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Workplace Engagement InsightsLatest Employee Engagement NewsWorkplace EngagementShould Employee Engagement Be an Equity Analyst’s Key Number?

Should Employee Engagement Be an Equity Analyst’s Key Number?

WestJet-employee-engagement

Businesses have been measuring employee engagement for over 20 years. During that time, a number of organizations have conducted regression analysis on the data.

The conclusion? A direct correlation exists between employee engagement and several key measures of company sustainability:

  • Productivity
  • Profitability
  • Turnover
  • Employee absenteeism
  • Employee theft
  • Employee accidents
  • Customer loyalty
  • And so on…

It is estimated that about 55% of large companies measure employee engagement. This is a step in the right direction, but what about the other 45%?

It might have something to do with that lack of attention employee engagement receives by equity analysts.

Dow Jones’s sustainability index looks at multiple factors such as governance and social responsibility – but stops short at employee engagement.

If we have a predictive measure for so many core sustainability attributes, why are we not including this in our analysis of any listed stock? Why don’t private equity investors use this measure?

When we talk to equity investors, they point to variables such as management, not less than 16 successive quarters of profitability, and so on, as key measures. They don’t dig down and try to understand the levels of employee engagement, learn more about life at the front line, and understand what the key issues are facing the front line management team.

The Value of Your Front Line Employees

I can tell you from experience that profound clarity is attained by listening to people on the front line. That the toughest job in the business is at the front line is an understatement.

The front line employees are the people who are expected to implement all the wonderful ideas, projects, and initiatives that come from people in corporate office.

They are the ones that can tell you clearly about the challenges facing the business, such as inadequate systems, inability to attract good talent, customer complaint issues, product quality, and so much more.

Is it time to begin listening to these front line people? Is it time to consider the adequacy of the front line team in the long term sustainability of the corporation? 

Return on InvestmentA study by Bain and Company done years ago found a direct link between home grown talent and increased return on equity (ROE) in companies. 

This is not something we should ignore.

I believe the problem is that too many CEOs and their executive teams think that employee engagement is a nice to have. A ‘soft’ human resources tool.

There are too few who truly understand that employee engagement is about building your culture and a first class leadership team from the first rung on the ladder to the top.

If equity analysts like Dow Jones began including an employee engagement index in their analysis, more CEOs would get on board. And that would be a great thing for companies, stockholders, and employees alike.

Do you agree? Why do you think only 55% of large companies measure employee engagement?

>> Workplace Engagement Insights can help your company measure and manage employee engagement to drive growth and success. Contact us now.

Start engaging your employees right away! Get the FREE cheat sheet: “Improving Employee Engagement in Just 10 Minutes”.

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Written by Dwight Lacey

Dwight Lacey

Dwight is the President at Workplace Engagement Insights. He leads Workplace Engagement Insights with a clear understanding of the latest employee engagement research, survey best practices, and leadership styles that create successful businesses.

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