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July 2011 Newsletter




Building the ROI Case for Employee Engagement

Carl Greenberg, Ph.D


Back in March I wrote a Pragmatic Thoughts article on the impact social media is having on organizations.  In that piece I suggested that social media could have vast implications for union organizing. 


This month it was reported in the New York Times that Walmart, who has fought vigorously to avoid unionization, is now facing a more grassroots-like effort. Enter the OUR WALMART social networking and employee-organizing site (www.forrespect.org).


The stated purpose of this organization is “to ensure that every Associate, regardless of his or her title, age, race, or sex, is respected at Walmart.”  The website focuses on employee disenfranchisement and the solution to this being the creation of a unified employee group that will not be involved in bargaining wages and benefits (but assumes all else is fair game).


While there maybe a hidden agenda to this organization in becoming a full fledged bargaining unit, it does speak to the growing need among workers to sound off on their feelings of disengagement and alienation. 


Employees are now entering the third year of the great recession. Overall, they have seen their real wages flatten, workloads increasing and job security still waning.  But job satisfaction and employee engagement levels vary considerably.


Those companies implementing employee engagement strategies have been able to maintain, or even improve satisfaction and engagement levels. It is those (a majority of employers) who have not invested in their human capital that have trended downward.


A reason companies do not focus on employee engagement is that they do not see the financial return on investment. Rarely do companies and consulting firms do the basic research to demonstrate the causal relationship between employee engagement and business outcomes.  Establishing the link can be beneficial not only to organization as a whole, but to human resources in elevating it from a cost center to one that can add to the company profitability.


This research can be accomplished in all organizations. It is combining the collection of business metrics with engagement survey data.  It is also relying on known theories and past research, which allow for causal models to be developed the target organization.  Finally, applying statistical techniques that can tease apart of the actual causal relationships and validate the model. Making proper interpretations of the data will lead to a logical plan for employee engagement implementation. This will ultimately provide a better understanding where employers can get the most “bang for the buck” in implementing engagement tactics.


Simply relying on a list of best practices and implementing what feels right for the organization can result in lower ROI and may miss the mark entirely.  Not doing anything may run the risk of creating a disgruntled workforce that uses social media to hurt the organization’s reputation, or use it to create a labor union.