Employee Engagement Li Presentation April 7 2011

Employee Engagement
How Can you raise the value
contributions of your people?

Engaged2Perform info@engaged2perform.ca
519-656-1066

Defining the
Terminology
Employee Engagement:
It is the extent to which employees commit to
something or someone in their organization -
the amount of discretionary effort they
provide and how long they stay with an
organization as a result of that commitment.
(CLC, 2004)
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Defining the
Terminology
Employee engagement is the level of commitment and
involvement an employee has towards their
organization and its values (Vazirani, 2007).
Engagement is the willingness and ability to contribute
to company success, the extent to which employees put
discretionary effort into their work, in the form of extra
time, brainpower and energy (Towers Perrin, 2007).
Often used as a synonym for motivation or motivation
and retention; engagement is really more fundamental.
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Defining the
Terminology
Engagement is an employee's decision to apply his
discretionary effort to the goals of the enterprise, to
accept those goals as his own and wholeheartedly
commit him/herself to achieving them. (Fineman &
Carter 2007)

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Defining the
Terminology
Return on Investment (ROI):
For recognition programs, the ROI is the method
used to measure the benefit
gained as a function of the cost of the program.

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Defining the
Terminology
Value on Investment (VOI):
VOI is another approach to ROI that emphasizes both the
financial and non- financial impact of recognition. VOI
includes all tangible and intangible benefits and overall
value (financial and non-financial) produced by a business
initiative -financial and non-financial. Too often, the use of
ROI focuses exclusively on only the financials and does
not include the "softer" measures of value, such as
teamwork and cultural values.
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The Challenge
Disengaged workers cost organizations money in
many ways especially in productivity . Engaged and
disengaged workers of equal skills, knowledge and
abilities do not contribute equally. Gallup estimates
the cost of employee disengagement in the u.s.
annually to be $375 billion in direct costs with total
costs exceeding $1 trillion or 10% of Gross Domestic
Product annually. (Gallup, 2004a, 1)
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The Challenge
Unfortunately, few measures exist that quantify the
impact of engagement in
financially tangible terms. And those that do exist
are hard to be implemented in organizations that fail
to see the merit in measuring human capital to this
degree.

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The Challenge
Why do we not see more attention to this?

The practice of tracking ROI on a piece of
equipment is more ingrained.
Employee recognition and engagement is often
misunderstood meaning
different things to different people.
Accounting is not set up to track this expense.
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The Challenge
Why do we not see more attention to this?

Only some HR disciplines are able to bring the
measurement of HR capital
to the surface.
It has traditionally been in a world of soft
measurement.
Hard to justify to owners and investors.
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The Challenge
Some best measures do exist, along with Return on
Investment (ROI) methodologies that impact
intangibles (such as turnover) can be measured and
therefore contribute to a quantifiable understanding
of the benefits of employee engagement.

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The Challenge
These measures are important because initiatives
designed to drive engagement are often time and
resource intensive and while we may firmly believe
that they are worth the investment, we must also
strive to demonstrate that potential in terms that
senior executives and investors can quantify to the
bottom line success of the company.
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Two Formulas for
Measuring Human Capital
Human capital ROT = Revenue - (Operating
expense - labour cost) + labour cost and
Human capital Value Added = Human capital ROJ +
number of employees

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Two Formulas for
When we consider that financial data is a lagging
indicator, it provides even more importance on the
leading indicators - such as employee engagement -
to see early warning signs and take action.

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Two Formulas for
In the era of cultivating the engaged workplace in
the knowledge-based economy, the paradigm shift
is for HR professionals to become key stakeholders
in the process of measuring employee engagement
to ensure that VOI and ROI are built in to the
process and to ensure all Employee Engagement
and recognition investments are clearly aligned with
company goals.
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A Starting Point
1. Understand the relationship between people and
business performance
2. Find a simple and consistent way to measure
value and report it
3. Spend time analysing results rather than arguing
about the data
4. Act on the outcomes to improve bottom-line
performance
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Call for Free Consultation!

info@engaged2perform.ca

519-656-1066

519-656-1066

Employee Engagement Li Presentation April 7 2011

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