The retail and restaurant industries are finally placing employee engagement at the center stage of business strategy, with the current pandemic further underscoring the importance of cultivating engagement to boost morale and improve employee retention. Experts agree that engaged employees are more productive, but exactly how does employee engagement increase productivity?
Between 2015-2019, data from the Bureau of Labor Statistics show that the average turnover rates in the retail and food industries are 56 percent and 74 percent respectively. However, industry estimates are significantly higher with the turnover rate at fast-food restaurants going as high as 150 percent.
Fortunately, more managers are recognizing that this alarming trend can be mitigated by implementing employee engagement strategies. According to studies, organizations with high employee engagement have workers who are 57 percent more effective and 87 percent less likely to quit.
Why Is Employee Engagement Important?
Aside from turnover rates, employee engagement is also a big factor in customer experience. As you know, retail and food businesses are service-driven industries where an employee's level of engagement can affect overall customer experience.
Social media can further amplify bad customer experiences by making it go viral and damaging your brand. On the upside, exemplary customer experience can trigger word-of-mouth and attract new customers.
What Is Employee Engagement?
People often mistake employee engagement with employee satisfaction, but these are two different concepts. A satisfied employee may simply be happy to show up at work, but an engaged employee is willing to go the extra mile.
Forbes defines employee engagement as "the emotional commitment the employee has to the organization and its goals, while other sources define an engaged employee as someone who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests.
Simply put, while a satisfied employee may derive satisfaction from factors like salary or relationships with co-workers, a fully engaged employee is motivated by the work and the company's vision.
There are three types of employee engagement according to Gallup-
Engaged- These are highly enthusiastic and motivated employees in the workplace. They add value to their job and drive innovations.
Not Engaged- These are the people who are psychologically unattached to the work and the company. Their needs are not fully met, so they tend to coast or perform the bare minimum.
Actively Disengaged- Actively disengaged employees are both unsatisfied and disruptive at work. Since their needs are not being met, they are likely to act up and undermine high-performing employees.
Gallup research found that high employee engagement results in a 17% increase in productivity. More specifically, businesses with highly engaged employees achieve a 10% increase in customer ratings, a 20% increase in sales, and 21% greater profitability overall.
You can even measure the exact amount of money you can earn or lose based on the level of engagement. According to TalentCulture, employee engagement can increase profits by $2,400 per employee per year. Meanwhile, Forbes estimates that a single disengaged employee can cost you almost $16,000 per year.
It is surprising, then, that even with strong data supporting the link between employee engagement and productivity, businesses still see engagement as an HR issue instead of an important business strategy.
Interestingly, the pandemic has boosted employee engagement levels nationwide. Gallup reports a historic rise in employee engagement amid the coronavirus outbreak even as people's wellbeing dropped to a 12-year low.
Of course, this does not mean restaurant owners and managers should be complacent. The current extraordinary circumstances could just be masking the industry's issues in employee engagement. For instance, employees are likely feeling fortunate to have a job in this unstable time, but sooner or later the need to sustain engagement will return.
How Does Engagement Increase Productivity?
You may think employee engagement is such an abstract term. While certainly multifaceted, when viewed from the lens of productivity, you will begin to see its tangible benefits in improving your bottom line.
Reduction in Turnover and Absenteeism Engaged employees not only show up at work, they also work harder. Gallup reports[DI7] a 41% reduction in absenteeism and a 17% increase in productivity among businesses with highly engaged business units. As mentioned, they are also more likely to stay. Engaged employees essentially become your brand ambassadors. So, if you have high employee engagement, you will improve employee retention and reduce hiring costs.
Better Customer Experience Another benefit of employee engagement is better customer service. Engaged employees have a better attitude and a happier disposition which means they are more likely to provide better service to your customers. This in turn helps improve customer ratings and generate return business. In a Deloitte consumer survey, 60 percent of respondents stated that they would visit a restaurant more frequently based on a positive dining experience.
Increased Profitability Low turnover, less absenteeism, and better customer service all contribute to increased profitability. If you have engaged employees, your profits will ultimately increase. Gallup estimates a 21% increase in profitability. Now that you have a clearer picture of employee engagement's effect on productivity, it is time to put your engagement strategies in place.
How to Increase Employee Engagement in Your Restaurant
Apart from being an HR issue, another popular misconception about employee engagement is that it is mostly a salary issue and so solutions often involve compensation negotiations. Unfortunately, it is not as simple as that. Experts say that more than financial incentives, employees want to feel valued.
1. Cultivate a Culture of Recognition High-recognition companies have a 31 percent less voluntary turnover compared to companies with poor recognition practices, according to Deloitte's report. Employees feel valued when good work is recognized and appreciated by management.
It can be as simple as a pat on the back when they manage to pacify a customer or get a glowing review. Engaging personally with an employee by saying Thank you can be a more powerful motivator than extra money on their payroll.
2. Place Employees in the Right Role A skills mismatch is a big reason for low engagement. Nothing is more demotivating than being an extrovert constantly relegated to do back-office duties or an aspiring cook stuck in the cash register.
A mismatch is a manifestation of mismanagement and neglect. Supervisors and managers likely do not take the time to get to know employees or observe their work. While the industry needs well-rounded individuals, at the end of the day, people look for meaningful work and tasks where they can excel.
3. Start Leadership Training Early No one likes a dead-end job, and high-performing employees with no clear growth opportunities will become disengaged and find work elsewhere; hence leadership training should start early.
Unfortunately, a study revealed that 84 percent of employees feel like their companies do not provide career-planning resources and 70 percent said their employers do not guide professional growth.
This gap should be addressed because high performers can be good at their job but have zero leadership skills. When these high-performing employees with no management background are tasked to manage people, some will inevitably fail and contribute to a company's low engagement. Remember that poor leadership is one of the main indicators of low engagement.
4. Establish Mentorship One way to start leadership training early is by assigning mentors to each employee. Mentorship is a long-held tradition in various industries but is sadly missing in contemporary workplaces.
Mentors ensure each employee has someone to talk to with their day-to-day issues. Just having regular check-ins can strengthen their commitment and connection to the company. Concerns can also be resolved quickly, and resentments will not build-up compared to having any point person to guide them or air their grievances.
5. Reaffirm Employees' Trust in Leadership The three main drivers of employee engagement, according to Dale Carnegie Research, are (1) pride in the organization, (2) trust in senior leadership, and (3) relationship with an employee's immediate manager. Therefore, consistency in messaging is important.
Employees need to have experiences that are aligned with business policies and the company's vision. If you say you are an eco-friendly business, then communication and actions should reflect that. More importantly, leaders should serve as role models so that employees have someone to emulate and take pride in being a part of the organization. Employee engagement is ultimately about investing in your employees. When you stop looking at treating people like machines and start addressing their needs, you are maximizing their potential and increasing productivity. Engagement transforms your employees into brand ambassadors; and isn't that the bottom line?