Tuesday, March 17, 2009

Does employee satisfaction = financial returns?

Oh, I love it. There seems to be brewing interest in the CFO Rising conference. Has that phrase ever been uttered before? Who cares? That's like saying the SHRM conference closing act was the best music concert you've seen in years?

Apparently, Rutgers University's Richard Beatty (an HR professor) told a crowd of 300 top financial leaders (at least those attending the CFO Rising conference), "HR people try to perpetuate the idea that job satisfaction is critical," Beatty continued "but there is no evidence that engaging employees impacts financial returns."

I love it, because it hits a nerve and I am guessing my CEO and many of you might agree with Beatty. It's one of the hard to measure, intangible parts of HR. Actually, I can't think of a better way to get attention from a boss you suspect might not trust HR. Put on your thick skin and show them the HR pro's "Memo to CFOs: Don't Trust HR." When you have their attention, you can say "wtf are we doing - should we stop all attempts to keep employees happy? What do we really believe, what are we doing and what is our commitment? Well, maybe that is a bad idea...

In either case, I think now is a good time be armed with sources pointing to the contrary; engaging employees does impact financial return.

  • Exhibit A: According to Denison Consulting, unhappy companies in their study had an average annual sales growth of 0.1% from 1996–2004. Happy companies grew their sales by 15.1% in the same period.
  • Exhibit B: According to HR expert David Maister (and Harvard Business School Professor), companies that enhance employee satisfaction by 20% can improve financial performance by 42%.
  • Exhibit C: According to Gallup, happy companies have much lower employee turnover and higher customer loyalty, sales and profit margins. (www.careerjournal.com/hrcenter/briefs/20010611-kennedy.html).
This year's Best Companies to work for were featured on the CBS Sunday Morning show last Sunday. NetApp is the #1 Best Company to work for - where "employee satisfaction is as high on the menu as commercial purpose."

Dave Hitz, NetApp cofounder, say he believes "the bottom line is helped by happy workers. When someone is motivated, when they are engaged, they'll do 5 times as much. If the they understand where the company is going, where they are trying to get to, and they feel good about it - magic happens."

Well, if you haven't already witnessed the plague of negativity and lack of productivity brought about by an unsatisfied employee, maybe you're convinced now? And Beatty, doesn't the Best company to work for outperforming the S&P count as evidence?

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