Payoff Of Employee Engagement

Did you see Adam Bryant's interview with Container Store CEO Kip Tindell in Friday's New York Times?  Early on Bryant asked Tindell about his most important leadership lessons to create a thriving and productive workplace culture.  Here's what Tindell said:

The way we create a place where people do want to come to work is primarily through two key points.  One of our foundation principles is that leadership and communication are the same thing.  Communication is leadership.  So we believe in just relentlessly trying to communicate everything to every single employee at all times, and we’re very open.  We share everything.  We believe in complete transparency.  There’s never a reason, we believe, to keep the information from an employee, except for individual salaries.

There's a lot to absorb in the leader's answer when it comes to communications team building.  But it boils down to creating a culture of ownership and accountability that is based on mutual trust – workers' trust in the leadership to engage them and provide a nice place to work, and leaders' and managers' trust that a payoff of employee engagement is increased commitment, including offering more ideas to improve processes and ultimately customer satisfaction (and sales).

It is this foundation of trust that has allowed the Container Store to reach true midsize status, with over 4,000 employees, while expanding from 38 locations when I blogged about them in 2007 to 48 today (yes, during this recession).

Related: One of our most popular posts is this one that's also about transparency.

What is it about spring and a focus on women entrepreneurship?  Don't get me wrong, I'm not complaining – I think discussing business leadership by the gender that is most dominant in our country, most employed as adults, and, according to BusinessWeek, does more with less venture capital is a good thing.

Last April I blogged about the "flurry of press on the topic of women in business," and a similar flurry seems to be going on now.  In addition to the BusinessWeek article I mentioned above, this has been a hot topic of Reuters, USA Today, and even the U.S. State Department.

Among this press is a call by In Good Company Workplaces – a workspace, networking, and training provider led by two women – for female entrepreneurs to share their workplace culture stories and tips.  Adelaide Lancaster and Amy Abrams are gathering this feedback for a new book they're working on.

In Good Company has gathered a few comments so far on their blog.  You can add yours by clicking here.

It will be interesting to read their book when it's out and hopefully see more real-world evidence of the payoff of employee engagement.

Related: This report by The Center for Women's Leadership, archived on our website, finds that entrepreneurial activity is highest among women who are also employed in a wage job.

Close to 1 in 5 readers of this blog is from California – a greater share than from our home state of Illinois.  And of those, most hail from where I've called home since last July: SoCal.

I speak now to you folks – and others if you want to fly or drive in: You can connect with me on March 23 by registering for this LA Chamber event on green entrepreneurship.  "Going Green for California," part of Occidental Petroleum's Power Hour Series, features Huell Howser, host of California's Gold on PBS.

According to the LA Chamber, this session will highlight "what innovative and creative Californians are doing to solve environmental challenges."  The registration fee is only $20.  Learn more and register to attend here.

If you can make it, I look forward to seeing you there.  I'll have business cards in hand – though not too many for environmental reasons – and I'd love to hear about what you do and answer any questions you may have about our work to equip small organizations with proven people practices.

Related: This week Taiga Company (a fellow user of our bloging platform, Compendium) shared 6 reasons why going green is a payoff of employee engagement, and makes for a more winning workplace.

Photo credit: Huell Howser Productions

Our tagline at Winning Workplaces is "better for people, better for business."  Lately we've taken to tacking on "better for society" to this, reflecting the focus of some of the double and even triple bottom line businesses we've honored over the years for their demonstration of the payoff of employee engagement practices.

A new blog post by small business new marketing guru Chris Brogan re-reminded me of this focus, in a small but powerful way.  In outlining his expectations for himself and his readers he might meet at the 2010 South By Southwest festival that starts tomorrow, Brogan made his case for limiting the distribution of business cards:

Unless you want to do business with me, don’t give me a business card.  We both know how to reach each other, so unless one of us asks for one, let’s not hand them out.  ...

Save a card.  Save the planet.  Rewire the way humans do business.

I think this is a great tip for individuals, and applied en masse it has the potential to help all three stakeholders I mentioned above:

• Employees – less materials to worry about in sales presentations, networking events, etc.  (As an aside, you can use technology – smart phones, laptops, PDAs – to store a contact's info if you really want it and are sans biz cards.)
• Businesses – printing fewer cards because employees hand out less of them can slim down your marketing budget.  On a larger scale, more money to play with can spur more effective strategy work to meet customer demands, which can mean more (wait for it) jobs!
• Society – fewer demands on printers means more trees!  And that's good for everyone because they absorb more of the CO2 caused by global warming and produce more oxygen.

My question for you: How do you engage employees to innovate how you communicate with customers and other stakeholders to cut costs while still achieving your goals?

Photo credit: ChrisBrogan.com

Yesterday I blogged about our announcement of our finalist organizations for the 2010 Top Small Company Workplace award, showing where these businesses are located across the U.S.

You may be wondering, OK, so what made these 40 firms stand out among the almost 500 that applied?

Our finalists stand out when it comes to their use of effective, progressive employee engagement best practices to drive improved business outcomes.

The two tables below spell this out in detail.  Here are some key best practices/benefits where the finalists stood head and shoulders above all applicants, on average...

...which helped them produce the following outcomes:

Metric/Outcome	2010 TSCW Applicants	2010 TSCW Finalists	Finalist Improvement
Percent profitable in 2009	91%	95%	4%
Average years in business	16 years	28 years	75%
Average employee turnover	19%	8%	138%
Average % open positions filled from within in 2009	22%	28%	27%
Average employee tenure	4 years	7 years	75%

So, yet another employee engagement research sample that shows the payoff of winning workplace engagement strategies.

Help a blogger out: Have you seen any new workplace research showing that better people practices bring better business results?  Let me know by commenting below.

Did you look closely at the byline on our post from yesterday arguing that employees are absolutely critical to achieving strong business results?  It's none other than our President, Gaye van den Hombergh.

You can read Gaye's bio here on our website.  She assumed leadership of Winning Workplaces last June, and in addition to the work she's been doing since to chart our strategic course and ensure excellent service, she recently, and graciously, agreed to join me as a writer on our blogs.

You can access Gaye's blog, which is titled "The Payoff of Progressive People Practices," here.  You'll want to bookmark it so you can stay current on her latest thoughts and tips on the payoff of employee engagement from a leader's perspective.

One of the more fun (because it's obvious) examples of the payoff of employee engagement is the number and scope of business awards a company can apply for – and win! – on the foundation of a productive workplace.  Just look at the homepage of Top Small Workplace Gentle Giant Moving Co.'s new website.

Yesterday PrintingForLess.com (PFL), the Montana-based, online printing services firm of our Best Boss Andrew Field, announced that they won four 2010 Marketing Plus Awards from the National Association of Printing Leadership.  PFL took home the gold for sales/lead generation and direct mail marketing, and also the silver and a merit award for direct mail marketing.

Even though building trust in the workplace is a journey, PFL is crossing the finish line of a race that started with working on improving how managers interact with employees, and soliciting and acting on everyone's feedback for creating efficiencies in service delivery.  Field outlined his leadership approach that is paying dividends now in the form of these awards, which help with both employee and customer retention, at our annual conference back in 2006.

Congrats to PFL on their milestone here in their continuing quest to use progressive employee engagement practices to remain the #1 online commercial printing company!

For more on PFL, go here on our website and here on this blog.

Much of what I write about here deals with the payoff of employee engagement when it's high.  But what is a company to do when it's modest?  Or – as is often the case for firms that do not actively measure this, or that haven't in quite some time – when it's low?

Martha Finney wrote an insightful post on this on SmartBlog on Workforce this week.  She says the end goal is not to achieve high scores from your employee engagement research, but to have a "great engagement culture."  Therefore, she advises, bad scores are really good news because they:

• reveal the areas that need to be fixed,
• demonstrate that your people still take the survey process seriously, and
• indicate that you are asking the right questions.

Read Finney's full post and get additional value from her commentors by clicking here.

Bonus: Access our 7 tips for launching an employee survey here.

How do you create a business that profits from the payoff of employee engagement and team building (and more importantly, does so even in a down economy)?

The magazine Remodeling wrote on this in their February 2010 issue.  Profiling our 2009 Top Small Workplace Anthony Wilder Design/Build, Victoria Downing engages both their leader, Liz Wilder, and ours, Gaye van den Hombergh, in a discussion of how Anthony Wilder's embrace of the building blocks of a Winning Workplace have contributed to bottom line results including:

• 9% revenue growth in 2008,
• Turnover in 2008 of 3%, and
• Average employee tenure of 6 years.

Read the full article

Related: I posted a video podcast here that MSNBC did on Anthony Wilder shortly after we announced their Top Small Workplace award last year.

"Am I already a Winning Workplace?"

This is one of the most common questions we get, and it really makes sense given the economy and, by extension, companies' ability to invest in their workplace.  They understandably don't want to spend any more than is absolutely necessary here.

One way to answer to this question is to benchmark themselves against applicants of our Top Small Company Workplace award with Inc. Magazine.  The process I've outlined below will allow you to do this:

1. Click on the title of this post to ensure you're just looking at this post by itself, and not with the rest of our blog feed.
2. Click here to print this post.
3. On the page that prints out, complete the "Your Firm" column below for each metric/practice of a productive workplace.
4. Once this is done you will get a rough* picture of how your people practices are contributing to your bottom line success.

Metrics

Organizational

Medical and Other Benefits

*This represents only a limited view of how well your organization is doing when it comes to the payoff of employee engagement.  There are many more factors than those shown here that go into creating a Winning Workplace.  For a more detailed picture, please contact us.

Who will be responsible for choosing which of our almost 500 applicant organizations will be named as 2010 Top Small Company Workplaces in Inc. Magazine this June?

We just posted our panel of judges this year on our website.  Those who will be making the final determination in early March as to which firms best showed the payoff of such productive workplace factors as team building and employee leadership development include:

• Elaine Brodsky – Former Co-Owner of CitiStorage, LLC
• Dan Denison – Professor of Management and Organization at IMD in Lausanne, Switzerland
• Craig Hickman – Author of The Oz Principle and other bestselling business books
• Bart Houlahan – Co-Founder of B Lab
• Ken Lehman – Winning Workplaces Founder and Chairman; former Co-Chairman of Fel-Pro Inc.
• Bill Marshall – President and CEO of Top Small Workplace Phelps County Bank
• Julie Silverstein – President and COO of SmithBucklin Corporation
• Kevin A. Trapani – President and CEO of Top Small Workplace The Redwoods Group

Related: This post shows the company success factors our award application solicits data on, which our judges will take into account in making their decisions.

There's an interesting new article over at HumanResourcesJobs.com that weighs investing in your workplace through employee education versus through perks like an on-site fitness center – and even bonuses.

While this piece concentrates almost entirely on the educational (tuition reimbursement) side, and therefore is not balanced in terms of listing the pros of company perks, I still think the writer makes a strong case.  By paying as much as $75,000 to help an employee earn a college degree, "The organization gets to keep and nurture an existing employee, making them more productive, useful, and loyal, and avoids the need to use recruiters or search firms and then assimilate a new employee."

The payoff of employee engagement and increased competitive advantage factor into the writer's final summation on the value of a company's educational investment in its workforce:

Organizations that are positive, encouraging, and supportive of employees who are trying to better themselves will have lower turnover rates, make more money and have a better public reputation than those who don’t.  The cost of tuition reimbursement programs is small compared to the benefit and a more liberal approach to tuition reimbursement and on-going education, especially when recruiting new college grads, is a powerful recruiting tool.  It’s a way to differentiate your organization from others.

The cost here is indeed small.  The over half of our 2010 Top Small Company Workplace award applicants that offer educational assistance reimburse tuition per employee by an average of just over $2,500 annually.  What they get from this and their other investments to create a productive workplace includes:

• Average annual reveue of $21 million
• Average revenue growth of 151% over the last three years
• Average annual turnover of 14%

(Source)

I think when you consider two of the chief cons of company perks like that fitness center that the article above mentioned – investment to educate that it's there, and more substantially to track its usage/ROI – the benefit of educational assistance makes even more sense.

How does education factor into your people practices spending?  And what impact has it had on retaining top talent?

The U.S. has survived and, most often during its 234-year history, thrived under a forward-thinking Bill of Rights.  Much more recently, innovative airline JetBlue has turned its industry on its ear and even inspired action by the White House through its Customer Bill of Rights – which, from a consumer's point of view, is one of the few bright spots amidst a slew of disappointing developments like this one.

If the Bill of Rights concept works, why not apply it to the workplace culture?  After all, research shows that more highly engaged employees result in stronger company earnings, and lead those firms to more resiliency in down economies like the one we're in now.

That – along with fair treatment of, and an adequate living wage for, employees – is the idea behind Workplace Fairness' proposed Workplace Bill of Rights.  The 9 "basic rights [they] believe every worker should be entitled to" that they spell out here are the basis of a petition in partnership with Change.org.  The signatures gathered will be presented to the Obama Administration, through which a best-case scenario would produce widespread adoption of the bill by employers.

The largest hurdle before this initiative is, of course, business owners' uncertainty of the payoff of employee engagement, or of anything beyond what they're already doing in a tough economy.  This is especially true of small businesses, which comprise the vast majority of employers and tend to be under-resourced versus their larger peers.

To help prove the point of my title for this post, and hopefully help overcome this hurdle, I've linked some of the 9 basic employee rights* Workplace Fairness is advocating to bottom line business results that Winning Workplaces has seen in our small business award honorees, and confirmed in workplace research by others – both of which I've blogged about previously:

• Employees should be treated with honesty and respect – Among our 2010 small business award applicants, employee activities designed to foster greater respect helped them grow 2009 revenues 12% over 2008, on average.
• Working full-time should guarantee a basic standard of living – Paying only 5% over the minimum wage saves a business almost $2,200 per employee in turnover costs.
• No working person should be without health insurance – An average increase in employer-paid employee medical premiums of 6.8% of our 2009 small business award finalists, over their 2008 counterparts, led to increases in employee tenure and year-over-year revenue growth, and a decrease in turnover.
• Employees should be able to leave a job with dignity – Our 2008 award winners' universal adoption of retirement plans that match employee contributions at an average rate of 2.8% is linked to double-digit, year-over-year revenue growth and average per-employee revenue of over $200,000.
• There is more to life than work – We pointed to Talent Management's citation of a Corporate Executive Board analysis which shows that strategies to promote work/life balance can raise workplace productivity by 21% and employee tenure by 33%.

The net impact of these business outcomes is stronger sales from a larger, more satisfied customer base, which adds up to job growth and ultimately a more robust economy over time.

If you see benefits for both employees and companies in WF's Workplace Bill of Rights, you can help to advance it by signing their petition here.

*Update: Workplace Fairness Executive Director Paula Brantner informed me that even though their list was promoted as having 9 employee rights, there are actually 10.  See toward the bottom of their petition, as well as the voting/comments page over at Change.org. 

If you missed Winning Workplaces' annual conference last October in Chicago, you can get a taste of what attendees experienced by watching the video below.  Especially noteworthy from an employee engagement research perspective is the section from :37 - 1:48, which describes the nomination, application, and judging process we undertook to select the 15 Top Small Workplaces that were honored at the event.

Check it out (if you can't see the video in your blog feed, click here):

In terms of the payoff of employee engagement activities, I love Bernie Dyme of Perspectives Ltd's definition of the ROI of a great workplace (starting at 5:38):

When people are so engaged in what they're doing and their employer that they want to be there no matter how bad the economy or the situation.  They're going to be there even when things are good after they're bad.

When it comes to employee retention tips and other strategies for greater workforce effectiveness, what would you like to see us cover in an event format this year?

Since we had just under 500 small organizations across North America complete applications this week for our and Inc. Magazine's 2010 Top Small Workplace Award, I thought two interesting pieces of aggregate data to share with you from this small business survey sample would be their prevailing industry and current marketplace conditions.

As in this instance, once again I'm boiling down tens of thousands of words in applicants' responses to these two questions to tag clouds (created with Wordle) so you can get a quick read on where they stand.

Click on both of these images to view a larger version of the tag cloud:

Prevailing industries (applicants selected from a list of 31 industries, or they specified "Other"):

The business conditions in their industry over the last three years (2007-2009), and their performance compared to their industry:

Surprised to see "growth" and "revenue" factor so prominently in applicants' feedback here?  This becomes more understandable given this workplace trend that they lead, and this trend on the customer side – though there are certainly many more factors at play.

Stay tuned, as I'll soon be sharing with you more tag clouds like this that aggregate applicants' answers to qualitative questions that get at their workplace culture practices and how they measure the payoff of employee engagement.

We heard that this last holiday season, while providing a much-needed year-end sales boost for retailers large and small, was still below prior years in terms of sales revenue.

That's at the aggregate level, of course, with all companies being even.  But as this research pickup by About.com's Retail Industry site shows, all companies are not created equal.  About.com shares Fortune magazine's finding, via their 2010 "Best Companies to Work For" list, that retail industry firms on this list outperformed the retail stock index by an impressive 75%.

Think about that for a second: stockholders of companies with moderate to excellent employee engagement and team building practices in the workplace enjoyed returns almost twice that of companies that lack nearly as highly engaged employees.  That kind of track record should, in an ideal world, provide an economic boost of its own, as current shareholders grab more shares and new investors jump on board.

This finding also speaks to the payoff of employee engagement – something to which more company leaders should pay attention.  Here's how About.com's Retail Industry guide, Barbara Farfan puts it:

For an industry that loves numbers as much as the retail industry, I don't think there is much more that needs to be said about why employee satisfaction should be high on the retail executive To Do list in 2010.

Related: Visit this page on Winning Workplaces' website to read about four retailers that are doing well relative to their peers thanks to their workplace best practices.

Due to overwhelming response by interested small and midsized organizations, Winning Workplaces is pleased to announce that we have extended our original application deadline of today for 2010 Top Small Company Workplaces to Monday, January 25.

Applicants now have three additional days to tell us about the payoff of employee engagement and team building strategies in their bid to win the prize: being featured as a winner of this award in Inc. Magazine this June.

As I've mentioned here before, the process of applying has proven valuable for our current applicants.  Here's some of the most recent feedback we've received from them on how applying has shaped their approach to improving their workforce effectiveness in 2010:

The questions are ones we are continually challenging ourselves with and were on target.

The essay questions really made us give specific details, which we felt was different from a lot of the applications we have completed in the past for similar competitions.

This application really helped us to evaluate our company.  We had several meetings to discuss the questions and learned a lot about what we should be doing.  We set goals and strategies to reach them.

1. Go here to create your application login, complete the criteria pre-screen, pay (yes, there's a fee and here's why), and reach the application Table of Contents page.
2. Click here to download a sample application you can use to gather the required information offline.
3. Go back here to copy and paste your offline data into our online application.

It's my impression that the hospitality industry is ahead of the game compared with some others in terms of realizing and acting on the connection between better employee engagement and higher customer satisfaction.  Because companies in this space deal with customers face to face more often than others, they were on the leading edge when the economy tanked starting a little over a year ago, and they had to make some changes in how they dealt with them or risk losing them, since they deal in "nice to haves" and not "must haves."

So therefore I was happy to see organizational and workplace culture consultant Gene Ference explain how companies whose leaders adapt to foster greater workplace team building will be more successful this year, on Hospitality Net.

Specific people practices Ference points to include:

• Taking more time in hiring to make sure the right people are on board
• Seeking and providing more feedback to employees
• Create more nuturing environments for employee leadership development

Here's how he describes what ideal employee engagement looks like, and the business benefits that occur as a result:

The key to a peak-performing organizational culture is engaged employees who are invested in their work.  As in Star Wars, effective leadership develops cultures in which people « feel the force » rather than merely collect a paycheck.  Clarity about the organization’s vision, mission and values allow employees to embrace that spirit and make it their own.  ...  Put another way, leaders need to make sure employees understand the brand and their roles in helping to build, energize and sustain that brand.

Talented employees who are fully invested in their jobs provide huge payoffs to the bottom line.  They increase productivity, reduce turnover and generate higher employee and guest satisfaction, all of which result in more profit for the organization.

Related: Winning Workplaces written Success Stories on three hospitality companies and the practices they use to strengthen their bottom line.  Check them out:

• Emmett's Tavern & Brewing Co.
• Kahunaville Management, Inc.
• Zingerman's

Continuing the trend of some good news for small business I started here this week, I thought I would share this feel-good article (in my mind, at least) by our friend Ann Meyer at the Chicago Tribune.

Here are some of the good omens Meyer points to when it comes to the payoff of employee engagement in small organizations, which, as she writes, are a leading indicator of economic recovery:

• HR consulting firm Vantage Solutions is "seeing more interest in training and other pro-active approaches to human resource development, instead of pay reductions, furloughs and layoffs."
• She cites a recent study by the Kauffman Foundation that I wrote about late last year, which finds that firms younger than 5 years old have created about two-thirds of all new jobs as late as 2007.
• She quotes a senior researcher at Kauffman, who says despite the recession, "hundreds of thousands" of startups have emerged which will look to add jobs as they grow.
• At least in Illinois, according to a state management association, the percentage of companies that plan to reduce their workforce dropped from 66% to 15% over the past year.
• SBA loan programs, spurred by the defense appropriations bill that President Obama signed in December, are expected to generate over $4 billion in additional small business lending.

When I think of all the new, small, smart companies out there and their innovative team building and other strategies for greater workforce effectiveness – some of which are already competing to be named a Top Small Workplace in Inc. Magazine this summer – I can't help but smile when I come across an article like Meyer's.

Related: Check out Meyer's write-up on two of our 2008 Top Small Workplaces and two of that year's finalists for the award.

Have you tried searching on our blog for something specific within the focus of people practices that show the payoff of employee engagement?  I use this feature all the time when I want to find and link to past blog posts.  It's the box on the right just under the four buttons for Winning Workplaces' social networking sites.

Well, now when you search here, you can thank Biz2Credit for sponsoring this feature.  A brief explanation of what they do with a link to their website appears just under the search box.

Biz2Credit acts as an intermediary between small businesses looking for credit and available, affordable financing solutions.  In the last two years they've used their relationships with over 60 financial institutions to help arrange financing of over $250 million for small and midsized organizations in the U.S. and abroad.

So if you're looking for a loan or other financing, click here to access Biz2Credit's site for more information on their offerings, as well as the phone number for a case manager who can provide you with immediate assistance.