Employee engagement gets a bad rap. Many employers look at it as fluffy, feel-good, and disconnected from the bottom line. After all, shouldn’t employees do the jobs they’re paid to do, with the resulting paycheck serving as enough incentive to stay engaged?
My company, Patriot Software, is all about helping small business owners keep their time and money by offering them a simple and easy basic payroll solution. That said, not all time and money saving solutions are as simple and straightforward as handing someone a check. That’s unfortunate, because many business owners only care about clear-cut return on investment options that plug easily into their bottom line. I should know, I’ve made a business out of providing services that do just that.
However, if I’ve learned anything in my 30 years of business ownership, it’s that engaged employees are more productive, cost less, serve as better recruiting advocates, and create more revenue than those who are not. This seems obvious, but when employers put their bottom-line-blinders on, they can miss just how useful, and profitable, it can be to maintain an atmosphere of engagement, and how that atmosphere translates into real ROI and cost savings.
As an employer and a leader, you need to have an active role in making employee engagement possible and sustainable. The benefits of employee engagement help your company on many levels, including your bottom line.
Here are three ways engaged employees can improve your bottom line:
1. Cut down mistakes
Accounting mistakes can cause huge problems for your business if you let them. A mistake can cause a domino effect of damage from one area of your business to another. For example, if receipts are lost at the point of sale, a small business owner trying to close their monthly books will have a headache in store.
Expand that thinking to employee engagement across all lines of work. Employees running on autopilot can miss crucial and costly details. Engaged employees still make mistakes—they’re human, after all—just not as many of them. They perform their tasks correctly to prevent the domino effect from reaching your bottom line.
Conscientious employees can also allow you to spend more time on the tasks that can be completed by you, and you alone. You may not have to worry as much about the small, day-to-day details of your business. Committed employees can handle those tasks autonomously.
Engaged, reliable employees deliver fewer surprises. You can focus the lion’s share of your attention on growing your business instead of fixing mistakes. This stability helps keep your accounting on track.
2. Lower costs
Employee engagement begins the moment that a hopeful candidate applies for a job at your company. If you don’t engage quality applicants from the start, you could end up hiring an employee that isn’t cut out for your business. This mismatch between the actual job and the new employee will cause a higher employee turnover rate. A high turnover rate costs you money.
How? Think about it: the more frequently you replace employees, the higher your overhead expenses are. When you hire employees, you spend money advertising the position, use billable hours to conduct interviews, and pay administrative costs for each new hire. At the end of the day, when you ask yourself, “how much does an employee cost me?” you will arrive at a lower figure if your turnover rate is at a minimum. High employee engagement and low turnover will also help you to avoid the loss of productivity you experience when one of your employees leaves.
Whether you’re a business owner or the HR rep in charge of the hiring process, this relationship between employee onboarding and turnover is very important to understand. If you can see the dollars inside each part of the hiring process, you can make more efficient decisions, and offer better ROI connected information to your leadership team.
3. Increase profits
An engaged employee is more likely to increase your business’s revenue. In fact, businesses with higher employee engagement levels see 22% more profitability.
The economics fall out like this: A reliable employee that arrives each morning and is excited to work will be more productive. This is old news to you as a small business owner, because you know the effect that high productivity has on your bottom line. In fact, your lack of engagement may have led you to the conclusion of starting your own business!
Engaged employees take the time to thoroughly learn your business, build valuable customer relationships, and meet important goals. These actions reflect your employees’ drive to increase profits. Engaged employees feel they have a future with your company and they want that future to be bright. Thus, they work hard to ensure it.
4. Engagement = Communication = Productivity
Disengaged employees often have little incentive to pass on useful or actionable information to their coworkers. This can be vital in project-focused businesses where collaboration and information sharing are keys to success. Poor communication can be the difference between delivering a work project on time, or wasting it and missing a deadline. Often, project management skills focus on creating clear methods for employee communication, which stems from making sure employees feel engaged. Project management also factors communication into the overall cost of the project. Even so, many bosses are asked to give approval on projects that their employees have never shared information about. One has to ask, why would an employee do that? Maybe because they don’t feel invested in what they’re doing.
Employee engagement tips
As a small business owner, you need to make an effort to encourage employee engagement. You can do this by:
- showing that employees are appreciated by rewarding achievements
- getting employees involved with company activities, events, and projects
- encouraging training and learning opportunities so employees can grow with your company
Find a handful of employee engagement methods that are a good fit for your company’s culture. That could mean celebrating an accomplishment or implementing a new-hire training program.
You can create employee engagement with big or small gestures. Consider the profit and loss benefits of employee engagement as you find new ways to connect with your employees.