Productivity challenge: the burden of employee loyalty

Employee Engagement

Illusion of Tenure

A comparative labour study between two plants of an electrical equipment manufacturing company revealed key gaps in their employee utilization and engagement.

Almost 80% of the employees of the first plant had over 10 years of tenure; in contrast, the second plant had only 38% of long term employees. Employee engagement analyses pointed out that 30% of first plant’s employees were in the hamster quadrant, versus 8% of the second. Business performance of the two plants mirrored this disparity. While the inter-year revenue growth rate of plant 1 was only 7%, they were consistently outperformed by plant 2 which was growing at 18% annually. Where plant 2 saved in annual costs by 8% due to higher labour productivity, plant 1 actually recorded a cost increase of 11% over the last few years. The study provided pointed evidence that without active employee engagement, longer tenure does not necessarily result in better business performance.

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