The single biggest decision your company makes every day is who you name manager.
This is the conclusion Gallup draws from decades of data and interviews with 25 million employees, in our recently released State of the American Workplace report. But companies keep getting this decision wrong, over and over again.
In fact, the people picked to be managers account for the majority of variance in almost all performance-related outcomes. Yet leaders will spend hundreds of billions of dollars every year on everything but hiring the right managers. They'll buy miserable employees latte machines for their offices, give them free lunch and sodas, or even worse -- just let them all work at home, hailing an "enlightened" policy of telecommuting. Hell, some of these practices might even earn your company a business magazine's Great Place to Work award.
The problem is, employee engagement in America isn't budging. Of the country's roughly 100 million full-time employees, an alarming 70 million (70%) are either not engaged at work or are actively disengaged. That number has remained stagnant since Gallup began tracking the U.S. working population's engagement levels in 2000. Talk about a lost decade.
Why is employee engagement stuck? If you estimate that America has one supervisor or manager for every 10 employees -- that is, 10 million managers -- then 7 million of those managers are not properly developing, or worse are outright depressing, 70 million U.S. employees.
This has all sorts of implications for companies. Work units in the top 25% of Gallup's employee engagement database have significantly higher productivity, profitability, and customer ratings; less turnover and absenteeism; and fewer safety incidents than those in the bottom 25%. What's more, companies with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher earnings per share (EPS) compared with their competition in 2011-2012. In contrast, those with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period.
And here's a finding that should worry all American executives: Gallup estimates that active disengagement costs the U.S. $450 billion to $550 billion per year.
There are three things companies must do to fix this nationwide engagement problem:
- Name the right people to be managers. Businesses must first understand that as goes the talent of America's 10 million supervisors and managers, so goes the engagement, inspiration, and effectiveness of 100 million U.S. employees. Success or failure starts with the front-line manager.
- Ensure that these managers encourage your employees' development. Those 100 million employees need managers who encourage their development and who value their opinions. They need a company that gives them the opportunity to do what they do best every single day.
- Focus on employees' strengths. Companies must understand that while employees' weaknesses never develop, their strengths develop infinitely. And employees' strengths never stop growing throughout their career -- particularly when they have talented managers who build unique development strategies around their individual, innate talents, and who make sure they are always in roles where they get to use those strengths every day.
Here's my big conclusion: For the United States to become a global economic powerhouse again, it has to have the most engaged and productive workplaces in the world. Right now, only 30% of U.S. employees are engaged in their jobs. That number needs to double -- which means companies need to double, as soon as possible, the number of talented people they are naming managers.
Starting tomorrow, every candidate for a management position in the United States should be tested by a Gallup assessment. We have a validated assessment of Yes/No talent for supervisors and managers. If candidates don't score as a manager/supervisor, but they have other talents, they should be put in a role as an individual achiever or a team member --- a role where they can succeed limitlessly. What's more, companies should have all of their employees take the Clifton StrengthsFinder assessment and make sure they build programs for each of those employees to get the most of their innate talents and strengths at work.
The biggest gains businesses will see in the next 10 years -- with the world likely facing stagnant growth -- will lie within hiring the right managers and maximizing the strengths of every single employee. Doing these things will not only transform companies, but America and the world, too.