The One Investment that Always Pays
Is this a good time to invest, or a bad time? When the Dow drops, is that a good time to buy or should we wait to see if the Dow dips more? Essentially, when is the best time to invest? The past year has been a roller-coaster in the markets. Santa definitely wasn’t good to the typical investor at the end of last year, but since January the markets rebounded, only to enter a summer where the Dow has been bouncing around like a yo-yo. The opinions of investment advisors run the spectrum from optimists without that the good will keep getting better, to the doom and gloom forecasters who insist that we are on the brink of another Crash so our best bet is to convert everything into cash and then…what? Stuff it in our mattress?
When I was an advertising exec, we had a saying about Good Times Vs. Bad Times. The saying went “When times are good, you advertise, but when times are bad, you advertise more.” There is some wisdom in this philosophy because unless people are buying your product or service, it’s going to be bad times, all the time.
Yet sales are only part of the economic picture. It doesn’t matter how big your sales volume is if your cost of providing those same sales is too high. While it can be exhilarating to be in an expansion phase, there is little point in expanding if expense management is not under control. It is better to be efficient in a weak economy, than to be productive just for the sake of productivity, in a strong economy. Efficiency optimizes profitability and with greater profitability comes greater opportunity to expand, but the efficiency has to come before the expansion.
And efficiency is all about our people.
Which brings us to the topic of employee disengagement.
Research on workplace engagement have been performed in earnest for twenty years, most notably by Gallup. An engaged workforce is an efficient workforce, and an efficient workforce is significantly more profitable. The reverse is equally true, but much more sobering, because when a workforce has employees who are disengaged, the workforce does not perform efficiently, the company suffers and then as the company suffers, so do its people. Think of disengagement as a vortex. The companies with the highest levels of disengagement are the ones who get suck down the proverbial toilet when the economy weakens. That should be sobering to any of us who are CEO’s senior executives or in management, because our job is to ensure the viability, profitability and sustainability of the company. Otherwise, we all suffer.
Disengagement is not because of a workforce’s physical inability. Disengagement is caused by mental, emotional and even spiritual lack of enthusiasm, lack of a sense of purpose and lack of belief in the one’s own value to the company.
And speaking of value, disengagement devalues a company’s worth. When our people don’t feel engaged then expense ratios rise and profitability dives. No company can survive when inefficiencies eat away profits. According to Dr. Jim Harter, author of the New York Times and Wall Street Journal bestseller Wellbeing: The Five Essential Elements, data shows that companies who create a culture where the workforce is engaged (read: efficient) achieve a ROI of up to 400% more earnings per share growth than that company’s competition.
Want to beat the competition?
Want to grab more market share?
Want to expand?
Then it’s first things first and the first thing to invest in, is creating a culture where employees become more engaged.
That’s right – invest in it. Don’t hope for it, don’t office memo for it and most certainly, don’t complain if you don’t have it. Having an engaged workforce is not something we can demand just because we want it, just like we can’t demand that our fund managers always protect us from downturns in the economy. Engagement is a reward we achieve from making good strategic decisions about how we invest, and the first thing we need to invest in is our people.
Engagement cannot be measured in absolute numbers, because engagement is not a quantifiable physical problem associated with productivity quotients. Engagement is a qualitative reflecting of the workplace environment. Like air, the presence of engagement is invisible, yet everyone knows whether the environment is refreshing, or toxic.
Creating a healthy culture of engagement is as much an investment as creating a more sustainable ecology. Yes, there is upfront money, but without that upfront commitment, there is no potential to achieve the benefits. Engagement doesn’t come at a cost, because it always provides a return on investment. It is the one investment that always pays. The only way to create better engagement, which leads to better efficiency, which leads to greater profitability, which leads to greater sustainability, which is good for EVERYBODY, is to invest in the very people who will decide whether they want to be engaged, or disengaged.
As the economy continues to quiver up and down with increased volatility and decreased certainty, the kind of investment decisions we make today, are going to determine whether we survive, thrive, or dive tomorrow. While the old advertising proverb is true, a company that delays investing in advertising beyond the economic tipping point is only going to discover they did too little, too late. The same proverbial wisdom applies with investing in defeating disengagement. The best time to invest, is now.