An alarming 70% of American employees aren't working to their full potential, and they're slowing economic growth. Here's how to fix this persistent problem.
Since the financial meltdown of 2008 and the recession that followed, the American workforce has struggled to adapt to an uncertain economic climate. Sluggish growth, persistently high unemployment, and sharp spending cuts by businesses and consumers alike have taken a toll.
Though the state of the U.S. economy has changed substantially, the state of its workplace has not. According to Gallup's State of the American Workplace: 2010-2012 report, employee engagement levels remain stagnant among U.S. workers. By the end of 2012, as the U.S. inched toward a modest economic recovery, only 30% of American workers were engaged, or involved in, enthusiastic about, and committed to their workplace.
Though this figure matches the all-time high since Gallup began tracking the U.S. working population's engagement levels in 2000, U.S. business leaders shouldn't be patting themselves on the back. An alarming 70% of American workers are not showing up to work committed to delivering their best performance, and this has serious implications for the bottom line of individual companies and the U.S. economy as a whole.
Of the 70% of American workers who are not reaching their full potential, 52% are not engaged, and another 18% are actively disengaged. These employees are emotionally disconnected from their companies and may actually be working against their employers' interests; they are less productive, are more likely to steal from their companies, negatively influence their coworkers, miss workdays, and drive customers away.
Gallup estimates that actively disengaged employees cost the U.S. $450 billion to $550 billion in lost productivity per year. This is troubling as American business attempts to recover ground lost during the financial crisis and reach prerecession levels of prosperity.
What companies can do to improve employee engagement
"The general consciousness about the importance of employee engagement seems to have increased in the past decade," says Jim Harter, Ph.D., Gallup's Chief Scientist, Workplace Management and Well-Being. "But there is a gap between knowing about engagement and doing something about it in most American workplaces."
There is a silver lining for any company that gets engagement right. Gallup's extensive research shows that engagement, as measured by Gallup's Q12 employee engagement survey, is strongly connected to business outcomes essential to an organization's financial success, including productivity, profitability, and customer engagement.
The State of the American Workplace report shows that companies with 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher earnings per share (EPS) on average in 2011-2012 compared with their competition. In contrast, companies with a lower average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period. The exponential boost in earnings due to a higher engagement ratio is a competitive advantage that business leaders can't afford to ignore.
How leaders manage their employees can substantially affect engagement levels in the workplace, in turn influencing the company's bottom line. Here are some strategies executives can use to move their companies -- and collectively, the U.S. economy -- forward:
- Use the right employee engagement survey. The engagement metrics that companies use can affect their ability to create changes in performance. When a company asks its employees for their opinions, those employees expect action to follow. But businesses often make the mistake of using employee surveys to collect data that are irrelevant or impossible to act on. The data that Gallup's Q12 employee engagement survey collects are specific, relevant, and actionable for any team at any organizational level. They also are proven to influence key performance metrics because the Q12 measures employees' emotional engagement, which ties directly to their level of discretionary effort -- their willingness to go the extra mile for their company.
- Focus on engagement at the local and enterprise levels. Real change occurs at the local, workgroup level, but it only happens when company leaders set the tone from the top. Companies realize the most benefit from engagement initiatives when leaders weave employee engagement into performance expectations for managers and enable them to execute on those expectations. Managers and employees must feel empowered by leaders to make a significant difference in their immediate environment.
- Select the right managers. Whether hiring from the outside or promoting from within, organizations that scientifically select managers for the unique talents it takes to effectively manage people greatly increase the odds of engaging their employees. Instead of using management jobs as promotional prizes for all career paths, companies should treat these roles as unique with distinct functional demands that require a specific talent set. They should select managers based on whether they have the right talents for supporting, positioning, empowering, and engaging their staff.
- Coach managers, and hold them accountable for their employees' engagement. Gallup's research has found that managers are primarily responsible for their employees' engagement levels. Companies should coach managers to take an active role in building engagement plans with their employees, hold managers accountable, track their progress, and ensure they continuously focus on emotionally engaging their employees. The most engaged companies consistently make employee engagement part of their formal review process, and most use these improvements as a criterion for promotions.
- Define engagement goals in realistic, everyday terms. While the overall organization may set lofty goals for engagement, leaders must make these objectives meaningful to employees' day-to-day experiences to bring engagement to life. Make sure that managers discuss employee engagement at weekly meetings, impact-planning sessions, and in one-on-one meetings with employees to weave engagement into daily interactions and activities.
- Find ways to connect with each employee. Teams are comprised of individuals, and individuals have different talents and needs. Managers should know them. Every interaction with an employee has the potential to influence his or her engagement and inspire discretionary effort.
Many companies are a long way from implementing most of these steps, and this is showing up in America's national engagement levels. A workforce with seven in 10 workers who are either not engaged or actively disengaged is bad for individual businesses and for the economy as a whole. Though it's encouraging that employee engagement didn't decline along with the post-financial-crash economy, U.S. businesses still have a long way to go.