Why is employee engagement important? Top 5 Reasons

The Harvard Business Review recently called employee engagement “the holy grail of today’s workplace”. Highly engaged employees are a significant factor in the success of a business, while on the flip side, disengaged employees can radically affect a company’s profitability.


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A Gallup poll revealed that of the 70% of American workers who are not reaching their full potential, 52% are not engaged, and another 18% are actively disengaged. These actively disengaged employees are costing the US between $450 billion and $550 billion in lost productivity, every year.


These astounding figures should be enough to show just how important it is to foster company-wide employee engagement strategies, but if you need further encouragement, here are five ways in which employee engagement is so important to a company’s success.

  1. A happy and engaged employee is less likely to want to leave a company than a non-engaged employee. If you factor in the cost of replacing an employee (which could be anything from 10% of their annual pay to 150%), reducing employee churn can have a significant impact on a company’s bottom line.  
  2. Happy and engaged employees work harder. A McKinsey Global Institute survey found that productivity improves by 20-25% in organizations with connected employees. This level of productivity growth has the potential for revenues of approximately $1.3 trillion per year.
  3. We’ve already mentioned how disengaged employees can have a negative impact on profitability; however, companies with engaged employees tend to have higher profitability rates. When employees are connected with a company they are naturally more inclined to be productive and efficient. As Richard Branson said, “look after your staff and they’ll look after your customers“.
  4. It’s no secret, engaged employees perform at a higher level have more natural interest in their job. This has a positive knock-on effect in that they will often be the first to make suggestions for new ways of doing things, new product ideas, new ways of dealing with customers; in short, they tend to be the people who encourage innovation in the workplace, which in turn, can lead to business growth and success.
  5. The engaged worker is also more likely to pay attention to company communications, including safety notices. According to figures from Gallup, businesses with highly engaged employees suffer 70% fewer safety incidents. Fewer safety incidents lead to less sick days and the subsequent loss of reputation that goes along with these types of incidents. Outside of safety incidents, the same Gallup survey revealed that company with an engaged workforce also experience 41% less absenteeism, which can have a substantial impact on a company’s bottom line.


So how do you know if you have an engaged workforce?

In any business, it can be difficult to keep track of employee sentiment. Work tends to take over and become the sole focus. But it’s a good idea to assess how engaged your employees are and to do so regularly.

We’ve spoken before about how important internal communications are to developing an engaged workforce. Establishing regular, two-way communications is a great way to create an open workplace where employees are kept up to date, encouraged to give feedback and highlighted for their good work. Read our blog post about how internal communications can be used to drive employee engagement.

Once you have put in place a good internal communications strategy, it’s vital that you keep track of how it’s being received. There are many tools that help you to determine engagement with your message. We’ve written previously about the various ways in which you can gather and measure employee engagement and feedback. Company newsletters, pulse surveys, in-depth analytics are all key tools available to you to make it easier to be on top of employee sentiment. If you measure regularly you will be able to see any gradual changes and react accordingly.


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