THE BLOG
12/17/2014 06:37 pm ET Updated Feb 16, 2015

Engaged Employees: Your Company's No. 1 Competitive Advantage

If you asked 100 CEOs what their company's competitive advantage is, how do you think they'd respond? A few might say they make a superior quality product, or they've got a bulletproof business model. I'm willing to bet, however, that the majority of the CEOs of leading organizations would say it's their people -- and although that may seem like a soft answer, it's true -- and anything but soft.

Think about it. No matter how good your product is, you still need a stellar team to design it, build it, improve it, sell it and service it. No matter how solid your business model, you need great people to back it up and deliver on your company's promise to your stakeholders.

If that's the case -- that employees are the secret sauce behind any successful business -- then why do so many leaders have a "set it and forget it" mentality when it comes to their workforce? If our people are our biggest asset, why isn't every leader trying their hardest to set their employees up for success?

Measuring engagement

According to the Boston Consulting Group, "people" companies -- those the firm categorizes as having good people practices -- have a competitive advantage that can be backed up by solid results. Companies that have made the "100 Best Places to Work" list for three or more years outperformed the S&P 500 in eight out of 10 years -- and over a decade, they cumulatively beat the S&P 500 by 99 percentage points.

What's more, companies with high engagement scores perform much better than those with low scores in key operational areas like productivity, absenteeism, turnover, safety and quality incidents, shrinkage, customer metrics, and profitability, according to Gallup. CEOs care about and are measured against these very real numbers, so it's no wonder they're taking aim and launching initiatives to boost employee engagement. In fact, CEOs say "increasing employee engagement" is their number one strategic priority, according to a 2013 Conference Board survey. But there's room for improvement in how their companies are going about it.

Most companies measure employee engagement -- loosely defined for our purposes, as "feeling the love" for and from their company -- through a yearly online survey. These surveys ask questions about how employees feel about their work, their coworkers and the company as a whole. And while employees may be responding to the surveys, something's not right: Just 30 percent of U.S. workers are engaged according to Gallup's annual poll, meaning the rest of our employees -- 70 percent -- aren't engaged and aren't reaching their full potential. That disengagement rate -- which is even higher globally -- costs U.S. companies between $450 and $550 billion each year, Gallup estimates.

Many have tried, but unfortunately few seem to know how to fix the problem. To get to the root of it, start by considering people's motivation to show up at work in the first place.

Why do we work?

Most people work to fulfill their basic needs. Let's take a moment to go back to your Psych 101 days and re-visit Maslow's hierarchy of needs, a generally accepted theory about human nature that ranks aspects driving motivation. The list ranks in order of importance:
  • Physiological needs (food and shelter)
  • Safety (security, employment, health)
  • Love and belonging
  • Self esteem, confidence and achievement
  • Self-actualization (creativity, problem-solving)

At the most basic level, we work to put a roof over our heads and food on the table -- fulfilling our fundamental physiological needs. Moving down the list, our employment also delivers a sense of security and safety with a steady income that helps us meet the first two needs. It drives our health too, since most people are able to pay for health care using health insurance provided by their employer. This brings us to the remaining aspects, which are a bit harder to measure. Are love, belonging, esteem and self-actualization things that employers should worry about?

The answer is yes. Before they can become engaged, employees first need to be engageable. If they're overwhelmed, stressed out, or feeling disconnected and unappreciated, their healthy habits are going to go right out the window. And that's exactly what we're seeing. Americans are unhealthier than ever. We're not exercising enough, eating right, or taking care of ourselves as we should.

The connection between health and engagement

People are putting healthy habits on the back burner because they're squeezed for time. And when we ask our employees to do more with less, to be accessible 24/7, to respond to emails the moment they hit their inboxes, they're sacrificing their personal priorities to do so. When people put their healthy habits on the back burner, it's impossible to even be able to engage, let alone thrive. Think about the days where you skip your workout or hit the drive-thru for lunch. Your energy bottoms out, and you're less productive and motivated. How about those days when you've only had a measly four hours of sleep? Consider that effect across your workforce and how much productivity or good decision-making happens as a result. Less than you'd like, I'm sure.

To truly drive engagement, we've got to put employees back in the driver's seat of their own lives. Show them your company cares about and appreciates them by supporting their healthy habits and help them be their best selves. Once they're feeling great and have that support in all areas of life they'll be more productive and ready to thrive. They'll move beyond fulfilling just their basic needs, to achieving the intangible yet critical ones as well. Help them in meeting all of their needs, and you'll find yourself with more energetic, focused and driven employees who want to come to work and give each day their A-game.

Stay tuned for part two on how to hire the right employees and set them up for success.