November 01, 2014

What is “Engagement”? And Why Does It Matter?

Engagement, specifically worker engagement, is one of the most popular catchphrases in human resources this year.

While most companies cite employee engagement as one of their top goals, only few are able to ensure that workers are truly committed to their organizational goals and values. In the 2014 Deloitte Global Human Capital Trends research study, 78 percent of business leaders rated retention and engagement as urgent or important.

Employee Engagement, 2002 - 2012

Employee Engagement, 2002 - 2012

Source: Gallup Inc.

According to a recent survey by Gallup Inc., only 29 percent of employees in the U.S. and Canada are engaged. And only 13 percent of the total global workforce is engaged. A 2013 study estimates that low employee engagement costs the U.S. economy between $450 billion to $550 billion annually.

Effect of Engagement on Key Performance Indicators

Effect of Engagement on Key Performance Indicators

Source: Gallup, Inc.

What is “Engagement”?

Often, managers equate employee engagement to employee happiness or satisfaction. However, it is possible for someone to be happy at work, yet not be working hard or productively on behalf of the company. Worker engagement is a workplace measure of the emotional commitment a worker has to the organization and its goals. This means that engaged workers care about their work and the company, and do not work simply for a paycheck or promotion, but rather on behalf of the organization’s goals.

Research shows that companies with engaged workers have better business outcomes. A Towers Perrin research study shows that companies with engaged workers have 6 percent higher net profit, and a separate study shows that engaged companies have five times higher shareholder returns over five years. According to research by Oxford Strategic Consulting, the top 25 percent of companies with the most engaged workers produced twice as much profit and had 22% higher shareholder returns than the companies with the least engaged workers.

Tips on Boosting Worker Engagement

1) Select the right managers

Companies should actively search for managers who have the unique skills required to effectively manage people rather than simply using management jobs as promotional rewards for all career paths. Managers should have the right talents for supporting, positioning, empowering, and engaging their staff.

2) One size does not fit all

According to Gallup’s research on employee engagement, different types of workers need different engagement strategies. For example, generations near the end of their career tend to be more engaged than those at the beginning. And women have slightly higher engagement rates than men. Tenure, industry, organizational level, and educational background also make a difference in worker engagement.

3) Consider workplace flexibility options

Research shows that working remotely has a strong correlation with employee engagement. Generally, remote workers are slightly more engaged and log more hours. Similarly, companies with workplace benefits that promote wellbeing frequently have a more engaged workforce.

4) Don’t implement without first really understanding your workers

Managers often hear stories of what’s worked to boost engagement at other companies, and attempt to mimic that program. However, simply copying what’s worked for another organization or industry might be not be the best fit for the company. Company leaders should really analyze their workforce and organizational culture to come up with unique practices that are relevant to their company.

5) Ask for continuous feedback

Asking workers to continuously provide feedback is a great way for managers to understand the pulse of the company. Continuous feedback from workers allows companies to uncover hidden issues, obtain data on what motivates workers, encourage collaboration, and give the message that worker opinions are important and that management cares about them.