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¡mploycc ¡ngagcmcnt
What’s Your Engagement Ratio?
Copyright © 2008, 2010 Gallup, !nc. All rights rcscrvcd. Gallup
¹
, Gallup Consulting
¹
, C¡
11¹
, Q
12¹
, Pcrlormancc Òptimization
TM
, and Tc Gallup
Path
¹
arc tradcmarks ol Gallup, !nc. All othcr tradcmarks arc thc propcrty ol thcir rcspcctivc owncrs.
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Gallup’s cngagcmcnt ratio is a macrolcvcl indicator ol an organization’s hcalth
that allows cxccutivcs to track thc proportion ol cngagcd to activcly discngagcd
cmployccs. Tc avcragc working population ratio ol cngagcd to activcly
discngagcd cmployccs is ncar 2:1.
Activcly discngagcd cmployccs crodc an organization’s bottom linc, whilc
brcaking thc spirits ol collcagucs in thc proccss. Vithin thc U.S. worklorcc,
Gallup cstimatcs this cost to thc bottom linc to bc morc than 8300 billion in
lost productivity alonc. !n stark contrast, worldclass organizations that havc
built a sustainablc modcl using Gallup’s approach havc an cngagcmcnt ratio
ol morc than 9:1. As organizations movc toward this bcnchmark, thcy grcatly
rcducc thc ncgativc cffcct ol activcly discngagcd cmployccs whilc unlcashing thc
organization’s potcntial lor rapid growth.
What’s Your
Engagement Ratio?
¡mploycc ¡ngagcmcnt as a Corc Stratcgy
The world’s top-performing organizations understand that employee engagement is a force that drives business
outcomes. Research shows that engaged employees are more productive employees. They are more profitable,
more customer-focused, safer, and more likely to withstand temptations to leave the organization. In the best
organizations, employee engagement transcends a human resources initiative — it is the way they do business.
Employee engagement is a strategic approach supported by tactics for driving improvement and organizational
change. The best performing companies know that developing an employee engagement strategy and linking it to
the achievement of corporate goals will help them win in the marketplace.
Unleashing the Potential for Growth
67%
26%
7%
33%
49%
18%
Engaged
Not Engaged
Actively Disengaged
World-Class Average
9.57:1 1.83:1
Ratio of Engaged to Actively Disengaged
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Te 12 Elements of Great Managing
I know what is expected of me at work.
I have the materials and equipment I need to do my work right.
At work, I have the opportunity to do what I do best every day.
In the last seven days, I have received recognition or praise for doing
good work.
My supervisor, or someone at work, seems to care about me as a
person.
There is someone at work who encourages my development.
At work, my opinions seem to count.
The mission or purpose of my organization makes me feel my job is important.
My associates or fellow employees are committed to doing quality work.
I have a best friend at work.
In the last six months, someone at work has talked to me about my prog-
ress.
This last year, I have had opportunities at work to learn and grow.
Copyright © 19931998 Gallup, !nc. All rights rcscrvcd..
Gallup’s Rcscarch8ascd Approach
Gallup’s cmploycc cngagcmcnt work is bascd on morc than 30 ycars ol indcpth
rcscarch involving morc than 17 million cmployccs. Tis rcscarch has appcarcd
in many busincss and scicntific publications, including thc Journal of Applied
Psychology and thc Harvard Business Review and in our bcstsclling books First,
Break All the Rules and thc scqucl 12: Te Elements of Great Managing.
Gallup has dcvclopcd and idcntificd 12 corc clcmcnts that link powcrlully to
critical busincss outcomcs. Tcsc 12 statcmcnts cmcrgcd lrom Gallup’s
pionccring rcscarch as thosc that bcst prcdict cmploycc and workgroup
pcrlormancc.
12 Elements of Engagement
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!n addition to thc 12 clcmcnts, Gallup rccommcnds adding qucstions that
addrcss your company’s uniquc culturc or addrcss busincss issucs lacing
your organization. Gallup’s cxpansivc itcm bank includcs kcy indiccs to hclp
organizations mcasurc thcir strcngth in arcas such as innovation, changc
managcmcnt, customcr oricntation, lcadcrship, and inclusivcncss.
Gallup’s latcst mctaanalysis (an analysis ol data lrom morc than 152
organizations) shows dramatic diffcrcnccs bctwccn top and bottomquartilc
workgroups on kcy busincss outcomcs. !t is through this mctaanalysis that
Gallup continucs to validatc thc 12 clcmcnts. 8cyond thc dramatic diffcrcncc
cngagcd workgroups show in productivity, profitability, salcty incidcnts, and
abscntccism vcrsus discngagcd workgroups, Gallup has provcn that companics
with worldclass cngagcmcnt havc 3.9 timcs thc ¡PS growth ratc comparcd
with organizations with lowcr cngagcmcnt in thcir samc industry.
Adding Elements
Linking Employee Engagement
to Critical Business Outcomes
-37%
-25%
-49%
-27%
-49%
12%
18%
16%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
Difference Between Top and Bottom Quartile Performance
Absenteeism
High
Turnover
Orgs.
Low
Turnover
Orgs.
Shrinkage
Safety
Incidents
Customer Productivity Profitability
Employee Engagement and Critical Business Outcomes
Quality
(Defects)
-60%
Top decile
companies have
3.9 times the
Earnings Per
Share (EPS)
growth rate
-41%
Patient
Safety
Incidents
Turnover
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Systcmatically !mproving ¡mploycc
¡ngagcmcnt
!mproving cngagcmcnt gocs bcyond simply asking thc right qucstions.
¡ngaging cmployccs rcquircs a ycarround locus on changing bchaviors,
proccsscs, and systcms to anticipatc and rcspond to your organization’s nccds.
From thc lcadcrship tcam to thc lrontlinc cmployccs, all lcvcls within an
organization must commit to making thcsc changcs.
Gallup approachcs cmploycc cngagcmcnt with sustainability in mind, and
thus, providcs managcrs and lcadcrs with tools to hclp drivc pcrlormancc on
an ongoing basis through a combination ol mcasurcmcnt, rcporting, lcarning,
action planning, and stratcgic intcrvcntions. Using thc latcst tcchnology and
cuttingcdgc rcscarch, Gallup continually providcs clicnts with innovativc
solutions that drivc changc. From statcolthcart organizational mapping
soltwarc and onlinc tools to firstclass instructional dcsigncrs and consultants,
Gallup’s approach to cmploycc cngagcmcnt rcduccs thc amount ol timc nccdcd
to movc lrom mcasurcmcnt to improvcmcnt.
Tc world’s toppcrlorming organizations rccognizc thc critical rolc managcrs
play in achicving busincss objcctivcs. As a global lcadcr in thc arca ol cmploycc
rccruitmcnt and sclcction, Gallup has a provcn mcthod lor hiring managcrs
and cmployccs with thc talcnt to build cngagcmcnt. Altcr rcvicwing ncarly
10,000 validatcd prccmploymcnt qucstions and thc global Q
12
databasc, Gallup
uncovcrcd a subsct ol qucstions that cnablcs organizations to asscss whcthcr a
job candidatc, il hircd, will boost cngagcmcnt lcvcls. Tis cngagcmcnt sclccting
approach will hclp hiring managcrs find candidatcs who havc morc potcntial to
drivc cngagcmcnt in thc workplacc.
A Sustainable Approach
Selecting for Engagement
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Vhat thc Vorld’s 8cst Òrganizations Ðo
Ðiffcrcntly
Gallup drivcs organizations to systcmatically improvc cmploycc cngagcmcnt
using provcn intcrvcntions at thc local and cntcrprisc lcvcl. 8cyond sctting thc
propcr stratcgy, intcrvcntions includc finding thc right pcrlormancc mctrics
that drivc accountability, crcating a comprchcnsivc communication stratcgy, and
dcsigning dcvclopmcnt opportunitics lor cvcry cmploycc, managcr, and lcadcr.
Vhilc partncring with many ol thc world’s bcst organizations, Gallup has
obscrvcd that worldclass organizations makc cmploycc cngagcmcnt a priority
by locusing on thc lollowing:
• Strategy
Vorldclass organizations dcvclop a lormula lor succcss by looking
objcctivcly and rigorously at thc busincss problcms thcy lacc and by
locusing on finding thc right cmployccs and kccping thcm cngagcd.
For thcsc organizations, an cmploycc cngagcmcnt stratcgy is not only
lundamcntal to thc way thcy do busincss, it is critical to thcir succcss.
• Accountability and Performance
Tc topdrivcn companics locus on outcomcs. Tcy dcfinc and
rigorously mcasurc succcss at cvcry lcvcl in thc organization. Tcsc
mcasurcmcnts ultimatcly hclp locus cach pcrson, tcam, dcpartmcnt, and
busincss unit on driving pcrlormancc and rcsults.
• Communication
Vithin thc bcst pcrlorming organizations thcrc is a cultural alignmcnt
bctwccn thc cmployccs and thc company, paircd with a stratcgic
alignmcnt bctwccn activitics and company goals. Tcsc organizations
usc thcir corporatc communication touchpoints to rcinlorcc thcir
commitmcnts to cmployccs and customcrs.
• Development
As thc strugglc lor talcnt intcnsifics, organizations lacc a continual
challcngc to build and grow thcir lcadcrship capacity. Tc world’s
toppcrlorming companics havc comprchcnsivc lcadcr and managcr
dcvclopmcnt programs, but thcy also go onc stcp lurthcr — thcsc
programs arc pcrlormanccdrivcn and incorporatc a comprchcnsivc
succcssion plan throughout thc organization. Tcy makc it a priority to not
only idcntily lcadcrship potcntial, but also to locus intcntly on thc crcation
ol dcvclopmcntal paths lor currcnt and luturc managcrs and lcadcrs.
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Provcn Rcturn on !nvcstmcnt
!ncrcasing cmploycc cngagcmcnt dircctly corrclatcs with a positivc cffcct on kcy
busincss mctrics. A partncrship with Gallup cnablcs your organization to dcsign,
implcmcnt, and cxccutc an cmploycc cngagcmcnt stratcgy, and at thc samc
timc, your organization will havc concrctc cvidcncc ol thc cffcct ol this stratcgy
on thc bottom linc. Gallup’s prool ol RÒ! gocs bcyond thc casc study lcvcl. 8y
continually validating thc cffcct ol incrcasing cmploycc cngagcmcnt through
mctaanalyscs and busincss impact studics, Gallup can obscrvc RÒ! trcnds across
hundrcds ol clicnts. Tc obscrvcd nct gain in kcy busincss outcomcs lor busincss
units that grow cmploycc cngagcmcnt is a dircct link to RÒ!.
Tink about thc cost to rcplacc an cmploycc, attract a ncw, loyal customcr, or
pay workcrs’ compcnsation. Using quick and simplc math with thc nct gain
valucs providcd, your organization can bcgin to modcl thc RÒ! it is capablc
ol attaining.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Median Growth in Engagement
(.15 GrandMean)
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Typical Net Gain at the Organizational Level
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Pcrlormancc Òptimization

: Managing thc
¡mployccCustomcr ¡ncountcr
Taking cmploycc cngagcmcnt onc stcp lurthcr, Gallup’s Pcrlormancc
Òptimization approach offcrs an innovativc, rcscarchbascd approach to onc ol
thc toughcst challcngcs busincsscs lacc today: how to drivc succcss by cffcctivcly
managing thc momcnts whcn cmployccs intcract with customcrs. Tis approach
brings cmploycc and customcr cngagcmcnt on to a singlc managcmcnt platlorm.
!t combincs a provcn mcthod lor asscssing thc hcalth ol thc cmploycccustomcr
cncountcr with a disciplincd proccss lor improving it. Gallup is uniquc in its
ability to dcsign and cxccutc this aligncd approach bccausc our cxpcrtisc and
global capability in markctplacc consulting practiccs is as dccp as our cxpcrtisc
and global capability in workplacc consulting practiccs.
Òur mctaanalysis ol cngagcmcnt and financial pcrlormancc in companics across
multiplc industrics rcvcals that busincss units that scorc abovc our databasc
mcdian on customcr and cmploycc cngagcmcnt significantly outpcrlorm units
that rank in thc bottom hall on both mcasurcs.
Òrganizations cmploying Pcrlormancc Òptimization principlcs havc outpcrlormcd
thcir compctitors by 26º in gross margin and 85º in salcs growth. Tcir customcrs
buy morc, spcnd morc, rcturn morc oltcn, and stay longcr. 8lcnding stratcgic
analysis with handson, practical stcps and advicc, Pcrlormancc Òptimization
changcs how lcadcrs vicw thcir work, thcir cmployccs, and thcir customcrs.
240%
Boost
70%
Boost
70%
Boost
1.0
(Baseline)
LOW
Q
12
EMPLOYEE ENGAGEMENT
HIGH
L
O
W
C
E
1
1

C
U
S
T
O
M
E
R

E
N
G
A
G
E
M
E
N
T
H
I
G
H
Te Impact of Performance Optimization
TM
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Changc Tat Ðrivcs Òutcomcs
Transformation does not occur instantaneously. It takes a lot of energy and effort to initiate change, and it takes
even more energy to build on that momentum. It takes focused attention to drive engagement. A partnership with
Gallup will help your organization influence and inspire engagement by building a “people” strategy that holds
people accountable for performance, aligns communication, and builds development opportunities for leaders,
managers, and frontline employees, giving your organization a competitive edge.
Gallup’s Global Rcach
Gallup’s 2,000 prolcssionals dclivcr scrviccs at clicnt organizations and lrom 40
officcs around thc world.
Gallup maintains thc world’s most comprchcnsivc historical and comparativc
cmploycc cngagcmcnt databascs. Tc historical databasc contains data collcctcd
in 67 languagcs lrom morc than 17 million rcspondcnts in 175 countrics
worldwidc. Gallup updatcs thc comparativc databasc annually, which cnablcs
clicnts to bcnchmark thcir organization’s cmploycc cngagcmcnt lcvcls against
thc most rcccnt data Gallup collccts lrom around thc world. Gallup’s most
rcccnt databasc, covcring thc past thrcc ycars, includcs data collcctcd lrom morc
than 6.5 million cmployccs rcprcscnting morc than 815,000 workgroups in 16
major industrics and morc than 70 subindustrics in 170 countrics worldwidc.
Gallup undcrstands thc importancc ol timcly data and rclcvant comparisons in
thc compctitivc landscapc ol today’s lastpaccd markctplacc. As a rcsult, your
organization can comparc its cngagcmcnt data with Gallup’s global, worldclass,
industryspccific, or custom databasc scgmcnts.
Benchmarking World-Class
Organizations
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For morc inlormation about Gallup Consulting or Gallup’s cmploycc
cngagcmcnt programs, plcasc visit consulting.gallup.com or contact
Sarah \an Allcn at 202.715.3152 or sarah_van_allcnCgallup.com.
“Best Buy has already had success in connecting improved employee-engagement scores
to store performance: it found that for every 10
th
of a point it boosted the former, its stores
saw a $100,000 increase in operating income.”
— CFO Magazine, June 1, 2007

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