Employee engagement directly impacts business success

Whether the economy is booming or struggling, employee engagement is a key factor in how companies perform, according to the latest Gallup study, Engagement at Work: Its Effects on Performance Continues in Tough Times. And while there are proven ways to increase employee engagement, the results of this overview indicate that many employers still do not see the value in raising the level of their workers’ commitment through employee engagement programs.

To arrive at its Engagement at Work findings, Gallup reviewed 263 research studies covering 49,928 business units at 192 organizations in 34 countries.

Although this study did not specifically survey employees for their levels of engagement at their workplace, continuous Gallup polling results from 2012 show that just 30 percent of U.S. workers are engaged at their companies. A majority, 52 percent, reported they are not engaged, while 18 percent said they were actively disengaged.

Engagement enhances performance

This is the eighth such survey on employee engagement that Gallup has undertaken since 1997.

Gallup scored business units on nine metrics that included absenteeism, customer loyalty/engagement, employee safety, patient safety incidents, product defect numbers, productivity, profitability, theft, and turnover.

Business units in which employee engagement scored on the top quarter, compared with units in the bottom quarter, had:

  • 37 percent lower absenteeism
  • 10 percent higher customer loyalty/engagement
  • 48 percent fewer employee safety events
  • 41 percent fewer patient safety events
  • 41 percent fewer quality defects or incidents
  • 21 percent higher productivity
  • 22 percent higher profitability
  • 28 percent lower employee and/or customer theft
  • 25 percent lower turnover (high turnover organizations)
  • 68 percent lower turnover (low turnover organizations)

The dollars and sense takeaway

Increasing employee engagement activities has tangible effects on the bottom line. When retailer Best Buy, for example, started examining and tracking the connection between employee engagement and customer satisfaction levels, it found that for every 10th of a point it boosted the former, its store increased annual operating income by $100,000.

UK-based manufacturer Nampak Plastic found that after establishing a program in 2007 to encourage and recognize innovation and ideas from all levels of the company, four years later absenteeism rates were down 28 percent from pre-initiative levels. An earlier survey revealed that 80 percent of employees would not recommend Nampak as a great place to work. The number was completely reversed four years later, when 80 percent of employees reported they would recommend Nampak to family and friends as a great place to work.

According to the lead author of the Gallup survey, engaged employees hold several beliefs that are critical to their higher performance. The three most important of these are:

  1. I have the chance to do what I do best every day at work.
  2. Someone at work encouraged my development.
  3. My opinions seem to count at work.

Companies with high levels of engaged employees recognize workers’ innate talents and put them in jobs where they use those strengths. They make real efforts to develop their workforces through coaching and other forms of mentoring. These companies listen and value the opinions and suggestions of those on the front lines, who are usually closer to daily activities and processes. They know what is or is not working.

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