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Gallup Discovers How to Double Your Return on Employees

Posted by Tom Lombardo on Thu, Oct 15, 2015 @ 08:33 AM

The Wall Street Journal, CFO Magazine, and the Chicago Tribune are all starting to wonder the same thing:

Perhaps we, as investors, need to be more conscious of how the people who clean our hotel rooms, cook our meals, and deal our cards are treated and paid, rather than simply looking to see whether the expense can be cut further. Staff motivation, although difficult to quantify, should be part of the investment analysis.

engaged-employees-a-new-investment-goal.jpgThey're responding to fifteen years of studies done by Gallup that have all but proven that companies with engaged employees outperform those without.

State of the American Workplace,

The top fourth of companies, meaning those with the most engaged employees, were 22% more profitable than the bottom fourth. They were 21% more productive, 48% safer, and they had far better absenteeism and turnover rates. They also "have higher earnings per share and seem to have recovered from the recession at a faster rate." At the extremes, companies in the top 1% enjoyed financial and business performance four times as high as those in the bottom 1%.

Nice to know, but Gallup went a step further and discovered which organizational best practices support employee engagement. It's not something you can accomplish over the weekend.

"Engaging employees requires a year-round focus on changing behaviors, processes, and systems to meet, anticipate, discuss, and respond to changing needs," they found, emphasizing that successful follow-through "requires a total commitment from all levels of the organization."

They found that the "top performance-driven companies...define and rigorously measure success at every level in the organization." Be prepared to dive deep into subtleties. "Measurement without targeted action is useless," they discovered, adding that "many [managers] persist in measuring performance by the wrong standard — using unsubstantiated or ineffective metrics that ultimately lead nowhere."

If the potential pay-off seems compelling to you, then understanding the suggestions and methods in Gallup's report, State of the American Workplace, may help you get started.