Business success in the 2009 economy?   Yes...and here's why.

By Paul Austermuehle

What drives business prosperity?  Is it new ideas?  Better ideas?  Customer-centric ideas? 

And what kind of culture works best as a springboard for new ideas?  Especially in a business climate that is both volatile and dynamic?

In a broad-based research study conducted by Bernard Hodes Group during the latter half of 2009, we heard loud and clear that companies see employee engagement as a key driver of new market solutions. 

The survey data is remarkable in that more than 30% of the organizations responding were actually improving or staying even during 2009's intense economic downturn.  Somebody out there is winning.  

And the Hodes research clearly shows that they are tuned in to the needs of their employees as a platform priority for marketplace success.  Let's call this 30% "recession- successful".

Compared to companies that had significant loss of revenue, this flat and improving group tends to invest more heavily in employee attraction, engagement and messaging. 

For 2010, more recession-successful companies indicate diversity as a top three concern (15% compared to 5%) and almost twice as many indicate sourcing new talent as a top three concern (39% to 21%). Overall, 46% of recession-successful companies indicate employee engagement as a top three concern, compared to 36% of those who suffered a downturn in revenues.  

More important, recession-successful companies are far more likely to have employee motivation programs in place today - 49% vs 30% -- and are far more likely to be measuring engagement at frequent intervals -22% vs 9%.

This is a case of the strong getting stronger.  Only 19% of the recession-successful companies are even concerned about experiencing a drop-off in revenue.

The Hodes study is also instructive on how privately-held businesses are managing their way through the new competitive challenges they face.  50% of our respondents were privately held firms, while 30% were publicly traded and the remainder were either government agencies or non-profits. 

For the whole group, here's what we found:

81% of these organizations are measuring engagement on a regular basis.

42% consider engagement as a top priority for the coming year.

64% have implemented or started to implement new programs to drive engagement.

Privately held firms are far more likely to use their engagement results to drive

new communications programs (70% vs 46% for non-private).

No matter which definition of engagement you might favor, there's broad agreement in the business community that engaged employees are willing to go beyond their job description and use discretionary effort to help drive prosperity for the organization.

The question for all of us centers on the nature of the products or services that are driving sales today.  While a small portion might be fueled by economic distress (say, credit relief services or bankruptcy advisors), we should assume that a great deal of recession-successful businesses are actually creating new, competitive ways to meet the needs of ever more cautious and frugal consumers. 

Now comes this January 2010 report from Gallup that shows engagement scores climbing or holding steady in most organizations throughout last year.  They sound one warning note within a generally positive report.   That is, the number of employees who feel that they "know what is expected of me" is declining. 

This drift in a sense of direction among employees was also indicated in the Hodes research.   While our respondents were clearly focusing on engagement, many were not using the results to drive a sense of purpose or business direction.  For instance:

Only 58% of respondents used engagement results to create internal messaging.

Only 10% of all respondents say that they have put communications programs in place in past six months to drive engagement.

49% say they have no plans to encourage employee blogs or other publishing venues like Wikis - despite the fact that only 8% do not use intranets. 

Hodes also found that social media as a business tool is still struggling to find a foothold among many organizations.  This may be tightly related to the respondent's business model or operational considerations.  However, it may also reflect a segment of business leaders who feel that social networks are not effective as competitive tools or that create unacceptable risk for legal and confidentiality problems. For this group, everything is going out with the bath water.

Over the past decade, Gallup, Harris, Watson Wyatt, the Conference Board and other prominent firms have connected the dots between engagement and business prosperity.

This new Hodes research shows a path to ever improving results.  The successful organization will focus on communicating a sense of direction and purpose. 

Communication is the key.  Our recommendations would include:

1) Make your intranet site function in ways that mirror the day to day life of your employees.

-Add formats and vehicles that foster relationships, sharing and conversation.

-Focus messages on your customer facing brand promise, the role of each employee and bring it to life.

-Use customer success as a narrative device to train and guide behaviors.

2) Leadership should continue to foster a climate of innovation - while also providing clear guidance on business purpose and direction.

3) Keep a close watch on how social networking and digital communities are changing the relationship with and among your customers, employees and community stakeholders.

-Sooner or later, every organization will need to weave this lifestyle change into their business approach.

-The trend is toward leadership transparency as a competitive tool - not just a mandate for survival.

To obtain a copy of the Hodes Report or to learn more about the research sample and methodology, visit http://www.hodes.com/.