7 Excellent Reasons to Focus on Employee Engagement

Better staff retention? Higher profits? Increased productivity? What's not to like?

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By Gordon Tredgold • Jun 6, 2017 Originally published Jun 6, 2017

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How many companies, or CEOS, do you know that talk about how their employees are their most important or valuable resource? I hear this almost every single day when I consult with businesses. In fact, if I had a dollar for every CEO I've heard say this over the years, I could probably afford to retire.

Related: A Data-driven Case for Understanding the Impact of Employee Engagement on Retention

But the truth is, when you look at how leaders actually manage and interact with these "valuable" employees of theirs, you feel just the opposite.

Indeed, many companies are merely paying lip service to employee engagement. Sure, it makes a nice sound bite, something leaders can say to try to motivate their staff. But what's being done in practice is very different, because for many companies, it's "profits first," followed by customers and -- last -- employees.

Don't believe me? Then explain why measures of employee engagement in the United States have been stuck at around 30 percent for many years.

Clearly, companies are engaged in short-sighted thinking. Here are seven benefits of focusing on your employees and their engagement that could help benefit your profits and your customers alike.

1. Better staff retention

Highly engaged employees are 87 percent less likely to leave your company than disengaged employees, according to a a Hay Group study. Turnover not only has a disruptive effect on your business and services but also adds an additional expense in terms of recruiting, onboarding and training new employees -- plus paying for the lost opportunity costs until their roles are filled. Altogether, these issues can cost your company anywhere from 16 percent up to 213 percent of salary depending upon the role.

2. Increased productivity

Happy people are productive people, and highly engaged people fall right into that category. When employees are engaged at work, they feel a connection with the company. They believe that the work they're doing is important, and they therefore work harder. According to Gallup, engaged employees outperform disengaged employees by 21 percent. In my experience, I would say that this is a conservative estimate, but even so, a 21 percent increase is a significant boost to productivity.

Related: 5 Companies Getting Employee Engagement Right

3. Higher profits

Companies with engaged employees achieve much better profits: A study by Towers Perrin in 2008 showed that organizations with engaged employees experienced a 19 percent increase in operating income over a 12-month period, compared to a 33 percent decrease in companies with disengaged employees.

That's a 51 percent difference in profitability between companies with engaged staff compared to those with disengaged staff.

4. Improvement to a company's reputation

Your staff are the ambassadors for your company, and what they say about you has a direct impact on your reputation. Employees who are happy and speak well about your company increase its reputation and attractiveness to other potential employees, as well as possible customers.

5. Increased customer satisfaction

Richard Branson has said that, "Clients do not come first; employees come first. If you take care of the employees, they will take care of your clients." A study by Temkin in 2016 showed that companies which excelled at customer service had 1.5 times as many engaged staff than companies with poor customer experience.

If you want happier and more satisfied customers, you need more satisfied and engaged teams.

6. Fewer sick days

Highly engaged employees have fewer absence days -- an average 3.5 days -- compared to disengaged employees. Sick days cause disruption to your operations and can put an additional burden on engaged staff.

Sick days cost American businesses $228.5 million, while a more engaged staff means fewer sick days -- and lower costs to pay.

7. Lower stress

There are connections between happiness and stress relief. Not only are happy teams more productive, they are also less stressed and stressful to other employees. And that's a scenario which helps create a much healthier working environment.

Related: 4 Ways Managers Can Commit to Improving Employee Engagement

Taking good care of employees, and ensuring that they are highly engaged shouldn't just be an empty slogan for companies and their CEOs. It should be an active part of your strategy, because as the above research illustrates, there are multiple benefits involved, which in turn help drive growth, profits and customer satisfaction -- the goals of every company.

Gordon Tredgold

Entrepreneur Leadership Network Contributor

Global Gurus Top 10 Leadership Expert, Speaker and Trainer

Gordon Tredgold is one of Global Guru's Top 10 Leadership Experts. He has worked in senior leadership positions, delivering $100 million projects and running $300 million departments. He now helps clients become leaders who are in demand, know how to succeed and get paid the big bucks.

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