the profitability of employee engagement

4 min read

As a CFO, my expertise is first and foremost “the numbers.” What drives profitability for our business? Can we reduce some costs without compromising our growth? What is the optimal resource allocation? These are the questions that I spend my days answering. 

While you may think that this is done by purely looking at financial data and metrics, or doing simulations on paper there’s another key indicator I use to assess our company performance: How our people are doing. Why does this matter? 

Having engaged employees is key to meeting an organization’s financial goals, because it means increased retention, improved performance and higher customer satisfaction. 

These three pillars of engaged employees are core to driving performance and profit for your business. If you see this part of your company failing, then it’s only a matter of time that your financial metrics will follow. 

So what are the warning signs that your company may be falling into this path of disengagement and profit loss? Here are three questions to ask yourself (or to bring to your own CFO!):

the profitability of employee engagement

What is your retention rate?

It’s important as CFOs to evaluate potential business investments from a numerical perspective, and this can include what type of people-centric solution – whether that’s an employee experience platform or a renewed focus on a reward and recognition strategy – can yield the highest ROI and the biggest impact on the business (and our workforce). 

Discover how to build the business case to invest in employee engagement »

Though retention might not be the obvious number to focus on to many CFOs, you can easily predict the cost of increased turnover. Studies suggest that depending on the size of the business and the role it’s at least 30% of the individual’s salary. And the indirect costs, such as recruiting agencies or loss of productivity from employees who are taking on too much at work, impact your bottom line too.

If HR is raising red flags about an increase in your staff turnover, you should be worrying about the next impact to your business — decrease in productivity, which will then result in decreased profits. 

the profitability of employee engagement

How is your overall business performing?

You need performance to drive profit — that is why I dig into the numbers. So employee performance is directly tied to my goals. That’s part of the reason why HR is part of the Leadership Team. People, performance and profit all go hand-in-hand. 

Start the conversation about how you can improve employee engagement at your company. Start it with HR, with your CEO, with the team leads and front-line workers and think about how to connect individuals’ performance to the bottom line business. 

A recent survey showed that 75% of employees in the U.S. agreed that motivation and morale would improve at their company if their managers simply said “thank you” more often and noticed when people do good work. 

Author Jacob Morgan’s research for his book “The Employee Experience Advantage” suggests that organizations that invest in employee experience are four times as profitable. Consider an investment in your employee experience, whether that’s better communications, strategic employee recognition or more significant perks, as an investment in your business’s bottom line — because it is! 

the profitability of employee engagement

How happy are your customers? 

Poor customer service is losing U.S. businesses an estimated $75 billion per year, according to a NewVoiceMedia report. A significant factor in awful customer experience is when you have disengaged employees representing the business. 

It’s simple: Disengaged employees are dangerous for your business. These are the employees that have a miserable work experience and may be actively trying to sabotage your business. 

They won’t serve your customers or clients well, and if that’s the case, your business will see more churn. And if your employees aren’t happy with what they’re doing, or don’t understand why they even show up every day, then they are not the ones driving your business forward.

Disengaged employees cost the United States somewhere between $450 and $550 billion every year. 

Those are numbers I’ll pay attention to. A happy employee leads to a happy customer, and customer satisfaction is great for your bottom line. Engaged employees are your best company ambassadors to those you do business with.

As CFOs, we rely on our trusty old data to back up a business case, and that means looking at what you can measure and connect with the business goals and objectives. When looking for a new investment, like an employee engagement solution, this is where to start building your business case.

And because I can link our bottom line to our people, employee engagement is a huge part of how I plan to hit our numerical targets. 

Author

Elli Morii

Elli Morii
Reward Gateway

Elli Morii is the Chief Financial Officer at Reward Gateway. Her personal mantra is Nantokanaru, which means, "everything will be all right."

The making of an agile working office and its effect on employee engagement Watch Video »
The making of an agile working office and its effect on employee engagement Watch Video »
The making of an agile working office and its effect on employee engagement Watch Video »
The making of an agile working office and its effect on employee engagement Watch Video »

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