Human capital is the lifeblood of any company. Yet, employee turnover and disengagement rank uppermost in business continuity. The organizational trend towards big data management has, unfortunately, left quite a gap in resources given to talent management. Naturally we need a blend of both strategies for company health.
Employee advocacy needs to be more than generic performance reports, a monologue-filled town hall meeting, and the occasional raise in salary. The employee population is an organizational machine that actualizes the bottom line and sets the reputation of the company. Employees make or break a company.
To date, senior management has paid attention to employee engagement as a means to reduce company costs. The bottom line will always be the most telling benchmark of company performance, and it is no secret that employee turnover packs a punch. The majority of Leadership considers recruitment costs and new employee onboarding costs when working with Human Resources on human capital management issues. However, there are numerous absence costs resulting in process and productivity disruption, as well as very serious exit costs that may come about with involuntary termination.
According to a 2012 Center for American Progress study by Heather Boushey and Sarah Jane Glynn, the quantified business costs of employee turnover is revealing:
- It costs at least 16% of the annual salary for high-turnover in jobs earning under $30,000 a year.
- It costs at least 20% of the annual salary for high-turnover in jobs earning under $50,000 a year.
- Very highly paid jobs and those at the senior or executive levels tend to have disproportionately high-turnover costs, up to 213%.
These above cited costs do not take absence costs, exit costs, and company reputation management costs into consideration.
As we have discussed on numerous occasions with our partners at Nater Associates Ltd., workplace violence issues tend to stem from simple, overlooked cases of employee disengagement that then avalanched into full blown issues. Many of these cases would have been handled effectively with an effective and timely employee advocacy program in place.
A majority of HR programs do not take sentiment factors into consideration, and so miss problems such as discrimination and harassment until it’s too late and a workplace incident such as violence or lawsuit has occurred. Human Resources tend to react punitively to signs of non-performance without tools to discern whether an employee may be facing hidden workplace factors.
As the workplace becomes more agile and complex, CSUITE has begun to explore means to better understand and develop enterprise-wide employee engagement.
An HBR Analytics Services study found an interesting trend: senior managers were pro employee engagement as a catalyst for innovation and company growth, while middle managers saw employee engagement as a means to cut costs.
This is an encouraging trend where CSUITE leadership is fast becoming a proponent of employee advocacy for company growth and innovation. Company growth only happens when employees feel that they can voice concerns as well as ideas in a safe environment.
Vezta & Co. strongly proposes having employee engagement as a required metric to be added to Board of Directors risk management oversight duties to ensure strong governance.
While it is not appropriate to ask the Board to execute employee advocacy, the Board of Directors of any company has the responsibility to set strategic direction along with senior management. Employee engagement is frequently severely overlooked as solely a middle management HR issue that is somehow separate from organizational governance. This gap needs to be fully addressed. We recommend that all Board of Directors risk management responsibilities include effective employee advocacy and engagement that must also detail quantifiable and qualified risk tolerance thresholds to be assessed and monitored at specific intervals.
Cameron Keng of Forbes Magazine reports that the average raise a loyal employee may expect over a 2 year period is 3%, whereas the average negotiated salary increase for the same employee who goes to the competition is anywhere from 10% to 20%. This fact already puts a spoke in the wheel of employee advocacy and retention.
We encourage companies to hire employees with the highest skills set and most positive attitude. Yet, once this talent is on the ‘inside’ we tend to silo their talents and expect our employees to follow procedure without input and many times, without a voice.
In today’s competitive corporate landscape employee advocacy must be fully put to practice to ensure business continuity through human capital development, and employee engagement must be included as a quantifiable metric of company bottom line performance to build a better workplace.