The ROE: Return On Engagement

A traveler passes a construction site and sees three men working. He asks the first man what he is doing and gets a reply: “I am laying bricks.” The second says: “I am building a wall.” Finally, the third man answers: “I am building a cathedral.”

This is a short version of a story teaching us that different people may have different attitude towards the same job, depending on how engaged they are.

The longest – and the most reliable – version of the story is the State of the Global Workforce report regularly updated by Gallup, Inc.  In Gallup’s lingo, the workforce is divided into three categories:

  • Engaged: work with passion and feel a profound connection to their company.
  • Not engaged: essentially “checked out,” putting time – but not passion – into their work.
  • Actively disengaged: aren’t just unhappy at work; they are busy acting out their unhappiness.

Although the oldest versions of this fable may take us back as far as the Pyramids, Gallup’s report indicates that the global workforce engagement has not improved since:

Actively disengaged workers continue to outnumber engaged workers at a rate of nearly 2-to-1.

That means only 13% of the global work force are like the third man – “building a cathedral,” or “engaged,” while the rest are “not engaged” (63%) or “actively disengaged” (24%).

Let’s assume that “engaged” employees – according to the Gallop methodology, “emotionally invested in and focused on creating value for their organizations every day” – work at 80 – 120%, with average efficiency about 100%. This is a generous estimate, as not many human beings can sustain higher than 100% productivity for extended periods of time and thereby counterbalance those “engaged” but otherwise human individuals who work at 80-100% of their capacity.

According to sociologists and HR specialists, working at just 40% of one’s capacity gives an employee a good chance to stay employed. I assume that “actively disengaged” workers, i.e. “those who are negative and potentially hostile to their organizations,” are below the 40% threshold, i.e. in the 0 – 40% efficiency interval, with a 20% mean. Again I demonstrate my generosity, as in reality their “net output” may be negative because their overall hostility and emotional – or sometimes physical – sabotage are driving down the efficiency of their engaged coworkers.

Finally, those in between, the largest, but often difficult to spot, “not engaged” group will fall into the 40 to 80% category. To facilitate our exercise, let’s assume that their average efficiency is around 60%.

According to the latest data, we have 32% “engaged” and 17% “actively” disengaged employees in the U.S. and Canada. With these percentages and above estimates, the weighted

average efficiency of a North American company is 63%.

Although the workforce engagement in North America is higher than anywhere else in the world, there seems to be room for improvement. And if we take the worldwide engagement figures (13%, 63%, 24%), the average global workforce efficiency will be close to 50%!

It is unlikely that your team’s performance is better than average.

To sum it up, if your company has never invested any systematic effort in its workforce engagement, chances are that your situation is not better. In simple words, with the global economy moving towards a “knowledge economy” and intellectual capital becoming its principal asset,

your business could potentially generate the same value with just over half of the workforce.

In fact, besides a significant direct impact on productivity, workforce engagement indirectly impacts the bottom line through improved HSSE performance, better customer ratings, and lower turnover and absenteeism, etc.

Of course, if this is your first ROE epiphany, you will need some outside help. Applying the “obvious” mathematical solution – fire the bottom 24% and increase the overall efficiency by almost as much instantly – will not give positive results in real life. Likewise, removing a tumour, in your basement workshop, even if you sponsor your son’s paramedic training (read: MBA), will hardly be a good idea. In both cases, you will need an external specialist that knows what changes are required in order to realize your team’s potential and – most importantly – will help you implement the necessary changes, becoming almost a member of your team.

As a performance improvement expert, I am firm in my belief that with expert help any company with serious intentions to improve its performance through people is capable of reaching a 10% efficiency growth within the first 6 to 12 months. Your almost immediate gain will exceed any one-time consulting fee and will continue for as long as you choose to stay efficient, thus making your ROE virtually limitless.

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