CPAs, Tick This: Engagement Boosts Earnings

Staff motivation translates into business success. How does your office rate? Join the survey; see the answers.

July 19, 2007
by Rick Telberg/On Careers

The best firms to work for may also be the most successful.

New research findings from the Gallup Organization reveal that among publicly-traded companies, those with the highest proportions of “engaged" employees increase their earnings more than twice as fast as companies with low proportions of engaged employees.

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Moreover, the study quantified that companies in the top-quartile for employee engagement have 18 percent greater productivity levels — and 12 percent higher profitability — than the bottom quartile companies. That all translates to 2.6 times faster growth in earnings per share.

The study findings are healthy food for thought for CPAs and finance professionals — particularly for managers of firms and accounting departments that are interested in their own profitability and in retaining superior employees.

What is an “engaged” employee other than a management buzz phrase? According to human resource specialists, employees are engaged when they feel connected to their companies, when they work with passion and when they voluntarily act to move the organization forward believing that they can positively impact the quality of their organization’s products or services. Only about 29 percent of employees are actively engaged in their jobs, those pundits further say.

Don't think you haven’t seen nor hired an engaged employee. Think about most new employees when they first join your organization. Note how enthusiastic and committed they seem to be, and how eager the appear to be advocates for their new employer.

Getting employees engaged in what they do has been an age-old struggle for management. What makes the Gallup study worth noting is that it is one of the few actually to measure the degree to which engaged employees factor into profitability. This is noteworthy for Corporate America in this era of mergers, acquisitions and private-equity take-overs, is more concerned than ever about earnings trends.

To be sure, determining a worker’s engagement level can be subjective. But it doesn’t need to be. Gallup offers these benchmarks for gauging engagement:

  • they have better attendance,
  • they are longer-term employees,
  • they pay closer attention to quality and risk management,
  • they are more productive, and
  • they are more likely to advocate to customers.

Groups that have studied the issue — including Gallup, the Towers Perrin consultancy and the prestigious Conference Board nonprofit research organization — have determined the following management factors that factor into employee engagement.

  • Trust/integrity — how well managers communicate with employees and cause the employees to value their relationships with managers.
  • The work itself — making it stimulating day-to-day.
  • Line of sight between employee performance and company performance — helping employees understand how their work contributes to the company's success.
  • Offering career growth paths and helping develop employees’ professional skills.
  • Creating employee pride in the company — paying attention to how much self-esteem the employee feels by being associated with their company.

According to Gallup, firms are most likely to enjoy faster earnings growth when the number of engaged employees outnumbers “disengaged” employees by at least four to one. How does your office measure up?

NOW IT'S YOUR TURN: How ‘engaged’ are people in YOUR office? Join the study; get the answers.

COMMENTS: Rants, raves, idle thoughts or questions? Contact Rick Telberg.

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