One of the unexpected facts about business performance is that profitability is no longer related directly to what is called the 4 Ps of business -- product, place, price, and promotion. Instead, the greatest single contributing factor to profitability is the 5th P - the people that a company employs. This is not supposition or theory. From 1995 to 2001, the world-renowned Gallup Organization surveyed more than three million employees, 200,000 managers, and 10 million customers in over 300,000 business units worldwide. Their results are summarized as follows:

"The success of your organization doesn't depend on your understanding of economics, or organizational development, or marketing. It depends, quite simply, on your understanding of psychology: how each individual employee connects with your company ; how each individual employee connects with your customers ." -- The Gallup Organization *

To put it another way, most companies have become so advanced in their use of marketing and technology that the distinguishing factor in a company's performance today is how well employees are engaged by their jobs. If employees are bored and just going through the motions, their performance suffers and too many of their company's customers end up going elsewhere. However, if employees are engaged in what they're doing, their enthusiasm is catching, which results in higher customer retention, more new customers, and increased profitability.

There are three keys to engaging your employees. The first is taking care to hire and promote employees who are properly matched to the job. The second is listening carefully to their concerns and suggestions, and implementing the changes that will increase their motivation. The third is to build enough flexibility into your system so that you can take advantage of employee initiative.

There is no magic to performing these three tasks successfully. The evidence is overwhelming, for example, that the best way to hire good employees or promote them into positions of competence is by using a systematic process, including job analysis and behavioral assessment surveys, in which the prospects and employees are matched to the job at three levels: appearance/presence, skills/experience, and attitudes/beliefs (personality).

According to a benchmark study in the Harvard Business Review, when companies used job analysis and behavioral assessment surveys as part of their hiring practice, employee turnover was reduced by as much as 50%. Furthermore, in companies that used such assessment tools, 61% of the employees become top performers within 14 months on the job versus just 7% of employees who were hired by companies who did not use such tools.

The final two tasks are associated with engaging existing employees. The best way to do this is through a two-step process in which the company surveys employees about how to improve their job performance at the workgroup level, and then implements the most meaningful suggestions work group by work group.

Interestingly, unless companies survey properly and implement the results, they are often worse off than if they did no survey at all. According to The Gallup Organization, while about 80% of Fortune 500 companies do employee attitude or engagement surveys, 60% of those companies reported being worse off after the surveys. Gallup says that the studies were not designed to find out "the real issues that employees were facing day in and day out at the local level. Nor did they include local accountability; … so middle managers assumed that the issues would be resolved at the top."

The results of improving employee engagement are absolutely staggering. When companies manage in a way that focuses on improving employee engagement, Gallup found that productivity improved in the range of 25% or more. Interestingly, Gallup also found that this often results from the existing top performers improving more than the lower performers, primarily because the top performers increase their engagement level, while the bottom performers remain unengaged.

Putting It All Together Accord's engagement surveys have yielded similar results to Gallup and the study in The Harvard Business Review. There is absolutely no doubt that productivity and profitability increase significantly when companies use job analysis and behavioral assessment their hiring practices, and then work on engaging their employees through work-group-level surveying and bottoms-up implementation of suggested changes.

The issue is not whether you should use professional surveying or assessment tools. It's which tools should you use, and how do you best implement the results.

* Coffman, Curt and Gabriel Gonzalez-Molina, Follow This Path, Warner Books, 2002, pages xii, 67 & 77