Business profitability is correlated with employee engagement Employee engagement. Every year, companies lose $450-500 billion due to disengaged workers and overall low employee engagement.
This means that if you are not engaging your employees in a way that makes them feel valued and appreciated for their work then they will leave or be less productive than they could otherwise be.
Employee engagement statistics show that highly engaged employees lead to an increase in profitability of 21%, lower turnover rates of 31%, and an 80% customer retention rate. 58% of employees wish their employer would conduct employee engagement surveys.
What is employee engagement?
In the effort to understand and describe the nature of the relationship between an organization and its employees, employee engagement is a fundamental concept.
Employee engagement is when an organization has engaged its workforce by creating a positive environment where people want to come to work every day. This can only happen through good leadership skills from senior management as well as effective communication between all levels within the company.
Why Employee Engagement Is Important?
The benefits of having engaged workers include:
Increased productivity
Employees who are more engaged with their jobs have higher levels of job satisfaction which leads to 17% increased performance. This results in better quality products and services being delivered by an organization. Recognizing employees’ efforts through employee recognition software can further boost engagement, making them feel valued and motivated to maintain high performance. In addition, offering corporate gifts as tokens of appreciation can reinforce a culture of recognition and strengthen employee loyalty
Increased Sales
Organizations that are highly engaged experience an average 20% increase in sales.
Increased profitability
Based on a 2016 analysis by Gallup, engaged teams have 21% greater profitability. Allowing for greater company growth and organizational success.
Improved customer service
As reported in the Demand Metric 2013 Employee Engagement Survey, the impact of employee engagement on customer service is undeniable, with more than 80% of customers being retained by organizations with more than 50% employee engagement.
When customers know that staff members enjoy what they do it helps create a positive experience when interacting with the company. It also creates a sense of loyalty from clients because they see how much effort goes into making sure everyone has a good time at work every day.
Reduced absenteeism
It is reported to cost U.S. employers $225.8 billion annually due to productivity losses associated with absenteeism, according to the Centers for Disease Control and Prevention (CDC).
High engagement organizations have 41% lower absenteeism. In the U.S., the absence rate for all full-time wage and salary workers is 2.8%, according to the Bureau of Labor Statistics (BLS).
Increased employee safety
In highly engaged workplaces, safety incidents are 70% lower than those in low engagement settings leading to a better overall employee experience.
Higher retention rate
Employees who feel engaged are 87% less likely to leave their company than unengaged employees.
People want to stay somewhere they’re happy so if they find out about a great place to work they won’t hesitate to apply. They may even ask friends and family to recommend the company as well.
Lower turnover costs
Employee retention statistics show that the cost associated with replacing someone who leaves is high. Studies have shown that organizations with highly engaged employees have a 31% lower turnover rate and increase employee loyalty.
How much more productive are engaged employees?
Based on a analysis by Gallup, engaged teams have fewer turnovers, 21% greater profitability, and 10% higher customer ratings.
Employees that are engaged to a 17% increase in productivity — according to employee engagement surveys. Employee engagement leads to more dedication and discretionary effort in the workplace, increasing both productivity and innovation.
According to Gallup through 2022, 32% of full- and part-time employees are engaged at their organization, while 18% are actively disengaged.
What is a good employee engagement rate?
A good average engagement score for an organization is 50% or higher. A recent survey by Gallup found that currently only 36% of employees in the U.S. are engaged in their work.
The survey also found that there was in a increase of actively disengaged employees going from 14% in 2020 to 15% through June 2021. The highly disenaged employees say factors such as poor management and bad work experiences are big contributing factors.
Among actively disengaged workers in 2021, 74% are either actively looking for new employment or watching for openings according to the Gallup survey. The majority of workers who are not happy at work are either already looking for another job, or very interested in doing so.
The rate of change of jobs for engaged employees is lower than for unengaged or actively disengaged employees.
ROI on employee engagement
The case of Best Buy is considered to be the best example of an ROI calculation. An employee engagement increase of just .01% at a Best Buy store is worth $100,000 to the company a study by the Harvard Business review found.
How do I know if my business needs more engagement?
There are many signs that indicate whether your business requires additional employee engagement. Here are indicators to look out for:
1) Employees feel like they’re working too much. This could be due to a lack of control over workloads or being forced into overtime hours.
2) Employee morale is low. Low morale means there isn’t enough motivation among team members to achieve success.
3) There is high absenteeism. High levels of absence may suggest that people aren’t feeling valued or appreciated.
4) People don’t have time to take breaks during the day. Breaks allow them to recharge mentally and physically before returning to work refreshed.
5) Workers complain about having no opportunity to grow personally.
6) Workplace safety issues occur frequently.
7) Productivity suffers when employees are unhappy with their roles.
8) Customer service becomes difficult.
9) Sales decline.
10) Customers become frustrated with long waiting times.
11) Profits drop.
12) Company reputation declines.
What are five indicators of high engagement in a workplace
1) Employees feeling safe at work
2) Employees having clear job descriptions
3) Employees knowing who has decision-making authority
4) Employees receiving timely information about changes in policies and procedures
5) Employees feeling supported by management
In order to be considered ‘engaged’, an employee must show positive behavior such as actively seeking learning opportunities, asking questions, and participating in discussions.
This means that not only does he/she need to demonstrate a willingness to participate, but also that they don’t just sit back and wait for someone else to take action.
So whether you’re looking to motivate your existing employees or recruit new ones, make sure you consider these factors before starting any recruitment process. After all, without proper incentives and benefits, no amount of money or perks will keep people around!
What are the key drivers of employee engagement?
Here’s what some experts say drives employee engagement levels:
• Job satisfaction – A sense of personal accomplishment from performing one’s duties well.
• Autonomy – Having the freedom to decide how to perform tasks within limits set by supervisors.
• Purpose – Feeling part of something bigger than oneself.
• Employee recognition – Being recognized for good performance.
• Feedback – Receiving feedback on performance.
• Work-Life balance– Having influence over decisions affecting own work life.
• Fairness – Working conditions based on merit rather than favoritism creating a strong culture.
• Leader Availability -Employees may question high-level business decisions if they don’t feel that leadership is connecting with people at work.
• Respect and core values– Feelings of respect from others toward self and overall corporate culture.
• Safety – Knowing that risks can be controlled through careful planning and execution.
• Support – Receiving help and support from colleagues.
• Employee development – Opportunity to learn different skills and experience variety in assignments and increase professional development.
• Opportunities for advancement – Possibility of career growth.
• Participation – Involvement in group activities.
• Responsibility – Taking responsibility for results achieved.
• Rewards – Financial rewards, non-financial rewards
How much do companies spend on employee engagement?
Each year, American companies spend more than $100 billion on employee engagement. Yet most programs provide a short-term boost only to revert to the mean.
23% of Employees Globally Are Engaged at Work
According to Gallup’s “State of the Global Workplace” report, only 23% of employees worldwide are engaged in their work. This figure, while a slight increase from 20% in 2020, still indicates a significant global disengagement issue in the workforce.
This statistic highlights a pervasive challenge for organizations worldwide. A low percentage of engaged employees suggests that a vast majority are not fully invested, enthusiastic, or committed to their jobs and organizations, which can impact productivity, innovation, and overall business success.
Source: Gallup’s State of the Global Workplace: 2023 Report
70% of Variance in Employee Engagement is Determined by Managers
Gallup research indicates that the quality of an employee’s direct manager accounts for a significant 70% of the variance in employee engagement. This underscores the profound impact that leadership, particularly immediate supervisors, has on how connected and motivated employees feel.
This statistic emphasizes that managers are often the primary drivers of employee experience. Their behaviors, communication styles, ability to provide feedback, and overall support directly influence an employee’s sense of purpose, value, and belonging, making manager training and development crucial for engagement.
Engaged Employees are 21% More Profitable
Companies with high levels of employee engagement are 21% more profitable than those with low levels of engagement, according to Gallup. This demonstrates a direct correlation between employee commitment and financial performance, showcasing engagement as a key business driver.
This powerful statistic illustrates that engagement isn’t just a “nice-to-have” but a critical factor in a company’s bottom line. Engaged employees are more productive, efficient, and innovative, contributing directly to higher revenue and reduced costs.
Companies with Employee Recognition Programs Have 31% Lower Voluntary Turnover
Organizations that implement employee recognition programs experience a 31% lower voluntary turnover rate. This highlights the effectiveness of appreciation in retaining talent and reducing the costly impact of employee churn.
Recognition plays a vital role in making employees feel valued and appreciated for their contributions. When employees feel their efforts are seen and acknowledged, they are more likely to be satisfied with their jobs and less inclined to seek opportunities elsewhere.
94% of Employees Would Stay Longer if Companies Invested in Their Career Development
A significant 94% of employees report they would stay at a company longer if it invested in their career development. This underscores the importance of growth opportunities and learning paths in fostering employee loyalty and retention.
This statistic points to a strong desire among employees for continuous learning and advancement. Companies that provide opportunities for skill development, training, and career progression are more likely to build a long-term, committed workforce.
Four Out of Ten Employees Who Receive Little to No Feedback Are Actively Disengaged
When employees receive little to no feedback, 4 out of 10 become actively disengaged from their work. This highlights the critical role of regular and constructive feedback in maintaining employee involvement and motivation.
Lack of feedback can leave employees feeling lost, unvalued, and unsure of their performance or impact. Consistent feedback, even when critical, provides direction and shows employees that their development is a priority, fostering a more engaged workforce.
89% of Employees Who Work for Companies with Wellness Programs Are Engaged and Happy
A high percentage of employees (89%) who work for companies with wellness programs report being happy with their jobs and would recommend them to others. This suggests a strong link between employee well-being initiatives and overall job satisfaction and engagement.
Employee wellness programs demonstrate a company’s commitment to its employees’ holistic health, which can foster a sense of care and support. This, in turn, can lead to higher morale, reduced stress, and increased dedication to the organization.
Engaged Employees are 50% Less Likely to Be Actively Seeking a Job
Engaged employees are 50% less likely to be watching for or actively seeking a new job. This demonstrates that a strong sense of engagement acts as a powerful retention tool, reducing the likelihood of employees departing for other opportunities.
This statistic reinforces the idea that engaged employees are more invested in their current roles and organizations. Their satisfaction and commitment mean they are less susceptible to external job offers, leading to greater workforce stability.
Only 20% of U.S. Employees Feel Connected to Their Organization’s Culture
A relatively low 20% of U.S. employees strongly agree they feel connected to their organization’s culture, according to Gallup. This suggests that many employees may feel a disconnect from the core values, mission, and overall environment of their workplace.
A strong and well-communicated company culture is vital for fostering a sense of belonging and shared purpose. When employees feel disconnected from the culture, it can lead to feelings of isolation and a lack of identification with the organization’s goals.
Hybrid Employees Have the Highest Engagement Rates at 38%
Gallup data shows that hybrid employees have the highest engagement rates at 38%, compared to 29% for on-site and 33% for remote workers (in the US, latest 2024 data). This suggests that a balanced approach to work location may be most conducive to engagement for many.
The flexibility offered by hybrid work, allowing for both in-person collaboration and remote autonomy, appears to resonate well with employees, leading to higher levels of engagement. This highlights the importance of adapting work models to employee preferences.
Engaged Employees are 46% More Likely to Be Thriving in Well-being
Gallup data reveals that engaged employees are 46% more likely to be thriving in their overall well-being. This statistic indicates a strong correlation between feeling engaged at work and experiencing positive physical, mental, and social health.
This highlights the reciprocal relationship between engagement and well-being. When employees are engaged, they often experience a greater sense of purpose, accomplishment, and connection, which positively impacts their overall quality of life.
69% of Employees Would Work Harder if They Felt Their Efforts Were Better Appreciated
A study indicates that 69% of employees would work harder if they felt their efforts were better appreciated. This emphasizes the motivational power of recognition and the desire for acknowledgment among the workforce.
This statistic serves as a clear call to action for organizations to implement effective appreciation strategies. When employees feel their hard work is noticed and valued, it directly translates into increased motivation and performance.
Companies with High Employee Engagement Experience a 22% Increase in Overall Profitability
Organizations with high employee engagement rates experience a 22% increase in overall profitability. This further solidifies the link between a committed workforce and significant financial gains for the business.
This statistic reinforces the business case for investing in employee engagement. The positive impact on productivity, customer satisfaction, and retention collectively contributes to a stronger financial outcome for the company.
87% of Managers Shape the Work Team Environment
Nearly 9 out of 10 workers (87%) indicate that their managers largely shape their work team environment. This statistic underscores the significant influence managers have on the immediate work experience and, consequently, on employee engagement.
Managers are the direct link between employees and the broader organization. Their leadership style, communication, and ability to foster a positive team dynamic are crucial in creating an environment where employees can thrive and feel engaged.
The Cost of Disengaged Employees is Estimated at $8.9 Trillion Globally Annually
Low employee engagement is estimated to cost the global economy $8.9 trillion annually due to lost productivity and higher turnover. This staggering figure highlights the immense financial impact of disengagement on businesses worldwide.
This statistic serves as a stark reminder of the hidden costs associated with a disengaged workforce. Beyond individual performance, disengagement has a macroeconomic impact, affecting global productivity and economic growth.
Conclusion
Since we know that employee engagement correlates with business profitability. Engaging with staff is not just about rewarding them; it also involves communicating effectively with people who work for us on an ongoing basis. This means being aware of their needs, wishes, and concerns so they feel valued and appreciated to increase employee satisfaction.
The more engaged you are with your team, the better chance there is of improving productivity levels, reducing absenteeism, and increasing customer satisfaction. So if recognition isn’t enough motivation for your workers why bother trying?
The truth is that while recognizing achievements and rewards do play a part in motivating individuals, it doesn’t have to stop there. There are many other things that companies could do to encourage greater commitment from their workforce including offering flexible working hours or even allowing time off when needed.
It may seem like a lot of effort to go through, especially if you’re already stretched thin, but it’s worth taking the time to get involved because it’ll pay dividends over the long term.
