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The Best Places to Work in Direct Selling 2016 Honorees!
- Story of the 2016 Best Places to Work and FAQ
- Nu Skin
- Team National
Workplace culture: When it’s right, you know it. There’s no Sunday-night dread of Monday mornings. You walk into work energized, positive and even excited about what’s to come. You know you have it good, and you can’t imagine working anywhere else.
A strong workplace culture isn’t a happy accident; it’s the result of smart hiring decisions; frequent, open and two-way communication that doesn’t get mired in formalities or pecking order; recognition of employees and their lives both inside and outside the office; and an ongoing system of checks and balances to preserve that culture, based on the philosophy that it’s the glue that keeps your organization together.
There has perhaps never been a more fitting time to discuss workplace engagement in the direct selling channel. The space has become much more crowded during the past 10 years, with the popularity of the channel on a steady rise. According to the Direct Selling Association, more than 18 million people were involved in direct selling in 2014, with estimated retail sales of $34.5 billion, a 5.5 percent increase from 2013. In fact, more people generated more revenue from direct sales in 2014 than in any previous year. New direct selling companies, born in the age of social media and more virtual relationships, are putting down roots alongside the channel veterans who have been on the scene for decades, those who have a rich heritage and a strong workplace culture all their own.
Whether they’re young or more established, however, all direct selling companies have a rather pressing question on their hands: how to hang on to their corporate office talent. As the channel continues to expand and diversify, the resulting competition for employees underscores the need for companies to take a close look at how employee engagement impacts retention—and, subsequently, their bottom-line revenue.
What Exactly Is Employee Engagement?
What is employee engagement, anyway? Google the term, and you’ll find numerous definitions; but in a nutshell, it’s the relationship between a company and its employees. Quantum Workplace, our partner for the Best Places to Work survey of direct selling companies, calls employee engagement the outcome of a healthy workplace. Engaged employees, according to Quantum, are more productive, more profitable, more customer-focused and more likely to stay. Further, highly engaged workplaces grow faster, adapt more quickly, and innovate more. In our channel, we are focused on the independent sales representatives out in the field and their tireless efforts to sell quality products, share business opportunities and form long-lasting relationships. But what about the employees who serve those independent representatives? Do we do a good enough job ensuring that they feel connected to our larger purpose and that they understand their respective roles? And do we understand the bottom-line ramifications of employee turnover?
Aaron Brown, Engagement Analyst for Quantum Workplace, names three measures that help to identify either the presence or absence of engagement: discretionary effort, intent to stay and advocacy for company. The first measure, discretionary effort, refers to how much an employee is willing to invest in his or her job—the fire in the belly, so to speak. Eileen Ryan, an employee at Team National, a Best Places to Work in Direct Selling honoree, exemplifies this, saying, “Here everyone just jumps in and has fun. We are smart and creative, and we get to work and roll up our sleeves. At this point in my life, I only want to associate myself with people who make my time meaningful.”
The second measure, intent to stay, relates to how easily an employee would be swayed by another job opportunity. When employees feel respected and that they are making a difference, like Gaya Samarasingha, an employee at Best Places to Work in Direct Selling honoree company Jamberry, they are less likely to leave. She says, “When we know we are valued and recognized by top management, we give 200 percent to the job.”
The third measure, advocacy for company, describes how readily your employee would talk up your products, join your cause voluntarily and promote your organization to others. Dena Kline, an employee at Best Places to Work in Direct Selling honoree company Zurvita, is a true advocate. She says, “Even though I’ve only been here a few months, I’ve already had friends and family members come to work here. The first things I tell them about are the great products and the integrity of the owners.”
Workplace Trends from 2016
In its 2015 Employee Engagement Trends Report, prior to its analysis of the direct selling channel, Quantum Workplace found that employee engagement in 2014 was at 65.9 percent, representing an all-time low across organizations of all sizes and in more than 75 percent of the markets measured in its Best Places to Work Program. Engagement had been on a slow but steady incline following the 2008 recession, but then began to slide, indicating a lack of confidence. Although they’d weathered the storm of the recession and still had jobs, it’s quite possible that more than a few employees looked up from their desks, surveyed the landscape and started to grow disillusioned.
Best Places to Work Methodology
Among the 37 statements to which employees responded were such items as “It would take a lot to get me to leave this organization,” “I trust the senior leadership team to lead the company to future success,” “I have a close and trusting relationship with one or more coworkers,” “I see professional growth and career development opportunities for myself in this organization,” and “The leaders of the organization value people as their most important resource.” The survey also includes a Net Promoter Score question, “How likely are you to recommend your organization to a friend or colleague?,” which may be used as an initial indicator of overall engagement. While not intended to be a substitute for an engagement survey, this telling question is highly correlated with an organization’s overall engagement score.
How does direct selling stack up to other industries with regard to employee engagement? The Best Places to Work in Direct Selling survey revealed an engagement rate of 57.1 percent. To give you a basis for comparison, of the 18 industries measured in the 2015 Employee Engagement Trends Report, the Arts and Entertainment (59.7 percent) and Nonprofit (57.6 percent) sectors achieved roughly the same results as the direct selling industry. The Manufacturing and Public Administration sectors scored lower than direct selling, with 53.9 percent and 48.2 percent, respectively. To give you a better idea of the range, at the top of the scale were Management of Enterprises (74.5 percent) and Real Estate (73.1 percent) industries. There’s no denying it: We’ve got room for improvement.
Leading with the Positive
What were the factors that affected engagement for our industry? And what are we doing well? Let’s lead with the positive: The three greatest strengths that emerged from the Best Places to Work in Direct Selling survey were Individual Contribution (“I am always thinking about how to do my job better”), Trust with Coworkers (“I feel loyal to my immediate team or work group”) and Alignment with Goals (“I understand how my job helps the organization achieve success”). Quantum also found four aspects related to our industry that could use some work: 1) employee recognition; 2) open, honest communication between managers and employees; 3) benefits and compensation (perception of fair pay relative to one’s contributions); and 4) job satisfaction (job in alignment with career goals).
In an industry in which we work overtime to recognize the efforts of independent representatives in the field, it will probably come as a surprise to learn that the lowest-ranking item on the direct selling survey was perceptions related to recognition of employees. In other words, while we’re doing a fine job high-fiving the field, making a demonstrated, regular effort to recognize the employees who support those field members every day could go a long way toward increasing engagement. In contrast to our industry, perceptions related to benefits and fair pay typically account for the lowest-rated item in surveys of other industries, says Cassie Neary, Program Leader for Quantum Workplace; although for direct selling, benefits and pay rank only slightly ahead of recognition.
Four Engagement Profiles
To help drill down into the psychology of disengagement, Quantum created four engagement profiles. Every employee falls within one of these four personas:
Engaged: Your ideal employee, he preaches organization love, pursues opportunities to go the extra mile and always puts forth maximum effort. He can’t imagine working anywhere else.
Contributing: Considered “moderately favorable,” this employee is standing “on the 5-yard line, so to speak,” Brown says. While a contributor is a good employee, there’s an opportunity for increased performance. She used to be engaged, but the magic is gone. Something is holding her back. It could be a less-than-stellar manager, the perception that her efforts go unnoticed, or something else. The good news: There’s hope for re-engaging her.
Disengaged: “These employees usually aren’t moveable,” Brown says. A disengaged employee is indifferent, lacks motivation and is at risk for retention. If and when this employee does leave your company, compensation and benefits may come up as a reason, “but that’s not usually the key reason,” Brown adds. “Compensation and benefits usually are just the final straw.”
Hostile: This employee is extremely negative, lacks commitment, and her attitude is negatively affecting others’ productivity. Trying to save this employee or otherwise change her mind is most certainly a futile effort. Hostile employees are rare. Quantum’s Recognition Workplace Study revealed that 87 percent of hostile employees reported that senior leaders give too little praise.
Engagement is highest during an employee’s first 12 months on the job, says Brown, who refers to the “honeymoon effect” of the rookie year. “During the second year,” he continues, “reality sets in.” Quantum’s research has determined that employees with tenure of between three to nine years are the most uncertain about whether they’re valued by their employers, when compared to the least and most tenured employees. Generational gaps also appear with regard to engagement. Millennials appear to be driven by professional development prospects; in other words, if their needs for career growth aren’t being met, they’re not afraid to leave for greener pastures. In recent years, belief in their organization’s future success has become increasingly important for millennial employees.
For all industries, including the direct selling channel, as company size increases we begin to see engagement scores dip. In 2014, a gap of 11 percentage points separated engagement rates at the smallest and largest organizations analyzed in the Best Places to Work Program. That year, 70 percent of employees at small-sized organizations were engaged, versus 59 percent at the largest organizations. In the direct selling survey, smaller organizations outpace the largest on 34 of 37 items, with perceptions of recognition and growth/development experiencing the largest differences. Employees at smaller direct selling companies are considerably more likely to believe they will be recognized and are more likely to see growth and development opportunities within the organization.
In December 2015, Harvard Business Review discussed the overwhelming benefits of a positive work culture in its article titled, “Proof that Positive Work Cultures Are More Productive.” Authors Emma Seppala and Kim Cameron, university professors at Stanford University and University of Michigan, respectively, discuss the cost of disengagement. “While a cutthroat environment and a culture of fear can ensure engagement (and sometimes even excitement) for some time, research suggests that the inevitable stress it creates will likely lead to disengagement over the long term. Engagement in work—which is associated with feeling valued, secure, supported and respected—is generally negatively associated with a high-stress, cutthroat culture. Well-being comes from one place, and one place only: a positive culture.” At USANA, a Best Places to Work in Direct Selling honoree company, one of the many company benefits actually works to reduce stress. Employee Nick Peterson says, “Having a fully-equipped gym just steps away from my desk is extremely helpful and convenient. It’s hard to make excuses for not working out when the treadmill is right there, and I’m allowed to take time out of my work day to use it.”
Further, Drs. Seppala and Cameron say, disengagement is costly. Studies by the Queens School of Business and the Gallup Organization show that disengaged workers had 37 percent higher absenteeism, 49 percent more accidents and 60 percent more errors and defects. In organizations with low employee engagement scores, they experienced 18 percent lower productivity and 16 percent lower job growth. Those studies also found that companies with highly engaged employees receive 100 percent more job applications.
Replacing employees is expensive, but how expensive? One popular school of thought among human resources executives, Neary says, is that a company can measure in hard numbers the loss of an employee by multiplying that former employee’s number of years of tenure by his or her former salary. “Those hard numbers provide the ‘wow’ factor for leadership, and show them the effect retention has on their bottom line,” she says.
How do companies ensure that their employees remain connected to the values of the organization? How do we provide adequate opportunities for employees at every level to make a valued contribution to the organization and in turn be recognized? How do we toe the line between respect for tradition and openness for change? How do we foster the kind of culture that drives employees to become brand and industry advocates? And how do we keep direct selling a people-centered, relationship-oriented business?
Quantum Workplace offers the following pointers:
First, turn to third-party, objective science to measure your engagement.
Second, survey annually. Organizations who survey annually see a five times higher engagement score than those who survey less frequently.
Third, look for themes in the comments. Don’t get mired in the specifics, or assign too much weight to extreme responses.
Fourth, don’t focus just on the low-rated items. Work to understand what’s driving engagement in your organization, identify weak areas within those top drivers, then focus your programs on improving employee perception of those items.
The factors that drive engagement aren’t static, by any means. It’s telling that, based on changing priorities in the workplace, Quantum has further revised its list of 37 survey questions effective this year. The updated list has been whittled down to 30 questions and now delves more deeply into such topics as workplace flexibility, transparency, change management and satisfaction with benefits. Flexibility appears to be increasingly important, especially to families with young children. Chieh Hanson, employee at Best Places to Work honoree company Nu Skin, has benefited from her company’s flex plan. She says, “When I had my second baby, I was able to work from home half of the day for about a year. I so appreciated that opportunity.”
A March 2015 editorial in The New York Times (“When Employee Engagement Turns into Employee Burnout”) written by Tony Schwartz calls for an overhaul of the traditional definition of what it means to be engaged. Engaged employees are described as those who are willing to go above and beyond, but what exactly does “above and beyond” entail—and at what cost? “That sounds good if you’re an employer,” Schwartz says in the article. “But too often, it refers to employees who get to work early, stay late and remain connected at night and on weekends. That’s a recipe for burnout, not enduring high performance.” Citing a study conducted by consulting firm Towers Watson in 2012, he added “Companies in which employees reported feeling well taken care of—including not working too many hours—had twice the operating profit margins of those with traditionally engaged employees, and three times the profit levels of those with the least engaged employees.”
Kristi Hudson, an employee at Best Places to Work in Direct Selling honoree company LegalShield would agree. She says her company keeps “the hours reasonable, and there are lots of incentives: jean days, meetings with snacks provided, corporate events and birthday celebrations. It makes you feel you are special as a person, not just another worker.”
“What companies really need to measure,” Schwartz continues, “is not how engaged their employees are, but rather how consistently energized they feel. That means focusing not just on inspiring them and giving them opportunities to truly add value to the world, but also on caring for them and providing sufficient time to rest and refuel.” Could it be that well-being trumps all other engagement factors? That’s hard to state with certainty, but the growing importance of flexibility, a significant promoter of well-being, to employees’ overall levels of workplace engagement reveals how we might be able to re-energize those employees, or Contributors, on the cusp of disengagement.
It’s clear that managers have to play a key role in the subsequent action plan that should follow an employee engagement survey. Quantum recommends that managers have access to their individual teams’ results and drivers, and that they be provided guidelines for how to handle conversations and follow-up with their respective team members. The best way to hold managers accountable is to make employee engagement a key performance indicator, or KPI. Focus groups and targeted learning for teams can keep employees on track toward engagement goals. Frequent, honest communication throughout all levels of the organization can help employees understand how engagement impacts your bottom-line results. David Matichak, employee at Best Places to Work in Direct Selling honoree company Jeunesse, says, “I can walk down the hall and see all the executives and see them laughing. It’s an open door policy. If you walk into their office, even if they are busy, they take the time to talk to you.”
Follow-up: The Biggest Challenge
The biggest challenge for companies isn’t the survey; it’s the follow-up. More than a few organizations have been guilty about jumping into a survey with the best of intentions, then keeping the results to themselves. That silence typically occurs when leadership doesn’t like what they read. “Responses to questions are taken very personally,” Brown says. “Leadership doesn’t always want to hear the criticism.” Another reason for inaction: “Some clients just want to know if there are any fires to put out.” If not, it’s business as usual. And, in other cases, companies do nothing with their survey results simply because the creation of an action plan is shoved to the back burner in the wake of more immediate fires. According to Brown, however, across the board, employees’ scores drop dramatically the following year when their companies fail to share survey results, suggesting that transparency and trust go hand in hand.
Workplace culture is a game-changer. When your employees are happy, that affects their interactions with the field, and we all want people on the front lines who exude genuine enthusiasm and pride. On the flip side, when employee feedback is muffled, the eventual result could be an exodus of valuable contributors who take their knowledge with them—of your salesforce, your culture and your products—on their way out the door. No direct selling company can survive without communicating with its salesforce, and often. As an industry, we know that people are our best resource; we stand together on that very principle. That’s why a little straight talk within our own four walls could make a profound difference not only in the future of our own companies, but for the future of direct selling, as well.