when you can see I mean, if you take take a professional services firm and what they know to be true is that at a professional services firm, is that. Yes. For them to make money, it is how many billable hours they have. You know, if you went to that company and asked, but is every single person's billable hour the same? Of course it's not right. What different people are capable of inside of the hour is fundamentally different. The output is different. And so if you can track engagement tied to output, that that's a really powerful combination to see how those two things work together. I would argue that every single organization should have an engagement score as one of their top KPI eyes. For years they've had, you know, their EBIDTA or their revenue or whatever, you know, whatever the different like standard business KPI is. But what often gets left out is what's the state of the people? And so we're not just looking at metrics in a vacuum. Oftentimes you're in these board meetings or you just see a giant spreadsheet and it doesn't give you the context on, but where are we? If we view our people as a strategic advantage and the numbers were great, but our people were highly disengaged. But now we know we might be on the cusp of risk of a really we have a really dramatic risk coming, but we don't see it because we're so focused on the traditional KPI is often when we think about metrics and measurement, we start to think in black or white.
[00:12:12] We look at a set of numbers and want to draw crystal clear conclusions. We want to check the box of what success looks like for each person. But the reality is, it's never that simple.
[00:12:22] We want to know what's important to people, and it's not the same for everybody. You can read a book on engagement and they're gonna pile everybody into one one big bucket and they say this is what people care about. But by working with a tool like Emplify, you learn that different people appreciate different things. So understand in these engagement, drivers by group is super important right now.
[00:12:50] For us, we're playing the long game, right?
[00:12:54] You can't just do a survey and then start to work on purpose and meaning and then expect to survey again and you just automatically going to change the world, right?
[00:13:04] It doesn't work that way. So it's a it's a long game. You gotta you gotta sort of play it out in time. You're getting baseline data every time you do a survey.
[00:13:16] But one of the coolest things that we do with it is we look at our bright spots. So our sales and marketing team, for example, super engaged, made, I think that the highest engaged department.
[00:13:28] Every survey. No, that's not true of every sales and marketing team.
[00:13:31] It could be a it can be a whole mixed bag.
[00:13:34] But I didn't know there were going to be consistently at the top of the list. So anyway, so we have this bright spot so we can go to the manager. We can observe. We can look and really understand what are they doing within the context of our organization to create this stuff.
[00:13:51] We can recognize the manager for a job well done, but we can also get those lessons learned, those tips and tricks, and start to use things to create an action plan for some of our other departments that we're trying to work on.
[00:14:06] So it's a lot about knowing what works within the context of your organization and then trying to see what lessons learned. You can you can take and apply to other departments.
[00:14:19] When you think about the impact engagement can have on your organization, one of those impacts can be extremely positive. Like you get insights into your company departments that you didn't realize were performing as well as they actually are then and learning. From John's perspective, you can take those opportunities to learn and pour into other departments where maybe engagement isn't quite what you'd like to see. The negative impact of disengagement like turnover and burnout can be proactively addressed. When you measure it and as the great Peter Drucker once said, what gets measured gets managed. And when you manage things, you get the positive impact of being able to lean into what is working and learn more about the individual needs of the people within your organization. And sometimes the people who are high performers may have low engagement levels, which can be really surprising. So what's the trick of having a high level of engagement that drives business impact?
[00:15:17] It comes down to just respecting people and how they want to show up at work and and what's important to them. Now they're far different than the sales and marketing team. So some of the stuff that we use over there to create engagement may not work for this engineering team, but it is good to know who's engaged and what departments are are doing.
[00:15:38] And I think by at least carried enough to to do this sort of stuff, it helps.
[00:15:44] Now, I go back to the to the cliche, you know, the beatings will continue until morale improves.
[00:15:51] He can't just brute force your way into better feelings of engagement at work. So you have to really open your ears. You have to ask. You have to what?
[00:16:00] She had to play the long game and really focus on the humans that are in play.
[00:16:06] So highly engaged people can they can be high performers. I think highly engaged people will tend to perform better.
[00:16:17] You can have you can have a really good set of process and tools. You can have really smart, skilled people and perform really well.
[00:16:28] I think you're always going to be if you take a group like that and you're gonna get their engagement level higher.
[00:16:33] You're gonna get a little bump. You're gonna get you're gonna get a nice improvement in performance.
[00:16:37] But a lot goes into performance. Not not just the engagement score specifically tools and skills, but yeah, it's you know, the the point is, is for people to love their work.
[00:16:50] You want them to feel good about their job.
[00:16:53] You want them to thrive in they're in their current job role in understanding their engagement levels is a big piece of that work. Should be great. That should be awesome. At my company, we think people should absolutely thrive at work. Right.
[00:17:10] It isn't a place where you come in and you tune out.
[00:17:13] It's a place where you come alive and you sat this whole episode was going to be about numbers in our life. Easy. It can never really be that simple because as I've said before, is this really does come back down to people and understanding levels of engagement is just one piece of that puzzle. Yet the facts do remain. Your employees will leave or they just won't work out if they're not understood. Nick said it a couple of episodes back, but employees want to be heard, seen and valued. If you want to understand more about the numbers behind the employee engagement trends discussed in this season, head on over to Emplify dot com slash trends, TRT and D.S. to download our report.
[00:17:54] And as always, I invite you to share your thoughts with me at podcast at Emplify dot com. We'll see you next season.