Tuesday, April 10, 2012

Create a Best in Class Company with These Benchmarks

What does it take to become a top performing company in a given industry? Maximizing individual employee performance would seem to be obvious. Yet in case after case it seems that leaders tend to overlook substantiated evidence on what actions to take that will yield the best from their employees.

Employee engagement ranks as having the highest impact on employee performance – in one study organizations with engaged employees were found to be up to 43% more productive.

Yet another study on employee engagement has been published and this one has come up with some benchmarking metrics that can be used across industries. Maybe this will be the one that will convince any holdouts of the benefits of investing in employee engagement strategies.

A July 2011 study from the Aberdeen Group surveyed and interviewed leaders from 248 diverse organizations on their employee performance and engagement practices. They were able to isolate key metrics that separate the top performing companies – the “best in class” – from the average and bottom rung – the “laggard” companies. Here are a few of those metrics; see how your company measures up:

     Percentage of employees who rated themselves as “highly engaged”:

     Best in class companies: 62%     Average companies: 35%     Laggard companies: 13%

     Percentage of employees who received “exceeds expectations” on latest performance reviews:  

     Best in class: 71%                       Average: 20%                        Laggard: 13%

     Degree of improvement in employee retention over the previous year:

     Best in class: 11%                        Average: 2%                         Laggard: 7% worse

Those are benchmarking metrics to strive for. The Aberdeen study also offers specific actions to take to help reach those goals.   

An engaged employee is first of all, in the right position. The Aberdeen study doesn’t mention this vital fact, but if an employee’s strengths and interests are not being utilized, they will not experience success and logically won’t feel very engaged. Managers need to know how to hire well, and to assign roles and responsibilities commensurate with an employee’s strengths and limitations. Or if necessary, move them to a role or team (or as a last resort, out the door) where they can experience success.

Assuming the individual is in the right role, “engaging” them will yield the highest performance results. Aberdeen reports that the following should be in place:

     1. A culture of alignment and ongoing communication.
     2. Tools and practices that provide visibility and transparency into individual and organizational      goals and progress.
     3. Full accountability among individuals and managers for business results.

Highly engaged employees need to know and understand exactly how their individual and team goals are aligned with the strategic plan of the company. Employees are crystal clear about their own performance expectations and can gauge how they are doing by looking at key performance metrics that are easily accessible. They are not overlooked by their managers, but given feedback and recognition on an ongoing basis. If they are high performers, they know it, and everyone else does too. They receive the recognition and corresponding development opportunities. If they are mediocre performers, they know exactly what they need to do to raise their performance.

It all seems pretty clear cut, doesn’t it? However, as we know, the ability to communicate well with direct reports – defining expectations, giving feedback, coaching, reiterating core values and strategic plans, etc.– does not come naturally to every manager. Tools such as wizards that aid in filling out reviews and appraisal forms, and in creating individual development plans can be provided. Training and coaching in communications and leadership skills should be required and reinforced for every leader. There are many methods and tools to provide assistance for leaders to help create an engaged workforce.

But the crucial sticking point is that senior leadership needs to be on board. In best-in-class organizations, 74% of senior leaders bought in and supported efforts aimed at increasing employee performance and 70% supported efforts at increasing employee engagement. Laggard companies were at 58% and 28%, respectively. That implies that it is still a struggle for many human resource leaders to establish the foundation to implement what is necessary to bring an organization to the top of their industry.

It seems obvious that performance improves when an employee feels totally engaged in their work. Now we have some metrics to strive for and proven actions that support what it takes to engage an employee. Numbers can make a good case when HR buzzwords (like “employee engagement”) don’t.



This fellow is definitely not engaged at work.

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