Engagement is an Inside Job

"The man who gets the most satisfactory results is not always the man with the most brilliant single mind, but rather the man who can best coordinate the brains and talents of his associates." — Sir William Alton Jones, 18th Century English Philologist and Jurist

When faced with major organizational problems, managers often hire consultants to help provide a solution. The consultant will usually interview people, run focus groups, and gather input from a variety of sources. Many good ideas are sifted through and the most relevant one presented to management along with the consultant's recommended action plan.

As a company that does a lot of this kind of work, we don't find the practice objectionable! What saddens us is how frequently the ideas that most excite managers are ones that have existed inside the organization for years. Yet managers are often hearing them for the first time. Or they are finally paying attention because the ideas are coming from outside experts. This points to a major failure of leadership within the organization.

In such cases, managers often will have tried to solicit ideas using various formalized approaches, such as suggestion boxes. These are rarely effective. A disgruntled staff member once put a sign on a suggestion box that summed up the consensus view of this approach: "Please don't put any more ideas in here. The handle is broken and it won't flush." Instead, the organization needs to focus on the leadership values of partnership, participation, and involvement. Without these values there is no system that can foster the communication necessary to keep ideas flowing.

Success Profiles studied 150 companies to understand the impact of "a business excelling in Feedback and Engagement where employees work each day in an environment where their feedback is elicited, valued, and acted upon." They found the companies that best met this description experienced revenue growth many times higher than those companies with low levels of feedback and engagement. They also studied organizational communication and employee access to information, and discovered that "companies demonstrating poor performance in this business practice had nearly twice the employee turnover as those companies achieving only average performance."

The evidence clearly shows that building partnerships through involvement and participation is the strong leadership that leads to high performance:

• "Companies that adopt employee involvement measures such as work teams and employee participation in decision making, are likely to find significant rewards on their bottom line," says a report produced by the University of Southern Califo
ia's Marshall School of Business. They found that the average return on sales was 8.3% among low-involvement companies versus 10.4% among high-involvement firms. Stock price appreciation was 21% versus 44%.

• A study of franchise systems found that one of the greatest differentiators among the most successful franchisees was "a belief that employees deserve trust, enjoy responsibility and offer meaningful contributions to the business." One of the study's researchers concluded, "The managers who involve their employees were much more successful in the performance of their franchise than those who distrust employees and exclude them from decisions."

• A study by Success Profiles analyzed the relationship between effectively giving people authority to make decisions and compounded revenue growth. They found that companies who scored "Poor" in this key leadership practice had a 2.3% compound growth rate. Those companies that scored "Very Good" on giving authority to make decisions had an 11.1% rate of compound growth!

• In an article entitled "Happy Companies Make Happy Investments," Fortune reports that "you can make a killing by making nice." Companies on the annual 100 Best Companies to Work For lists had an average return on investment of 18.2%, versus the S&P 500 average of 5.7% during that same time period. "So managers, be kind and honest. Your employees and shareholders will thank you."

• A study by J. Howard & Associates in a large insurance company found that the 20% of managers that were seen as least inclusive ran the least profitable units. This contrasts with the 20% of managers considered to be the most inclusive who had units with 60% higher profitability. They also had lower turnover rates and higher customer satisfaction ratings.