Companies are always looking to increase their profitability. Many business leaders spend their time looking for ways to scratch out a small increase in revenue or find ideas to reduce expenses a little. They look for the best places to invest their capital to drive the best return on investment. However, most businesses miss the single best opportunity they have to improve their bottom line – engagement.
There are always opportunities to drive a little more profit. One company recently discovered that their trash company was emptying their dumpster when it was less than half full, so they reduced the number of times the trash was collected, saving more than a thousand dollars per year. Another company implemented a program to reuse scrap paper for internal office memos to save money on paper. Yet another company ran a marketing special to boost sales by 10 percent for a month.
These are all great initiatives that can drive extra profit for a company. Yet these stories pale in comparison to organizations who learn how to unleash their most powerful resource – their own people.
A manufacturing company empowered their operators to start looking for ways to reduce defects. One employee took the initiative and found a new source for a key raw material that eliminated a common quality defect. This not only reduced the amount of rework time required, it also improved the quality of the product. The employees in this company were so excited they had made a major impact, they went on searching for more opportunities to change the company. Production output increased. Quality increased. Expenses dropped. Morale skyrocketed. This company didn’t just find a few percentage points increase in their profitability, they saw a dramatic and long lasting new culture that delivered results upon results.
Another organization engaged their employees on general ways to improve their operations. The employees immediately zeroed in on a recurring problem that had plagued the company for many years. Working together with management, these employees developed a new and innovative process for their business that not only eliminated the long standing problem, but also improved other parts of their process at the same time. Again, these employees were encouraged by the results and continued to work on other improvements.
Management-directed iniatives that cut expenses or stimulate sales can expect impacts of a few percentage points on profit. Furthermore, this impact is typically temporary.
Employee-led iniatives, however, drive incredible results. Organizations can increase their profitability by 50 percent or more, simply by engaging their employees.
Employee engagement yields compounded results. When an employee is engaged and empowered to help solve a problem or take advantage of an opportunity, the employee gets excited and highly motivated. This is contagious.
Soon, other employees will want to get in the game and find ways to make things better because they will enjoy the challenge or simply want to attack a problem.
Employees start learning to communicate more effectively with each other and work within their individual strengths together as a team to solve more complex problems. This is much like a flywheel. It starts slowly and then it gains more speed until it really takes off.
A great example of this compounding effect occurred with a local and very successful organization that had seen modest growth during many decades of business. The company started the process of engagement by pulling volunteer employees together to discuss ways to improve the company.
These employees weren’t used to being engaged and started off with a very safe improvement project. They decided to improve the quality of the coffee served in the breakroom. A small team of people was established who were passionate about the “coffee challenge.”
The team met one time and developed a proposal to install Keurig machines throughout the office. The management was agreeable to this simple solution and the coffee was upgraded. The first project was a success, but management was more than a little disappointed. They had wanted more than just improved coffee. Soon, they got their wish.
The employees were again assembled and asked for ways to improve the company. This time, the employees decided to work on ways to boost their sales. This project spun off several other projects related to sales. The company not only explored their competition and their own product internally, they worked with their customers to truly understand their own value.
Within a year, the company that had traditionally seen 2-3 percent sales growth per year had enjoyed 10 percent growth. At the same time, employee turnover was reduced. Morale improved. The team is on the same page. All of this started with a little employee engagement.
As your management team looks for ways to improve your company bottom line, you should strongly consider investing in employee engagement. Get your people involved in solving your most common problems. The return you will receive is better than any other investment you can make.
Don Harkey is a professional speaker, consultant, and partner in People Centric Consulting Group in Springfield providing consulting, coaching, strategic planning and leadership development to support business leaders. He may be reached at donharkey@peopleccg.com.
