Why Employee Engagement is Important
Employee engagement remains a challenge for many companies. Have you ever asked yourself, just how many of the employees in my organization are really engaged? If you believe it is about half, you may actually be overestimating the number.
But why is employee engagement important to businesses? It’s simple: to make higher profits. Businesses with more engaged employees perform better. Need convincing? Need a business case for employee engagement?
- Businesses with more engaged employees have 51% higher productivity.
- Businesses with higher engagement have 9% higher shareholder returns.
- Companies with the most effective employee communication have 47% higher shareholder returns over the last five years.
- Engaged employees outperform disengaged employees by 20-28%.
- Organizations with engaged employees showed a 19% increase in operating income over a 12-month period, compared to a 33% decrease in companies with disengaged employees.
- Employer understanding of the business strategy and how their work contributes to company performance is one of the top drivers of engagement.
- Almost two-thirds of all employees are 33% as productive as they could be because they don’t understand what they are being asked to do.
- 80% of employees with a high degree of trust in management are committed to the organization, compared with 25% of employees with a low degree of trust.
- In organizations with highly engaged employees, the share prices rose by an average of 16 percent compared with an industry average of 6 percent.
- Highly engaged employees have less absence days – in average 3,5 days – compared to not engaged employees.
- A 5% increase in total employee engagement correlates to a 0.7% increase in operating margin.
- Organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement.
- In companies where 60 to 70 percent of employees were engaged, average total shareholder’s return (TSR) stood at 24.2 percent; in companies with only 49 to 60 percent of their employees engaged, TSR fell to 9.1 percent; companies with engagement below 25 percent suffered negative TSR
Steps to Build Successful Employee Engagement
Employee engagement can best be summarized as a dynamic partnership in which employees bond with their organization and with each other through shared understanding and a common purpose.
- Define and map of Organization’s Strategy so the Direction is Crystal Clear.
- Communicate the values, behaviors and measurement criteria that will Signal Success.
- Conduct Strategic Mapping in every major business unit.
- Create a performance management/talent management system.
- Link Incentive Compensation to the Outcome of performance management.
- Set Objective based on the department Strategy map.
- Make every manager accountable.
- Commit to a formal career advancement/enhancement program and succession planning.
- Foster Positive, Supportive relationships.
- Communicate constantly and consistently.
Where to Start
Collect – Survey Data
Review – Other key indicators of organizational success.
Look – For gaps between employee expectations and organization’s performance.
How to build successful employee engagement
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