In the modern workplace, employee engagement is the difference between an average year and an outstanding one. Among similar companies, those with motivated, enthusiastic workers simply perform better. For too long, leaders failed to connect the feelings and attitudes of individual workers, the quality of their work, and the organization’s success. Today, future-focused organizations understand that employee engagement is inextricably linked to a healthier bottom line.
This shift in corporate attitudes is gaining ground. As Deloitte researchers state in the 2024 Global Human Capital Trends report, “Workers and leaders aren’t looking to make work more human at the expense of business outcomes and priorities, but as a path toward improving business outcomes and priorities.” Considering the powerful correlation between worker morale and professional performance, it’s no wonder that senior executives rank employee engagement among their top global business strategies.
Higher Employee Engagement Leads to Higher Profits
According to Gallup, organizations with highly engaged employees are 23% more profitable than those with low morale. In one year, beverage giant Molson Coors saved more than $1.7 million in safety costs by strengthening employee engagement. Efforts to address morale at a start-up facility enabled Caterpillar to realize a $2 million increase in profits and a 34% higher customer satisfaction rate.
In another study, Microsoft researchers reported a correlation between higher employee engagement and better stock performance. According to the tech giant’s Work Trend Index Special Report, the stock of companies with high employee engagement performed 200% better than companies with low engagement. The study analyzed more than 3 million workers at 226 global companies that trade on U.S. stock exchanges.
Employee Engagement Explained
It’s helpful to define employee engagement to understand why it is such a powerful driver of organizational success. More than job satisfaction, employee engagement is the mental and emotional connection that individuals feel toward their job, their team, and their workplace. Engaged employees are not just working for a paycheck. They are genuinely interested in their work, committed to the success of their colleagues, and motivated to help the organization succeed. Actively engaged employees take pride in their work, strive for excellence, and inspire their team to deliver high-quality outcomes. Each achievement leads to another, translating to greater individual career success and job satisfaction.
Unengaged employees, by contrast, might be neutral in their attitude about work. They might not feel any particular connection to the organization or passion for their work, yet they appreciate a steady paycheck and benefits. Unengaged workers complete their assigned tasks, but aren’t particularly interested in stretch assignments or putting in extra effort. They might be described as “quiet quitting,” not looking for another job but doing only the bare minimum to keep their current one.
Actively disengaged employees are unhappy at work and demonstrate their feelings through negative behavior. They might complain, gossip about their colleagues, perform substandard work, or fail to accomplish tasks at all. They don’t expect to work for the organization much longer and are likely looking for another job. Actively disengaged employees are particularly toxic in workplaces, and not just because other employees wind up redoing shoddy work. Negative attitudes toward the company and leadership can spread throughout a team, straining professional relationships and workplace morale.
In its most recent survey, Gallup found that only a third of U.S. workers were engaged, roughly half of employees were not engaged, and 16% were actively disengaged. However, at organizations that prioritized people-first strategies to increase employee engagement, 70% of employees were engaged. These high-engagement companies reported 14% higher productivity than those with low engagement.
How Does Employee Engagement Affect Productivity?
Considering the description of engaged employees, it’s not surprising that job performance improves in lockstep with morale. Engaged workers care about their work and will go above and beyond their job description when necessary, leading directly to higher productivity. However, it’s worth exploring the various ways that highly engaged employees perform better themselves and bring out the best in their colleagues.
1. Employee engagement and innovation
Engaged employees feel a sense of ownership of their work, making them care about the quality and success of everything they touch. Knowing that their contributions are valued and respected, they feel empowered to test new ideas and suggest different strategies. This creative spirit drives innovation, resulting in better products, processes, and services that improve productivity and client satisfaction. In addition, their willingness to embrace change, enables engaged employees to be more agile and resilient in the face of change and volatility.
2. Employee engagement and collaboration
Highly engaged workers align their personal goals with organizational objectives and work in concert with their team to accomplish them. This focus on group achievement promotes the sharing of knowledge and the free-flowing exchange of new ideas and different perspectives, leading to better problem-solving and excellent outcomes. Strong communication and mutual support results in better teamwork, greater efficiency, and stronger professional relationships.
3. Employee engagement and customer satisfaction
Going above and beyond extends to the customer service that engaged employees provide. They understand the importance of caring for customers and meeting their needs. Receiving a personalized experience results in higher customer satisfaction and greater loyalty. Gallup has quantified these outcomes, reporting that companies with highly engaged employees have 10% greater customer loyalty and 17% higher sales.
4. Employee engagement, retention, and absenteeism
Lower absentee and turnover rates are also associated with higher workplace morale. Employees who feel connected to their work and their employer are roughly 50% more likely to remain with the company, reducing turnover costs and the disruptions associated with replacing personnel. Engaged workers are also 78% less likely to call in sick, contributing to higher productivity.
5. Employee engagement and well-being
Finally, no conversation about engagement is complete without considering employee well-being, because people can’t do their best work unless they are mentally and physically healthy. When employees feel cared for and supported by their leaders and managers, they reciprocate with greater enthusiasm and dedication to their work. It’s no wonder that organizations with high employee engagement also invest in people-first programs like mental health support, professional development, work-life balance initiatives, and wellness activities.
“Advancing mental health and psychosocial safety at work may call for a significant organizational change in a company’s culture, including a shift in leadership mindset,” says WPO President and CEO Alan King. “On their own, employees can only do so much to move the needle if not actively empowered by the employer.”
Senior executives have the power to shape workplaces where individuals flourish. And, considering the clear bottom-line advantages, they have a responsibility to improve organizational outcomes by increasing employee engagement. To create “win-win” solutions to business challenges, organizational leaders must prioritize human-centric strategies and inclusive actions that generate feelings of well-being, boost employee engagement, and result in greater productivity and economic growth.
To increase employee engagement, leaders must adopt a holistic approach to employee well-being and empower individuals to be their authentic selves. The Employee Engagement Growth Model is a framework that enables organizations and leaders to boost the effectiveness of teams while inspiring enthusiastic, motivated, and committed employees to do their best work. Contact us today to learn more.
Amber Keister is a Content Strategist at The Diversity Movement. She has spent more than 20 years as a journalist for publications throughout the South. Connect with her on Linkedin.
