Happy employees, colour

A win-win situation: the benefits of employee engagement for a business and its people

The success of any business is predicated on its people. For people to perform at their best, they need to be engaged — and robust employee engagement programmes can help facilitate this.

As the Fourth Industrial Revolution unfolds, opportunities for innovation seem limitless. Businesses have better access to disruptive new technologies than ever, and the automation of mundane tasks can help save time and money.

Despite fears of a robot takeover of service jobs, employees are still the biggest competitive advantage that any company, regardless of industry, has at its fingertips. As the leadership expert and keynote speaker, Brigette Hyacinth asserts,

"Your employees are your most valuable asset. Don't take them for granted or treat them poorly. They are your best brand ambassadors. Employees who have been pushed to the point where they no longer care will not go the extra mile. They will not take the initiative to solve problems. They will end up treating customers the same way you treat them.”

People drive bottom-line growth — but only if their intrinsic needs are consistently being met.

Indeed, according to Deloitte research conducted across over 3,300 businesses around the world, ‘culture and engagement’ was deemed the most important issue for companies. Of all the challenges facing HR — including leadership, learning and development (L&D), and workforce capability — engagement is seen as the most critical and least understood.

As this blog will explore, employee engagement is vital for both business success and individual happiness. Engaged people are more likely to feel fulfilled at work and have a sense of purpose, while employers can trust them to deliver on their outputs.

Benefits to a business

1) Productivity and performance

The UK has a massive productivity problem. According to The Economist, one-third of British businesses have seen no increase in productivity since the millennium.

Australian business has had a similar setback. In June 2018, a Productivity Commission report revealed that labour productivity in the country was essentially flatlining. After a generation in which productivity had grown at almost 2% annually, the figure dropped to a “troubling” 0.2%.

Enter engagement. A 2006 study by Gallup looked at over 23,000 business units around the world and compared the productivity of those with the highest engagement scores versus those with the lowest engagement scores. The results? The most engaged people were 18% more productive than the least engaged.

Further analysis from call centres run by UK-based insurance company, More Than, also found that branches with higher levels of employee engagement had 35% less downtime between calls. Engagement enables productivity.

But what comes first? Engagement or performance? Understanding the relationship between the two can feel like something of a chicken-and-egg quandary for businesses. Should organisations engage with their people and hope they fulfil their duties, or should they demand proof of productivity before engaging?

As it turns out, overwhelming evidence suggests that the process always starts with engagement. In their 1999 book, First Break All the Rules: What the Greatest Managers Do Differently, Marcus Buckingham and Curt Coffman stated that the relationship from engagement to performance is four times stronger than the reverse. Meanwhile, Aston University identified a robust link from engagement to performance but not the other way round. The process only works left to right: engagement facilitates performance.

2) Customer satisfaction

“The customer comes first.”

We’ve all heard this oft-repeated adage at some point in our lives. The problem? It’s simply not true.

Right Management found that 70% of their more engaged people had a good understanding of customer needs. For disengaged people, the figure was a lowly 17%.

In NHS trusts, patient satisfaction is significantly higher where there are higher levels of employee engagement. Professor Michael West of the Centre for Performance-led HR at Lancaster University concluded that “employee engagement emerged as the best predictor of NHS trust outcomes.” Put simply, hospitals with higher engagement scores have lower mortality rates.

3) Innovation

Extensive research from the Chartered Institute of Personnel and Development (CIPD) suggests that higher levels of engagement lead to more innovative work behaviour. Engaged people are far more likely to search out new methods and techniques to transform innovative ideas into useful applications. Further analysis published by Gallup found that 59% of engaged people say that work brings out their creativity, whereas only 3% of those considered disengaged felt creative at work.

4) Profit

Over a five-year period, Kenexa found that organisations with engagement scores in the upper quartile had twice the annual net income and seven times the shareholder return than businesses in the bottom 25%. Companies with engaged people have 8.6% higher profit margins than companies with bored people.

Marks and Spencer, for example, found that stores with improving engagement delivered an average of £62 million more in sales every year than stores with declining engagement. Meanwhile, Dorothy Perkins discovered that environments characterised by high engagement delivered 12% higher growth in sales, a 10% improvement in operating savings, and 35% lower stock loss.

Benefits for an organisation’s people

1) Wellbeing and health

Research across the UK demonstrates a strong correlation between employee engagement and psychological wellbeing. According to the British Psychological Society’s psychometrics, for a test to be predictive, it needs a correlation of 20%. CIPD data shows that the link between engagement and wellbeing is 35% — almost double the prediction threshold.

The CIPD also found that those who are absorbed in their work are three times as likely to have positive emotions (enthusiasm, cheerfulness, contentedness) than negative ones (stress, depression, anxiety). Gallup, meanwhile, found that 54% of disengaged people say that work affects their health negatively; for engaged people, the number is only 12%. The key takeaway? Engaged people take significantly less sick days per year.

2) Retention

The Corporate Leadership Council (CLC) has reported that highly engaged businesses have the potential to reduce staff turnover by 87%. The study also found that disengaged people are four times as likely to leave a business than engaged ones. Similarly, Royal Bank of Scotland (RBS) data suggested that branches with the lowest engagement scores had almost double the voluntary turnover as highly engaged branches.

3) Health and safety

Other research has found that engaged organisations are actually safer. In some cases, the least engaged businesses were on average experiencing 62% more accidents than those high engagement scores in the upper quartile. The Olympic Delivery Authority (ODA), for example, had an accident frequency rate of half the construction industry average and put it all down to employee engagement.

The takeaway

If one thing is clear from these benefits, it’s that everyone gains. The only losers are a business’ competitors. When engagement is high, individuals, managers, shareholders, and customers associated with a business all stand to win. By driving engagement across a business, the conditions are set for trust and virtuosity to flourish. As such, the business case for widespread employee engagement needs direct CEO and CFO oversight and needs to be a fundamental part of business strategy.

 

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