Employee First: The importance of the people in any business

People are the lifeblood of any business. As is its culture. And the two go hand-in-hand.

Despite this, it never ceases to amaze me how few businesses put their own people first when they’re planning how to drive sustainable growth. Often employees are made to feel as though they are simply a number. Or worse, an afterthought.

This can be evidenced by some fairly damning statistics:

According to Gallup’s?State of the Global Workplace , only 15 percent of employees are engaged in the workplace.

In effect, this means that the vast majority of the global workforce is doing the bare minimum just to make it through the day and have little to no emotional attachment to the businesses they’re working for.

It's interesting to note some of the big differences globally. A third of US employees are engaged at work, which is more than double the global average.?

Whereby in Western Europe, only 10 percent of employees are engaged at work. And in the UK, it’s an even bleaker picture where the amount of engaged employees is as low as?8 percent?—?and has been in steady decline for the past few years (Gallup, 2022) .

Unsurprisingly, employee engagement increases productivity in the workplace. Engaged employees outperform their peers that are not engaged. Overall, companies with high employee engagement are?21% more profitable .

Employee engagement also reduces absenteeism.?In fact, a Gallup study shows that highly engaged workplaces saw?41% lower absenteeism .?

Engaged employees also provide better customer service. Nothing worse than reaching a completely disengaged member of staff in a contact centre when you have a problem that needs resolving!

According to Haiilo , It costs businesses ￡3,000 on average to hire new talent, and around ￡1,000 to on board them. So, you lose around ￡4k every time an employee walks out the door never mind the cost to the business by way of disruption when an experienced employee leaves.

The bottom line is that businesses that look after their people perform better. And have far less peaks and troughs in their commercial performance over time.

There are fewer better examples in the UK than Timpson. From trusting their front-line colleagues to make decisions, such as compensating customers when something goes wrong, to creating their own promotions, they can make decisions without the need to ask permission from a line manager. Trusting your colleagues goes a long way. And is a core driver for the culture in the business.

Guess what? A good Company Culture Increases Revenue by 4X.

In a?major long-term study , companies that had the best corporate cultures, that encouraged all-around leadership initiatives and that highly appreciated their employees, customers and owners grew?682 percent in revenue .

During the same period of evaluation?—?11 years?—?companies without a thriving company culture?grew only 166 percent in revenue . This means that a thriving company culture leads to more than four times higher revenue growth.

When I teach my Mini MBA in customer centricity, I talk about a simple model that can make all the difference. I created it for one of my books. It’s called the Rules model:

RULES model

• Remuneration – Pay staff a proper wage.
• Understanding – Empathise and demonstrate this through business culture and the environment you create.
• Learning and development – Look to offer continual opportunities for growth.
• Empowerment – Give them the tools to do the job and the trust and freedom to make decisions that don’t need management approval all the time.
• Succession planning – show them there’s a career path available to them in the business.?

Two great examples of businesses in North America that live and breathe this approach are Home Depot and Nordstrom.

Home Depot trust its staff with the autonomy to give discounts of up to $50 in order to close the sale. Through?Team Depot, their associate-led volunteer program, associates are able to work with local organisations to give back to their communities.?

Home Depot also offers support for associates in financial emergencies through?The Home Fund, and they reimburse tuition for associates pursuing higher education.

Nordstrom is famous for its world-class customer service to the extent that there have literally been?books written about it. They’ve been ranked one of the?Top 100 Places to Work?for 21 years. That is no small achievement. When it comes to employee empowerment, they are hard to beat. Take their somewhat mythical?employee handbook, which allegedly reads,?in its entirety, “Rule #1:?Use the best judgment in all situations. There will be no additional rules.?Please feel free to ask your department manager, store manager, or division general manager any question at any time.”

Trusting their associates and giving them the autonomy to handle situations how they see fit creates a strong and positive relationship between staff and the company. This leads to high levels of employee engagement and a real desire for frontline associates to succeed and perform well in their roles.

You can see the impact that being an employee-first business makes. It is time to put your people first and your customers.

I recently spoke with Darren Topp, CEO of LK Bennett, on my latest episode of Consumer Focus. Check it out now and hear what he and my panel of consumers think about the importance of the people in any business. You can Listen here.