Written by Reality HR & Secantor Business Services | 11th May 2023
Authored by Reality HR & Secantor Business Services – financial and business consultants.
While we can’t always predict if a company will report record-breaking profits, there’s one area that’s proven time and again to be a strong indicator of business success: employee engagement.
Studies have shown there’s a direct link between employee engagement and a company’s financial performance, including this research from Gallup, which found that companies with the highest rates of employee engagement are four times more likely to succeed than the companies at the opposite end of the scale.
It’s also true that positive people have a positive effect on business. Those who come into work feeling motivated will create a positive environment and encourage their peers to work hard. For this reason, teams with engaged workers often reduce absenteeism by as much as 81% and see better retention – they also see higher customer loyalty.
Here’s a deeper look at the link between employee engagement and a company’s bottom line, and how you can foster more engaged employees.
Engaged employees improve productivity and performance
It goes without saying that employees who remain highly engaged at work perform far better than those who are disconnected from work or demotivated.
Employee engagement is how well an employee is actively engaged with their role and organisation on a daily basis. Fully engaged employees care about your company’s mission, future success, and have an interest in how they can contribute to this. Being fully immersed in their role reduces the chance of error and increases the quality of the work they produce. By contrast, the cost of poor quality can have a significant impact on profits when the time and disruptions of re-work, wasted materials and energy, management time and damage to reputation are considered.
People who perform well feel good about themselves and where they work, so continue performing – it’s a cycle.
In the end, a team of productive employees builds capacity for your business to serve more clients, accomplish more goals and harness greater profits.
Engaged employees contribute to a great work culture
Given that company culture touches every aspect of a business, this means it can have a profound effect on a company’s level of success or failure.
Culture is also closely associated with employee engagement. When employees are driven by a desire to do well and enjoy their job, they are happier and more naturally engaged. Plus, employees with consistently positive experiences in the workplace are more likely to stay with their organisation – a strong culture can lead to a rise in employee retention by 30 – 50%.
A good company culture attracts talent, drives employee happiness and engagement, encourages better productivity and in the end, leads to better company performance. It’s no surprise then that culture is more important than salary for 57% of UK workers, according to research by Glassdoor.
Don’t forget it’s not just about your existing team. The interview process should let your company culture shine through to candidates. Highlighting your company’s strong points such as how you communicate with employees, will ensure the right candidates will join your team and stay happy, motivated employees.
On the other hand, a workplace culture where employees are disengaged will result in higher levels of staff turnover, poor quality, inefficiency, missed opportunities, unhappy customers, ground lost to competitors and, ultimately, reduced profits.
Employee engagement drives retention
Disengagement is a key driver of people choosing to leave their jobs and can be caused by a number of factors such as feeling they are working hard for little in return or lack of challenge. But most often people leave because of management. According to an Impulse survey of 30,000 UK employees, employee engagement levels fluctuate based on that of their leaders and 43% of people in the UK have left a job at some point in their career because of their manager.
The link between low engagement and increased job moves is no coincidence, at the start of this year almost 75% of UK workers were actively looking to move to new company and a recent study by Qualtrics of 13,000 employees found that employee engagement in the UK is currently sitting at just 50%.
Perhaps one of the biggest concerns of employee turnover is the financial cost of recruiting and training new employees to replace the ones you’ve lost. The more you see employees come and go, the higher the cost to your business. And it’s not just the cash spent on the process, you also need to consider the opportunity cost of time that could have been spent serving customers and growing the business.
This is a good opportunity to focus on employee engagement and make sure that you understand what drives or hinders it for your employees – this will be different for every organisation.
How to improve employee engagement
For managers, the reality is that engagement is not a one-size fits all – it’s a personal thing. You have to fully understand each of your employees to find out what engages them in order to make the right workplace changes. But here are some suggestions to start with:
Build trusting relationships
Engagement is multi-faceted, but it is vital not to underestimate the importance of your employees’ relationship with their direct line managers – after all, employees often leave managers, not companies.
Trust needs to be present between employee and manager (and employer) for engagement to improve, and one way to do this is by delegating or giving employees more autonomy.
It’s your job to lead from the front, but it’s also important at times to give your team responsibility. For employees to feel passionate about their work and strive for the best outcome, they need to know that the company values their skills and experience.
Delegate with clearly defined roles and responsibilities supported by performance discussions and two-way communication in which you share your plans and progress with your team and celebrate success.
This allows you to identify and develop your talent into a strong team and gives you time as a leader to focus on the things you should really be doing like planning, strategy, and growing the business.
Invest in employee development
One of the keys to greater profitability for business, is to spend more time ensuring that each employee has access to training, career progression opportunities and incentives (see below). Not doing this increases your risk of losing talented employees and giving you the headache and additional cost of finding a replacement.
What’s more is that many employees say opportunities to grow is a reason to stay at their job or go after another. To improve this, you want to give them time and resources to learn in areas that will expand their careers. Keep your employees engaged by finding out how they’d like to develop in the business and work with them to identify opportunities for growth in that direction.
Also consider how upskilling and succession planning can engage your people. It is more cost-effective to invest in developing your current employees into the managers, leaders, and specialists you need to drive the business forward long-term. Identify team members with the potential to create more value for the business who demonstrate motivation and commitment to their role and invest in upskilling them into specialist and management positions.
Upskilling rather than recruiting to fill gaps in the workforce, not only improves the profitability of your business, but encourages the loyalty of promising, and ambitious employees so that they stay with your company.
Offer incentives, rewards and recognition
You just can’t have strong employee engagement without rewards and recognition. It’s one of the biggest boosters to motivation and satisfaction and can change your company culture.
There are different ways to approach it, whether through constant verbal recognition, or even a rewards programme. Whatever you choose, you can’t let good work go unnoticed – ensure your team has something waiting for them when they reach their goals.
Flexible working, job stability, extended holiday, wellbeing initiatives are just some of the perks and benefits that employees are looking for right now, and can go a long way to improve retention.
Rewards and recognition can further motivate them to achieve more and more for the company. Motivated and engaged employees and company success are closely linked.
In addition to engaging your employees there are a number of other ways you can improve the profitability of your business, including maximising sales, improving margin and controlling costs. Read Secantor’s free guide to learn 10 ways you can increase the profitability of your business.
For advice or to talk about our bespoke employee engagement programmes, contact our team at info@realityhr.co.uk.
To request a complimentary review of your business, contact the Secantor team at info@secantorbusiness.co.uk