Chapter 7. Engagement Leads to "Better Earnings and Fatter Margins"

I believe there are many managers who have yet to grasp the essential connection between engagement and financial success. Companies that score highly on engagement have better earnings and fatter margins. . . .

Gary Hamel

Boost Earnings!

Earlier, we explored how employees' feelings at work impact all the other areas of their lives. But now we turn 180 degrees and show how employees' feelings about work impact the organizations they work for. And we don't just mean a warm and fuzzy impact; we mean cold, hard profit impact.

Imagine a gathering of corporate executives, huddled around a massive mahogany conference table, their company stock price falling, pressure from analysts and shareholders rising.

The impassioned CEO stands at the table and barks, "We need to increase profits 10 percent; now what are we going to do?!"

"Global expansion," proclaims one voice.

"Layoffs!" shouts another with gusto.

"Outsource IT," offers another.

"I'll renegotiate better rates," the CFO contributes.

And then one quiet but confident voice suggests, "Increase employee engagement." Heads turn, and you can hear a pin drop . . . .

Think about all the things companies do to increase profit or earnings per share. A simple Internet search on Google News for "boost earnings" pulls up these stories from a 24-hour period:

  • Yahoo! enters a strategic partnership with Microsoft.

  • Chevron to cut 2,000 jobs.

  • Atmel to sell a chip factory.

  • GE Healthcare expands business ...

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