Want to make CEO's see HR as a profit centre?

Even though most CEOs say "our employees are our most important assets", modern accounting is virtually devoid of employee engagement measurement. The balance sheet has traditionally had no allocation line for human assets. Engagement has not so much been about numbers, but it is about performance. An increase in productivity performance can result in increased profitability.

Companies with an engagement score of 60 per cent or higher have an average five-year shareholder return of more than 20 per cent, while companies with engagement scores of less than 40 per cent usually have a negative return of 10 per cent to shareholders.

Alarmingly, Australia has some of the lowest engagement levels in the world with 82 per cent of workers either not engaged or disengaged. Disengaged employees cost the Australian economy about $31.5 billion a year through loss of productivity, sick leave and even sabotage.

ENGAGEMENT ECONOMICS

Turnover is increasingly becoming one of the primary expenses for businesses due to additional hiring, lost productivity and retraining costs. Many researchers suggest turnover costs companies between one and two times an employee's salary in lost productivity. For an organisation of 1000 employees with an average salary of $60,000 and 22 per cent turnover, this equates to around $15,800,000 annually in lost productivity. Reduce turnover by just 2 per cent by engaging people and you could save your business over $1.4 million p.a.

ISSUE: Employee engagement can now be illustrated by HR as a profit centre

For more information go to Engagement Economics or Frequently Asked Questions