We Need A Price-To-Employee-Engagement Ratio: Financial Advisors' Daily Digest

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By SA For FAs :

I didn't mean to return so quickly to the topic of millennials we discussed last week , but I came across a statistic from Gallup that caught my attention: The polling firm says that 71% of millennials are either not engaged or are actively disengaged at work. At first, that seemed high to me, and I felt there was a story here to report. But on further reflection, that figure doesn't seem high, though there nevertheless remains a story to report.

Why does it not seem high? It so happens a friend of mine was hired some time ago by a large U.S. multinational tech firm to crack the employee engagement problem. Apparently, it's a "thing." Gallup appears to have a whole consulting arm built around this issue, which I only discovered today. This friend, a tech genius, was given a large staff and generous time to figure out some sort of marketable solutions.

I have no idea what those might be, but I do recall him reporting that, on average, one-third of U.S. employees are engaged in their jobs, one-third disengaged and another third "actively" disengaged, meaning they are spreading their discontent throughout the company. Those figures are apparently strong relative to other places in the world, where employees are even less engaged.

If that is true then there's actually no big story about the Gallup finding on millennials. It stands to reason that if 67% of employees fit into these two categories, then millennials, who are younger than the U.S. workforce on average, should be somewhat less satisfied than their older peers. Generally speaking, time, experience and skill lead to greater satisfaction in work - or really in anything (for example, in playing an instrument). So while I expected to write a story called "More Sympathy for Millennials," there's no demographic angle here.

But there is a story and it is rather obvious: To a bull market that is old, to an economy that grows slowly, to stock investors who want higher future returns, "engagement" may be the next frontier. The conversation I had with that friend about a year or so ago was fairly brief, because I did not grasp its importance at the time. But I can now see why his corporation and Gallup are devoting attention to this issue.

The more engaged an employee is, the more productive he is; the more productive employees are, the more profitable is the company; the more profitable the company, the higher stock prices climb, and so forth. Most readers know about price-to-earnings ratios. Do we yet have a price-to-engagement ratio? Does corporate reporting yet capture the true underlying strength of an organization - that is, its human capital?

I'm sure there are numerous factors that go into properly engaging employees, but the most obvious one to a non-specialist like me is showing appreciation for workers' contributions, by which I mean appreciation beyond their paycheck. Yes, I understand that there is a quid-pro-quo aspect to employment, kind of like the old Soviet-era joke: "They pretend to pay us, and we pretend to work." But human nature is that we all take the ordinary arrangement for granted. We shouldn't, but most people do. And indeed, a 2014 survey from the American Psychological Association reflects this idea. I quote:

…those who felt valued by their employer were more likely to report being satisfied with their job (92 percent of those who felt valued versus 29 percent of those who do not) and to say they are motivated to do their best (91 percent versus 37 percent) and to recommend their employer to others (85 percent versus 15 percent).Employees who felt valued were also less likely to say they feel stressed out during the work day (25 percent versus 56 percent of those who do not feel valued) and more likely to report being in good psychological health (89 percent versus 69 percent of those who do not feel valued).

It's the difference between "Hi, honey I'm home" and presenting a bouquet of flowers. If we could close the engagement gap at work, we'd experience a boom bigger than the internet. I don't see a big push in this direction, but the little pushes hinted at by my friend and Gallup leaves room to hope.

Please share your thoughts on this issue in our comments section. Meanwhile, below please find links to other advisor-related content on today's Seeking Alpha.

  • Neuberger Berman offers another take on engagement from the point of view of shareholders.
  • Eric Basmajian looks at the jobs report as a step in the bullish direction.
  • Mark J. Perry: How important is international trade to each state's economy?
  • Jeff Miller: Can markets continue to shrug off political turmoil ?
  • Charlie Bilello: Is cash no longer trash?

For more content geared to FAs, visit the Financial Advisor Center .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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