The Business Benefits of an Empowered Workforce
Part 2 of this Empowerment blog series shares why increased revenues, better customer satisfaction and higher employee retention are just a few of the reasons why employee empowerment is good for business
In part 1 of this 5-part blog series, I posed two questions: what is empowerment, and why should employers care about it? Intrinsically, empowerment may sound like a good thing. Empowered employees… has a nice ring to it. But if anything, empowered employees aren’t just happier and more engaged – they’re also better for business.
In a study, Towers Watson analyzed three years of employee data for 40 global companies and found that over a period of 36 months, companies with a highly engaged employee population turned in a significantly better financial performance (a 5.75 percent difference in operating margins and a 3.44 percent difference in net profit margins) than did low-engagement workplaces.
These companies also managed to maintain a consistently high level of engagement and produced shareholder returns 9.3 percent higher than the returns for the S&P 500 Index from 2002 through 2006.
Need more? Here are a few more examples of how empowerment can impact your business:
- Better Customer Satisfaction. An empowered workforce will be a more engaged workforce, and engaged employees drive higher customer satisfaction, a sure-fire bottom-line propellant. The Gallup Organization reports that companies with higher-than-average employee engagement enjoyed 50 percent higher customer loyalty. Added research by the Forum for People Performance Management & Measurement also found that organizations with engaged employees have customers who use their products more, which leads to higher customer satisfaction levels.
- Higher Employee Retention. Want higher retention rates? Research from Bersin & Associates shows that companies that empower employees via comprehensive talent management strategies become 109 percent more capable of retaining high performers. This also gives an organization a larger talent pool and as a result, more and better options for succession planning – an increasingly important factor for success.
- Increased Revenues and Profits. Gallop’s research also revealed that organizations with higher-than-average employee engagement enjoyed 27 percent higher profits and 50 percent higher sales.
- Improved Talent Readiness. By nature, empowered employees are personally in sync with overall business goals. This means they have the right skills, knowledge and expertise required to support current and future initiatives. The result is greater “talent readiness” and more effective succession planning.
There are many other benefits for empowering your people – more innovation, increased productivity, status as an employer of choice, strengthening of the organization. You may not have given it much thought before, but making the business case for creating an empowered workforce is obvious. When it comes to driving revenue and profits, while at the same time responding to growing employee disenchantment with today’s stressful economic landscape, empowerment is the perfect fuel for that particular engine.
In Part 3 of this 5-part series, I'll examine what empowerment looks like at different levels of an organization -- including business leaders, managers and employees.
In the meantime, if you’re interested in reading more about this topic, download the white paper, “From Employment to Empowerment: Why Business Execution is Not Enough” and “The Empowered Workforce: Crucial to Success in the New Economy.”