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How Employee Engagement Impacts Your Bottom Line

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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.

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. 

Download eBook now

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