Employee engagement is the holy grail for the modern workforce: engaged employees have better work results, are happier at work, more motivated, and more productive.

In this article, we break down the effects of engagement on productivity, business outcomes, and employee retention.

What is employee engagement?

Employee engagement refers to the commitment a worker feels towards their company and the company’s goals. It means their goals aren’t only materialistic (like their paycheck) or self-centered (climbing up the career ladder or getting a raise), but they truly care about what they do and believe in the company’s vision and the importance of their product or service.

An engaged worker can be happy and satisfied, but a happy or satisfied employee isn’t automatically an engaged one.

An employee can be happy at their workplace without working hard or going out of their way to make sure they reach their goals and help the company reach theirs. An employee can also be satisfied with their paycheck but never take that little extra step to show they know their “why” and they’re committed to it.

Impact of employee engagement on productivity

It’s often said one engaged employee can contribute more to the company’s bottom line than ten unengaged employees — and that’s not far from the truth. Employee engagement is a strategic metric, and it influences everything from customer experience to employee productivity.

And even though employee productivity shouldn’t be the core metric companies rely on, an engaged workforce does see higher productivity scores. Happy employees who put in the effort to meet the company's goals are up to 18% more productive than their peers.

This means motivation, employee satisfaction, and workplace happiness can improve your business success by almost 20% — not a small feat. However, most organizations worldwide haven’t tapped into engagement as a strategic opportunity, as most employees worldwide are not engaged.

Remote companies, in particular, are at risk of disengaged employees, as their organizations sometimes focus on output and deadlines more than employee engagement.

Employee engagement in numbers

Gallup’s State of The Global Workplace 2022 Report and their most recent employee engagement stats show there is plenty of room for progress:

• Unengaged employees cost their employers the equivalent of 18% of their salary
• Only 21% of employees are engaged at work, and only 33% of them thrive in overall wellbeing
• Highly engaged teams see up to 18% higher productivity than less engaged teams
• Teams with high engagement levels show 23% higher profitability than their less engaged counterparts
• Engaged business units and teams are more resilient to shocks and outperform their peers even more in hard times
• 44% of respondents felt a high amount of stress on a daily basis
• Low engagement alone costs the global economy $7.8 trillion
• Wellbeing initiatives tie strongly to high employee engagement
• Highly engaged teams see an 18% lower turnover than unengaged ones, even in high-turnover companies

Benefits of employee engagement

Let’s talk a bit more in-depth about why engagement matters. What benefits can you hope to experience if you focus on engaging your employees?

Increased Employee Happiness

Engaged team members create an overall positive work environment, which contributes to employee happiness. For most people, it’s not enough to have a satisfactory paycheck and flexible working hours to be happy with their job - they may feel like something is missing to feel happy at work.

That something is usually the feeling of being engaged - emotionally committed to reaching the company’s goals and spreading its vision. And as you know, happy employees will go the extra mile to do their best work and keep customer satisfaction high.

Less Absenteeism

Absenteeism happens in both office-based and remote companies, and it boils down to employees not showing up for work often, which is one of the telltale signs of disengagement. Absenteeism doesn’t mean your employees use their PTO — they should absolutely do that! — but rather that they find ways or reasons to skip work more often than is the norm.

Companies with engaged employees have fewer occurrences of absenteeism among their teams and are also less likely to suffer from other performance issues like quiet quitting.

Better Interpersonal Relationships

Did you know that workplace friendships are an important factor people consider when deciding if they’re going to leave a job? It’s no surprise since most of us spend one-third of our day at work - it’s only logical that we’ve made friends among people we share the workplace with.

But engagement has a positive impact on these relationships, too. Engaged people build better interpersonal relationships and communicate more effectively, which contributes to their overall happiness and productivity.

Workplace Safety

Feeling engaged in what your company stands for may help you feel psychological safety at work, too. Many people can’t reach their full potential because they’re constantly feeling uncertain about their job and have the paralyzing fear of making a mistake.

A company that engages its employees may help them overcome this fear by reminding them of the purpose everyone in the company shares. Consequently, the employees will provide outstanding performance and feel more satisfied at work.

Additionally, engaged teams have 64% fewer safety incidents at work than unengaged employees, which means engagement helps increase physical workplace safety as well and therefore reduces the costs associated with workplace injuries.

Better Company Profitability

We can’t say profitability or great salary is irrelevant. Money is a significant part of external motivation when it comes to work, although it usually doesn’t make up for some other factors, such as inflexible working hours or incompetent leadership.

From the employer’s point of view, better business outcomes and profitability come from employees’ dedication to work-related tasks, which is greater when they feel engaged. According to a SmartCEO survey, poor leadership costs a company around 7% of its annual sales. So, the question is - can you really afford to keep your employees disengaged?

Higher employee retention

Losing a sense of purpose may contribute greatly to a person’s decision to leave a company. When someone keeps working on the same old daunting tasks every day without really knowing why and how it helps the company, they may feel like they need new challenges.

By keeping your employees engaged, you can decrease your employee turnover rate. That will allow you to build strong and reliable teams and keep retention high.

More Successful Crisis Management

It’s easy when everything is going according to plan. But what happens when a business faces a bad period or a global crisis such as a pandemic?

Engaged employees show greater initiative and innovation in the face of a crisis. Those who feel disengaged at the workplace will probably look after their own interests since they feel no connection to the company’s purpose or goals. Creating a team of engaged employees you can rely on may help you overcome crises and build a stronger business.

How to Boost Engagement in Your Company

If you’ve realized by now you should do something to increase employee engagement in your company, here are a few tips to help you do just that.

Improve employee communication

The first step in improving engagement is to create a clear internal communication strategy. Employees need to have clear expectations, visibility into the business strategy, company goals and how they contribute to them, and the confidence to ask for help or guidance from their teams and managers.

Clear communication lines and transparency in expectations help employees feel safer, happier, and more engaged, driving employee performance (and productivity!) up.

Do employee surveys

Some employees may feel shy and avoid expressing their thoughts publicly. You should give them a chance to be heard as well. Additionally, human resources departments benefit from gathering employee data in the long run and comparing the effectiveness of their initiatives over time.

Employee engagement surveys are one of the tools you can use to measure engagement levels, report on them, and make decisions based on the data. For example, if you see the levels of employee engagement dipping two quarters in a row, it’s time to alert the leadership and take action.

Design an effective onboarding for new hires

Employee engagement starts before an employee’s first day at work, and poor onboarding can impact how they perform in their new job. In fact, most employees resign within their first year on the job, so it’s essential to boost their engagement and job satisfaction as soon as possible.

Create a comprehensive onboarding guide that covers everything from sending swag to new employees to their first month in the company, and deliver it before they start. It will improve their experience and signal that the company is invested in their career.

Emphasize your company culture

Some employees will need a reminder from time to time - why are they here? Why are you all doing what you’re doing? By building an admirable company culture and conveying a sense of purpose, you will help your workers do their job better.

Clear company culture matters to employees, and the more they feel connected to the culture, the more likely they are to be invested and engaged in their work.

Focus on employee recognition

Employee recognition is one of the most effective ways to keep employees engaged and happy, even more so in remote teams. And it’s cost-effective, too, as recognition programs often come with a vast trove of data and aren’t too expensive to run.

From shoutouts and awards to perks and rewards, employee recognition is an easy way to show appreciation.

Have an employee wellbeing strategy in place

Do you want your employees to care about your company and its goals? You have to start by creating an employee wellness strategy to help your team maintain their physical and mental health. By showing them that you care about them and don’t consider them easily-replaceable resources, you’ll drive the same response from them.

Pay special attention to burnout, especially in remote teams. Remote workers often feel unable to turn off from work, can have a poor work-life balance, and are at higher risk of burnout and isolation.

Investing in employee experience and wellbeing pays off through cost savings on healthcare, employee engagement, reduced attrition, and, yes, you guessed it — higher productivity.

Be a good role model

If you want your employees to be in touch with their purpose within the company and stay committed to your shared goals, you have to model that kind of behavior. A good leader lives by their words, and if they want to see a change in their team, they need to be the one to drive it.

Create a Better Culture for Everyone

Is there anyone who doesn’t benefit from a good employee engagement strategy? The answer is clear: no. With engaged employees, you get a highly motivated team driven by the same purpose and values, ready to make that extra effort to reach and even exceed their own and the company’s goals.

It all starts with appreciation and treating people like valuable resources whose expertise, commitment, and effort affect your company’s profit, reputation, and the results you achieve altogether.