What is Employee Engagement and Why is it Important?

What is employee engagement?

There is no one definition, but it can commonly be understood to refer to the relationship between employees and their work and/or the company and can include areas such as motivation, how an employee views themselves and the organisation and how attached and dedicated they feel to their work.

(Schaufeli, W.B., Bakker, A.B. and Salanova, M. (2006) The measurement of work engagement with a short questionnaire: a cross-national study. Educational and Psychological Measurement)

Why does employee engagement matter?

Engagement affects performance

There has been a lot of research around the importance and impact of employee engagement which indicates a relationship between engagement and performance.  Whilst there is some debate around causality (think chicken and egg scenario),evidence overwhelmingly suggests that high levels of engagement result in improved performance.

Research carried out in 2006 examined nearly 24,000 business units and compared top quartile and bottom quartile financial performance with engagement scores.  They found that:
Those with engagement scores in the top quartile averaged 12 per cent higher customer advocacy, 18 per cent higher productivity and 12 per cent higher profitability.
Those with engagement scores in the bottom quartile averaged 31 – 51 per cent more employee turnover, 51 per cent more inventory shrinkage and 62 per cent more accidents.

(Harter , J.K. et al (2006), Gallup Q12 Meta-Analysis 9 Gallup Organisation (2006).‘Engagement predicts earnings per share’.)

In addition to the impact on performance, engagement levels can affect other important areas.

Improve levels of innovation and creation

‘Gallup’ indicates that higher levels of engagement are strongly related to higher levels of innovation.
59% of engaged employees say that their job brings out their most creative ideas
against only three per cent of disengaged employees.

Reduce sickness absence

Engaged employees in the UK take an average of 2.69 sick days per year; the disengaged take 6.19.
The CBI reports that sickness absence costs the UK economy£13.4bn a year.

(Gallup, 2003, cited in Melcrum (2005),Employee Engagement: How to Build A High Performance Workforce 16CBI-AXA (2007), Annual Absence and Labour Turnover Survey)

Reduce employee turnover

Engaged employees are 87% less likely to leave the organisation than the disengaged.

The cost of high turnover among disengaged employees is significant; some estimates put the cost of replacing each employee at equal to annual salary.

(Corporate Leadership Council, Corporate Executive Board (2004) ‘Driving Performance and Retention through Employee Engagement: a quantitative analysis of effective engagement strategies’)

There is even evidence of it leading to a reduction in accidents at work.  It’s all good news!

Why is it a challenge right now?

A combination of reasons:

• The impact of the pandemic on people’s mental health and well-being has affected many people’s approach to work, with work-life balance higher on the agenda
• A new generation of job seekers with a ‘what’s in it for me?’ attitude. Well-being and self-interest become more of a factor than an organisation’s prestige and reputation.
• The rise of hybrid working provides a challenge for those managing employee engagement in their business.
  It can disrupt communication channels making it more difficult to effectively listen and respond to employees needs, to communicate goals and other motivating factors and to maintain social communications which can help bond teams.
  It also puts physical distance between colleagues & employees and their workplace, perhaps limiting access to resources/ social provisions and other previous benefits.

So what can I do about it?

1. Measure it – Look at the engagement level in your business now?
   You’ll need to think about what you want to measure and the right approach for your business situation e.g. a survey or focus groups
2. Learn from it – Don’t just measure it, learn from it.  Identify areas for improvement and create a plan for doing it.
3. Communicate it – Tell your employees what you’re doing as a result of the process. Let them know you’ve listened and understood
4. Do it – Make sure you action what you’ve said you’ll do.  There are few things more demotivating than being asked for your opinion, then being ignored.
5. Celebrate success! – Whilst evidence suggests high engagement levels lead to improved performance, it’s also thought that improved performance can lead to higher levels of engagement, so let your employees knowhow well you’re doing – it’s a win-win scenario!
6. Repeat it – Employee Engagement isn’t a static thing.  Many factors can influence it, so if you don’t stay on top of it, it can slide.  It’s better to maintain and seek to improve than repeatedly have to fix and solve.

How can we help?

We can provide support with:

• Helping you to understand what employee engagement is
• Employee engagement surveys
• Internal Communications
• Employee Relations
• Becoming an Employer of Choice

Get in touch to see how we can support you to focus on employee engagement and become and Employer of Choice.