Engaged employees are the key to a successful business. That’s the short answer to the question, “Why is employee engagement important?”
When employees believe in the company’s mission and the work they do, they’re more likely to be productive and stick around at the company longer. In turn, these higher productivity levels often lead to more revenue, raising a business’ profitability.
To fully understand the link between employee engagement and business success, let’s take an in-depth look at employee engagement’s benefits, as well as how companies can measure and improve upon it.
Use our template to seamlessly calculate your own employee retention rate.
The Importance of Employee Engagement: 10 Benefits
Beyond its impact on profit margins, retention, employer branding and other aspects of your business, employee engagement matters to your employees. For that reason alone, it should matter to you. Simply put, prioritizing employee engagement shows your staff that you care about each of them as individuals, not just contributors to the company.
Why Is Employee Engagement Important?
When your employees are engaged and driven by the work they do, your whole organization will be more productive and reach goals faster. They’re also more likely to stay at your company if they feel connected and empowered in their roles, reducing recruiting expenses.
There are several more reasons why employee engagement is important, and these 10 stand out:
1. Employee Engagement Reduces Turnover
The average American spends one-third of their life at work, so it stands to reason they want to like what they do and who they do it with. If your employees don’t care about their work or your goals, they’re not going to stick around. Struggling employees — including those who are disengaged at work — are twice as likely to leave their position and company.
Improving employee engagement encourages individual contributors to invest in your team, helping you retain top talent. In fact, teams with low employee engagement suffer from turnover rates that are up to 43 percent higher than teams with high engagement. If you’re currently experiencing high turnover, get in front of a mass exodus by figuring out what is driving people away and how you can improve.
2. Employee Engagement Boosts Employer Brand
According to a 2021 Jobvite survey, 86 percent of job seekers cite company culture as an important deciding factor in choosing a role. When your employees feel connected to the work they do and to each other, they can become ambassadors for your company. The stories they tell about your company’s culture can shape your employer brand and draw in new candidates who want to be inspired by the work they do.
3. Employee Engagement Helps With Recruiting
A positive company culture with high employee engagement makes the lives of recruiters that much easier. As part of a recruitment strategy, recruiters can film employee spotlights and share them on social media. They can also create a recruitment video showcasing an office space and the fun atmosphere that employees enjoy each day.
If a workforce is engaged and invested in their daily work, they’ll contribute to a company culture that recruiters will want to show off and candidates will want to join.
4. Employee Engagement Supports Productivity
If your employees enjoy their work and want to do well, they’ll work harder. Teams that nurture employee engagement see an 18 percent increase in their productivity in terms of sales. However, engaging employees isn’t about just giving them work they enjoy but giving them a sense of purpose and fulfilling their passion.
A major driver of employee engagement is understanding how individual roles contribute to business strategy and objectives. If employees feel like their work has meaning and they’re valued by an organization, they’ll be more inclined to work harder. Companies can foster this sense of purpose by creating a company mission statement and articulating how teams fit into the larger mission and vision of the business.
5. Employee Engagement Increases Customer Satisfaction
Organizations with engaged employees experience a 10 percent increase in customer loyalty and a 23 percent boost in profitability. Your employees’ belief in your company and product translates into employees going above and beyond for the people they serve.
Customers pick up on engaged employees’ excitement and passion, which influences their buying decisions. One study found that customers of companies with engaged employees use their products and services more frequently and were more satisfied than customers of companies with disengaged workforces. Stephen R. Covey, author of The 7 Habits of Highly Effective People, said it best: “Always treat your employees exactly as you want them to treat your best customers.”
6. Employee Engagement Reduces Absenteeism
Vacation time is important for your employees’ well-being, but if they’re not showing up to work because they’re not engaged with their work, those days off can start to add up. According to the CDC, U.S. companies lose around $225.8 billion each year due to employee absenteeism.
Tackling employee absenteeism as a part of your overall retention strategy is crucial for maximizing your budget, and engaging your employees is a great place to start. Companies that actively engage their employees report an 81 percent average decrease in absences.
7. Employee Engagement Prevents Burnout
It’s not enough to provide a comfortable office environment or give employees new or more interesting tasks. Companies must offer mental health days, paid sick leave, access to therapy and other basic benefits. A combination of work and mental health policies is ideal for ensuring workers remain engaged without burning out.
8. Employee Engagement Increases Profitability
It makes sense that companies with employees who work harder, serve customers better and stick around for longer are more profitable than organizations with disengaged workforces. Reducing turnover cuts down on the cost of hiring new employees; improved productivity means more business-driving products, ideas and strategies; increased customer satisfaction leads to more sales. All of this drives profitability.
The numbers also back up this trend. Businesses with engaged employees enjoy 23 percent higher profits compared to businesses with disengaged employees. A highly engaged workforce infuses passion and energy into every corner of your business, generating higher profits in return.
9. Employee Engagement Means Better Mental Health
Beyond its financial and productivity impacts, employee engagement is important because it supports your team’s well-being and happiness. Employees who feel fulfilled and engaged by the work they do are likely to feel happier in their lives overall, while employees in workplaces that are disengaging or outright toxic are three times more likely to suffer from depression and other mental health issues.
10. Employee Engagement Strengthens Leadership
Engaging all employees is crucial to the success of your business, but this is especially true at the managerial level. Managers have a direct impact on the engagement of other employees, being responsible for 70 percent of the variation between employee engagement scores across business units. If you fail to engage some of your highest-ranking employees, then you’re bound to see ripple effects spread throughout your organization.
Make sure managers and executives understand your company’s mission, their roles within the company and how each position contributes to the success of the business. Knowledgeable managers are better at communicating objectives while answering questions about resources and policies. This centers your company culture around trust and transparency, improving employee engagement among all team members.
Keep Track of Employee Engagement
Because levels of employee engagement often fluctuate, it’s crucial you stay on top of changes in your workforce’s sentiments. There are several ways to measure employee engagement, such as:
- Distributing employee engagement surveys
- Making one-on-one meetings more common
- Conducting exit and stay interviews and applying what you learn
- Employing meeting techniques like small groups to encourage sharing and discussion
Keeping a finger on the pulse of your workforce can help you sense when something’s off and take swift action to revamp your employee engagement levels.
Take Steps to Raise Employee Engagement
There’s no overarching solution for cultivating employee engagement since the nature of the issue can vary between workforces. Below are just a few ideas that you can adopt to better engage your employees:
- Develop more channels of communication to increase transparency
- Create or reinforce employee recognition programs
- Introduce more monetary rewards like merit pay and referral bonuses
- Provide customized benefits plans for employees
By keeping these employee engagement tips in mind, you can build a healthier company culture that promotes success without sacrificing the well-being of your employees.
We'll walk through a process for crafting an EVP that resonates with candidates.