Discretionary Effort & Individual Performance

But Wes, you’re not hearing me… It’s just not in the budget and that’s just the way it goes with turnover, we’ve got to keep our focus on doing the work that pays the bills! I know that feeling all too well… Heck, that was the reality I lived with every day of the nineteen years I worked in manufacturing! Even during the 15 or so years that I worked in safety and human resources, there was always an expectation that an initiative we implemented to train supervisors or improve safety would make a direct and positive impact on the facility’s overall productivity. And as tough as that was to accomplish at times, I understood because that’s what kept the doors open…

With all that in mind though, I believe it only increases the importance of being intentional about investing time and resources into developing our leaders; it just costs ways too much not to! Remember that 25x ROI that I referenced last time? You know, the one that used the lowest numbers possible based on the studies we looked at… What if we considered the hit that productivity takes when we have high turnover, as well as all the other indirect costs, and used the higher numbers from the Gallup study? Even at the average of $36k per year, that same facility could already be spending close to $1 million per year on turnover alone - and that doesn’t even touch the impact leadership (good or bad) has on employee engagement!

I’ve done several full lessons in our Leading At The Next Level program on the reasons engagement matters to a company’s bottom line so I won’t go into all that here. For the sake of time, let’s just look at how much profit we’re missing when the folks on our teams who are in roles with leadership responsibility haven’t been developed so they can earn buy-in and engagement from the people reporting to them. Buy-in and engagement don’t just happen, but when earned, they lead to significant measurable results! Don’t take my word for it, here’s what the Harvard Business Review shared from a global survey showing the total financial impact engagement can have:

“Company leaders won’t be surprised that employee engagement—the extent to which workers commit to something or someone in their organizations—influences performance and retention. But they may be surprised by how much engagement matters. Increased commitment can lead to a 57% improvement in discretionary effort—that is, employees’ willingness to exceed duty’s call. That greater effort produces, on average, a 20% individual performance improvement and an 87% reduction in the desire to pull up stakes.”

Since we already have some numbers in place for the cost of turnover, let’s ignore the “87% reduction in the desire to pull up stakes” when our leaders can effectively earn engagement from their team members and just focus on the “57% improvement in discretionary effort” and the “20% individual performance improvement.” 

Discretionary effort is an interesting thing for any of us to consider. Most organizations have metrics in place to evaluate performance, detailing what’s necessary for any given employee to accomplish on a routine basis. While we’d all like to think everyone on our teams gives it all they’ve got every single day, that’s just not reality! For the sake of simplicity, let’s disregard the ones who are actively disengaged. They’re more likely to fall into the “good turnover” category than they are to have a complete attitude change. Let’s just consider the ones that typically fall somewhere in the middle, the ones studies refer to as “neither actively engaged or actively disengaged.” In case you’ve never seen the stats on this, that tends to be about 50% of any workforce… Since 100% is anyone can truly ever give at once, a 57% increase in discretionary effort means that they were previously contributing something less than 64% of their potential effort - and that’s assuming the 57% increase takes them to the 100% mark…

I don't have any trouble at all seeing where that could easily result in a 20% individual performance improvement, but I know we can’t reasonably expect this from everyone at once. I also can’t put numbers out there for what that 20% improvement looks like in every industry. Here’s what I’ll challenge you to consider though… How much additional revenue would your company see if just 10% of your workforce (rather than the entire 50% that’s typically somewhere between disengaged and engaged) were impacted positively when you developed your leaders and increased their individual performance by 20%?

I’d love to chat through the numbers with you one on one because I have no doubt whatsoever that this would show just as much ROI from the investment in developing your leaders as the turnover decrease did before! But there’s still one more place where money is already being spent so we’ll look at that next time…