Return on Asset of Employee Engagement
MSA 602 Financial Analysis, Planning, and Control
Dr. James Neubecker
May 5, 2014
Table of Contents
Term Paper 4
Appendix A 14
The purpose of this paper is to measure the return of assets of employee engagement. The paper focuses on cost of measuring employee engagement, ROA of employee engagement, and cost of improving employee engagement at Michigan One Community Credit Union. Based on the assumptions of the paper Michigan One Community Credit ...view middle of the document...
“The return on total assets (ROA), often called the return on investment (ROI), measures the overall effectiveness of management in generating profits with its available assets (Financial analysis, planning, 2014, pg. 64)”.
One common factor among organizations worldwide is the need to more effectively understand and use their people’s talents, skills, and energy. Employee engagement has become a critical element for business performance and success. We’ve all heard the one about the CEO who was asked how many people worked in his organization. “Oh, about half of them,” he replied. Clearly, CEOs and managers should be very concerned about wasted time, effort and resources in their organizations. “The Gallup Organization has been studying employee engagement … for many years. A 2009 survey of 42,000 randomly selected adults in the United States revealed that 49 and 18 percent were actively engaged (i.e. loyal, productive, and satisfied) and actively disengaged (i.e. “checked out” and disenchanted with their workplace), respectively. Gallup estimated that employee disengagement in the United States costs roughly $350 billion a year [due to lost productivity] (Kinicki & Fugate, 2012, pg.156)”. This cost is staggering. According to Gallup, employee engagement affects eight performance outcomes: productivity, profitability, customer satisfaction, absenteeism, turnover, shrinkage, safety, and quality. Many organizations do not measure employee engagement or at least not measuring it in a way that gives the same top line data such as profit, debt days outstanding and units shipped, even when their biggest cost is the salary bill. Things like shared knowledge, organizational effectiveness and employee engagement are all intangible assets, which means they aren’t easily measurable. This term paper will focus on cost of measuring employee engagement, ROA of employee engagement, and cost of improving employee engagement at Michigan One Community Credit Union.
In 1990 William Kahn defined employee engagement as “the harnessing of organization members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performance. The essence of this definition is the idea that engaged employees “give it their all” at work. Further study of this attitudinal variable reveals that it contains four components: (1) feelings of urgency, (2) feelings of being focused, (3) feelings of intensity, and (4) feelings of enthusiasm (Kinicki & Fugate, 2012, pg. 156).” Based on employees’ responses to the 12 item survey developed by Gallup employees can be grouped into one of four categories:
* Fully Engaged [High contribution] – These employees are at the apex where personal and organizational interest align. They cooperate in building the organization and are behind everything good that happens there. They know the scope of their jobs and look for new and better ways to...