The importance of employee engagement can’t be overstated – employee engagement has been proven to reduce staff turnover, improve productivity and efficiency, improve customer service and retention, and deliver higher profits. Ultimately, having an engaged team makes a business easier to run, and enables leaders to focus on activities that deliver higher value, such as innovation, process improvement, and development. In a nutshell, this is why employee engagement is so important to business outcomes and success.
It all starts with individual employees and the simple fact that when a person is engaged, everything they do is infused with purpose, energy, and enthusiasm. Employee engagement is defined by some as the degree of commitment a person feels to their employer and the company’s goals. Another way to think about this simply in terms of how much a person cares about their job. If a person feels pride in their work and in the company they represent, they’re going to score highly on any measure of engagement. Now, take those feelings of pride and commitment, and multiply them across the company. As a workforce becomes more engaged, improvements in performance and productivity aggregate, creating a measurable positive impact on company results.
An older but still very relevant study published in the Journal of Occupational and Organizational Psychology titled “New insights into an old debate: Investigating the temporal sequence of commitment and performance at the business unit level,” concluded that organisational commitment “had a more persistent influence on performance at the business unit level than vice versa” leading the researchers to conclude that job attitudes lead to improvements in business unit performance.
How employee engagement impacts performance
To understand how employee engagement improves work performance, simply take one look at the key components of employee engagement, which include:
- Clear understanding of one’s role and responsibilities
- The tools, training, and resources needed to do one’s job
- Recognition for their contributions and successes
- The opportunity to develop professionally and advance one’s career
- An environment in which employees have an authentic voice
- Leadership that cares about the well-being of employees.
- A sense of purpose, and contributing to the good of the community or other stakeholders
- A sense of belonging.
It’s not difficult at all to understand how role clarity, access to training and resources, and recognition for a job well done improve an employee’s performance. The ability to learn new skills and develop oneself professionally, combined with a culture and environment that value employees’ feedback and ideas enable people to develop skill and go from strength to strength. Along the way, they also accrue expertise and intellectual capital that only increases their value to the organisation. Retaining these valuable employees is a top priority for leaders. Those who care about employee well-being and foster a strong sense of belonging and purpose will be rewarded with improved retention, intrinsic motivation and job satisfaction.
In short, employee engagement is the very foundation of job performance.
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Strengthening key business areas with employee engagement
Building on these ideas, to better understand why employee engagement is so important, it’s useful to look at its relationship to three key areas of the business, such as customer satisfaction, sales, and innovation.
How employee engagement improves customer satisfaction
If you’ve ever angrily hung up the phone after talking to a customer service person, snarling to yourself about never doing business with the company again and the waste of time you just endured, you already have some insight into how employee engagement affects the service experience. Unhappy situations like this one are the direct result of practices that prioritise numbers over people, creating incentives for employees to focus on getting callers off the phone, rather than delivering satisfaction.
A study from Glassdoor, a site where employees rate and review their employers, draws a straight line between the employee experience and customer satisfaction, noting “On average, a 1-point increase in Glassdoor company rating is associated with a 1.3-point increase in customer satisfaction,” measured by the American Customer Satisfaction Index (ACSI).
Indeed, at the top of the heap in terms of both employee and customer satisfaction on the ACSI is Trader Joe’s, a popular grocery store chain. Famous for its nontraditional approach, Trader Joe’s culture is steeped in seven key values – one of which is “WOW customer service.” However, the company’s success in delivering a great customer experience is likely equally attributable to the other values, which it strives to live. These include kaizen (continuous improvement,) no bureaucracy, and integrity, creating an empowered workforce that has control over its destiny. You can see it when you shop at Trader Joe’s (as your author frequently does) – employees are smiling, thoughtful, and determined to help – in other words, they’re engaged.
Better employee engagement leads to better sales performance
Understanding what’s most important to sales professionals offers an enlightening example of the relationship between employee engagement and sales performance. Research conducted by sales coach Ryan Estis found that the top three drivers of engagement for salespeople are, in order:
- Confidence in senior management
- Opportunities to grow and develop
- Confidence in the future of the organisation
In short, an organisation that offers a bright future will do a better job engaging – and retaining – its sales professionals, and keeping them focused on their current job, rather than looking for a new one.
While retention is always important for company performance, it plays a critical role in the sales equation. Sales teams are notorious for employee churn. Keeping and developing top performers can be a real challenge, and doing so can make or break a company’s numbers. However, one of the most powerful benefits of employee engagement is the fact that it slows employee departure. In fact, becoming an employer of choice for talented salespeople is one of the swiftest ways to improve competitive posture.
The next three drivers of engagement for sales professionals on Estis’ list are:
- The belief that they work well as a team
- The feeling of personal accomplishment from work
- Knowing they contribute to the organisation’s success
These three elements all roll up into a sense of belonging, which has emerged as one of the most important engagement trends and a real workplace superpower.
Elements of belonging that resonate particularly well for sales teams include:
- Teamwork and camaraderie: Most salespeople are natural-born extroverts – they are energised by other people, and they are likely to feel the effects of lockdown and working from home more keenly than some other employees. Organisations that prioritise an esprit de corps will be, in effect, creating an environment that supports your sales team, and creates the kind of camaraderie that enables them to feed off each others’ energy.
- Purpose. Creating belief in the company’s purpose – and enthusiasm for it – is powerfully motivating for employees, particularly the sales team. Engagement Multiplier is a great example of this. Our ultimate purpose is to unlock potential and improve people’s lives. We reinforce these ideas each day – for example, when we talk about onboarding a new client, we don’t talk about the number of employees they have – we talk about the number of “hearts” we’re bringing on board. Similarly, at the beginning of the pandemic, our founder sunk significant development resources into creating subject-specific surveys that could be used on-demand to check in on employees who suddenly found themselves working from home. He then told our team that he was “putting purpose before profit” and making these new tools – and, in fact, the whole platform – available free to companies that needed to assess employees working remotely. The team loved it, which ultimately led to record sales during the most challenging of years.
These are some of the reasons why the connection between sales success and employee engagement is well-established. According to a study from Gallup, employee engagement can drive double-digit increases in company sales. It almost sounds too good to be true, but if you think about it for a few minutes, the line between improved employee engagement and better sales performance becomes very clear.
The secret to fostering innovation in the workplace
There’s no lack of articles, books, and podcasts on the subject of innovation. However, many overlook a crucial component – employee engagement.
At the beginning of this article, we describe an engaged employee as one who is suffused with purpose, energy, and enthusiasm, feels committed to the company, and cares about its goals.
Thinking about this another way, could a person who is uninterested, uncaring, and uncommitted to the organisastion even be able to contribute meaningfully to its innovation? Possibly, but it wouldn’t be likely.
“Management scholars use a variety of terms to refer to what most practitioners would consider engagement. An employee might be “tethered” to her role, or “embedded” in her job. But ultimately, it all comes down to engagement – how involved and dedicated an individual is to the job they hold,” wrote Mischa Kaplan in his article for LinkedIn titled The Link Between Employee Engagement and Innovation. “And to be clear, there is now an extensive body of academic research that has demonstrated a clear link between high levels of employee engagement and the frequency with which individuals engage in on-the-job innovation. Put another way, a workforce that is engaged is one that is more innovative.”
Hallmarks of a culture that supports innovation can be copied straight from a list of core drivers of employee engagement, including:
- Employees have a voice, and leaders value employee feedback. An environment in which people can share ideas unimpeded is crucial for fostering innovation. Crispin Manners, an expert on innovation and the author of our on-demand survey who authored our “Kickstarting Innovation” survey notes, “If the organisation isn’t a listening organisation, and leadership suddenly says ‘We want to hear your ideas,’ they will be met by a wall of disbelief.”
- Purpose: Innovation is dependent upon the health of the company’s culture, and purpose is at its heart. By connecting people to the purpose, people become more receptive to doing things differently. They will buy-in, and bring great ideas forward in support of the shared purpose.
Employee engagement is chiefly about removing the barriers that prevent employees from doing their best – and most personally satisfying – work. Poor communication, lack of information, micromanagement, and unfair treatment are just a few ways leaders can swiftly quash the energy and enthusiasm most people bring readily to work.
“People show up wanting to be engaged at work,” says Stefan Wissenbach, our founder and CEO. “It’s companies that disengage them.”