As a leader, how severely do you think employee disengagement is impacting your bottom line? The Ivey Business Journal cites a study by New Century Financial Corporation, a U.S. specialty mortgage banking company, which “found that account executives in the wholesale division who were actively disengaged produced 28 percent less revenue than their colleagues who were engaged. Furthermore, those not engaged generated 23 percent less revenue than their engaged counterparts.”
If these figures aren’t compelling enough, a 2013 Forbes article revealed that a staggering 2 million American workers voluntarily resign from their jobs each month, even in an uncertain economy that has been hovering near 8% unemployment. The Forbes piece cited two studies, one by Harris Interactive and a second by the Mercer consulting firm, which found that 74% of workers would consider finding a new job and a full 32% are actively searching. Why is that significant? The Bureau of National Affairs has estimated that businesses in the United States lose $11 billion annually due to employee turnover.
One CEO of a major business enterprise, a man who is a very “hands-on” leader, recently told me, “You talk about purpose partners who are discouraged. I’d add ‘cynical’ to that description. I’ve seen it in their faces, heard it in their voices, and observed it in their actions.” So at a time when companies are scrambling to increase outputs with limited inputs, and thus need their purpose partners to keep their eyes on the ball like never before, three-quarters of their staff are rolling their eyes, looking out the window, or scanning the want ads!
The level of purpose partners’ engagement often makes the difference between profitability and failure in this era of shrinking margins. A study conducted in the United Kingdom by the Institute of Work Psychology at Sheffield University measured performance at manufacturing companies. The study reported that good management practices which brought out the best in people caused an 18 percent improvement in productivity and a 19 percent improvement in profitability. The study asserted that “People management practices were a better predictor of company performance than strategy, technology or research and development.”
Florida-based Publix Super Markets is banking on engaged purpose partners for its very survival. Locked in a fierce battle for market share with low-price Walmart, Publix has responded with an emphasis on the customer. Forbes described the Publix strategy as a “People-First culture,” a phrase I’ve been using for more than a decade. Publix’s president, Todd Jones, candidly explained the concept: “We believe that there are three ways to differentiate: service, quality and price. You’ve got to be good at two of them, and the best at one. We make service our number one, then quality and then price.”
To date, the plan appears to be working; Publix is the largest employee-owned company and the most profitable grocer in America. But if purpose partner engagement at Publix should drop to the same tepid levels that Gallup found throughout the United States, how long will that success continue?