The Importance of Employee Engagement and Its Impact on Your Bottom Line
An actively engaged workforce is not just good for morale; it brings about tangible benefits like a healthier bottom line and improved workplace safety.
According to Gallup's How Millennials Want to Live and Work report, only 29 percent of Millennial employees in the United States are actively engaged in their jobs, while 55 percent are not engaged and another 16 are actively disengaged. Older workers have a higher rate of engagement in their work, but even then the numbers are not great: among the generation with the highest engagement rate, the Traditionalists (those born in 1945 or earlier), fewer than half—only 45 percent—are actively engaged in their work.
Employees who are actively engaged take pride in their jobs and, as a result, can help move their organizations forward. In contrast, disengaged employees are often unhappy with their jobs and this can negatively impact the organizations for which they work. Employers, therefore, should not dismiss employee engagement as a luxury but should be concerned about it at every level of their organizations.
What Do We Mean by Employee Engagement?
While there are many definitions of employee engagement, their most common feature is employee satisfaction. Gallup defines an “engaged employee” as one who is fully "involved in and enthusiastic about their work." Because of their involvement and enthusiasm, engaged employees will act in ways that further their organization’s interests.
What Are the Signs of a Disengaged Workforce?
Disengaged employees tend to lack enthusiasm and are often distracted (see Distraction, Fatigue & Impairment to learn about the safety implications of distraction for jobs involving transportation). From a health and safety perspective, the following signs can help employers determine whether or not their workforce is engaged:
- Employees fail to report injuries or hazards (if this is a problem you face, see How to Encourage Employees to Report Workplace Hazards)
- Poor safety performance regardless of the fact that the organization is OSHA compliant
- Employees break safety rules on a regular basis (which can lead to greater safety issues, as discussed in Safety and the Broken Windows Theory)
- Employees show no respect for the organization’s safety programs
- There is a low employee participation in safety committees and other safety-related activities
The Link between Employee Engagement and Safety Performance
Gallup's State of the Global Workplace report identifies a significant positive correlation between safety performance and employee engagement. According to this report, organizations with actively engaged employees had 48 percent fewer safety incidents compared to organizations with lower employee engagement.
How Much Does Low Employee Engagement Cost an Organization?
The financial cost of employee disengagement in the United States is estimated to be $370 billion annually. Disengaged employees cost organizations on average $3,400 per year of every $10,000 in annual salary, with turnover costing between 48 and 61 percent of an employee’s annual salary.
Unfortunately, the financial costs to organizations are not only attributed to loss of productivity and higher employee turnover rates. Because disengaged employees are regularly absent from work, they are more likely to be involved in higher numbers of safety incidents. And the severity of the accidents they are involved in also affects the bottom line: an average safety incident costs $392 for a non-engaged employee, while it only costs $63 per engaged employee.
Furthermore, disengaged employees often exhibit negative attitudes, which can have a negative impact on employee morale.
Steps to Identify, Monitor, and Improve Employee Engagement Levels
The following are some basic steps that employers and organizational leaders can take to identify, monitor, and improve employee engagement levels.
1. Determine the engagement levels of your employees. It's important to understand the difference between happy, satisfied employees and engaged employees. After all, being satisfied with your job and being motivated to do it well are two different things. Additionally, not all actively engaged employees will be at the same level of engagement within the organization. Employers and organizational leaders need to take these distinctions into consideration before embarking on an employee engagement initiative—the initiative must be customized according to the various levels of employee engagement within the organization.
2. Measure employee engagement. After gaining an understanding of the levels of engagement that exist within the organization, it is important to measure that engagement more precisely. Measuring employee engagement can be achieved by administering an employee engagement survey, something that should be done at every organizational level. Not only will this survey provide feedback, it will also help employers isolate areas of concerns.
3. Design and implement programs and initiatives aimed at disengaged workers. Employees become disengaged when their basic needs are not being met in the workplace, including have a clear set of expectations and having the right tools to do their jobs efficiently. It is also crucial that employee engagement initiatives be tied to the organization’s goals in order to maximize the potential for success, with the main focus being placed on the work itself, relationships with co-workers and supervisors, job security, and opportunities for growth.
4. Ensure that leaders are on board and that they are held accountable for employee engagement levels. Management buy-in is integral to the success of employee engagement initiatives. Once on board, managers should be held accountable for their employee's engagement levels. Additionally, organizations should consider leadership development activities to help their managers and supervisors adopt a more inspirational leadership style as this can help increase engagement.
Employee Engagement and the Bottom Line
Employee engagement can impact all aspects of an organization’s operations. Multiple studies of companies around the world indicate that strong employee engagement has had measurable impact on customer ratings, profitability, productivity, turnover, safety incidents and absenteeism. Companies with high levels of employee engagement increased their operating income by 19 percent, while the operating income of companies with low levels of employee engagement decreased by 33 percent.
Worker engagement brings about some significant, tangible benefits: high levels of employee retention, a healthier bottom line, and a safer work environment. Taking steps to improve employee engagement is a worthwhile investment for any organization.
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