When budgets tighten, employee engagement tech tends to land as nice to have but easy to live without. Rebecca Wettemann says HR has something to do with that.
“If HR can’t clearly connect the dots between engagement, retention and contribution to EBITDA, it’s not a business case,” says Wettemann, CEO of Valoir, an analyst firm experienced with the business impact of HR technology. “Its big feelings expressed in a bar chart.”
Where HR isn’t connecting the dots
Wettemann argues HR has largely brought this scrutiny on itself by failing to build a solid business case for investing in employee engagement. “Until HR does this,” Wettemann says, “CFOs will keep treating employee engagement as the soft stuff that gets cut first when belts need tightening.”
Most engagement data is self-reported through employee surveys, which isn’t credible with finance leaders, says Wettemann. She says CFOs are trained to be skeptical of metrics that are generated and interpreted by the same function.
Wettemann identifies another problem when HR tends to sell correlation as causation. “Survey scores don’t connect to business outcomes in any way that finance leaders find credible,” she says.
The fix isn’t another, better survey. “CFOs also understand variance analysis,” says Wettemann. “They track forecasted versus actual and explain the gaps. HR needs to do more post-mortems on what engagement initiatives cost and what they actually delivered, and where they moved the needle, to be credible with the CFO.”
Employee engagement as a business case
HR leaders are familiar with the engagement-as-business-case argument when analyzing turnover. Replacing an employee is expensive. Recruiting fees, manager time, onboarding and lost productivity add up quickly. The tally sheet fattens with specialized or senior roles where institutional knowledge resides with the departing employee.
“Engaged employees quit less, and the cost of replacing them is real and calculable,” she says. But she pushes HR leaders to see beyond recruiting cost savings, because the CFO is thinking about risks HR often isn’t putting a number on.
The risks of disengagement
The first is disengaged employees who haven’t left yet. Wettemann points out that these workers are going through the motions or calling in sick more often. “Companies are paying full price for partial output,” she says. That gap between what an engaged employee delivers and what a disengaged one delivers is real and can show up in output in roles that are measurable.
The second risk category is legal and insurance exposure. Engaged employees are less likely to escalate workplace conflicts into formal complaints, says Wettemann. In industries with physical risk, engaged employees have lower accident rates and fewer workers’ compensation claims. HR rarely connects engagement investment to liability exposure.
Wettemann says HR leaders don’t need to poll workers to get a taste of employee engagement. Instead, they should check the operational data the department already holds. “This is not about another survey,” Wettemann says. “It’s about thinking about business benefits beyond the walls of HR and connecting them to outcomes CFOs already care about.”
Rebecca Wettemann will speak at HR Tech Europe, April 22-23 in Amsterdam. Catch her sessions: Building the Business Case for HR Technology Investments and The Real ROI of Becoming a Skills-Based Organization. Register now.
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