This presentation is from a 2006 workshop on employee engagement strategies.

1. Symphony and Harmony
Building an Employee Engagement
Strategy
Sharlyn Lauby, SPHR
ITM Group, Inc.
954.217.2165
slauby@itmgroupinc.com
www.itmgroupinc.com

2. Workshop Objectives
Understand why companies want an
engagement strategy
Learn the steps to developing an employee
engagement strategy
Discover engagement drivers that can be
immediately applied in the workplace
Discuss measurement and evaluation tools for
success

3. What is “Employee Engagement?”
Emotional and Intellectual Commitment to the
Organization
Based upon 3 Behaviors
Say – Speaking Positively about the Organization
Stay – Desire to be a Member of the Organization
Strive – Exerts Extra Time, Effort and Initiative
Adapted from Hewitt Associates, 2004

4. Levels of Engagement

5. Is Our Workforce Engaged?
According to Gallup’s U.S. Employee
Engagement Index:
29% of the total workforce is ‘engaged’
54% of the total workforce is ‘not engaged’ (aka “the
massive middle”
17% of the total workforce is ‘actively disengaged’
SHRM says 79% of the workforce is job
searching (actively or passively.)

6. The ‘Massive Middle’
Focus on Tasks versus Goals
Want to be told what to do and Do the Minimum
Feel They are Being Overlooked
Feel Their Talent is Wasted

7. Profile of the Actively Disengaged
Normal Reactions Start with Resistance
Displays Low Trust and Isolation
“I’m okay, everyone else is not.”
Inability to move from Problems to Solutions
Low Commitment to Company, Work Group, and
Role
Won’t Speak Frankly about Negative Views but
will Act Out Frustration (overtly or covertly)

8. Why worry about Engagement?
The cost to the U.S. economy by the 17 percent of
the actively disengaged is between
$254 and 363 Billion annually.

9. Is Your Workforce Engaged?
Write down the names of people you interact
with on a regular basis at work.
Think of an example of how they have demonstrated
initiative within the past year.
Name a problem that they have faced and what
actions they took to solve the problem.
Provide an example of the results that they have
achieved through the efforts of others.

10. Attract, Retain, and Engage
Competitive Pay
and Increases
Competitive Pay
Health Care and
Retirement
Satisfaction with
Benefits
Work-Life Balance
Career
Advancement
Skills
Development
Challenging Work
Recognition of
work
Management
Interest
Input and Decision
Making

11. Top 5 Drivers of Engagement
1. Senior Management Interest in Employees
2. Challenging Work
3. Decision Making Authority
4. Customer Focus
5. Career Advancement Opportunities
From the Towers Perrin Talent Report, 2003

12. 1 - Management Interest
Taking Steps to Insure Long-Term Success
Business Knowledge
Supports New Ideas and Ways of Doing Things
Has Integrity
“Walking the Talk”
Communicates Clear Vision for the Future
Communicates Openly and Honestly
Two-Way Communication, Not Just Information

13. 2 - Challenging Work
Supporting Employees Taking Initiative
Being Open to Change
Coaching and Developing New Skills
Holding People Accountable
Recognizing and Rewarding Performance

14. 3 - Decision Making
Consulting Employees Before Making Decisions
Keeping Employees Informed
They have the freedom to make decisions
Supporting Employee Decisions

15. 4 - Customer Focus
Being in the Business to Serve Customers
Understanding the Link Between Customer
Service and Financial Performance
Adapting to Customer Needs and Market
Demands
Providing Leading Edge Technology
Managing Costs

16. 5 - Career Advancement
Gaining Experience/Education
Providing Clear Goals and Direction
Ensuring Access to Learning
Building Teams with Diverse Skills and
Backgrounds

17. Case Study – Continental Airlines
Management Interest
Work
Decision Making
Customer Focus
Career Advancement

18. Developing a Strategy
1. Developing the Business Case
2. Using an Integrated Approach
3. Creating a Campaign
4. Measuring Effectiveness

19. 1. Developing a Business Case
DDG Companies:
Connect What Employees Do with Business Results
Have the Trust of Their Employees
Get Positive Press from Their Employees
Take a Visible, Active Role in Leading the
Organization
Create Opportunities for Development
Solicit Feedback on a Regular Basis
Adapted from Hewitt Associates, 2004

20. Engagement & Performance
Engaged Employees are:
Committed to perform 20% better
87% less likely to leave
From the Corporate Leadership Council

21. Engagement & Company Growth
Highly Engaged Employees
Stronger orientation toward meeting Customer needs
Cost of goods sold tends to drop as employees
become more engaged
Company is more likely to exceed industry averages
in revenue growth
Least Engaged Employees
Revenue growth 1-2 % below industry average
Adapted from Towers Perrin Talent Report, 2003

22. 2. Using an Integrated Approach
Relationship between the Employee,
Department, Company and Business Results

23. Integrating People and Performance
Programs Employees Customers
Business
Results
IncreasedIncreased
TurnoverTurnover
High Cost ofHigh Cost of
Goods SoldGoods Sold
Employee
Satisfaction
Increased
Market
Share
Higher
Operating
Margin
DecreasedDecreased
RevenueRevenue-- EngagementEngagement

24. Integrating People and Performance
Programs Employees Customers
Business
Results
Increased
Turnover
High Cost of
Goods Sold
HighHigh
EmployeeEmployee
SatisfactionSatisfaction
IncreasedIncreased
MarketMarket
ShareShare
HigherHigher
OperatingOperating
MarginMargin
Decreased
Revenue
++ EngagementEngagement

25. 3. Creating a Campaign
Building engagement is a process that never
ends
Engaged environments don’t happen overnight

26. The Gallup Q12
1. Do you know what is expected of you at work?
2. Do you have the materials and equipment you need to
do your work right?
3. At work, do you have the opportunity to do what you do
best every day?
4. In the last seven days, have you received recognition or
praise for doing good work?
5. Does your supervisor, or someone at work, seem to
care about you as a person?
6. Is there someone at work who encourages your
development?

27. (continued) The Gallup Q12
7. At work, do your opinions seem to count?
8. Does the mission/purpose of your company make you
feel your job is important?
9. Are your associates (fellow employees) committed to
doing quality work?
10. Do you have a best friend at work?
11. In the last six months, has someone at work talked to
you about your progress?
12. In the last year, have you had opportunities at work to
learn and grow?

28. Predictors of Engagement
Culture
Management
Job Design
Employee Satisfaction

29. Culture
Customer-Focused
Company Reputation
Programs Align and Support Culture

30. Management
Rainmaker Thinking Survey
10,000 Employees at 700 Organizations
Manager Communication has more Impact than any
other Single Factor on:
• Productivity
• Quality
• Morale
• Retention

31. ‘Most Influential People in the
Workplace’
Key Element is Management
Beliefs, Passion, and Ability
Drives the Motivation of Employees
Commitment
Consistency
Strong Leadership
Daily Management

32. Job Design
Challenging Work
Skill Variety
Task Significance
Autonomy
Feedback

33. Employee Satisfaction
Work – Life Balance
Training and Development
Resources
Mentoring/Coaching
Career Advancement
Sense of “Community”

34. 4. Measuring Effectiveness
Linking Engagement to Outcomes
Employee Retention
Customer Retention
Productivity
Profitability

35. Employee Retention
An engaged workforce is a stable workforce
Caution in a disengaged workforce:
Openings in key positions
Retaining the disengaged

36. Example #1 - Turnover Cost
Staff Level: Entry
1x Annual Salary and Benefits per replacement
Workforce of 1,000 employees
Average Salary and Benefits: $30,000
Turnover 10%
Turnover Cost $3,000,000

37. Example #2 – Turnover Cost
Staff Level: Middle Management or Technical
Personnel
1.5x Annual Salary and Benefits per replacement
Workforce of 1,000 employees
Average Salary and Benefits: $50,000
Turnover 10%
Turnover Cost $7,500,000

38. Example #3 – Turnover Cost
Staff Level: Executive Level or Highly Skilled
Professionals
2x Annual Salary and Benefits per replacement
Workforce of 1,000 employees
Average Salary and Benefits: $85,000
Turnover 10%
Turnover Cost $17,000,000

39. Customer Retention Calculation
$ _____ (# of lost customers x avg revenue per customer)
$ _____ (cost of appeasing a frustrated customer)
$ _____ (cost of concessions to fix a customer relationship)
$ _____ (cost of lost goodwill)

40. Productivity
Amount of Goods/Services Produced (Output)
÷
Inputs Used in Production
Example:
Units Produced
=
1000
= 4 units per hourLabor Hours Used 250

41. Gross Profit
Total Revenue – Cost of Goods Sold = Gross Profit
Gross Profit Margin = Gross Profit/Total Revenue

42. Example – Greene’s Golf Supply
9/30/05* 9/30/04*
Total Revenue 405,209 315,000
Cost of Sales 243,125 189,000
Gross Profit 162,084 126,000
*In thousands

43. Calculation: Gross Margin
$162,084 (Gross Profit)
÷
$405,209 (Total Revenue)
= .40 (40%) Gross Margin
If the average golf supply company has a gross
margin of 30%, what does this tell you?

44. Results
Understanding
what drives
engagement
How
engagement
factors impact
the organization
Allocating
resources to
motivate the
workforce
Engagement
increases and
company growth
increases
accordingly

45. Any Questions?
Thank you!
Sharlyn Lauby, SPHR
ITM Group, Inc.
954.217.2165
slauby@itmgroupinc.com
www.itmgroupinc.com