The Business Case for Engaged Employees

Most business owners can scan a financial report and quickly identify areas for concern.  Similarly, it’s easy to look at percent-to-goal numbers and determine which collectors are the most productive.  Every good agency and A/R department is already focused on rewarding and encouraging optimal performance on the collection floor.

However, profit and loss statements or month-to-date numbers don’t tell the whole story. You know the value of the employees who are already “going the extra mile,” or creating innovative solutions, but how can you effectively cultivate the unrealized potential in your other employees?

In a customer-centric environment like debt collection, characteristics such as employee morale and engagement are known to be essential to a company’s overall success. A growing body of research suggests this factor may have a more direct connection to profitability than you might think.

A recent study by the Wharton School found a significant correlation between employee satisfaction and long-run shareholder returns.  The study looked at publicly-traded companies on Fortune magazine’s “100 Best Companies to Work For in America” from 1984 to 2005, and found that a portfolio of their stocks outperformed the market in 18 out of the 22 years.

HR consulting firm ISR found similar results when comparing employee engagement with financial performance. ISR surveyed over 650,000 employees to determine their level of commitment to their employer, and then the results were compared with financial performance of their companies over a 12-month period. Companies with highly-engaged employees improved their operating performance by 19.2 percent during the measurement period, while companies with low-engagement actually declined by 32.7 percent.

The Society for Human Resource Management (SHRM) has a helpful report on effective practice guidelines for measuring and improving employee engagement.  They found compelling examples of how investing in employee morale can increase profitability. Caterpillar, a construction equipment manufacturer, saw $8.8 million in annual savings from reduced overtime, absenteeism, and attrition after implementing an engagement initiative. Software developer Intuit launched an aggressive program in 2004 after seeing employee engagement levels at their customer contact centers drop significantly.  Within two years, engagement scores increased by 16 percent, but more importantly, revenue growth increased to 15 percent – the best growth rate in four years – and its stock rose almost 300 percent over the same period.

As the old adage goes, “what is measured is treasured,” so it’s not surprising that managers often overlook employee happiness when evaluating profitability.  It may be a great idea, but without measurements in place, where do you start?

SHRM’s recommendations for an effective strategy include:

• Develop a short, focused employee survey that links engagement measures to business strategy. For example, one question Dell asks is an agree/disagree response to “I can see a clear link between my work and Dell’s objectives.”  Employees must be allowed to submit responses anonymously.
• Make sure that what you measure is actionable – and that you act on the results.
• Measure engagement at least once per year to monitor progress.
• Create a culture of engagement.  Commitment to your staff obviously goes beyond conducting an annual survey.  Be sure you share the results, monitor the resulting action plan, and celebrate progress with your team.

Knowledge is power, and in this era of knife-edge margins, going the extra mile to keep your employees engaged and happy may just be the secret weapon for success.

To help companies in the ARM industry measure employee satisfaction, insideARM.com has launched the second annual Best Places to Work in Collections program. It’s free to participate, and whether you receive top ranking or not, you can get extremely useful information about what your employees are thinking. Since we work through a 3rd party to tabulate the responses, employees are free to be candid, which is essential.

As an added bonus, insideARM.com will honor the companies that rank as the "Best Places to Work in Collections" in December – publicity that can be shared with staff, clients, and prospects.

To participate, the first step is to register your company with Best Companies Group, a firm that conducts similar "Best Places to Work" surveys you may have seen in your local media. You can register online at Best Places to Work in Collections. Then, you’ll ask your employees to fill out an online survey anonymously. After Best Companies compiles the results, you’ll receive a free results overview report.

The program is open to collection agencies, debt buying companies, collection law firms, and recovery departments at creditor organizations.  There is no charge for participation if you use the online survey option (vs. a nominal charge for processing paper surveys). To be eligible, your company must be U.S.-based with 15 or more employees. Deadline to register your company is July 17. For more information, please visit www.insidearm.com/go/best-places-to-work.

Stephanie oversees all operations for Kaulkin Ginsberg. She has more than twenty years of experience in operations management and consulting, both for start-ups and large established firms. She can be reached at 240-499-3806 or by email.