Why Is Employee Engagement Important?

Understand the business value of a highly engaged workforce.
Product Marketing Manager
December 22, 2021
Updated: February 22, 2022
Product Marketing Manager
December 22, 2021
Updated: February 22, 2022

You’ve probably heard the term employee engagement used more frequently as of late. No, it’s not a business trend to take note of now and forget in a year. Employee engagement refers to how invested your employees are in your company and their work, i.e. an eternally relevant and important aspect of your organization. 

Unlike job satisfaction, employee engagement isn’t transactional; higher salaries don’t correlate with higher levels of employee engagement. Instead, engaged employees are intrinsically motivated, meaning they care about their work, not just their paycheck. 

Engaged employees are the key to a successful business; a highly engaged workforce has been shown to boost retention, productivity and profitability rates, among others. Don’t believe us? Read on to learn why employee engagement is so important.


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Table of Contents

Employee Engagement Definition

Employee engagement is defined as the degree to which employees are committed to their employer, passionate about their work and invested in the company’s success.


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Why Is Employee Engagement Important?

Beyond its impact on profit margins, retention, employer branding and other aspects of your business, employee engagement matters to your employees. For that reason and that reason alone, it should matter to you. Simply put, prioritizing employee engagement shows your staff that you care about them as individuals, not just individual contributors. 

Empathy and compassion are somewhat taboo in business, with an unfair stereotype that neither will get you anywhere. However, those are the very cornerstones of successful employee engagement; if you want your employees to invest in — or at the very least, care about — your organization and what you believe in, you must do the same for them. 

Why Is Employee Engagement Important?

Employee engagement is defined as the degree to which employees are committed to their employer, passionate about their work and invested in the company’s success. 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 the time and expenses of recruiting.

92 percent of employees believe that empathetic leaders are critical to retention. While retention is a positive indicator of engagement levels, engaged employees don’t just stick around. According to a 2021 Businessolver report, 70 percent of employees say that workplace engagement results in better business outcomes and higher productivity. 

Nonetheless, business decisions are informed by data and tangible results; every aspect of your company should be tied to a positive business impact, and employee engagement is no exception. There are several reasons why employee engagement is important, but these four stand out:


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. Actively disengaged employees are 12 times more likely to quit than their engaged colleagues. 

What’s worse, employee turnover creates a ripple effect. Your top performers know their worth and can easily get another job — 53 percent are confident they’ll find a comparable position within six months. If your best people start to leave, the rest of your team will look around the office, wonder “What am I missing?” and pack their things.

Improving employee engagement encourages individual contributors to invest in your team, helping you retain top talent. In fact, a highly engaged workforce has been shown to decrease turnover by 25-59 percent. 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.


Employee Engagement Boosts Employer Brand 

Engaging your employees can help your talent strategy in more ways than just reducing turnover. According to a 2021 Jobvite survey, 86 percent of job seekers cite company culture as an important deciding factor in choosing a role. Working to increase employee engagement will have a positive impact on your company culture, which will in turn make you more attractive to applicants during the recruitment process.

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.


Employee Engagement Supports Productivity 

If your employees enjoy their work and want to do well, they’ll work harder. However, engaging employees isn’t about just giving them work they enjoy but giving them a sense of purpose and fulfilling their passion. Employees want to work for a company with goals beyond profit margins and with people they like. Simply improving employee communication and connection via social technologies can improve productivity by 20-25 percent.

A major motivator and 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. This is to your benefit, as business units with engaged workforces outperform their competitors by up to 202 percent.

Engaged employees go the extra mile, using discretionary effort to do more than their job description requires. They possess an owner’s mentality; they’re actively invested in the organization’s long-term success and believe their day-to-day responsibilities positively contribute to how the company achieves its goals.


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Employee Engagement INCREASES Customer Satisfaction

Organizations with engaged employees experience a 10 percent increase in customer rankings and a 20 percent boost in sales. Why? Engaged employees believe in your company, value your product and are passionate about the work they do. This translates into unparalleled customer service in which employees go 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.”


Employee Engagement Reduces Absenteeism

Employee absences can deal a real blow to your company’s bottom line. According to the CDC, U.S. companies lose around $225.8 billion each year due to employee absenteeism. 

Vacation time is important for your employees’ wellbeing, 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. 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. Per Gallup’s research, companies that actively engage their employees report an 81 percent average decrease in absences.


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. Consider the above three benefits: reducing turnover cuts down on the cost of hiring new employees; improved productivity means more business-driving products, ideas and strategies are developed; increased customer satisfaction leads to more sales. All of this drives profitability. 

A highly engaged workforce infuses passion and energy into every corner of your business, generating higher profits in return. If you’re not yet convinced of the financial impact improved engagement levels can have, know this: investing 10 percent more in employee engagement efforts can increase profitability by $2,400 per employee annually.


Employee Engagement Means Better Mental Health

There are plenty of ways that employee engagement benefits your bottom line. But beyond its financial and productivity impacts, employee engagement is important because it supports your team’s wellbeing and happiness. 

Employees that 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 or other mental health issues.


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How to Measure Employee Engagement

One of the most effective and efficient ways to measure employee engagement is through an employee engagement survey. Frequent short surveys, or pulse surveys, are superb for regularly collecting real-time employee data. This helps you maintain a clear understanding of your team’s engagement levels as they naturally ebb and flow. Pulse surveys should be used to answer pointed questions and address specific problems.

Quarterly or annual surveys, on the other hand, are typically more robust and are used to collect big-picture data. These offer a good point of reflection for employees and employers as they look back on the past year or few months. The data collected from these broader surveys can be used to track long-term goals and progress. 

Surveys are common, but there are several ways to measure employee engagement. Incorporate one-on-one meetings, small group discussions as well as exit and stay interviews into your strategy. In-person conversations are A) much more personal, which employees will appreciate, and B) give both employers and employees the opportunity to address more sensitive matters. They will also paint a more accurate picture of the current state of employee engagement for the leadership team. 


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How to Improve Employee Engagement

While there are endless employee engagement ideas that can be implemented at any time to give your team a much-needed boost, a long-term strategy is key to improving employee engagement and keeping your people engaged.

As your business scales and company grows, new faces will regularly join your team. It’s vital to the health of your organization that every new hire is set up for success as an engaged employee. Use these three strategies to start building a lasting, engaged workforce today.


Hire the Right People

It’s not altogether impossible, but nurturing disengaged employees into actively engaged team members is no easy feat. The best way to remedy disengagement is by hiring the right people from the get-go. Work with hiring managers to create detailed candidate personas. These will help recruiters more accurately identify the best candidates.

Keep in mind, the best candidates aren’t necessarily the most qualified or most experienced. Seek out prospective employees that ask questions about your culture, show interest in your field and genuinely seem excited about what you do. These are the individuals that will invest in your company and better connect with their colleagues. However, do your part and be upfront with every candidate by carefully explaining the role’s responsibilities and how it will influence the company’s long-term goals. 


Onboard New Hires Better 

Effectively engaging employees starts from day one. Train new hires in your core values and company mission in addition to carefully reviewing role responsibilities and expectations with them. Make every employee feel welcomed and valued from their very first day. Failing to do so will cost you — a poor onboarding process makes new hires eight times more likely to turn into disengaged employees.


Offer Professional Development Opportunities

The chance to grow professionally is hugely important to employees — no one wants to start a role only to plateau a few months down the line. Employees who report feeling a lack of support for their professional development are three times more likely to look for another position. Not only will growth opportunities improve retention, but they’ll also boost profits: business units that invest in professional development and skill training experience 24 percent higher profit margins

Set career path expectations from an employee's first day, and promote learning and development opportunities to candidates while recruiting. Additionally, make it a priority to promote from within. Doing so will show employees that their contributions are valued. Not only that, but internal hires help improve the efficiency of your recruitment process and cut down on your cost-per-hire. That’s what we call a win-win-win.

Employee engagement isn’t just a buzzword to throw around during interviews or conversations with employees; it’s a serious matter that can lead to monumental success or significant setbacks. Work closely with your people team to develop a comprehensive employee engagement program that’s tailored to your organization. Need further proof as to why employee engagement is important? Check out these 41 employee engagement statistics.


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