1 MENTORING & ENGAGEMENT Sustaining Organizational Success www.3creek.com By Triple Creek 2 TABLE OF CONTENTS Introduction ..................................................................................................3 The High Cost of Employee Disengagement ............................................. 4 The Positive Impact of Employee Engagement ........................................ 6 Engagement, Mentoring and the Q12™ .................................................... 8 Conclusion .................................................................................................. 11 Appendix..................................................................................................... 12 Endnotes/References ................................................................................ 13 The material contained in this pamphlet is by Triple Creek Associates, Inc. It is protected by U.S. Copyrights and Trademarks. The Reproduction of this material in any form is prohibited by penalty of law. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of Triple Creek Associates, Inc. Copyright ©2006, 2010 by Triple Creek Associates, Inc. Second Edition For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 3 INTRODUCTION In Follow this Path: How the World’s Greatest Organizations Drive Growth by Unleashing Human Potential, authors Curt Coffman and Gabriel Gonzalez-Molina analyze a Gallup Organization study of over 10 million customers, 3 million employees and 200,000 managers.1 Based on their research, they infer that: Results in Sustainable Engaged Lead to Growth, Profits Employees Engaged and Higher Stock Customers Value for Organizations2 The argument is clear: engaging employees should be a top priority in companies that are striving for success. What is also clear is that the majority of employees are not engaged, and it costs companies dearly: Hundreds of diverse companies were studied that shared one extraordinary and troubling statistic. In a majority of these companies, only 20 to 30 percent of the employees were engaged in their work…. The most engaged work groups were the most productive. The rest tended to be average, mediocre, or downright destructive….3 For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 4 78% of the workforce is 22% of the workforce is not engaged or is actively engaged, resulting in: disengaged, resulting in: - Low Turnover - High Turnover - High Productivity - Low Productivity - High Customer Metrics - Low Customer Metrics - High Profitability4 - Low Profitability4 The Critical Question: What can companies do to increase employee engagement? In this paper, we will explore the negative impact of employee disengagement on an organization and the positive impact of increasing employee engagement. We will also show how web-based mentoring can address a number of critical issues that have been proven to impact employee engagement positively. THE HIGH COST OF EMPLOYEE DISENGAGEMENT The facts and statistics related to employee engagement can be startling. The numbers in this section highlight evidence in relation to two major areas: retention/turnover and organizational costs. Retention/Turnover One of the most obvious results of disengagement is turnover. • According to a 2003 Towers Perrin study of 35,000 employees, employee engagement may be the best predictor of retention5; or to state this negatively: employee disengagement may be the best predictor of turnover. • “The importance of engagement is that it simply improves retention. Fully two-thirds (66 percent) of highly engaged employees have no plans to leave their current jobs, versus just a third (36 percent) of the moderately engaged and only 12 percent of the disengaged.”6 For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 5 • According to the Gallup research in Follow this Path, in employment years 3-10, 22 percent of the workforce is engaged, 56 percent is not engaged, and 22 percent is actively disengaged (meaning a staggering 78 percent of employees are disengaged to some degree).7 • Disengaged employees are two to three times more likely to leave their jobs voluntarily, leading to average turnover rates in the United States of 15-20 percent, depending on industry and region.8 Costs The cost of disengagement is steep for organizations on multiple fronts. • Turnover – The average annual turnover cost to an organization of 10,000 employees is roughly $84 million (or $8,400 per employee).9 • Productivity Lost – According to the Gallup research, active disengagement causes lost productivity that costs an estimated $3,400 per $10,000 in salary10; this is on top of the turnover costs. The Gallup research further establishes that the least engaged employees are the lowest performers. • Absenteeism – One hospital network reported that unengaged employees missed 1.9 days more per year and actively disengaged employees missed 4.8 more days per year than engaged employees.11 The chart below represents a summary of these costs for an organization of 10,000 with a turnover rate of 15 percent whose employees have an average salary of $40,000. Factor Rate Amount Turnover $8,400 per employee $84,000,000 Productivity Lost $3,400 per $10,000 $29,920,00012 in salary Absenteeism $154 per day13 $3,264,800 Total $117,184,800 For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 6 If this total seems high, consider one example cited by Coffman and Gonzalez-Molina. A $6 billion software organization had engagement numbers in line with national averages: 24 percent of employees engaged, 60 percent not engaged, and 16 percent actively disengaged. The turnover rates were just as depressing: 7 percent for engaged employees, 13 percent for those not engaged, and 28 percent for the actively disengaged. The company implemented a program to address engagement issues and achieved dramatic results. They increased the engaged population to 36 percent and decreased the actively disengaged group to 9 percent. The company estimates that this shift in engagement added $250 million to the bottom line in retention savings alone.14 Clearly, increasing engagement will save companies substantial sums of money and offset any significant losses they would incur through disengagement and turnover. THE POSITIVE IMPACT OF EMPLOYEE ENGAGEMENT Authors Coffman and Gonzalez-Molina make the case that employee and customer engagement is the one lever that can lead to higher profits. According to a 2002 meta-analysis by Gallup, business units with more employee engagement showed higher rates in every measure of success when compared with business units that had low employee engagement. • 86 percent higher success rate on customer metrics. • 70 percent higher success rate in lowering turnover. • 70 percent higher success rate in productivity. • 44 percent higher success rate in profitability. • 78 percent higher success rate in safety figures.15 Recent research on the mentoring program at Sun Microsystems demonstrates that mentoring had a much higher impact on the bottom 60 percent of performers than on the top 40 percent. In fact, the greatest impact accrued to the bottom 20 percent, leading the For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 7 researchers to conclude that “investing in a mentoring program for high performers does not yield as significant of a return as might be assumed. Rather, the better investment for Sun would be to spend the money on lower performers to help them raise their level of performance.”16 This is further supported by additional research—the top factor that increases engagement, according to the 2003 Towers Perrin study, is actions that demonstrate senior management’s “sincere interest in employees’ well-being.”17 Engaged employees believe that senior leaders care about their personal and professional development, and one of the most desirable and appreciated developmental opportunities is a mentoring relationship. Surveys of Fortune 500 leaders show that 96 percent believe that mentoring enhanced their career development and opportunities.18 Sun Microsystems’ research also validates the positive impact mentoring has on employee retention. The study involved an analysis of Sun’s mentoring program, examining more than 1000 employees over a five year period. The results showed higher retention rates for both mentees (72 percent) and mentors (69 percent), when compared to the retention rates of non-participants (49 percent).19 By every measure, companies or even business units that invest in efforts to increase employee engagement, even by a few percentage points, could see substantial returns on that investment. The primary, long-term benefit to increasing engagement is seen in sustainable profit margins that could add hundreds of millions of dollars to the bottom line every year. In our view, investing in a large, self-directed mentoring process is a low cost, high impact way to foster employee engagement, while improving morale, retention and productivity at the business unit or organizational level. The need to address employee engagement and retention issues is precisely why so many companies we talk to are looking at a web- based process to broaden the reach and perception of mentoring. This approach does a number of things to increase engagement and morale: For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 8 1. Leadership is seen as providing all employees with developmental opportunities, rather than just an elite few. 2. Employees can find mentors to help them improve the competencies needed for current jobs, thus increasing satisfaction and a sense of accomplishment. 3. Employees can explore other career paths and opportunities through mentoring relationships outside their own departments and silos. 4. Employees take more responsibility for their own development and for the development of others, increasing the sense of teamwork and community. 5. More employees can be utilized as mentors, increasing their sense of value and worth to the company. Increasing engagement may well be the single most important personnel factor that leadership can control that will lead to higher profitability in the long run. ENGAGEMENT, MENTORING AND THE Q12™ The hard facts about employee engagement lead authors Coffman and Gonzalez-Molina to conclude, “Engaged employees are a rare and precious resource.”20 So what can companies do to retain and energize these employees? Can companies practice a kind of human resource alchemy, turning disengaged employees into rare and precious assets who actually engage customers and contribute to company value? The answer is a resounding yes. We agree with Coffman and Gonzalez-Molina that employee engagement can be improved. We further believe that one way to accomplish this is through mentoring; the right approach to mentoring can create an engagement engine that drives up individual, business unit and organizational performance. For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 9 The premise of Follow this Path is that great managers unleash the untapped potential of people, increasing their engagement by building 12 conditions into the workplace culture and environment. These conditions are referred to as the Q12™, and according to Coffman and Gonzalez-Molina, these should be the primary focus of anyone concerned with enhancing employee engagement. The authors argue that a manager who keeps the Q12™ in mind and interacts with employees according to these principles will bring out the best in people and increase engagement, resulting in a more productive work group. “Managers view it as their responsibility to provide a range of learning options… and it is the employees’ responsibility to select from these options,” keeping track of what they have learned.21 One learning option specifically mentioned in this context is mentoring. While managers may have the most impact on a few of the Q12™ factors, mentoring can directly impact the employees’ experience. Few managers can provide all of the 12 critical environmental conditions alone, and in some cases, mentors may be better positioned than managers to help employees discover their potential and thus become more productive and engaged. We will explore these mentoring connections to engagement under two main benefits of mentoring relationships; the notations are provided to correlate our views of mentoring with the authors’ Q12™ factors. (See chart on page 10 for details.) Additional Q12™ information can be found in the appendix. 1. Mentoring provides an objective way for employees to explore their strengths and find better alignment between their talents and their role in the organization. Many employees are in jobs that only partially fit their strengths. Managers can often become more focused on the parts of job performance that are lacking. They may not have the time or energy to fully explore whether the problem is a talent issue or whether another role in the organization may well provide a better fit. To offset this, we recommend that people have access to multiple mentors who can help employees grow and develop in their areas of strength and interest (#6 and #12). From the feedback and exploration of other job roles, a mentor could For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 10 help an employee find a job that better aligns the person’s talents Employee and passions with organizational mission and purpose (#8). This Responses to Q12™ Factors gives each person a better opportunity to do their best and make a maximum contribution every day at work (#3). 1. Focus me. 2. Equip me. 3. Know me. 2. Mentoring provides a safe, supportive, relational 4. Help me see environment where employees can explore, grow and develop my value. as people and team members. One of the underlying themes of 5. Care about me. 6. Help me grow. Follow This Path is that relational and emotional issues play a much 7. Hear me. larger role in the success of companies than previously realized. The 8. Help me see current Emotional Intelligence movement provides further evidence to my importance. 9. Help me feel this truth—people must feel emotional support to develop relational proud. competencies. Not every manager can or perhaps should provide 10. Help me build everything an employee needs in this critical area. For example, a mutual trust. 11. Help me mentor can provide a safe place where employees can express real review my opinions about work and discuss issues concerning coworkers (#7). contributions. Mentors can help employees see more clearly how best to work 12. Challenge me. through relational issues to utilize their team while working toward common goals (#9). Coffman and Gonzalez-Molina, 95. Gallup® and Q12™ are trademarks of The Mentoring can also provide a relationally supportive environment Gallup Organization. outside the context of a direct supervisory situation. It can provide a All rights are reserved. caring environment where “someone at work” is focused on developing the person, not just improving their job performance (#5). Mentors can provide encouragement (#4) and feedback on progress that employees need in order to have a more balanced view of themselves and their job (#11). Mentors can also become trusted advisors who can help employees process events, which can lead to deeper engagement (#10). By providing self-directed mentoring opportunities for all employees and encouraging managers to support and promote these relationships, organizations ensure that employees are not limited in their experience of the Q12™ elements by the boundaries of what a manager can provide. It is a truism that people quit bosses not companies. Forward thinking companies realize that not every manager is a superstar, and therefore provide functional workarounds for employees to discover their potential. This often occurs using For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 11 a network of developmental and relational opportunities such as mentoring. This results in the Q12™ factors of employee engagement becoming part of the social and cultural fabric of the company; they are not solely dependent on managerial quality in order to be successful. CONCLUSION In every sector that we serve with mentoring solutions—Fortune 500 and Global 1000 industry leaders, smaller regional organizations, governmental agencies, professional associations, higher educational institutions—increasing engagement and retention is critical. As research has shown, mentoring positively impacts employee engagement and can have lasting positive repercussions for organizatons. Open Mentoring® is a proven way to provide quality mentoring relationships throughout an organization. More than 100 clients have used our enterprise mentoring system to take advantage of one-to- one, group, and situational mentoring to spur employee engagement in multiple ways. Please contact us for a demo of our web-based Open Mentoring® and see for yourself how we can help you address employee engagement. Toll-Free: 866-470-1603 Direct: 303-707-0800 E-mail: email@example.com Web: www.3creek.com For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 12 APPENDIX Curt Coffman and Gabriel Gonzalez-Molina present three main pieces of pertinent information related to employee engagement: the Q12™ list, information pertaining to what employees need in order to stay engaged in Chapters 4 and 5, and a summary list of the way employees emotionally respond on p. 95. The following is a hybrid list of these factors created by Triple Creek Associates and meant to be used in the context of this review as a summary for those in the mentoring community. Gallup® and Q12™ are trademarks of The Gallup Organization. All rights are reserved. 1. “I know what is expected of me at work.” Focus me. 2. “I have the materials and equipment I need to do my work.” Equip me. 3. “At work, I have the opportunity to do what I do best every day.” Know me. 4. “In the last seven days, I have received recognition or praise for doing good work.” Help me see my value. 5. “My supervisor, or someone at work, seems to care about me as a person.” Care about me. 6. “There is someone at work who encourages my development.” Help me grow. 7. “At work my opinions seem to count.” Hear me. 8. “The mission or purpose of my company makes me feel my job is important.” Help me see my importance. 9. “My associates or fellow employees are committed to doing quality work.” Help me feel proud. 10. “I have a best friend at work.” Help me build mutual trust. 11. “In the last six months, someone at work has talked to me about my progress.” Help me review my contributions. 12. “This last year, I have had opportunities to learn and grow at work.” Challenge me. For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 13 ENDNOTES/REFERENCES 1. Curt Coffman and Gabriel Gonzalez-Molina, Ph.D., Follow this Path: How the World’s Greatest Organizations Drive Growth by Unleashing Human Potential. New York: Warner Business Books, 2002. 2. Coffman and Gonzalez-Molina, 14. Their full logic string states: Identify Strengths The Right Fit Great Managers Engaged Employees Engaged Customers Sustainable Growth Real Profit Increase Stock Increase. 3. Coffman and Gonzalez-Molina, 76. 4. Coffman and Gonzalez-Molina, p.136. 5. Cited in: Patricia Van Arnum, “HR Balancing Act: Cost Pressures and Employee Development,” Chemical Market Reporter, Sept. 29, 2003. 6. Van Arnum, Sept. 29, 2003. 7. Coffman and Gonzalez-Molina, 136. 8. The national average for voluntary turnover (quitting) hovers around 20 percent (Source: U.S. Department of Labor, Bureau of Labor Statistics). These figures are extrapolated from the chart at: http://www.bls.gov/news.release/jolts.t04.htm. 9. For our calculations, we use 15 percent as the turnover rate, representing the low end of industry and regional averages. One widely used replacement cost calculation is 1.4 times salary. This means that for a person with a $40,000 salary, the replacement cost would be $56,000. Therefore, a company with 10,000 employees would have an average turnover cost of .15 x 10,000 x $56,000 = $84 million annually. For more information about Triple Creek, our services or our resources, visit us at www.3creek.com. 14 10. Coffman and Gonzalez-Molina, 136. 11. Coffman and Gonzalez-Molina, 141. 12. Calculated on the Gallup average of 22 percent actively disengaged, with a cost of $3,400 per every $10,000 of salary, and at a salary of $40,000. Calculation is: 2,200 employees x $3,400 x 4 = $29,920,000. 13. This is an industry specific example and is used here for illustrative purposes. Total work days missed by the unengaged would be: 1.9 x 5,600 = 10,640; for the actively disengaged it would be: 4.8 x 2,200 = 10,560. Overall total works days missed for both groups would be 10,640 + 10,560 = 21,200. The total cost would be: 21,200 days missed x $154 per day = $3,264,800. 14. Coffman and Gonzalez-Molina, 141. 15. Coffman and Gonzalez-Molina, 127-128. 16. Holincheck, James. “Case Study: Workforce Analytics at Sun.” Gartner, Inc., 27 October 2006 (ID Number: G00142776). 17. Van Arnum, Sept. 29, 2003. 18. Sandra Hagevik, “What’s a Mentor, Who’s a Mentor?,” Journal of Environmental Health, October 1998, v. 61(3), pp. 59-61. 19. Holincheck, Oct. 27, 2006. 20. Coffman and Gonzalez-Molina, 76. 21. Coffman and Gonzalez-Molina, 121-122. For more information about Triple Creek, our services or our resources, visit us at www.3creek.com.
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