Thursday, 15 July 2010

Releasing the discretionary 30-50%

Recent studies, such as that conducted by Nita Clarke and David MacLeod on behalf of government in late 2009, have shown beyond reasonable doubt that, in organisations where leaders have successfully engaged their people in pursuit of a vision with enthusiasm and commitment, performance is increased very significantly. Most reports suggest that the 'discretionary performance' that is contained within untapped potential or is deliberately witheld due to disaffection amounts to around 30%-50% of the total available.

It is therefore clear that this discretionary performance represents a far larger source of profitability than any 'cost-out' exercise is likely to generate. The MacLeod report also indicates additional benefits from engaging and aligning people with the organisation's vision and strategy - as indicators such as:

  • Levels, frequency and impact of innovation
  • Staff turnover
  • Absence
  • Quality and volume of applicants for vacancies

...all show similarly significant increases.

We're not talking about a bit of an increase here, either. Some examples from the MacLeod report:

  • Those companies with a highly engaged workforce improved operating income by 19.2 per cent over a period of 12 months, whilst those companies with low engagement scores saw operating income decline by 32.7 per cent over the same period.
  • Over a 12 month period, those companies with high engagement scores demonstrated a 13.7 per cent improvement in net income growth whilst those with low engagement saw net income growth decline by 3.8 per cent.

Both these examples are taken from a study of 664,000 employees worldwide. Another example from a study of nearly 24,000 business units by Gallup...

  • ...found that engagement levels can be predictors of sickness absence, with more highly engaged employees taking an average of 2.7 days per year, compared with disengaged employees taking an average of 6.2 days per year

Consider the impact of these measures alone on your organisation.

I commend the report to you. As leaders, we all have stretching and challenging targets to achieve 'more of better for less' - I believe John Gardner said it best while in Government in the USA in the 1990's -

True leaders articulate goals that lift people out of their petty preoccupations to unite them in pursuit of objectives worthy of their best efforts.

At the National Centre for Strategic Leadership @ Silverstone - (see the intro blog at http://www.nationalcentreforleadership.blogspot.com/), our purpose is to work with leaders to help them do exactly this and then to engage their people at all levels, through dynamic, passionate, effective and constant communication with the organisation, teams and individuals.

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