For business owners, CEOs, and HR managers, a solid ability to answer why employee engagement is important is essential in addressing multiple workforce problems and ultimately increasing revenue and return on investment for labor costs.

What Is Employee Engagement?

Employee engagement is the measure of employee motivation, commitment, and involvement in their job and the company. Engagement is also related to job satisfaction, the degree to which employees feel optimistic about their place of work and work.

Generally, employees who believe in a company’s values and mission and have a high level of job satisfaction also have high levels of engagement. On the other hand, non-engaged or disengaged employees may have low levels of motivation and commitment to their job. These low motivation levels may negatively affect your company’s daily operations – and bottom line.

Engaged employees are more productive, so understanding the importance of employee engagement can help improve productivity in your workforce. View these signs for each or download our infographic.

What Impacts Employee Engagement?

According to Gallup, only 32% of employees in the U.S. fit into the “actively engaged” group. Numerous factors impact effective employee engagement in the workplace. These factors can have negative or positive effects on business outcomes.

• The leadership of the workplace and their relationships with employees
• The clarity and consistency of communication with colleagues and supervisors
• A sense of purpose and belonging in the organizational culture
• Opportunities for development and growth in the employee experience
• Flexibility around scheduling and work location

Why is Employee Engagement Important?

Is employee engagement the key to improving performance in the workplace? Research shows that employee engagement is the number one predictor of job performance. Conversely, poor employee engagement can negatively impact business operations and profits. Lack of employee engagement is a primary reason why 70% of mergers and acquisitions fail.

Focusing on increasing employee engagement can solve many workforce problems that businesses of all sizes struggle with, like a high absenteeism rate and low employee retention. On the contrary, the benefits of high employee engagement include increased productivity and innovation.

Employee Engagement Trends in 2022:

• 32% of workers are actively engaged, and 17% are disengaged, based on Gallup research. This data shows a 2% decrease in worker engagement and a 1% increase in disengagement in the past year.
• The leadership of a workplace, including executives, managers, and supervisors, remains a top factor in employee engagement.
• Hybrid and remote workers are 8% more engaged than on-site workers.

The Business Case for Employee Engagement

While it’s vital to understand what employee engagement is and why it is important, the real motivation for business owners and CEOs is how it will affect their company. Of course, disengaged employees don’t work as hard, but identifying candidates who will be hard workers can be difficult.

Furthermore, disengaged workers may spread their negative attitudes to other employees, causing a ripple effect on productivity levels, communication, and business growth. To answer the question of how important employee engagement is for business success: it’s essential.

The Impact of Employee Engagement on Organizational Performance

To further build the case for why employee engagement matters, let’s look more closely at the impact of employee engagement on organizational performance. A disengaged employee is not motivated to perform well at work. That results in issues with punctuality and attendance, which could disrupt daily operations and negatively affect customer experience.

Key impacts on Organizational Performance:

• Burnout
• Conflict
• Accidents
• Absenteeism

Disengaged workers also do not communicate or collaborate well with colleagues and supervisors, leading to accidents and conflicts, which take time away from employees’ work. So, a significant reason why engagement is important is that it can reduce these negative impacts to maximize organizational performance.

The Impact of Employee Engagement on Business Results

CEOs and other c-level executives may also want to know how employee engagement affects business results. A disengaged workforce can harm business results through low productivity and high turnover. Because disengaged employees are less likely to collaborate, businesses may lack growth and innovation. Employee engagement and commitment drive growth.

Key impacts on Business Results:

• Profit Losses
• Staff Turnover
• Growth stagnation

Low employee engagement is especially damaging for customer-facing workers. A study by Glassdoor found that customer satisfaction and employee satisfaction are directly linked. That means unhappy workers could result in a loss of profit due to poor customer service.

Employee Engagement and Turnover (Retention)

Hiring an employee costs a lot, from recruitment costs to onboarding costs. It’s also normal to see a decline in overall workforce productivity when hiring someone new, as there is often a learning curve for new hires even after a lengthy onboarding process. Every employee hired by a company represents an investment, and high turnover means a low return on investment (ROI).

When an employee quits, it can result in a loss of revenue of up to one-third of their annual salary, and the more disengaged an employee is, the more likely they are to quit without notice.

7 Benefits of a Highly Engaged Workforce

The importance of employee engagement is evident in the breadth of benefits that come with a highly engaged workforce. Engagement correlates with productivity, job satisfaction, retention, and more. The impact of employee engagement can be seen both short-term and long-term in the workplace.

Benefits of Employee Engagement in 2022:

• Employee stress levels are at an all-time high, but employee engagement can help.
• High employee engagement can be linked positively to increased employee well-being.
• According to Forbes, employee engagement can address and alleviate the impacts of The Great Resignation on the economy.

Productivity

Productivity is the efficiency of the work an employee does. The larger a worker’s output is compared to their input, the more productive they are. High productivity levels are one of the most valuable benefits of a highly engaged workforce. When employees work harder, they often generate more revenue for the company without any increase in the cost of labor. Engaged employees are more productive because they see value in their work and find intrinsic motivation to work hard.

Commitment and Satisfaction

Employee commitment represents an employee’s dedication toward their job responsibilities and the company. Commitment to a company shows a strong bond that connects to increased productivity and retention.

Committed employees work hard because they believe in the value of the work they are doing and in the purpose behind that work. They can see the company’s big picture and long-term goals. Organizational commitment is also directly linked to high job satisfaction; both are common attributes of engaged employees.

Employee Retention

Due to the high cost of employee turnover, employee retention is a crucial issue for CEOs and HR teams. As a result, you may be more likely to invest in training employees that are more likely to stick around long term. In addition, companies with high employee engagement have up to 43% less turnover than companies with low employee engagement. A straightforward solution for executives struggling with retention is to improve employee engagement to retain their workforce.

Communication and Collaboration

Effective teams communicate well, which highlights the importance of team engagement. Engaged employees share more openly, often, and efficiently than disengaged employees. C-level executives can help foster both formal and informal communication through the right technology tools.

Engagement also increases collaboration because engaged employees are more likely to work effectively in teams. According to the Harvard Business Review, a cut-throat work culture leads to disengagement, so executives and managers who foster collaboration over competition will see more employee engagement, creating a positive upward cycle between these three factors: communication, collaboration, and employment.

Effective Leadership

It’s impossible to paint a complete picture of the importance of staff engagement without discussing the importance of leadership. Leadership impacts employee engagement but is also improved by it. It’s unlikely that a disengaged manager will be effective at engaging their employees.

On the other hand, when managers are engaged, daily operations among teams in your organization will run more smoothly. Effective, engaged managers act as coaches using people analytics to promote growth and productivity.

Safety, Health, and Well-Being

What is the importance of employee engagement in the safety of a workplace? Engaged employees are safer because they are more present and aware of their surroundings. But a disengaged employee may be mentally checked-out, chatting too much, or listening to music on the job. All of these behaviors could lead to a costly on-the-job accident.

People also want to feel happy at work. When they do, they will work harder, according to research from the Human Capital Institute. Engagement effectively increases employee happiness and well-being and reduces stress, leading to better overall health.

Innovation and Growth

Engaged employees are more likely to collaborate and be creative which leads to innovation, a critical factor in the success of any business. When employees are encouraged to innovate, they are more likely to become engaged and less likely to burn out. With burnout levels rising, this is an essential factor in employee engagement in an organization.

Bringing employees at all levels into a company’s innovation processes gives them a sense of belonging and reason to continue working hard. Learn how to leverage worker engagement to improve customer satisfaction.

3 Ways to Improve Culture and Employee Engagement

Now that you understand why employee engagement is important, you may be wondering how to foster employee engagement. There are many ideas on how to increase employee engagement, but many are not research-backed. The strategies to improve culture and employee engagement described below are data-driven with proven results.

Screen for Employee Engagement with Pre-Hire Assessments

Assessments such as Chally’s Predictive to Engage Assessment gives leaders strategic data to drive decisions and organizational success with current and potential employees. The assessment measures what is known as the ABCs of Engagement which determines an employee’s propensity for success in their role:

• Advocate: Engaged employees talk positively about the organization with coworkers, potential employees, and clients.
• Belong: Engaged employees feel a strong sense of belonging as members of the organization and are committed to goals.
• Contribute: Engaged employees go beyond their expected roles and actively work to increase the organization’s success.

Chally’s Predictive Engagement Assessment can identify highly-engaged workers that are the best fit for any specific role. We can even help determine where an organization should use pre-hire assessments in the recruitment and hiring process.

Activate Coaching with People-Analytics to Guide Development

We have already highlighted the role of leadership in the importance of engagement. However, even the most engaged hires can become non-engaged or disengaged under a poor management team. Managers play a direct role in motivating employees and communicating a company’s culture.

Enabling managers to conduct data-driven coaching starts with data you can trust. Chally’s Predictive Talent Assessment goes beyond finding candidates that are the best fit for the job. Our program includes coaching toolkits to personalize development plans for each employee to keep your business growing and innovating.

Invest in New Talent and Existing Talent Simultaneously

The age-old question of investing in recruiting new talent versus developing existing talent creates an unnecessary dichotomy. The most effective way to boost employee engagement and satisfaction is to build a comprehensive plan that analyzes recruitment processes and engages current employees. A pre-hire assessment and data-driven coaching for workers and managers may be your best chance of significantly impacting employee engagement.

Find Your Most Engaged Applicants with Chally’s Predictive Engagement Assessment

The importance of employee engagement in the workplace is undeniable. The differences between an engaged and disengaged employee are staggering. Employee engagement affects everything from punctuality to productivity.

With Chally’s Predictive Engagement Assessment, hiring people who will be engaged employees is no longer a guessing game. Our assessments include personalized, easy-to-read reports, so you can quickly analyze candidates and pick the best ones for your company.

Explore what makes Chally different and learn more about our proven track record of employee engagement results by requesting a call with us today.

Read more related articles:

• New Hire No Show? Why Candidates Ghost a Job and What to Do About It
• The Best Ways To Engage Millennial Employees
• Why 70% of Mergers and Acquisitions Fail