Blog Engagement

The importance of employee engagement across the whole business

Updated 6th October 2022

People often argue about what the most vital part of employee management is. There's certainly no one magic bullet, but that doesn't stop people championing values like productivity, autonomy, or flexibility. One might argue it's most important that people work hard and go the extra mile. Another might say it's better to have people who can innovate and work more efficiently. The truth is that all of these values are essential. But they're all much easier to cultivate in an engaged workforce. So, let's look at just why employee engagement matters so much.

Research proves that companies with high levels of employee engagement generate up to 2.5x more revenue than companies with low engagement. That's because engaged people have a much greater potential for productivity. Engaged employees are also much more likely to feel valued which lowers the risk of attrition and increases the likelihood that they'll advocate for the business. They'll also go over-and-above with discretionary effort.

The Hilton hotel chain topped the Fortune 100 list of the best companies to work for in 2019. They attribute this to regular check-ins with their employees using surveys and pulse checks, which achieve 90% participation. It reflects in their reported revenue too, so there's certainly something to be said for the relationship between employee engagement and success.

Poor engagement directly impacts your bottom line

On the business side, one of the biggest reasons why employee engagement matters is how it impacts profitability. Unengaged staff are at increased risk of turnover, are more likely to make mistakes, and less likely to provide a solid customer experience.

The Engagement Institute puts the cumulative costs of low employee engagement at $550bn a year for US companies. Raconteur puts UK engagement-related losses as high as £130bn as it connects lack of engagement with a loss in productivity.

In 2017, Sears were ranked the lowest on Jacob Morgan's employee experience index along with year by year decline in revenue of $8bn. The lesson to be learned here is that failing to address issues with engagement is going to hit you right in the bank account.

How engagement benefits productivity

So, obviously, productivity is a huge reason for why employee engagement matters. But why is that exactly?

For starters, it's about focus. The more engaged someone is, the better able they are to focus on a given task. Of course, this means they'll get the job done faster. But that's only part of why employee engagement matters for productivity.

In any job we do, there has to be a certain margin for human error. That might mean recounts, proof-reading, or safety measures to prevent dangerous oversights. And the longer a mistake is left unchecked, the more time-consuming and expensive it can be to fix. But an engaged workforce is the best defence against human error. Focused, passionate employees are much more likely to pick up on and compensate for their own mistakes.

And, finally, we can't forget about discretionary effort, which we like to think of as the ultimate result of employee engagement. Like the name suggests, there's no forcing discretionary effort. It's people going the extra mile because they want to. That might mean taking a project home, going outside of your specified responsibilities, or putting in elbow-grease to get an innovative new idea off the ground. If you want that kind of effort from your people, you've got to be an employer they're passionate to work for.

The factors behind employee engagement

We know why employee engagement matters, but even we admit it can be a little temperemental. Engagement is influenced and disrupted by a lot of different aspects of the employee experience. Some of the main factors that influence engagement include:

Wellbeing in and out of work

As you might expect, poor wellbeing can seriously inhibit a person's ability to engage with their work. Whether it's a physical illness, poor mental health, or any other form of wellbeing, managers have a duty of care to their employees that means safeguarding their wellbeing as much as reasonably possible, and helping them to become resilient in the face of workplace stress.

Our personal impact at work

Employees aren't always implicitly aware of their responsibilities, or how the work they do impacts the company. Proper understanding plays a major role in our ability to engage with subject matter, so it's in your best interests to make sure you're on the same page, and to show them the impact of their work. Remember that as a manager one of your primary responsibilities is to guide and mentor the people in your team.

Loyalty to colleagues and the business

Being proud of and enjoying our work massively influences our ability to stay engaged. This is why it's important to help employees to continue developing professionally, because having the opportunity to learn new skills helps increase employee loyalty.

Recognition as an incentive

Saying thank you or calling out great work or behaviours goes a long way. In fact, workplace recognition from managers and peers has been proven to reliably outperform performance-based financial incentives in the long-term.

Better communication practices

Proper communication is essential for a functioning workplace. Employees left out of the loop in workplace communication run the risk of falling behind their colleagues, so making sure employees have access to the proper channels is vital.

Growth through regular feedback

There's a strong argument that feedback has the most impact on employee engagement. Feedback helps your employees to keep developing their skills while juggling the demands of their job, but that's not all. A vital part of the process is the feedback your employees give your managers. A manager who cultivates an honest, transparent feedback loop will thrive. Timeliness is vital, so you'll need to find a way of checking in with your staff between performance reviews. That's where Weekly10 can help.

So, there you have it. Hopefully we've established exactly why employee engagement matters so much. It's not something you can build up overnight. But helping it take root now will mean dividends in employee performance and loyalty further down the line.

Want more tips on how to build employee engagement for all your people? Order your free copy of The HRDs Guide to Employee Engagement in a Digital-First World now.