Front Line Staff Drive 90% of Your Profit – Stop Ignoring the ROI of Engagement

A new McGill Institute for Health and Social Policy study published by the Harvard Business Review reports that no matter what the size of your business – SURPRISE! – the way you treat employees at the lowest rungs of the company ladder can have a positive impact on your bottom line.

This finding seems to be a direct contradiction to the pattern we see at most companies, where executives and highly skilled people get big bucks and bigger incentives, and Wall Street rewards companies for squeezing and cutting people on the lower rungs of the ladder (even if this practice is proven to be at the expense of long term performance).

The study looked at companies all around the globe, ranging in size from 27 to 126,000 employees, from 2005 through 2009.

Results demonstrated that in most businesses, front-line employees drive 90% of the profits.  By increasing employee engagement you can cut staff turnover, find cost savings, increase productivity, and increase profits.  Here’s how you can do just that – by adopting some or all of the following practices:

  • Provide more training and advancement opportunities for people on the lowest rungs of the ladder, which leads to lower staff turnover, easier recruitment, and increased efficiencies.
  • Invest in the health of people by providing low-cost health insurance, on-site exercise facilities, and a more nutritious company cafeteria menu – which reduces absentee rates and boosts productivity.
  • Promote from within to impact worker happiness and to reduce turnover.
  • Offer employee ownership options, which increase revenue and the value of the stock options themselves.
  • Practice open book management by showing front-line workers the monthly financials and inviting them to find and share in cost-saving initiatives, which increases profitability.
  • Implement flex time for line workers, which allows firms to shift employees into more productive areas through the down times.
  • Give line workers more say in the direction of their work, which motivates workers and leads to cost savings and efficiency increases.

This is yet another study with HARD DATA that increasing employee engagement creates positive outcomes and a return on investment for all concerned. It makes business better for everyone – for you, for your people and for your stakeholders.

Here are three businesses that are doing it right – check them out:

Great Little Box is in an industry—packaging—that was particularly hard hit by the recession. But they’ve been growing and buying out competitors, because the company showed low-level workers its monthly financials and invited them to be part of finding cost-savings.

One If By Land Two If By Sea, a restaurant in New York, offers paid vacation and health care since 1999. Keeping those benefits has become a cause for employees, helping the business weather the downturn after the 9/11 attacks and through the latest recession.  This year, general manager Rosanne Martino was able to enlist employees in a campaign to conserve energy that saved therestaurant $60,000.

PortionPac Chemical, a producer of cleaning fluids, maintains a 20-year tradition that reinforces their “company as a family” values and connects their front office to the manufacturing floor.  Once a year, the entire front office staff – from the receptionist to the CEO – reports to the manufacturing floor to receive their assignments for the day from Mary Jaramillo, the plant supervisor.  Front to Back Day culminates with a massive barbecue.  This tradition, along with a number of other practices that enhance employee engagement, is why PortionPac was recently featured in Inc. Magazine as a “Top Small Company Workplace.”

Do you need more convincing?  Or is it finally time to measure and drive employee engagement in your firm?

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One Comment

  1. Posted June 28, 2010 at 11:58 am | Permalink

    Great sharing of very critical information. So sad that so many “successful” businesses fail to take this to heart. Just imagine how much more successful they could be.

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