In today’s fast-paced business world, employee engagement has become a buzzword, bandied around boardrooms and put forward as a catch-all for schemes to “fire up the troops!”. But it’s much more than just a trend. It’s a crucial element that can make or break a company’s success.
As Gallup reports, employees who are engaged and in tune with a company’s corporate goals help deliver 23% more profitability. But what exactly does any of this mean and how does it contribute to your bottom line?
This article explains what employee engagement means (and what it doesn’t mean), the benefits of having highly engaged employees (and what it will cost if you don’t), and real-life examples of what this engagement looks like in the workplace.
If you want to skip right to speaking with an expert at our HR agency in Toronto about the benefits of employee engagement for your workplace, contact us here to start a conversation.
What is employee engagement?
Before we dive into what it means, let’s clarify what isn’t employee engagement. First, it’s not employee or job satisfaction. A person may be satisfied with clocking in at 9am everyday and clocking out at 5pm, with a paycheck reliably waiting at the end of each month. But that doesn’t mean they won’t check out at the first sign of a 10% pay bump offered by a recruiter.
It’s also not employee happiness. As Forbes points out, an employee could be happy at work, but not necessarily productive or even hard working. Besides, while foosball tables and pizza parties are great fun and would make many happy, having engaged employees is a completely different proposition. What then is employee engagement?
In simple terms, employee engagement refers to the emotional commitment an employee has towards their organization and its goals. For these employees, it’s not just about job satisfaction; it’s about being invested in the company’s success.
When an employee is engaged, it means that they are:
- Emotionally committed: They feel a strong connection to their work and the company.
- Eager to contribute: They are driven to go above and beyond in their role, meaning they put in “discretionary effort” without being asked to.
- Loyal: They are less likely to leave and genuinely enjoy working at the company.
Engaged employees are some of the best people you’ll ever work with. They’re emotionally invested in the company and truly care about being there – and that’s a big deal for your company. As they say, “happy employees produce better results.”
Business leadership writer, Simon Sinek, best described the impact of employee engagement. He said: “When people are financially invested, they want a return. When they are emotionally invested, they want to contribute.”
Benefits of high employee engagement
As you’ve seen, engaged employees feel connected to their workplace, and this can make a big difference in how they approach their job and the dedication they put in. Beyond the remarkable effect it has on workplace culture, employee engagement also contributes directly to productivity, talent retention, and customer satisfaction.
- Increased productivity: In its 10th study to determine how employee engagement predicts key performance outcomes, Gallup found that highly engaged teams show 18% greater productivity than less engaged teams. The reason is simple – engaged employees are more motivated and committed to churning out quality output, leading to higher productivity.
- Enhanced innovation: When employees are engaged, they are also more likely to contribute innovative ideas. This operates in two ways: first, they are more willing to share ideas. So, rather than hold their cards to their chest, they speak up and often. Second, they are more likely to pipe up with quality ideas because they genuinely want the business to do well, and feel some responsibility for making this happen.
- Reduced Turnover: High engagement levels result in lower turnover rates. Highly engaged employees are less likely to be actively in the market for new roles. Compare this to low engagement teams which typically endure rates of turnover between 18% to 31% higher than their highly engaged counterparts.
- Improved Customer Satisfaction: Lastly, employee engagement has a tangible impact on a company’s customers and ultimately its profitability. Engaged employees provide better customer service and help the company generate more revenue. In fact, Gallup found that “businesses with a critical mask of engaged employees outperform their competition”, recording faster earnings per share growth.
So, it’s clear that high employee engagement has a tangible impact on company performance and employee retention. But companies that have low-engaged employees do not only miss out on these benefits – they may experience even worse outcomes.
The cost of low employee engagement
Low employee engagement can have significant implications for financial performance and workplace culture.
- Low productivity: Disengaged employees lack motivation and commitment, and this can lead to inefficiency and missed opportunities. They’re happy to do the bare minimum and rarely value the job beyond the paycheck it provides.
- Poor workplace culture: As employees become more disengaged, negativity and apathy can spread around the workplace, undermining team morale and collaboration. People may feel more reluctant to bring their whole selves to work, and when they’re at work all they can think about is getting away.
- High turnover: More than half of disengaged employees would be open to jumping ship if an opportunity comes along, compared to just 25% for engaged employees. In turn, companies have to spend more to replace these employees. And the costs can be significant, as companies may have to spend between 40% to 200% of salary on replacing outgoing staff, depending on the role.
Ultimately, low employee engagement can be quite expensive for companies that don’t give it the attention it deserves. What happens when you take the time to ensure your employees are invested in their work? We’ll look at a reallife examples of employee engagement next.
Patagonia
Patagonia sells a vision of sustainability and the great outdoors, and the company’s employees are its first believers. As one review of the company’s culture notes, Patagonia “has built its core values around the great outdoors, the environment, and sustainability, and it actively invites its employees to champion and enjoy those values every single day.”
By prioritizing flexibility, integrity and environmental responsibility, Patagonia has created a highly engaged workforce that is just as passionate about the company’s mission as the company itself.
And the results don’t need anyone to speak for them. Compared to the average US employee turnover rate of 57%, Patagonia had a turnover rate of just 4% in 2023. So, they’re clearly doing something well.
Conclusion
It bears repeating once more, “happy employees produce better results.” And the states back it up — companies that are willing to invest the time and effort to identify how to make and keep their employees engaged at work will reap the rewards in higher productivity, a positive workplace culture, and fatter revenue. But it won’t happen overnight or by itself. You still have to put in the work, and hopefully with the right support your workplace will start churning out engaged employees in no time.
If you would like to learn more about employee engagement and how to get your workers better engaged, the people and culture experts at our HR agency in Toronto can help. Let’s help you make employee engagement a top priority and create a workplace where everyone can succeed. Get in touch with us today to find out more.