How To Increase Your Profit With Engaged Staff
If we ask how you intend on making your business more profitable, what could your answers be? Perhaps by cutting expenses? By raising your prices? By reducing your production costs?
But what if there was another way? A more holistic and feel-good way? Wouldn’t that be nice?
Well, there is. It’s about identifying, building and refining a purpose for your business. Defining your Brand Purpose! A Good Purpose, of course. Your own way of making the world a better place. And yes, really, it can be highly profitable… Let us explain.
Put simply, having a good business purpose will
- first allow you to increase profit internally, through your workforce, by attracting and retaining quality, engaged staff;
- then it will increase your profit externally, through sales, by attracting more loyal customers who will market your business for you.
Today, we want to go deeper into the first point: YOUR EMPLOYEES
Let’s face it, millennials are the new workforce. And the bad news is, according to a survey conducted by Deloitte, “43 percent of [them] envision leaving their jobs within two years; only 28 percent seek to stay beyond five years”. Those are all pretty high numbers, right?
“43 percent of millennials envision leaving their jobs within two years”
And, if you haven’t already calculated your own cost of employee turnover, here is some eye-opening info on the subject:
“Forbes stated that for entry-level employees, mid-level employees, and highly skilled-level employees, the associated cost comes to 30-50 percent, 150 percent, and 400 percent of their annual salary respectively.”
Those numbers are real! They takes into consideration various quantitative items such as:
- Cost of Hiring – includes advertising, interviewing, etc
- Cost of Onboarding – includes initial training as well as management time
- Lost Productivity – while the new employee “catches up”
- Lost Engagement – “other employees who see high turnover tend to disengage and lose productivity”
- Customer Service and Errors – Unfortunate, but true
- Training Cost – “for example, over two to three years, a business likely invests 10 to 20 percent of an employee’s salary or more in training”
- Cultural Impact – often forgotten, this is the time taken to explain “why” to remaining employees
That’s huge! We’ll let it sink in…
We’re sure you’ll now easily agree that in order to be profitable, a business must lower their employee turnover rate. But let’s dive even deeper and take a closer look at lost engagement.
Does employee engagement really improve profitability? The short answer is, absolutely!
According to Gallup, “an actively disengaged employee costs their organization $3,400 for every $10,000 of salary, or 34 percent.” 34%! “Disengaged employees are estimated to cost the U.S. between $450 billion to $550 billion”.
Now, reading this, you can’t deny that increasing employee engagement reduces costs and therefore does, in fact, increase profit!
Disengaged employees cost their organizations 34% of their salary!
All right, it’s agreed, employee retention and engaged staff will save your business lots of money. We’re glad we’ve made that clear.
But how do you keep engaged employees within your organization? Our solution is: by having a positive Brand Purpose! (see our 5 Steps to create your brand purpose here) This means having a business mission that is positive for society, communities, environments, etc.
In fact, a report by Macquarie University Graduate School of Management (MGSG) and the Principles of Responsible Management Education (PRME) presented some very interesting findings on the matter.
One of the tasks asked to the students participating in the study (who are your soon-to-be employees, by the way) was to prioritize what was important for them, work-wise. The results:
We can see here that Living and working according to your values and Being proud of my job/employer hold a surprisingly(!!?) high score for the students.
These statements are important, or even absolutely essential, for them. On the other hand, although Making a lot of money is important, it did not score high on “Absolutely Essential”.
So, there you go. You don’t really need to give your employees a raise (yay! No extra cost). You simply need to align with their values, make them proud to work for you, and even help them make the world a better place (no extra cost either!).
As if this wasn’t enough to convince you, here’s another one of their findings: “students were asked how much initial financial benefit they would be willing to give up in order to work for a company that in addition to making profit focused on the aspects listed” below:
The results indicate that over half (55.8%) of respondents would give up more than 20% of their initial financial benefit to work for a company that exhibits all four aspects listed.
We believe our point has been made:
- Save money and/or increase your profits by keeping your staff longer, and turning them into engaged staff.
- Do this by having a purpose that aligns with their values (and yours!), and help them change the world.
Who doesn’t want to be a good citizen anyway?
The good news for you is “Today, only a minority of millennials believe businesses behave ethically (48 percent vs 65 percent in 2017) and that business leaders are committed to helping improve society (47 percent vs 62 percent in 2017)”.
So, there’s your chance to stand out! Be different. Change that perspective and offer a true, authentic, ethical work environment to your staff.
According to HSBC’s Essence of Enterprises report, “one in five entrepreneurs considers social responsibility, being active in the community, or environmental responsibility as their top priority as a business owner.” If you’re not the one out of five, what are you waiting for? What is your Brand Purpose?
Not sure where to start? We can help!
And if you need more convincing, stay tuned. Next, we’ll talk about the external positive impact of having a brand purpose: increased sales!