Let’s call it – Failure to engage is the largest area of waste in your business

Today I would like to challenge your thinking on employee engagement:

Employee engagement is measured annually by most organisations using one of many available survey tools. Unfortunately even with these regular surveys, many organisations only make minor improvements in their levels of employee engagement year on year.

When I try to understand why organisations do not improve their levels of engagement I start to wonder if it is because we call the measure “employee engagement”; which is an intangible almost abstract measure that may not carry a great deal of meaning.

Can we create a greater focus on improving employee engagement by stopping calling the measure employee engagement and start calling the measure engagement waste instead? Engagement waste can be quantified using averages based on research which suggests for every five percentage points of improvement in employee engagement your business profit will improve by three percentage points.

The following formula is used to calculate engagement waste:

Your engagement waste represents a lost opportunity for improved profit and an ineffective use of human resources.

Let’s look at an example: if a business achieves 60% employee engagement we can calculate the engagement waste using the formula:

Now imagine having to report to your manager or board that 24% of your annual wages bill was wasted because you failed to engage employees and that the business could increase profit by 24% if employees were engaged more effectively.

For example

If you employee wages bill is $10 million and your employee engagement is 60% you are overspending on staff by $2.4 million per annum

If your profit is $1 million and your employee engagement is 60% you are missing out on $240,000 of profit

When defined in terms of waste, it becomes apparent that a lack of employee engagement is most likely the largest area of waste in any business and that the greatest opportunity to improve business performance is to improve the level of employee engagement.