Engagement and the Bottom Line

​Many people can provide anecdotal evidence as to why employee engagement is important—they can point to examples of when high engagement leads to good working relationships, creative problem solving, and trust. There also are many examples of low engagement leading to the opposite: poor relationships, one-off solutions, and lack of trust. Such stories are common and interesting, but to be able to support the decision to enhance engagement, leaders need concrete data.

Fortunately, the data are there to help make the business case for engagement efforts. According to Hewitt Associates, a global HR consulting firm, total shareholder return was 19 percent higher than average for high-engagement firms, while in low-engagement firms, it was 44 percent below average. Gallup reported that in 2008, the year after the recession officially began, “organizations with comparatively high proportions of engaged employees were much less likely than the rest to see a decline in earnings per share.” In an analysis of the Best Companies to Work for in America, the Wharton Business School reported that “high levels of employee satisfaction generate superior long-horizon returns.” Employee engagement affects more than just the bottom line: international HR research firm BlessingWhite links engagement levels to common business metrics such as discretionary effort, innovation, customer loyalty, quality, profitability, and productivity.

Based on interviews with executives at Fortune 500 companies, Gallup states that “[w]orkplace measures like employee engagement might be even more important as predictors of an organization’s economic health [than earnings per share].”

Addressing employee engagement can take time and money, both of which are precious commodities. Data like those above indicate that many companies can’t afford to not address low engagement. So what does an organization do? According to BlessingWhite’s 2011 survey, the top drivers of engagement are opportunities to apply talents, career development, and training.