Most organizations are looking for ways to increase their bottom line. However, increasing profit margins with minimal expenditures can seem like a challenge. One method — which can increase the bottom line — is often ignored. This method is increasing employee engagement. According to Gallup, only 30% of the workforce in the US is engaged and 17% is actively disengaged. The rest of the 53%? Not engaged. Senior leaders usually know employee engagement is an issue. But it never becomes a priority because of the common misconception that it doesn’t have a direct impact on the bottom line. However, research shows otherwise. One study revealed that companies with disengaged employees can cost them up to $550 billion dollars a year. However, this can change. Employee engagement impacts the bottom line through improved productivity, lower employee turnover and higher performance.
Higher engagement leads to increased productivity
When employees find their work meaningful and purposeful, they feel more immersed and engaged in their role. As a result, you get happy employees that are more productive too. In one study where employees had to choose between salary and happiness at work, 69% chose happiness. This shows how it’s not enough to just increase an employee’s salary. You need to ensure that they are happy and enjoy doing their work, because the lack of motivation for the job will affect their productivity. Lower levels of engagement can cause a drop in productivity and a reduction in product quality. If your employees are more productive, they have a higher quality of output which positively impacts an organization’s bottom line. For example, employers with engagement rates above 65% beat industry average revenue growth, profit margins and shareholder returns.
The key to employee engagement
Learn more about employee engagement from our collection of free resources. You'll discover how you can boost performance and productivity through improving employee engagement.
Lower employee turnover and improve employee retention
If your employees leave, finding their replacement may be the least cost-effective solution. There are costs associated with training new employees rather than retaining and moving forward with existing ones. Time and resources have to go into training a new employee. With this approach, it is hard to see an immediate ROI because you have to wait a few months until they are fully geared up to do the job that your ex-employee did. One study revealed that employers will need to spend the equivalent of six to nine months of an employee’s salary to find and train their replacement. For example, if an employee has a salary of £60,000, it will cost the company between £30,000 to £45,000 to hire and train a replacement. Plus, if your new employees are not yet up to speed, this could affect their performance and productivity initially, causing a lag in meeting team objectives. By focusing on employee engagement, you are likely to lower your employee turnover and ensure a high employee retention. You may want to do this by assessing regularly how engaged your employees are and putting things in place to support them at work.
Higher employee engagement leads to better performance
An organization’s revenue and growth has been linked with having high performing employees. But where does engagement fall into this? Countless studies have revealed a positive correlation between highly engaged employees and performance. A Gallup study showed that there were significant differences in performance between employees that were engaged and disengaged. Those who were highly engaged nearly doubled their odds of success on the job. For example, those in the 99th percentile had four times the success rate of those in the 1st percentile. Companies with a high level of engaged employees outperformed their competitors in earnings per share and they were also better positioned to rebound after the recession. If your employees are more engaged in their work, they are more likely to do their job successfully and perform better. Employees that are more engaged understand the company’s objectives and share a common goal, which means they will go above and beyond. This increase in engagement and performance will ultimately impact your organization’s bottom line.
Learn more about employee engagement
Our new eBook looks at engagement in the context of performance and how it can impact productivity and profitability. Created in collaboration with workplace psychologist Ian MacRae, our eBook is designed to give you a new perspective on work engagement and how that can translate into sustainable high performance.