There’s a great deal of talk about cost cutting as the UK economy struggles to recover from the aftershock of the financial crisis. Worryingly, however, what are wrongly referred to as the “soft skills disciplines” – including training and development; internal communication/employee engagement; brand engagement and culture development – are under threat just when they’re needed the most. A large part of the reason for this is that these disciplines are wrongly seen as discretionary spend, easily subject to cutbacks.
But there’s a flipside to the cost argument. Market research leader Gallup asserts that, in 2008, the cost of disengagement to the UK economy was between £59-64 billion and an IES/Work Foundation report found that if organisations increased investment in engagement practices by only 10 per cent they would increase profits by up to £2,000 per employee, per year (see Employee Engagement Today, vol 2, Autumn 2009).
As someone who has first-hand experience of the impact disaffected staff can have on business performance and brand management, I believe these to be conservative figures, but they still make a very strong point.
David Bolchover, in his book The Living Dead, states that, in the UK alone, doctors receive over 9 million “suspect” requests for sick notes per year. This is equivalent to the entire population of Sweden. His book came out during the good times.
In addition, one-in-three midweek visitors to a major theme park are reputedly “pulling a sickie” from work. That’s great news for the entertainment industry but worrying for HR departments. It also begs the question: “Where do the theme park employees go when they fancy a duvet day?”
A 2006 study by ISR found that a 5 per cent improvement in the overall level of employee engagement converts into a 25-85 per cent increase in profits for service-oriented organisations.
Jack Welch, legendary former CEO of General Electric, identified employee engagement as the most important barometer of organisational performance.
Meanwhile, the CBI reports that apparent sickness absence costs the UK economy more than £13 billion a year. Putting aside the business case for employee engagement at an individual level, recovery of these figures alone would go a long way towards solving the national debt problem on its own.
We need our organisations to function if the economy is to function. There are no organisations without people. Performance is not sustainable without engagement. Take great care where the axe falls or you may be cutting off your proverbial nose to spite your face.