In today’s hyper-competitive environment, we know that companies must be lean, shrewd, and focused on the bottom line. CEOs are right to be uncompromising on this key metric. However, (regardless of how my lip services is paid to the importance of their people), common practice is still that that the bottom line takes priority over the expense of the organization’s people.
In a recent report by Kronos on the state of employee engagement, a majority of employees felt that their CEOs focused solely on the finances of the organization, and not the people within it. This seeming indifference to employee engagement wasn’t remedied by HR. According to the report, 66 percent of HR managers did not even consider their people amongst the top three assets of the company.
When thinking about the bottom line, is this “profit-over-people” approach an effective strategy? Already, employees are an organization’s largest expense. Where’s the value in spending even more organizational time, resources, and cash on trying to develop them?
Yet, the data is clear: people are the most valuable asset of an organization.
“Engaged workers who are appreciated as an asset are the source of innovation, customer service and feed top line growth in the most successful organizations,” the Kronos report states.
So, to view employees as a liability rather than as asset is a dangerous strategy – one that will, counter-intuitively, end up negatively impacting a company’s bottom line.
A recent HBR report on the effectiveness of employee engagement initiatives found companies that invested in enhancing employee experience consistently outperformed those that didn’t. They were also up to four times more profitable per employee.
These companies didn’t just throw faddish perks or incentives their employees’ way to keep them momentarily happy. They invested in their long-term well-being. Fittingly, according to the Kronos report, 78 percent of employees said they would leave their company if they didn’t feel valued.
So, why do companies still resist acting on what the hard data shows? There is still difficulty in measuring and aligning the impact of soft skills training to a financial metric. Therefore, the criteria around deciding on this investment hinges on the impact on the bottom-line in the short term.
Companies must take up an organizational-wide, systemic change both in the way they view employees, and how they attract, hire, incentivize and retain them. That’s especially true considering that millennials, dubbed the most “restless” generation by the media, will make up 75 percent of the workforce in 2025.
The best way to do this? By investing in employee soft skills and professional development. Not only does this show employees they are valued, but it also empowers them to become leaders, mentors, and innovators within your organization. Soft skills are becoming critical skills. To survive in environments of significant change, and as some work activities are outsourced to technology via automation, “soft skills” are increasingly being recognized as core skills. These are what will become a key differentiator for successful organizations. And, as the data indicates, that DOES positively impact the bottom line.
How large enterprises foster people in pursuit of profit
Large enterprises such GE and NBC Universal tackle this by sending high-potential talent to corporate “universities”, intensive training programs that foster success mindsets, strategic frameworks, and leadership development aimed at growing the top line. This intensive intra-organizational training encourages people to shape the culture and become game-changers within their company.
Ryan Holmes, CEO of Vancouver darling Hootsuite, advocates a “people movement” strategy, which encourages talent to “turnover” to various roles within the company, effectively reducing churn out to another employer.
“Ultimately, that leads to better recruitment and (yes) better retention anyway,” says Holmes. “Smart prospects want to work at a company where they know they can learn and grow. And A-players want to keep working there as long as they’re continually challenged.”
Canada’s top 50 employers for young people in 2017 actively invest in their employees to attract and retain talent. Strategies include providing tuition subsidies and sending employees through in-house leadership development and training programs.
A professional development strategy doesn’t need to be as massive or as complex a corporate university, though.
Priority Solutions offers Actionable Conversations, a powerful solution that delivers engagement strategies for growth, high-level leadership and organizational skill development. The Actionable solution helps you measure the impact of learning and cultural shifts on your strategic and financial objectives.
A social enterprise based in Baltimore, Maryland (with a 50% millennial workforce) added Actionable Conversations to their year-long, multi-disciplinary training program.
The results? They concluded 2016 with the highest revenue in their 100-year history, a 42% increase in new business, a 12% decrease in client attrition, a 90% overall retention rate of their clients, and at least a 20% increase in the delivery of core services. They attributed these results to the renewed sense of employee ownership and engagement from Conversations
Want to learn more? Feel free to give me a call to discuss how you can develop your people to their highest potential.