Employee engagement has been identified as a critical factor in corporate success. Despite its importance, global rates of employee engagement are shockingly low at 20%. With the opportunity that an engaged workforce provides for improving resiliency, turnover, profitability, productivity, well-being, and absenteeism, employee engagement has become a priority among business leaders and executive coaches. Here’s a breakdown of the trends and research you should know about, and consider, when addressing employee engagement.
“Employee engagement is an investment we make for the privilege of staying in business.” - Ian Hutchinson
Current engagement trends
Employee engagement is rising in the United States, but not globally
According to Gallup, 39% of employees in the United States were engaged in their jobs in 2021—a 3% increase year-over-year. Despite the fact that less than half of America’s workforce is engaged, we are experiencing “new record level of employee engagement” (Harter, 2021). For context, only 20% of employees globally are actively engaged in their jobs—a 2% decrease from 2019 (Gallup, 2021).
Remote employees are more engaged than in-person employees
Research has shown that “employees who work remotely at least some of the time had the highest levels of engagement” (Harter, 2021). This engagement has continued to increase despite COVID-19. Compared to in-person employees in 2020, remote employees were at least 6% more productive when working from home (Harter, 2021).
“To win in the marketplace you must first win in the workplace.” - Doug Conant
Manager engagement is declining
Reports show that in 2020, manager engagement “declined from 34% to 33%” (Harter, 2021). This is a concerning low level of engagement for management professionals, given that engagement of management affects “70% of the variance in team engagement” (Harter, 2021). Engaged managers lead engaged and informed teams. When managers are not engaged, employees can easily disengage from their work and reduce their productivity due to the reduced risk of sub-par efforts being noticed.
Best practice = best engagement
According to research by Gallup, “best practice organizations” that have high-impact leaders have a 73% rate of employee engagement. These companies’ heightened rate of employee engagement is a distinguishing factor between the average business and the successful tycoon.
Why employee engagement matters
“Employees are a company’s greatest asset- they’re your competitive advantage…” - Ann M. Mulcahy
Current research indicates that employee engagement has a significant relationship “to performance in economic crisis” or other challenging circumstances (Harter, 2020). When employees are engaged, they are more resilient to challenges in the marketplace or workplace. This can help organizations maintain high levels of productivity and high standards of customer service when competitors with lower levels of engagement might suffer.
Organizations that are in the top 20% of companies in terms of employee engagement have “59% less” employee “turnover” (G., 2021). Replacing employees can cost employers anywhere from 6 to 9 months of their annual salary (Merhar, 2020). By increasing employee engagement, employers can save thousands of dollars in hiring costs.
Increased profitability and productivity
Gallup’s polls have found that between companies with high rates of engagement and those with low rates of engagement, companies with a higher rate of engagement are more productive and more profitable. Companies with high engagement rates found a 23% median increase in profitability. These same companies also had a 14-18% median increase in productivity depending on the field of work. This also correlates with a 41% decrease in production defects when employees are engaged as well (Harter, 2020).
Research has found that companies with high rates of employee engagement had a median well-being increase of 66%. When employees are engaged in their work, they can begin to find meaning and purpose in their work. Associate Professor Michael Steger shares that “If you have a meaningful job you’re less dependent on what happens within the controls of those outside of you. You’re more expressive of what truly matters to you, you’re using strengths you have and you’re working to make a positive impact on the planet around you” (McQuaid, 2016). Research has shown that when employees feel like they have meaning in their work, they are likely to have a greater sense of well-being (Michaelson et al., 2013).
Engaged employees are less likely to miss days of work. Compared to organizations with low employee engagement, highly engaged workplaces have a median of 81% less absenteeism (Harter, 2020). This has several positive impacts on the overall well-being of an organization. Firstly, decreased rates of absenteeism can increase overall productivity. Secondly, this increase in productivity can increase profitability. Lastly, employees who are present in the workplace are more likely to develop their careers within the same company, leading to an increase in internal employee development.
“When employees join executives in truly owning the responsibility for business success, an exciting new sense of teamwork takes hold.” - Punit Renjen
How to increase employee engagement
During the recent increase in employee engagement in the United States, 45% of employees reported getting “feedback from their manager either daily or a few times per week”—an increase from previous years. Research has found that “meaningful feedback is a critical factor in the engagement of all workers, especially remote ones” (Harter, 2021). This increase in feedback is also correlated with the increase in remote employment. Because of this, we can deduce that an increase in feedback, despite the employment type, can increase an organization’s overall employee engagement.
Increase manager engagement
As manager engagement declines, organizations need to invest in developing more engaged managers. Manager engagement is responsible for 70% of “team engagement” (Harter, 2021). The Center for Creative Leadership recommends that employers should “provide routine feedback” for managers and “delegate more” responsibilities. HR Technologist shares that employers can increase managerial engagement by setting goals with managers, developing leadership programs, and supplying “benefits beyond the ordinary” (BasuMallick, 2019). Investing in the development of your managers can directly increase their engagement, producing additional increases in employee engagement rates.
Invest in wellbeing
Studies have shown that engaged employees who are “struggling or suffering in their overall lives have a 61% higher rate of burnout” (Harter, 2021). By investing in the well-being of employees, employers reduce their risk of losing valuable employees due to burnout and ultimately increase the benefits and longevity of their employees’ engagement. Research by Gallup shows that employees who are engaged in the workplace and have a positive sense of well-being are “59% less likely to look for a job with a different organization in the next 12 months,” “45% more likely to report high levels of adaptability in the presence of change,” and “miss 70% fewer workdays because of poor health over the course of a year” (Witters & Agrawall, 2015). Investing in the well-being of employees has a three-fold benefit: it increases the benefits of employee engagement, increases the longevity of employees’ engagement, and makes engaged employees more resilient to struggles.
The main takeaway
Organizations with high rates of employee engagement are more resilient to change, have a decreased rate of turnover, are more profitable, are more productive, have a higher rate of well-being amongst employees, and have decreased rates of absenteeism. Despite these benefits, globally, only 20% of employees are actively engaged in their careers. Due to the wide range of benefits that come from an engaged workforce, business leaders and executive coaches should consider methods of increasing employee engagement including (i) investing in managers, (ii) encouraging feedback, and (iii) investing in the wellbeing of employees to improve profitability, workplace culture, and employee development.
“You can’t have a growth story without an engaged team.” - Alan Smith
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