Every business leader knows corporate success depends upon hiring and keeping the right employees. You also know that engaged employees will increase both customer satisfaction and loyalty and corporate revenue. Today, there is more good news about how your employees and the way you manage them can further increase revenue for your company. A recent study by Gallup demonstrates that four critical HR and management practices result in big revenue gains.
The Human Capital Practices study released in May 2014 identifies four practices that lead to significant revenue gains in the firms that implement them. The study found that each of the four practices resulted in increased revenue; but when the four are combined, the revenue gains become significant. Individually, the practices increased revenue per employee by up to 27 percent. When the four practices were combined, revenue per employee was increased by as much as 59 percent.
The four pratices are:
- 1. Choose managers with natural talent for managing people. The study found that in the most progressive companies, people are promoted to management positions only because they are among the 10 percent of people who have the innate ability to motivate, lead, and facilitate excellence in the work produced by their employees. Companies that hire managers with natural talent achieve a 27 percent higher revenue per employee than average firms.
- 2. Hire the right employees. By hiring people with the natural talent to succeed in a specific job or role, these progressive firms add an additional six percent gain in revenue per employee. In addition to improving performance for the specific position, the firm is able to build a team that reduces performance variance, streamlines decision making, improves diversity, and enhances employee engagement and, by extension customer engagement and satisfaction.
- 3. Focus on engaging employees. Putting naturally talented managers with well-suited employees will increase employee engagement. But, according to the study, a focus on employee engagement produces other benefits as well. The added benefits include: “increased productivity, profitability, retention, safety, quality, and customer engagement.” When a focus on employee engagement revenue per employee rises by 18 percent.
- 4. Focus on strengths. A focus on “turning weaknesses into strengths” is doomed to failure, as we all know. “Gallup found that when managers focus on employees’ strengths, 61 percent of workers are engaged and only one percent are actively disengaged.” However, when employees work from their strengths they are more engaged, more productive, and less likely to leave the firm. A focus on strengths adds eight percent higher revenue per employee.
The findings of the Gallup study of human capital suggest that a firm that wants to increase customer engagement and loyalty, achieve greater productivity, improve employee satisfaction and retention, and significantly increase revenue per employee would do well to implement these four critical talent management practices in their company. The total increase in revenue per employee when these four practices are implemented in a firm is a surprising 59 percent over average firms.