How to Pitch Employee Engagement to the CFO
Published Date
Employee engagement is critical for any enterprise, especially in a booming economy with record low unemployment. Everyone understands its importance, but making a strong business case with clear financial outcomes can be challenging. How do you pitch employee engagement initiatives to a CFO focused on business outcomes and key financial metrics?
What’s the KPI?
When pitching to a CFO, identify the business outcome they care about most—whether it's sales, profit, or another metric—and show how your initiative affects it.
Corporate Employee Engagement
If your CFO cares about Net Income, reducing employee turnover is one way to improve it. For example, study by the Center for American Progress (CAP) showed that replacing mid-range employees costs about 20% of their salary. Replacing 100 employees earning $45,000 annually could cost $900,000.
An engagement initiative might include leadership development programfor your managers, a social event once a month and scheduling a daily rotation of food trucks for lunch. The total cost is $50,000 but if it reduces turnover by 20% it could save the company $180,000, in 'employee replacement costs' netting $130,000 in savings.
Advance Manufacturing Employee Engagement
In an advanced manufacturing setting, employee turnover can stem from physically demanding work, limited career advancement, or competition from other employers. Suppose a plant loses 100 skilled workers annually, each with a $50,000 salary. According to the Center for American Progress, replacement costs are around 20% of salary, or $10,000 per employee. That's $1,000,000 per year, to replace employees who are not finding what they want.
If the CFO prioritizes Asset Turnover—measuring how efficiently assets generate sales—adding expensive equipment (CapEx) increases assets and lowers this ratio. The CFO may prize Asset Turnover when the company is being prepared for acquisition, as it demonstrates efficient use of assets to potential buyers.
Crafting Your Proposal
To gain approval, propose engagement initiatives that focus on operating expenses (OpEx) like leadership training, wellness programs, or flexible work policies. Avoid large capital expenses, as they add to the balance sheet and negatively impact Asset Turnover. Aligning your proposal with the CFO’s key metrics demonstrates strong business acumen and increases the likelihood of approval.
You propose an initiative that’ll provide leadership coaching for managers and supervisors. You’ll also provide additional training and development opportunities for the operators and maintenance staff.
What Do You Mean By That?
One of the key phrases we teach in our business acumen simulations is, “What do you mean by that?”.
The CFO is always seeking to improve the organization’s financial performance. This doesn't automatically mean increased sales or reduced costs?
Understanding the CFO’s priorities—whether net income, asset turnover, or another metric—is essential when pitching employee engagement initiatives. A well-crafted proposal that aligns with these metrics and offers clear financial benefits is more likely to be greenlighted.
Schedule an appointment today to discuss how we can help everyone in your organization learn the language of finance!
