Employee Disengagement Spells Bad News for All Canadians

According to a recent study conducted by the Mercer Group (a leading global provider of consulting, outsourcing and investment services) employee disengagement in Canada has reached crisis proportions!



Among the nearly 30,000 employees Mercer polled across 17 countries, Canadian employees had the lowest level of engagement (defined as feeling they have a vested interest in the success of the company they work for and the willingness and motivation to exceed their job requirements) with over 50% acknowledging they have virtually 'checked out' on the job.

Interestingly, the highest level of engagement was found among employees over 50, the very group most large companies seem most eager to jettison these days.

That aside, a full 36% of all Canadian employees said they are seriously considering changing employers, up from 26% when last surveyed in 2006, and a further 22% said they could care a less whether they stay or go, which would suggest that growing turnover is inevitable. But as Madeline Avedon, Principal, Mercer’s Human Capital Business states in the report:

"This erosion in employee sentiment has business consequences that reach well beyond the direct costs of employee turnover."

While Madeline did not spell out specific consequences, it stands to reason that all Canadians, be they business owners, corporate executives, consumers, investors, students, employees or retirees, can expect to pay a very high price if this problem is not addressed.

Decreased productivity, lower quality goods and services, inflated costs, fewer exports, diminished customer service levels, fewer employment opportunities, worse returns on investments, higher taxes, more business failures, more layoffs and a lower standard of living...are just a few of the potential implications of this negative trend.

Is there a way out or is it too late? That's hard to say, but perhaps at least part of the answer lies in one of the other findings of the study, which points out the strong correlation between employee empowerment, engagement and service quality. Again according to Madeline:

"Canadian employees, in particular, are more engaged when they can deliver quality service..."

I would suggest that the flip side also hold true - Canadians deliver a higher level of service quality when they are more engaged - and that the problem (and therefore the solution) lies in the hands of management!

Either way, those of us in business better start empowering, investing in and caring more about our people and our customers... preferably before we find ourselves operating in a country with third world economic status!


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The Real Value of a Customer

One of the reasons customer service is what it is (as in not nearly as good as it should be) is that most organizations grossly underestimate customer value (CV) seeing it as simply the difference between the cost of providing goods or services and what the customer pays for them at point of sale.

Say for example Neil, my youngest pictured above, buys a pair of skis on sale for $800 (a ridiculous amount if you ask me, but considerably less than the ones he really wants). If the total cost of those skis (what the manufacturer/distributor charges the retailer, plus a proportionate share of operating expenses such as salaries, commissions, rent, advertising, etc.) to the shop is $700, they are likely see his CV as $100.

On the surface this might seem reasonable, but it far from tells the whole story.

First, the skis mentioned above by no means represent my son's first pair, in fact, he currently has three pair in active service (don't ask) and there are at least as many cast offs in the basement. I prefer not to think how many pair of skis he has owned and how much they cost.

It should be noted that not all of those skis were bought from the same shop and even if they had, I can understand why the retailer is not all that likely to account for purchases of years gone by when calculating Neil's value as a customer, although a little acknowledgment would be nice.

But consider this - Neil typically buys a new pair of skis every two years, either because he wears them out (what he tells me) or because something 'way better' has come along (the real reason). Given his passion for the sport, he is very likely to continue this pattern for many years to come and it would not be out of line to suggest that in the course of his lifetime he will probably go through at least 25-30 pair.

So what we are really talking about here are sales over time of somewhere between $20,000 - $25,000 and based on a 10% margin, that translates into $2,000 - $2,500 in potential value for the retailer.

But that is only part of the story. In order to ski, Neil not only needs skis, but also boots - good ones go for about $500 to $600 (replace every 3-4 years); poles - $50 to $100 (lasting 2-3 years, unless stolen); gloves - $100 (at best 2 years, but only if he doesn't lose them); goggles - at least $100 for anything decent, considerably more if you go with the built in antifogging fans (who know how long they'll last); a helmet - his mother won't let him leave home without one - $100 to $150 (good for 3-4 seasons or until he head buts a tree)...and then there's the outer wear (jackets and ski pants)... inner wear (thermal underwear, fleece, etc.)...and après ski wear...let's not even go there.

But we're not done yet. When it comes to skiing, Neil is the expert in our family, so when his brother or I need new equipment, we follow his lead. And because he can recite equipment specs in his sleep, not to mention 'drop a line' (ski cliffs/shoots/tight trees) most of us wouldn't think skiable, there's also a broader circle of friends, acquaintances and people who just happen to be riding the same chairlift who turn to him for advice as per what to buy and where to buy it.

When you add everything up over the course of his life, Neil will directly or indirectly influence the purchase of well over $100,000 in ski equipment, which would suggest that to those who sell the stuff he has a potential customer lifetime value (CLV), even at very conservative margins, well in excess of 10 grand!

It would be silly to imply that all of Neil's 'customer lifetime value' will be realized by a single shop, but one thing is for sure, little if any will go to the one that calculates his CV as $100!

So if you happen to own a ski shop, you might want to think about that the next time some lanky kid in jeans and a hoodie strolls in and tips back his baseball cap to give you and your inventory a critical glance.

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Where Did Everybody Go?

In a recent survey, 54% of employed Canadians (of all ages) admitted they are at least somewhat likely to look for a new job once the economy turns around; and of the respondents under thirty, over 70% suggested they may take a walk as soon as the opportunity arises.

Given the events of the past year or so, these findings should come as no big surprise to anyone. Current economic conditions have certainly changed the way employers view and manage their workforce; and this in turn has changed the way employees view their employers.

According to the latest IPSOS Reid Workplace Loyalty Study, a full 36% of the employees in companies that have cut programs and reduced their workforce feel considerably less loyal to their employer; notwithstanding the fact they themselves were spared; and apparently this loss of loyalty is as common among executives and managers as among regular workers.

Unrealistic sales targets, lack of recognition, poor communications, autocratic management, toxic work environments, poor job security, limited development opportunities are among the major reasons cited as per why so many are unhappy to the point of wanting to leave.

Conventional wisdom tells us the best and brightest will be the first to go... followed closely by their customers.

Ironic how less than two years back, most employers were concerned over the demographics and worrying how they would hold their own in the inevitable war for resources. While this economic meltdown may have put those concerns on the back burner for a while, the demographics have changed little. Now companies are just that much closer to having to go to war… and a significantly larger number of their home troops are looking to change sides when they do.

Who knows when the economy will pick up, but it doesn’t take a crystal ball to predict that when it does, employers that haven’t take proactive steps to win back the love are going to have some serious staffing and retention challenges!

To comment on this blog click on 'comments' beside the little envelope below. To read previous articles, see the Blog Archive (lower right) and to become a Wavemaker Blogs follower, click on 'Follow' (just above Archive).

If you would like to be notified whenever a new Wavemaker blog topic is posted, just drop us an email at wmconsulting@live.com with "Blog Me" in the subject bar. We promise never to provide your contact details to anyone else and you can unsubscribe from this service at any time.

If you would like to know more about how Wavemaker Consulting can help your company 'win back the love' and improve both the employee and customer experience you provide, visit our Website, or email us at wmconsulting@live.com