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Employee engagement matters

People can add or detract value to organisations and repeated research consistently shows that business success is driven by engaged employees. Here is a small selection of the mounting evidence-base that engagement matters not just as a “nice to have” but as “critical to the financial bottom line”.

• Organisations in the top quartile for engagement have higher profitability, productivity, customer satisfaction and staff retention; and less absenteeism, safety incidents and quality defects (Gallup).
• Companies with highly engaged people have up to four times higher returns on share prices.
• Disengaged people spread negativity, dissent and poor performance. The Macleod Report states employee disengagement costs the UK economy £59-£65 billion annually in lost productivity.
• A Swiss study into retail banking, published in the Journal of Occupational and Organizational Psychology, shows that positive job attitudes breed success, rather than the other way around. The study measured the organisational commitment (job attitudes) and two measures of business unit performance (financial achievement and customer satisfaction) over three years and found that employee job attitudes more persistently boosted performance than vice versa.
• According to Gallop, managers account for 70% of the variance in engagement. Great managers inspire high engagement, but poor managers inspire disengagement. People join organisations but leave managers. Organisations reap benefits far greater than the costs of investing in leadership development and tools that enable managers to act in ways that engage their people. For example, a study by Manchester Inc. reported that executives who received coaching improved relationships with their direct reports (77%), immediate supervisors (71%) and peers (63%), with average ROI at 5.7 times the initial investment (or 570%). Given the high impact of immediate managers as well as senior executives on engagement, organisations that want to improve performance and customer satisfaction need to invest in all managers at all levels to ensure employees are engaged throughout the organisation.
• Highly engaged employees are happier, healthier and have a higher sense of wellbeing overall. Wellbeing is important, not just a fluffy nicety (which is why it is a component in my ILM certified development programme “Leadership, Engagement and Wellbeing”). Wellbeing reduces the financial costs of absenteeism, sickness pay and insurance, staff turnover and loss of highly experienced expert talent in whom the organisation has already heavily invested.

You can see that managers in your organisation hold much of the responsibility for keeping your employees engaged and, therefore, for impacts on the bottom line performance metrics. You don’t expect managers to know technical skills automatically without specific training. So if you want to raise performance and thrive through change, you will reap high rewards when you invest in leadership development and coaching for your managers so they know how to engage their people.

What is Engagement?

Engagement is an emotional and psychological commitment to your work and loyalty to your organisation. When you are engaged at work, you invest more effort in your work, have intrinsic interest and motivation in what you are doing, take pride in your work and deliver results to high standards, feel a sense of pride in belonging with your organisation and become an ambassador for it. Engagement leads to an overall sense of energy, commitment, belief in what the organisation stands for, and a positive culture that you see in the way people speak and interact with each other and with customers.

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The Authority Guide to Engaging your People

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How can engaging your people add value for you?
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