Knowledge Center


Article -> Engaged Employees = Increased Shareholder Value

Date Added: March 2005

We've all seen the research that says organizations want employees to be engaged. Engaged employees are more productive. Productivity translates to improved efficiencies. Improved efficiencies equate to increased shareholder value. Despite this, most senior leaders still don't take the time to ask how employees are doing - they guess.

A recent study discovered that increased employee engagement can lead to a 57% improvement in discretionary effort - or employees' willingness to exceed duty's call.1 Another study noted that 40% of employees are not completely satisfied with their leader2 - meaning they are not completely engaged.

Organizations can take some simple steps to increase shareholder value through employee engagement.2

  • Measure the Voice of the Employee: Fortune magazine's list of the "100 Best Companies to Work for in America" is weighted heavily on employees' evaluation of their leader. Many organizations measure employee satisfaction, but do not measure a 360-degree view of employee-leader-department, thereby missing an opportunity for feedback of leaders.
  • Set SMART goals: These are Specific, Measurable, Acceptable, Relevant and Time-Bound. These should part of an annual employee performance assessment process.
  • Focus on SOBs: Specific Observable Behaviors (SOBs) - rather than perceptions or "hearsay" - should be part of any employee feedback. Employees can't improve perceptions; however, they can improve behaviors.
  • Communicate: Annual assessments should not be surprises. Employees should be communicated to openly and honestly at all times. They should always know how they are performing.
  • Recognize and celebrate: Compensation is not the primary motivating factor for employees. Being recognized for achievements and celebrating successes create happiness and encourage teamwork.

As organizations continue to focus on growth through improved profitability with customers or increased market share, employees are either forgotten or taken for granted. Employee engagement is an important way to set a baseline and receive an honest view of how employees really are feeling.

Information gained from this can be used for specific leadership, training and development programs. This creates happier employees, fosters growth and generates a succession pipeline.

Employees are an important - and often over-looked and forgotten - venue to increase shareholder value. Unlike prospective customers, employees are something you already have. Although like customers, if they are not engaged with the "service" provided by your organization - they can leave. Companies must protect this valuable asset by fostering employee growth and happiness.

1 "Driving Performance and Retention Through Employee Engagement." Corporate Executive Board. September 2004.
2 "Good boss translates to happier workers." The Green Bay Press Gazette: October 31, 2004.

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