Employees are the biggest value creators and value destroyers for most organizations. Here’s how to identify and enhance the role your employees play in the value creation process.
Distinguishing between value-enhancing and value-destroying employees
The primary aim of every organization is to maximize the value it creates from its existing resources. Exactly what that ‘value’ looks like can differ from one business to the next. For some businesses, value may simply mean generating a greater return for the shareholders, but for others, value creation can be something much more specific.
To add value, a business needs to know how value is created. There are all sorts of assets that create value, including intellectual property, customer relationships, and business processes, but arguably, your most important value-creators are your people.
The trouble is that not all people are value-creators. Research from McKinsey has found that up to half of employees report being relatively unproductive at work, and 10% are actively engaged, which is a core destroyer of value. There are many different reasons for this lack of unproductivity. Some workers suggest that an overreliance on screens and digital overload takes its toll on productivity, while others blame stress or too many meetings.
Whatever the reason behind this disengagement, research suggests that it costs a median-size S&P 500 company between $228 million and $355 million a year in lost productivity
Why are workers so disengaged?
According to a study by Gallup, employees who are not engaged cost the world $8.8 trillion in lost productivity. Given the high levels of dissatisfaction, the trillion-dollar question is: why are workers so disengaged?
The reasons for employee disengagement can vary dramatically. One study suggests that worker unhappiness has hit a three-year low, with unfair treatment at work being the leading cause. That unfairness can take a variety of forms, such as inconsistent compensation, unreasonable workloads, or a lack of support from managers.
Another study from McKinsey suggests that the six leading causes of employee disengagement are:
- Lack of meaningful work-creator
- Inadequate total compensation
- Lack of workplace flexibility
- Lack of career advancement and development
- Unreliable and unsupportive people at work
- Unsafe working environment
The study suggests that prioritizing the leading causes of dissatisfaction could save the average S&P corporation up to $56 million a year.
Who are your value makers and breakers?
Anyone who has worked for an organization knows that employees can differ greatly in their productivity and engagement levels, even within the same teams. Understanding these levels of engagement can help leaders implement strategies to reward and retain the value-makers and move employees away from the more dissatisfied groups.
According to McKinsey, there are six different levels of value-enhancing and value-destroying employees.
Accounting for around 10% of the workforce, these are the employees who are the least satisfied with their roles. While they may not be the worst performers, mentally they are already heading for the door. This group can include previously high-performing individuals who have become disillusioned, often by the lack of progression or their treatment by management.
What can you do: The declining performance of these employees makes them easy to identify. Strong leaders may be able to re-engage them by creating a clear career path for them or by making meaningful changes to their roles or responsibilities. You should also ensure their salary and benefits are at least comparable with the industry average.
These employees have actively disengaged from their work and are the leading cause of value destruction. Accounting for around 11% of the workforce, they may have disengaged from the company some time ago, often due to a feeling that their needs are not being met. They now engage in quiet or loud quitting and their behavior demoralizes others.
What can you do: Career development opportunities can help to re-engage this group and show them they have a positive future. Assigning them a coach or mentor can be effective, as can shifting their role or responsibilities or giving them a performance-related plan. If these approaches are ineffective, you may have to intervene to prevent them from negatively impacting your best performers.
The mildly dissatisfied
This group of mildly disengaged employees accounts for 32% of the average workforce. Although their performance is below average, they do what they need to to get by and are not actively disruptive. However, the size of this group means they can be a source of value destruction.
What can you do: As this group is only mildly disengaged, it might be possible to change their outlook relatively easily. Introducing more workplace flexibility, giving them more autonomy, and providing them with opportunities to develop, along with a fair compensation package, can be effective.
This group, accounting for around 5% of workers, are salaried full-time workers who hold at least two jobs, usually without their employers’ knowledge. Some of this group are value makers while others are value breakers. That depends primarily on their reasons for having two jobs.
What can you do: Having more than one job is undesirable for most of the workforce. Inadequate compensation is one reason why people feel compelled to find more employment, but a lack of advancement opportunities can also play a part. Improving compensation levels, introducing benefits such as subsidized childcare and flexible working, and creating more structured career paths can improve satisfaction levels and reduce the size of this group.
This is the first group we’ve encountered who go above and beyond for their employer. They account for around 38% of the workforce, so there are a lot of these value-creators performing reliably and helping the business achieve its objectives.
What can you do: This group is satisfied and committed and you need to keep it that way. Employees in this group are typically motivated by meaningful work, autonomy, and flexibility, so give it to them and avoid unfairness, as it’s a leading factor that’s likely to demotivate them.
The high achievers
These are the rising stars of the company who create value and elevate others. Accounting for around 4% of the workforce, they’re relatively few and far between, but their consistently high performance and sustained well-being help to generate value that’s disproportionate to their number.
What can you do: It’s your job to protect these value-creators and provide them with an environment that prevents burnout and maintains their well-being. You may have to limit the number of projects your rising stars are involved in to keep them engaged over the long term.
Turning value breakers into value makers
Once you have identified what group employees fit in, the key challenge is to move as many as possible away from the least engaged groups to the most committed groups. That’s easier said than done.
The first point to note is that every worker’s experience is unique and so are the factors that motivate and engage them. Therefore, organization-wide tactics aimed at increasing performance will not have the desired effect. Instead, managers must be empowered to provide the structure and support each worker needs, whether that’s by allowing them more workplace flexibility, changing their responsibilities, or giving them opportunities to develop their skills.
Managers themselves have a significant part to play in engagement. A Gallup survey found that 70% of the variance in team engagement and wellbeing is down to the team leader. They have a huge responsibility to get things right in terms of making sure people understand what their roles are, are recognized when they do good work, and are given chances to develop in the future.
Once you get the workplace basics right, trust builds between management and employees and that paves the way for deeper and more meaningful conversations. Managers can find out what a worker’s goals and motivations are and what is standing in the way of a better work-life balance. Once they understand their situation, managers can then start to make the changes that turn value destroyers into value enhancers.