7 Ways Employee Engagement Drives ROI

10.24.2018 »
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Building a business case for employee engagement is easier than you think, with updated statistics and insights that demonstrate there’s a measurable return on investment – including increased profitability.

Image of a company employee talking to a customer.

We hear a lot about employee engagement and how important it is to organizational success, but what does that really mean? And what’s the ROI of employee engagement? It’s a question that’s more important than ever, since Gallup's latest State of the American Workplace study shows that only 33% of U.S. workers are engaged in their jobs, and 45% report having either having changed jobs in the past 12 months or planning to do so in the next year.

Here are 7 ways to build the business case for strengthening employee engagement in your organization.

1. Increased Profitability

Companies with high employee engagement outperform their peers by 147% in earnings per share, according to the most recent Gallup study. And, companies with a highly-engaged workforce average a 19.2% growth in operating income, according to the Enterprise Engagement Alliance.

2. Productivity gains.

Engaged employees get more done, faster, and with higher quality because they believe what they’re doing matters, and they’re personally invested in the results. Teams with high employee engagement are 21% more productive, according to Gallup. When workers feel their work matters, that it’s more than just a job, their energy levels are higher and attention to detail increases. You get more done when you’re happy, don’t you? Guess what. That’s human nature.

3. Increased trust in management.

Research by Towers Watson showed that 8 out of 10 highly engaged employees have trust and confidence in their leaders, and another shows that 90% of engaged employees trust their immediate superior. Among millennials, 34% of those who have worked for 5 companies or more say they don’t trust their direct manager, and 48% say their organization only thinks about profit. Not a lot of trust there.

4. Increased innovation.

59% of engaged employees strongly agree that their current company brings out their most creative ideas, and 78% of employees who say their company encourages creativity and innovation also say they’re committed to their current employer. It ties directly to the higher profitability we noted earlier in this post. If innovation matters in your business, (is there any business where it doesn’t?!) then so does employee engagement

5. Reduced absenteeism and health care costs.

Actively disengaged workers have significantly worse health, more on-the-job accidents and higher absenteeism than engaged workers, and those costs add up quickly. 43% of workers say they’re often or always stressed, and one-third of these employees say the stress they experience is detrimental to their health. Engaged employees have 28% lower absenteeism. The savings associated with more working days and fewer illnesses and injuries are well worth the investment in employee engagement.

6. Higher retention levels.

Higher levels of employee engagement mean higher retention levels: 60% of non-engaged or actively disengaged workers would accept another job if offered, and one-third of adults say they would leave their current job for a higher-level position, better company culture, or a shorter commute. That includes your star players, whose departure has a disproportionate impact on your business results. Retention is key to productivity, and employee engagement is key to retention.

7. Lower recruiting costs.

Employee engagement has an effect on recruiting, too – 70% of executives say their employees’ desire for purpose is affecting HR’s ability to recruit and retain top talent. The cost of losing an employee averages 6 to 9 months of that employee’s salary – and that doesn’t even account for the loss of your internal knowledge base, lost productivity as other staffers fill in and the time it takes to get the right new person into the role. And then what if you make a hiring mistake? People working at the most engaged companies are 30% less likely to look for a new job and 20% more likely to recommend their workplace on Glassdoor or similar sites.

Engaged management and effective communication matter.

Most managers and executives don’t know how to effectively communicate objectives and results – or how to implement employee engagement strategies – and that leaves their teams feeling disengaged and out of the loop. That puts them – and your business – at risk. 63% of employees say managers are the most responsible for implementing employee engagement strategies, so creating effective communications that help managers and executives better communicate with their teams creates a real competitive advantage.

So now you have some additional insights into why employee engagement matters, and the facts to back it up. Stay tuned for our next blog where we'll talk about how to go about building employee engagement. 

Need more insight into building culture, now? It’s what we do, every day. Contact us to start building your culture, and your employee engagement levels!

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Sanger & Eby
501 Chestnut St.
Cincinnati, OH 45203

Katie Krafka
Director, Client Engagement
p. 513.784.9046

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