Return of Investment on culture means talent retention success

by Melissa Paris, regional director EMEA people science, Culture Amp

October 10 2023 - It's a long-held belief that happy employees are more likely to go the extra mile to ensure customer happiness. But today, with economic uncertainty casting a shadow over nearly every industry, this relationship's significance is being scrutinised like never before.

By analysing data from Zendesk's customer satisfaction records and Culture Amp's employee engagement benchmarks, a quantifiable connection was revealed. Companies with highly engaged employees that surged above our engagement benchmark consistently outperformed their less-engaged counterparts - outshining their peers by a resounding 2-to-1 margin.

However, these high-scoring engagement companies didn't merely enjoy a marginal advantage; they consistently achieved customer satisfaction scores that were 10% higher than those lagging behind the benchmark.

The Ripple Effect of Engagement

The influence of employee engagement ripples through an organisation, generating a multiplier effect that can't be underestimated.

High-engagement companies are not just havens for satisfied customers; they also serve as nurturing grounds for top-performing employees, with our research highlighting that these organisations cultivate two to three times more high-performing individuals compared to those with poor engagement scores.

Testament to the transformative power of employee engagement, when employees feel valued, empowered, and motivated, their enthusiasm spills over into their customer interactions.

The Cost of Low Engagement

However, while employee engagement can have immense beneficial results, low engagement can be a costly loss of great talent.

Attrition, both voluntary and involuntary, comes with a hefty price tag. The direct costs encompass recruitment, hiring, training, and the inevitable dip in productivity as new team members acclimate to their roles. Yet, the indirect costs are equally significant, ranging from knowledge loss to the intangible costs associated with a workforce that feels disengaged and demotivated before departing.

In challenging macroeconomic times, the financial toll of attrition becomes all the more pronounced. Retaining employees is not just about preserving morale; it's about safeguarding the bottom line.

Drawing from the perspectives of over 650,000 employees, we found that those who believe their company actively contributes to their growth and skill enhancement are twice as likely to stay compared to those who feel otherwise. In short, employee development is the ultimate retention shield.

Tailoring Strategies for Success

While the overarching principles of employee engagement and development remain universal, localising strategies to address region-specific challenges is imperative in a world where businesses operate globally.

In the United States, for instance, the average rating for the statement, "[Company] is a great company for me to contribute to my development," stands at an impressive 79%.

However, Australia, the United Kingdom, and the DACH region (Germany, Austria, and Switzerland) have unique dynamics. In Australia, the average rating is 74%, while the UK and the DACH region have slightly lower average ratings of 72% and 69%, respectively.

The implications are clear: one-size-fits-all strategies may not effectively address the diverse needs and perceptions of employees across the globe.

For organisations with a global footprint, here are some key takeaways:

1. The Geography of Engagement: Understanding these geographical differences is essential for crafting targeted interventions.
2. Risk Assessment: By assessing the level of agreement with the statement, "[Company] is a great company for me to contribute to my development," organisations can identify regions with higher attrition risk and prioritise them for intervention.
3. Balancing Disparities: For multinational companies, addressing disparities in employee perceptions and engagement across regions is vital. Organisations can effectively mitigate attrition risks by focusing on improving development outcomes where they are most needed.
4. The Opportunity for Growth: Even in regions with relatively high engagement, there remains untapped potential for improvement. For instance, in the USA, there is an opportunity for a 10% increase in favorability, as demonstrated by the 90th percentile companies.

A Global Path to Success

In conclusion, the journey to employee engagement, development, and reducing attrition risks is not a one-size-fits-all endeavour. It requires a nuanced approach that considers regional dynamics and tailors strategies to meet the unique needs and perceptions of employees across the globe.

As we continue to adapt to evolving economic landscapes, one principle remains steadfast: engaged and developed employees are the cornerstone of business resilience and prosperity, regardless of where they are located on the map.

More International Employment Articles