When someone utters the phrase ‘employee brand engagement’, it’s likely that the very last person you think about in your organization is your Chief Financial Officer (CFO), your accountant, or any other member of your finance department. That’s because, in most organizations, financial professionals are responsible for activities such as preparing budgets and financial statements, ensuring compliance with financial laws, analyzing financial data, conducting audits and reporting on financial performance.
Although there are some noticeable exceptions, very rarely will CFOs be actively involved in their companies’ discussions about topics such as employee loyalty, talent management, company culture and other related elements of a company’s employee brand engagement. Chances are, discussions on these topics take place in your company’s HR department. But there’s a good reason why finance professionals shouldbe involved in these discussions. Let’s take a look at online retailer Zappos.comto explain why.
When it comes to employee engagement, Zappos is one of the companies that many people benchmark as the gold standard. Zappos is known for its rigorous recruitment policies, its extremely high levels of employee engagement, its quirky culture and its commitment to customer experience.
Zappos’ recruitment policies are, shall we say…’unique’. Each potential employee is taken through a comprehensive training program which involves learning about the company’s strategy, culture and business operations. During the training, each candidate is offered a pay-out of $2,000 – not as a signing on bonus, but as an incentive to walk away from the job offer. The idea behind this curious practice is to weed out individuals who are only interested in the money and instead, to hire only people who are so passionate about working at the company that they’d be willing to pass up $2,000 in easy cash. Reportedly, only 2%-3% of individuals take the offer to walk away with the cash.
Individuals who make it past the recruitment phase are welcomed into a fun, but hardworking culturewhere they have ample opportunities for training, mentorship and career advancement, and to work with likeminded individuals who share a passion for delivering “WOW” through service (one of the company’s core values).
The outcome of Zappos’ employee brand engagement practices definitely works out in the company’s favor. Its unique company culture and its commitment to customer experience are so revered that curious customers and business leaders from around the globe sign up to take tours of Zappos’ operations and get a glimpse of Zappos team members in action.
But even with such accomplishments under its belt, the company is still concerned that it could do much, muchbetter in the area of employee brand engagement. In fact, Zappos’ CEO, Tony Hsieh, estimates that over the years, bad hires may have cost the company over US$100 million dollars.
Let’s put this into context. Zappos is a goliath in the online industry, producing upwards of $2 billion in revenues annually. The company is respected not only for its financial success, but also for its company culture, highly engaged team members and exceptional customer experience. Yet Hsieh is concerned that, over the years, bad hires may have cost the company hundreds of millions of dollars.
That’s because Hsieh understands that a bad hire can have several deleterious effects on an organization. For one thing, disengaged employees who are not excited about their company’s purpose, vision and core values, and who are not enthusiastically committed to helping their company meet its business goals, are unlikely to be as productive as their engaged colleagues.
For another thing, as most HR professionals will agree, having disengaged employees on board could lead to productive, engaged team members becoming resentful towards the company for its poor hiring practices. When (not if) the company’s engaged team members’ frustrations boil over, they could suffer from lower morale and become less productive. After all, why go the extra mile for your company when the company doesn’t care that the guy sitting next to you isn’t giving his all? In many cases, engaged employees will even leave their companies and seek career opportunities elsewhere. Their former employers will then need to repeat the often expensive recruitment process by advertising for replacements, interviewing potential candidates and training new hires. In the long run, one bad hiring decision could lead to lower levels of productivity across the entire organization and could also lead to the organization investing valuable time and money in hiring new team members.
In an articleon Forbes.com, writer Falon Fatemi points out that, according to the U.S. Department of Labor, the price of a bad hire is at least 30 percentof the employee’s first-year earnings. In other words, low levels of engagement can affect the bottom line! That’s why Hsieh and his team prefer to offer potential employees $2,000 to nottake the job rather than risk having an employee on board who could cost the company considerably more in productivity and profitability.
Vigilant CFOs and accountants are always on the lookout for ways to help their companies cut costs and improve profitability. The ‘usual suspects’ of cost-cutting exercises may include cutting overheads, reducing staff, outsourcing to vendors and re-organizing workflows. But in order for CFOs to be trulyvigilant, they should work hand in hand with their company’s HR Department to determine the financial costs associated with bad hires and disengaged employees. That data can then be used by the CFO and the HR department to justify the development of less expensive programs and initiatives designed to improve their company’s overall level of engagement and reduce the costs associated with recruitment and retention of high-performance team members.
If you are an entrepreneur, business owner or a member of your company’s leadership team, and you are having challenges improving your profitability, it may be time for you and your team to have a serious conversation about the levels of employee brand engagement at your company. Ask your accountant or CFO to determine how much disengaged employees may be costing your company, then work with your HR department to develop programs to improve your levels of employee brand engagement. Chances are, you’ll take a giant step towards improving the levels of profitability at your firm.