SME’s in the dark over impact of employee engagement gap on revenue and profit

Propellernet, one of the UK’s most engaged workplaces, has revealed figures which highlight the significant employee engagement gap within UK SMEs. According to the research, two thirds of senior managers (64 per cent) within UK SMEs believe their staff feel valued. Yet when posed the same question, less than half of non-managerial SME employees (46 per cent) feel valued at work.

The research highlights how almost a quarter of SME employees (24 per cent) are disengaged, which suggests senior managers are worryingly in the dark over the impact this can have on their business and the additional revenue and profit they could be missing out on.

Engagement is costing SMEs profit and productivity

In 2009, research by EngageforSuccess demonstrated the commercial link between engagement and profitability. Today, nearly 10 years after this definitive research was published, it seems there is still some way to go until the engagement gap is closed.

Despite 87 per cent of managers saying that their business is taking active steps to improve employee engagement, only 12 per cent list it as a business priority. Customer satisfaction (45 per cent) and revenue and profit (12 per cent) are reported to be of increased priority, and half of businesses (50 per cent) do not invest anything in increasing engagement.

Furthermore, according to the research, just 1 per cent of employees believe that recruitment and retention is a priority for management.

Delving into this further, perhaps there is something to be said of the fact that only a third of managers (32 per cent) say they have a strong understanding of the term employee engagement. So, despite the majority of managers recognising the importance of increasing engagement, any initiatives they employ are unlikely to yield the required results.

Lisa Pantelli, Director of Become Communications and employee engagement specialist said:

“Average UK engagement scores have remained stagnant despite the well-documented link between engagement and profitability. Too often initiatives and ideas are introduced to the business with little understanding as to whether they’re going to work or not – or an articulation of what an engaged team means to them. This research shows that while businesses think they are taking active steps forward and despite their best intentions, it’s not working.

 Business owners and senior managers need more practical support in how to encourage positive change.  Not enough is out there. SUPERENGAGED is a fantastic blueprint for driving this shift and taking the conversation out from theory and into action.”

Misdirected priorities?

When senior managers were asked what steps they are taking to increase engagement, the most popular was regular meetings and training. However, when employees were asked what would make them feel more engaged at work, ranking highest was flexible working (36 per cent) and recognition for good work (36 per cent). These figures suggest that managers may be investing time and money in other areas which do not positively contribute to driving engagement.

Further examples of managers overestimating how engaged employees are can be seen when looking into the values and purpose of a business; 42 per cent of managers believe their employees are aligned to the purpose of the business, yet just half as many employees (22 per cent) say that they are. Similarly, three quarters of managers (74 per cent) believe that their business operates in alignment with their values compared to just half of employees (51 per cent).

Nikki Gatenby, MD, Propellernet commented:

“If you step away from just thinking about profit, you can transform your company by putting people and purpose first instead. Some business leaders believe that this can harm the bottom line, but this a misinformed theory. At Propellernet, we have managed to triple our margin, quadruple revenue and generate ten times more profit – proving beyond all doubt that putting people first creates genuine success.

 “Our staff turnover is just 7 per cent, compared to an industry average of 30 per cent. 98 per cent of our team would recommend working at Propellernet to others – and actively do. This has a positive impact around the business, on each other, our clients, our environment – it’s a magnet for good people, having a positive ripple effect beyond the agency walls to you. And this level of recommendation saves us considerable time and effort on recruiting, time we can focus into client impact instead.”

Employee wellbeing is perceived to be low on the corporate agenda

The research also highlighted the apparent disconnect on the topic of employee psychological wellbeing. The study found that 34 per cent of senior managers strongly believe that employee psychological wellbeing is a priority to leadership teams, compared to 13 per cent of employees. With only 43 per cent of employees believing that their company is committed to work life balance (compared to 64 per cent of managers) and employees feeling under recognised for the work that they do, it could be said that SMEs are failing to achieve their full potential by failing to appropriately support those who are there to help them succeed.

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