It’s no secret that the retail marketplace is unbelievably competitive. Brick-and-mortar retailers face a war on both the internet and physical front. The internet battle is growing, putting extra pressure on brick-and-mortar stores to grow their revenues and remain a viable revenue stream. That’s why today executives are acutely aware of the tremendous importance of having an engaged workforce in the physical battle. No matter the size of your company, employee engagement is directly linked to revenue growth (or shrinkage) and companies today are responding by investing heavily in building and maintaining an engaged employee base.
The research company, Gallup, has been conducting a long-term study of the impact of employee engagement and their findings are bringing facts to light. In their 2013 State of the American Workplace paper, Gallup found that 70% of US workers are not engaged at work. Translation: The low satisfaction level of employees leads to low customer service levels and lowered revenue. Even more intriguing is how the Gallup study has found that “Organizations 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.” Simply put, the more engaged your employees, the better your ROI.
The Deeper Dive
This all seems like simple logic, but it is important to understand the details of how a disengaged workforce leads to poor financial performance. The most obvious reason companies with disengaged employees are suffering is because unmotivated employees offer poor customer service. A company’s reputation typically begins and ends at the front line where employees directly interact with customers, forming impressions and judgments about the company. When employees lack enthusiasm, customers notice and the negative impression is passed on through word-of-mouth. This much is common knowledge in the marketplace.
But dig deeper and the effects of a disengaged workforce reveals cascading negative impact. Employee turnover increases because while employees show up for work, they are only going through the motions while looking for a new job after their shift. Productivity slows down because employees lack loyalty and the motivation to represent their employer in the best light.
Inevitably, employee absenteeism rises. This forces a higher workload on the employees that do show up and reduces operational efficiency. And of course, tougher working conditions for loyal employees causes friction in the coworker dynamic, leading to further productivity losses. The sense of teamwork disappears and you are left with a store that somehow trudges on. The impact of disengagement is rarely isolated and has direct negative effects on any employee base.
Negative Impact at a Higher Level
Some executives and managers might accept this as the norm for retail, but that kind of attitude is a sign of denial and future poor performance. A disengaged workforce has an impact far beyond customer service and the front line. A revolving door of employees places higher pressure on HR and takes time away from designing and executing engagement strategies and policies due to the need to hire more bodies, more often. And this leads to opportunity cost as companies struggle to simply maintain staffing levels, rather than acting on new initiatives to improve efficiencies and teamwork. In essence, a disengaged workforce slows down the entire company machine and impedes growth.
A manager stuck with a disengaged team will, over time, become somewhat (if not actively) disengaged themselves. And this is the nail in the coffin. As the Gallup study shows, a manager’s level of engagement directly influences their employees’ engagement, creating a “cascade effect,” and the link between the two is powerful. Employees who are supervised by highly engaged managers are 59% more likely to be engaged than those supervised by actively disengaged managers. Without motivated leaders, the front line lacks direction and the vicious cycle of disengagement continues on despite new hires and changes in policy.
The Deadline has been Extended
The silver lining is knowing that while companies today better understand the huge impact of a disengaged workforce, the race to build a highly engaged workforce is still in its early stages. Disengaged employees can be replaced through smarter recruiting, or converted through improved workforce policies. Wages can be renegotiated and innovative work-life balance policies can be implemented to raise the level of employee engagement. The only important question you should answer after reading this article, is when will your company acknowledge the impact of disengagement and engage in the process of renewing the employer-employee bond?
Mindfield is a Recruitment Outsourcing solutions provider that partners with companies to create powerful hourly workforces. Our solutions combine a recruitment team, simple to use technology and a data-driven hiring strategy that promises to improve the quality of your hourly workforce. This approach focuses on tying business outcomes such as sales performance, tenure, and engagement to the selection, hiring and measurement of quality candidates.