What is employee engagement?
To improve employee engagement, you need to understand what it actually is.
According to Wikipedia, employee engagement is "a property of the relationship between an organization and its employees. An 'engaged employee' is defined as one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests."
Pretty dense stuff, right? Try this instead:
Employee engagement is the level of personal investment a person has in his or her work.
Let me simplify even further:
The more personally invested you are in something, the more it matters to you.
You become a bigger stakeholder in whatever "it" may be, whether it's your kids, your health, or your career. And you'll be far more likely to put more into it if the result is meaningful to you.
The same goes for your employees. The more personally invested they are in their work, the more it matters to them and encourages them to contribute more. Employee engagement is what you have to work on to raise everyone's level of personal investment. That way they increase their positive contributions to the organization.
Why is employee engagement important?
A fast-growing body of research demonstrates that employee engagement is a huge mover of fundamental metrics like retention and revenue. This is why senior executives and CEOs are clamoring to get a grasp and reap the bottom line benefits of employee engagement to the organization. But again, most are focusing on the wrong things and not following the principles in this guide. The problem is that these managers aren't working on how to consistently raise the level of personal investment by their employees.
To understand what motivates personal investment of an employee, you first need to understand how motivation even works: what makes us feel good about work?
1. Making more money
Let's get one thing straight. The financial impact of employee engagement can't be exaggerated: it's massive.
Over the course of a decade, Queen's University School of Business examined over 111,000 employee surveys on employee engagement.
Organizations with the highest levels of employee engagement were consistent with 15% greater employee productivity and up to 30% greater customer satisfaction levels.
Gallup employee engagement statistics indicate that an engaged organization can lead to up to 18% higher revenue per employee.
If dollar amounts interest you, the Workplace Research Foundation has found that a 10% increase in investment in employee engagement can increase profits by $2,400 per employee, per year.
Organizations with high employee engagement also tend to withstand economic downturns and, when the economy picks back up, are able to run circles around their competitors.
2. Saving more money
In the US only 32% of employees are engaged at work, while only 13% are engaged worldwide.
Together with the fact that companies with lower levels of engagement experience significantly higher costs of absenteeism and turnover, you get the picture as to why employee engagement is important.
It's common wisdom that retaining employees is more cost effective than hiring new ones, so it's easy to see why low levels of engagement are super expensive. If you ever want to make money with your staffing, you should work on getting more employees to stay with the organization for longer.
Don't ignore the financial upsides of employee engagement.
And bonus (3.) -- a successful company culture!
I know I said there were two main benefits, but there's a third benefit that answers the question, "Why is employee engagement important?"
Raising employee engagement builds company culture.
Think about it:
A vast majority of companies still depend on a culture of hyper-competitive, self-serving behavior to drive results. It's a pernicious, but almost universal thought process. It goes something like this: "Competition will drive employees to do better as individuals, so the sum of their results will be better. Let the invisible hand take care of the rest." Unfortunately, this prevents employees from personally investing any more than the minimum that affects them as individuals."
This is a big problem, because employee engagement and company culture go hand in hand. Just take a look at what 400,000 employee survey responses showed about the factors with the highest positive relationship with an employee's experience:
When employees act not only to benefit themselves but the organization at large, they fuel this positive relationship and build culture at the same time. Don't forget: an investment in employee engagement is an investment in culture.