Why Employee Engagement Matters

Since its introduction in 1993, "employee engagement" has been a hot buzzword in the business world. When companies offer new products, management techniques, or strategies, they throw the phrase around more than rice at a wedding.

But why?

Why is Employee Engagement Such a Hot Topic?

The term wasn't coined until 1993, but employee engagement is nothing new. Employee engagement describes an employee's job satisfaction and company commitment. An engaged employee shows commitment to their work. They are more likely to drive innovation, generate new ideas, and create new customers. They are they “gold stars” of a company who add value to the organization.

Engaged employees are less stressed. They are healthier, reducing a company's medical obligations. They are the first to volunteer or take new employees under their wing. In 2013, Gallup found that these employees make up about 13% of the global workforce.

"Only 13% of employees are engaged at work."

If only 13% of the workforce is applying itself and raising profitability, what is the other 87% doing?

How Disengagement Harms Companies

We can sort these employees into two groups: not engaged and actively disengaged. Those who are not engaged account for 63% of the workforce. They are average employees, the ones who do their work but don’t go beyond what their company requires of them. While they don’t add value to an organization, they don’t take any away either.

And the last 24%? They are actively disengaged. They hate their jobs, their companies, and their work. It's not just that they don't add value; they actively take it away. These workers are responsible for an annual estimated loss of $550 billion.

"Disengagement costs companies $550 billion per year."

Now that we’ve defined the three categories of engagement, let’s examine their effects. We already know that engaged employees add value to companies, but in what ways? Exactly what do companies gain by putting a focus on engagement?

What Are the Benefits of Engagement?

It makes logical sense that engaged employees help the company, but how? Are the benefits worth the money spent on increasing engagement? The answer is, definitively, yes.

The Top 100 Companies to Work For contains the Top 5 Most Profitable Companies. But why? Besides not losing 550 billion dollars per year, companies with engaged employees report higher earnings per share. They also enjoy a 22% increase in profitability and a 21% increase in productivity. This makes sense. When employees want to work, then they - and in turn, their company - will accomplish more. The more a company can get done, the more money they can make.

"Organizations with engaged employees report 147% higher earnings per share than other companies."

These companies also see a 25% increase in employee retention. High retention lets them spend less time training and build a close-knit workplace. Engaged employees are 28% less likely to steal from their company and 37% less likely to be absent.

For more information on employee engagement, check out this white paper, Importance of Employee Engagement.

This is the first post in a series of three which outlines engagement and how it relates to you. Check out the next installment in this series: What Influences Employee Engagement?