The Economics of Enterprise Engagement

As part of the Enterprise Engagement Alliance’s commitment to an open-source approach to information sharing on the implementation steps for stakeholder management, this begins an ongoing series featuring specific chapters in the EEA’s two books, Enterprise Engagement: The Roadmap 5^th edition, by Bruce Bolger, Allan Schweyer, and Richard Kern, and Enterprise Engagement for CEOs, by Bruce Bolger.

Click here for links to information about EEA engagement solution providers.

Enterprise Engagement: The Roadmap is the guidebook for any organization seeking to implement the “Social” of Environmental, Social, Governance (ESG) management, increasingly known as Stakeholder Capitalism. It is designed for any management in charge of making the shift toward a stakeholder approach to management and value creation.

The book is included with the EEA PurposePoint Academy membership library or can be purchased online.

This is an excerpt from Chapter 3, The Economics of Enterprise Engagement. Click here for the full chapter. Select chapters will be featured in the coming weeks and throughout the year.

Click here for the full chapter.

The research is clear: Engagement provides a long-term competitive advantage. In 2005, a milestone book, The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want, by Dr. David Sirota made headlines across corporate America. Sirota gathered never-before-published case studies, more than 30 years of employee attitude research, and data from 920,000 employees from 28 multinational companies. This data showed that the share prices of firms with highly engaged employees increased an average of 16% in 2004, compared with an industry average of 6%. Stock prices of companies with high morale outperformed similar companies in the same industries by more than 2½-to-1 during 2004, while the stock prices of companies with low morale lagged behind their industry competitors by a ratio of almost 5-to-1.

A Towers Watson study in August 2005 looked at 85,000 people employed in large and midsize companies in 16 countries on four continents. It showed there is a vast reserve of untapped “employee performance potential” that can drive better financial results if companies can successfully tap into this reserve. The study also showed that highly engaged workers believe they contribute more directly to business results than less engaged employees. For instance:

84% of highly engaged employees believe they can positively impact the quality of their company’s products, compared with 31% of disengaged workers.
72% of the highly engaged believe they can positively affect customer service, vs. only 27% of the disengaged.
68% of the highly engaged believe they can positively impact costs in their job or unit, vs. just 19% of the disengaged.

Towers Watson researchers quantified this relationship by performing an analysis to explain current financial performance (measured as the market premium) as a function of various factors. They found a significant relationship between current financial performance and past engagement, even after controlling for past financial performance, industry and other considerations, to wit: A significant (one standard deviation) increase in the level of past employee engagement is associated with a 1.5% increase in current market premium, all other factors including past market premium constant. For the typical company in the sample with a market value of $14 billion, that represents an increase in market value of 1.7%, or more than $230 million.

Click here for the full chapter.

The book is included with the EEA PurposePoint Academy membership library or can be purchased online.

ESM Is Published by The EEA: Your Source for Effective Stakeholder Management, Engagement, and Reporting

Through education, media, business development, advisory services, and outreach, the Enterprise Engagement Alliance supports professionals, educators, organizations, asset managers, investors, and engagement solution providers seeking a competitive advantage by profiting from a strategic and systematic approach to stakeholder engagement across the enterprise. Click here for details on all EEA and ESM media services.

1. Professional Education on Stakeholder Management and Total Rewards

Become part of the EEA as an individual, corporation, or solution provider to gain access to valuable learning, thought leadership, and marketing resources to master stakeholder management and reporting.
The only education and certification program focusing on Stakeholder Engagement and Human Capital metrics and reporting, featuring nine members-only training videos that provide preparation for certification in Enterprise Engagement.
EEA books: Paid EEA participants receive Enterprise Engagement for CEOs: The Little Blue Book for People-Centric Capitalists, a quick implementation guide for CEOs; Enterprise Engagement: The Roadmap 5th Edition implementation guide; a comprehensive textbook for practitioners, academics, and students, plus four books on theory and implementation from leaders in Stakeholder Management, Finance, Human Capital Management, and Culture.

2. Media

ESM at EnterpriseEngagement.org, EEXAdvisors.com marketplace, ESM e–newsletters, and library.
RRN at RewardsRecognitionNetwork.com; BrandMediaCoalition.com marketplace, RRN e-newsletters, and library.
EEA YouTube Channel with over three dozen how-to and insight videos and growing with nearly 100 expert guests.

3. Fully Integrated Business Development for Engagement and Total Rewards

Strategic Business Development for Stakeholder Management and Total Rewards solution providers, including Integrated blog, social media, and e-newsletter campaigns managed by content marketing experts.

4. Advisory Services for Organizations

Stakeholder Management Business Plans; Human Capital Management, Metrics, and Corporate Sustainability Reporting for organizations, including ISO human capital certifications, and services for solution providers.

5. Outreach in the US and Around the World on Stakeholder Management and Total Rewards

The EEA promotes a strategic approach to people management and total rewards through its e-newsletters, web sites, and social media reaching 20,000 professionals a month and through other activities, such as:

Association of National Advertisers Brand Engagement 360 Knowledge Center to educate brands and agencies.