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Could the Pope be Talking About Engagement?

By Bruce Bolger, Managing Director, Enterprise Engagement Alliance

Never did I think I would find myself writing about Pope Francis, at least in the context of Enterprise Engagement. The world of the Pope might seem far removed from the issue of Enterprise Engagement, which of course has nothing to do with religion. And it would be far beyond my expertise to in any way speak of God and His teachings on behalf of any religion, and how they might or might not apply to business. Yet, the issues Pope Francis recently has raised about redistribution of wealth do have some bearing on our emerging field, in that they touch upon the driving purpose of Enterprise Engagement: the opportunity to create more wealth for everyone, not necessarily through redistribution of wealth – we’ll leave that to the politicians – but by understanding and profiting from the true value of people in a way that creates a virtuous circle benefiting consumers, employees, vendors, communities and shareholders. By valuing people in business, we not only elevate ourselves in the eyes of God, if the Pope is correct, we also elevate our own business practices and outcomes.

The Connection

Companies that continue to overlook this strategic focus on people ignore overwhelming evidence that organizations with highly engaged customers and employees perform better over time in the stock market, generate higher earnings than their competitors over time, have lower marketing and recruitment costs and generally have better relationships with their surrounding communities. And more to the point, organizations that focus on engagement almost always pay better than their competitors and do more for their employees and everyone in their communities because they see the connection between people, performance and profitability.

It’s so logical that engagement is a critical success factor, one wonders why there’s even a need for research to substantiate it. Despite the compelling results from multiple credible sources and the clear-cut examples of organizations whose results prove it – Whole Foods, Southwest Airlines, Costco, Alcoa and numerous others – so far only a small percentage of U.S. business leaders “get it.” I believe there are two major reasons why.

1. Short-Termism

About a year ago, the EEA began a stock index based on research provided by McBassi, a leading analytics company. Using a database of companies with high engagement scores with both customers and employees and a list of companies with low customer and employee engagement scores,  McBassi studied the stock performance of those companies over the last six years. It found that in years three to six, the companies with high levels of engagement outperformed both the S&P 500 and (by an even wider margin) the companies with poor engagement scores. The margin was less pronounced in the first three years, but still outperformed both groups.

After starting a similar index last year, we’ve discovered something intriguing. So far the companies with low engagement have actually outperformed both the good companies and the S&P 500. Even though McBassi’s team attributed at least some of this to an unusually high volume of mergers and acquisitions among the low engagement companies over the last year, another possibility comes to mind: With CEO turnover an almost weekly occurrence and investors focused on short-term returns, the easiest way to get results is to maximize revenue and cut costs, no matter the long-term consequences. It remains to be seen whether this is why short-term-focused companies would do better initially, but the research indicates that it’s highly likely they will fall well behind in the long term, paying the price for having cut corners.

2. It Can't Be Measured In My Organization

Another reason many CEOs have ignored Enterprise Engagement is because, while the macro data suggests it might work for other organizations, it’s not easy to make the engagement connection on the basis of one’s own company. How does a single organization realistically gauge not only the level of engagement of its constituencies, but also correlate that to actual results? Until recently, this was nearly impossible. 

Today, Big Data promises to change that. It will become increasingly easy for organizations to measure customer and employee satisfaction and turnover; willingness to speak positively of the company and its products; levels productivity and quality; overall employee wellness; involvement in organizational learning, communications, collaboration and reward & recognition programs; etc., and correlate all that to performance in specific regions or areas of the company. This will make it increasingly difficult to ignore the engagement connection, when management can quantify the impact within their own organizations.

Earthly Rewards

Big Data will not prove to top management that there is a reward after death for engaging all of their people, but it does promise to demonstrate that such organizations are rewarded in this lifetime. What better way for the Pope to make his point about a more humane approach to capitalism? It’s good for business.

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EGR International Inc.

Marriott Bloomington-Normal

McBassi

Canon