How Employee Engagement Affects Your Bottom Line

Successful companies know that customer engagement is mission-critical. The most successful companies engage not just their customers, but also their employees. When the heart and soul of your business is engaged, you’re in a position to innovate, deliver exceptional customer service, and outperform financially.
Read on to learn more about how increasing employee engagement at your organization could affect your bottom line.

Employee Retention

We all know how difficult it can be to attract and retain great employees. The search and onboarding process can be costly. Some research places that figure as high as 50 to 60% of an employee’s annual salary. That figure doesn’t include the cost of orientation, training, and reduced productivity during the first few months. When all costs associated with turnover are taken into account, the cost can skyrocket up to 200%.¹

A 4-year Best Companies Group study, published in the Academy of Management, revealed that organizations named Best Places to Work reduced voluntary turnover by 21%.2 The employers we recognize as Best Places to Work have an average engagement level of 92%, which is about 50% higher than U.S. national employee engagement averages.3 Since employees who don’t feel engaged are far more likely to leave their job than employees who are highly engaged, it becomes clear that investing in employee engagement makes sense.

Productivity

There’s no question that an increase in engagement results in an increase in productivity. In a comprehensive analysis of the results of 199 research studies that covered 152 companies from 26 countries, a significant difference was found between entities with the top 25% on the engagement scale versus those in the bottom 25%. Those with lower levels of engagement experienced an 18% drop in productivity compared with those on the higher end of the scale. Additionally, they saw a 60% reduction in quality, as measured by defects in products.⁴

Customer Engagement

Improved employee engagement naturally leads to better customer engagement. No matter what department an employee works in, if they are engaged, they’re more likely to be knowledgeable about your processes, products, and services. Furthermore, they’re more likely to be interested and invested in helping to meet the needs of customers while solving their problems. When you look at it that way, it’s easy to see why employee-centric employers are also known to be customer-centric. As Sir Richard Branson famously said, “Clients don’t come first. Employees come first. If you take care of your employees, they will take care of the clients.”

“One group we worked with found that by increasing employee engagement year-over-year, they were able to increase their market share in retail sales by almost 70%,” shared CEO Jeff Tobaben of Evolve Performance Group, a consulting firm located in Bryan, Texas. He went on to say that among their competitors with declining employee engagement were also “losing market share.”.”

Financial Performance

Sourcing Gallup’s annual poll, Huffington Post reports that less than a third of U.S. workers are engaged, meaning that the other 70% are not engaged nor reaching their full potential. Author Chris Boyce goes on to point out that that disengagement rate (which is even higher globally) costs U.S. companies between $450 and $550 billion each year.

Where are the costs hidden in disengagement? Less engaged employees are more likely to miss work,⁴ wouldn’t give extra effort to help their employer succeed, don’t feel they can do their best work and wouldn’t recommend your products/services to their loved ones.

Aon Hewitt agrees in their study of employers with engagement levels at or above 65%; who apparently beat industry averages with higher revenue growth (6%), profit margins (3%), and shareholder returns (6%).

Learn More

It’s powerful to know what your employees think! You can identify problems like poor supervision, communication breakdown, and mounting plans to leave your company before expensive turnover affects your business.