108 There has been considerable talk over the years about so-called soft measures like employee engagement which begs the question, is this a nice-to-have element or a must-have element? I doubt any execu- tive would say he or she doesn’t really care about employee engagement, but when you examine the time and money spent on es- tablishing such an outcome, it would appear most companies and most managers don’t devote enough. In my 26 years of consulting companies I see boards of directors, chief ex- ecutives, regional managers, and even local managers talk much more about sales goal attainment, margins, cost efficiencies, and budget adherence than employee engage- ment. But those hard measures are what needs to happen. Employee engagement is a key element of how these measures will ac- tually be attained. How does employee engagement translate to hard dollars? 1. Turnover. This a very measurable factor directly related to employee engagement. The less engaged your people are the most likely they are to jump for a better environment. A com- mon formula regarding the cost of turnover is 1 ½ times annual salary. If you look at a $75,000 salesperson, for example, and lose ten of those over the course of a year, it’s three quarters of a million dollars. Nobody budgets for that, but they should. When I tell executives they should put a line item in their budget for this, they laugh, but the re- ality is this turnover is an unbudgeted “inter- nal bleeding” they are paying for anyway. 2. Productivity. There may not be as finite a formula to mea- sure this one but it stands to reason that en- gaged employees produce more than disen- gaged employees. For one thing, engaged workers come to work more often (that is measurable). They work harder and are also more likely to innovate, feeling motivated and comfortable contributing ideas. 3. Recruitment Edge. We all know there is a war for talent out there, especially these days. Companies with an engaged workforce develop a repu- tation as a good place to work. Managers with an engaged team become someone others want to work for, and thus, they have a “talent magnet” that allows their unit or department to consistently excel. the connection between EMPLOYEE ENGAGEMENT AND HARD DOLLARS