The true impact of employee engagement on business performance

We know that organizations with more engaged employees produce better results on a number of levels.

These “better results” not only relate to financial (higher revenue and profits), but also in people terms – less stress, less absence among employees and higher customer satisfaction.

In theory, employee engagement makes perfect sense. Engaged employees are far more likely to put in the extra effort when dealing with customers, working on projects and adapting to the changes affecting all organizations today.

However, until recently it’s been difficult to quantify exactly what affect engagement has on business success. That’s starting to change.

For example, an Institute for Employment Studies report put this figure on it: Organizations increasing investment in engagement by just 10% can increase profits by approximately US$2,100 per employee, per year.

Aon Hewitt’s 2014 Engagement Report examined the link between engagement and its impact on a business’ bottom line:

  • Organizations in the top quartile for engagement (where more than 7 in 10 employees are engaged) saw a 4% increase in sales growth compared to an average company. By contrast, bottom quartile engagement companies were down 1%.
  • Operating margin was also affected; top quartile companies saw 2% increase, versus a 3% decrease for bottom quartile companies.
  • As for total shareholder return, top quartile companies saw a 4% increase, while bottom quartiles were down 8% compared to average companies.

Engagement harnesses people power

It’s not just growth and shareholder returns that are affected. Engage for Success have demonstrated the link between engagement and reduced absenteeism (2.69 average sick days versus 19 for disengaged employees). When plastic bottle producer Nampak increased their employee engagement by 5%, absence levels fell by 26%.

Engaged employees are also more likely to stay with an organization. The Corporate Leadership Council (CLC) suggested that engaged organizations could reduce staff turnover by 87%.

With statistics like these, it is no surprise that CLC found that 70% of business leaders now believe employee engagement is critical for their business.

The infographic below, “Rise of Employee Engagement: From Buzz Phrase to Bottom Line,” gives an overview of the most effective employee engagement strategies, the key factors that can affect target audiences and the employee archetypes to identity and nurture. (Click to see the full image.)

newsweaver-emp-engagement-infographic

Click on the image to see the full infographic.

Technology can and will play a major role. The introduction of social media, “social” intranets and smarter internal email software can provide a platform for employees to find their voice and share ideas.

Two-way communication plays a key role in engagement

Threshold Survey found that employees who feel they’re genuinely listened to by their managers are nearly five times more likely to have high enthusiasm for their jobs, and 21 times more likely to feel committed to their company than those who do not feel listened to.

The growing focus by organizations on the value of the employee voice for increasing engagement means that internal communications can no longer be a cascaded or one-way channel. Employees want to help shape the narrative and be a part of telling the story. This means organizations need to get much better at listening, and taking meaningful actions, if attempts to increase engagement are going to stick.

Building the capabilities of these internal champions can also play a major role in engagement. Providing training and ways for them to connect can have a major impact on influencing other employees across the organization.

For more on employee engagement, download our whitepaper, Driving Employee Engagement Through Internal Communications.

Author Denise Cox will be presenting the session “Key metrics to measure: Intranet, social and email” at the 2015 IABC World Conference.

Join Newsweaver, sponsor of the Communication Skills track, at the IABC World Conference.

Discover what better employee engagement can do for your business. Register today.

X
X