Transforming Human Capital into Financial Capital.
Guest post by Polaris MEP Partner and award-winning author, Jeff Deckman.
EE = EBITDA is an obscure but interesting formula that, once I came to understand it, I realized uncovers an exciting new source of increased profits that any business can realize.
The “blow up” of this formula is:
Employee Engagement = Earnings Before Interest Taxes Depreciation Amortization
Before going any further I want to say that Employee Engagement (EE) is certainly not the only factor that impacts EBITDA but it does have a significant impact on your bottom line. It just also happens to be one of the easiest ways to increase profitability you will ever come across.
Because, of all the ways to increase profits such as increasing prices; decreasing costs and generating more sales increasing your levels of EE is almost completely within your control. This is because EE is largely determined by the leadership culture of your organization. And you get to control that.
In fact, a recent Melcrum Employment Engagement Survey of over 1600 HR professionals found that “The actions of senior leaders and direct managers are the most important drivers of employee engagement by a factor of between 400% and 700%.
So not only is this “silent profit driver” largely in your control but the financial impact of increasing the levels of EE in your organization is undeniably real.
In fact, I doubt you could find a single CEO of a Fortune 500 company who even questions whether increasing EE increases EBITDA.
The Numbers behind the Science:
In an effort to be as informative as possible as quickly as possible let me get right to the math….
To continue reading the full post, click here.
Jeff will also be presenting a new Lunch & Learn for us on this topic entitled “Employee Engagement – Why Should I Care?” – Reserve your seat today.