Boosting Employee Engagement to Increase Productivity and Profits in a Recession

According to the US Bureau of Labor Statistics, 4.4 million Americans have lost their jobs since December of 2007. With unemployment in many states hitting double-digits, plenty of people are pounding the pavement, looking for work. But what about the workers who remain employed? Are their work habits changing as they watch co-workers take pay cuts or get laid off? And how can employees’ opinions affect business operations?

One measurement of how employee behavior affects a business’ bottom line is productivity. In manufacturing businesses, productivity is often defined as the amount of time required to produce a good. In other sectors, such as service industries, productivity can be defined as the amount of revenue an employee has generated divided by her or his salary over a specific time span.

Most business analysts consider productivity a key consideration in strategies for strong, profitable growth. In fact, some economists define nationwide economic growth as an increase in a country’s production output and/or employee productivity.

You might expect that productivity would inevitably decline during times of widespread economic woes, but that isn’t necessarily true. According to Dr. John Cotton, a professor of management at Marquette University, employee productivity can actually rise during economic crises.

Speaking with Milwaukee Public Radio, Dr. Cotton said that people "will actually work harder" for a company during economic challenges, "especially if [they] are in a situation where they think that there’s a possibility of recovering business, of doing better. They’ll actually put more effort and try harder because they’re trying to ensure that they and their jobs will survive." When employees feel a sense of purpose and believe their hard work can help their employer stay afloat, they’re more likely to be productive.

It can be especially challenging to keep employee morale and productivity high during a recession, but it’s not impossible. Cost-cutting coping strategies, like reducing or eliminating company travel, can help or hurt productivity. Mr. Cotton says, "A lot depends on how people view the strategy behind the actions. If people aren’t sure exactly why it’s happening, or they’re not confident that management knows what they’re doing, it can be very tough on morale. A lot depends on how well management communicates their vision for what they’re trying to do and why they’re doing what they’re doing." A sense of purpose, mentioned above, and ability to trust management are two of the key emotional drivers of Employee Engagement as defined by PeopleMetrics.

When these key drivers are realized at an organization, the impact on employee productivity and customer engagement can be monumental. Just as the old saying goes: Happy Employees = Happy Customers. As HR professionals know, companies with higher rates of employee engagement have increased customer engagement which leads to higher profits and more stability.

In fact, increasing employee engagement could provide your business with a crucial edge in today’s challenging bear market. U.S. consumer spending dropped 3.1% in the third quarter of 2008, the steepest decline since 1980. At the same time, the American Consumer Satisfaction Index has been on the decline for over a year. Consumers are spending less, and they’re getting pickier about which businesses they support. Aside from decreasing cost and increasing quality, improving employee engagement is an excellent way to increase customer satisfaction and create fully engaged, loyal customers.

In a recent Nation’s Restaurant News article, PeopleMetrics vice president Frank Rowe explained findings from the PeopleMetrics’ 2009 Most Engaged Customer study, that reveal employee engagement as a key driver of customer engagement: "The three major drivers of customer engagement in the restaurant industry are 1) that a customer feels valued and taken care of, 2) there is an engaged employee who is making the experience take place, and 3) the functional things such as a clean environment and hot food."

Engaged employees are passionate about their workplace and willing to go above and beyond to help the business succeed. And, let’s face it, in a struggling economy businesses need their front-line employees to be doing everything possible to keep their customers happy.

In the end, a declining economy doesn’t necessarily mean declining profits for your company. By focusing on the key drivers of Employee Engagement, you can affect worker productivity, Customer Engagement and thrive even in a bear market.