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What is employee engagement? Why is it important for a company's success?

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We’ve heard a lot in recent years about the importance of employee engagement. Managers today realize that employees don’t respond to being hectored or browbeaten. 

Instead, they need to be treated as valued colleagues and to have a sense of being part of a shared mission or project. Creating a better employee experience, in that way, often leads to better business outcomes.

But for all the talk about developing an employee engagement strategy, and the value of engaged employees to productivity and higher levels of staff retention, there’s often relatively little clarity about what all this actually means. 

How do we translate this into practice and ensure that it amounts to more than mere rhetoric? And what sort of a contribution can we expect it to make on a business’s success—namely its bottom line? 

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In this guide, we’ll address some of the most important points about employee satisfaction and engagement and how your organization can put them at the heart of what it does. We’ll elaborate on the following:

  • The meaning of employee engagement
  • What makes employee engagement important (and the perils of disengagement)
  • The different types of employee engagement
  • Some of the employee engagement initiatives your business should introduce.

What is employee engagement?

Employee engagement refers to various practices and techniques intended to foster a greater sense of belonging and common purpose among staff. 

The importance of engagement has come to occupy a prominent place in employers’ thoughts since the turn of the millennium. HR leaders increasingly ask themselves how they can go the extra mile to make their colleagues feel genuinely appreciated.

Of course, there’s a degree of subjectivity involved, and there’s no one-size-fits-all solution. What makes one employee feel more engaged won’t necessarily work for others. 

But the key objective is to create a work environment and a company culture where employees are really enthused by what they do. That will drive them to better both themselves and the wider organization. The aim is to foster passion and enduring loyalties.

An employee engagement strategy needs to cover a range of areas, including:

  • Culture
  • Perks and rewards
  • Personal and professional development
  • Work-life balance
  • Vision and leadership
  • Communication

Let’s take a closer look now at why employee engagement matters so much.

Why is employee engagement important?

Employee engagement matters for a variety of reasons, and there are numerous ways it can be translated into concrete, everyday practice. 

1. Employee retention, reduced turnover

The first reason to prioritize employee engagement is that it can have a big effect on levels of employee retention

Staff retention is a major concern for most businesses. Losing experienced, skilled, and hardworking employees can do lasting damage. Not to mention forcing employers to find new hires to replace them, which can be both expensive and time-consuming.

In this age of remote work, your employee engagement program needs to account for remote workers as well. It must address how to make them feel that they’re an important part of your team, beginning at the initial onboarding phase and continuing throughout their time at the company.

2. Enhanced productivity, lower absenteeism

Another potential advantage of a robust employee engagement strategy is improved productivity. An engaged workforce is far more likely to be a productive one. That’s both because they’re likely to stay in their jobs for longer and because they’re seriously passionate about what it is they do. 

A demotivated workforce, by contrast, will be more prone to problems such as burnout and elevated absenteeism.

Levels of employee engagement can have a major bearing on overall productivity. Put yourself in your employees’ shoes. If you feel your employer doesn’t appreciate your efforts and skills, you’re probably going to lose focus. 

Skilled and talented employees are an indispensable human resource. Businesses need to recognize their value.

3. Engaged employees drive innovation

Employee engagement can also spur all manner of new discoveries at work. This is because staff who are emotionally attached to their work will be far more motivated to bring their very best ideas to the table. 

This is, again, about creating the right kind of company culture and opening up a space for creativity and experimentation. Employees need to be encouraged to share their ideas, observations, and perspectives.

What are the types of employee engagement?

There are different types of employee engagement, and different employers have different approaches. However, we can group these types of employee engagement strategies into three broad categories: company culture, the nature of the work itself, and opportunities for personal development.

1. Workplace culture

Over the last few decades, business leaders have realized that workers aren’t just looking for good wages or advancement opportunities, but a workplace culture that’s welcoming as well. 

Nobody wants to spend their time in a work environment that’s overly restrictive or where their colleagues aren’t enjoying themselves. Disengaged employees tend to influence their coworkers, which affects morale throughout the organization. 

An emphasis on workplace culture is important both for creating a more active, shared social life outside of working hours and a freer, more liberated atmosphere—one conducive to greater creativity—at the workplace itself. 

2. Rewarding work

Employees who feel that they’re not being offered the kind of work that matches their level of ambition or allows them to show off their full range of skills and capacities have a high chance of disengaging from work. 

Employers should therefore engage regularly with their employees and ask them what they’re looking for from work and what their future ambitions are. This can help both parties to keep in step with one another.

3. Personal development

Employees today are also looking for good opportunities when it comes to training (including virtual training) and development. In this day and age, employees want to be provided with challenges that allow them to learn and grow as professionals. Personal development is therefore essential to effective employee engagement strategies.

How do you build employee engagement?

Now that we’ve clarified what employee engagement is and why it matters, we now need to look at how to build it. Here are three suggestions that could form the main pillars of your approach.

1. Broad-based engagement strategies

The first point to make here is that you should take a broad-based approach to engage your employees. As we’ve discussed, there are many different aspects to employee engagement (we’ve only had space to list a few of them here). 

Don’t concentrate on one aspect—say, workplace culture and social life—at the expense of others. For employees to be truly enthusiastic about their work, employers must consider all their concerns.

2. Measure employee engagement

There are various metrics you could use to give you a broad indication of how your efforts at employee engagement are working; productivity and profitability are among them. 

However, the most effective way of measuring employee engagement is to get employee feedback, whether through surveys or tools like team messaging.

3. Employee engagement surveys

An employee engagement survey can be a very effective way of measuring how effective your efforts to engage your staff are proving. 

How often you do this is up to you. Although you don’t want to bombard people, it’s important to take your workforce’s temperature (so to speak) quite regularly. A pulse survey can give you a quick indication of workplace sentiment.

Key areas that any employee engagement survey should cover include:

  1. Leadership
  2. Support and communication
  3. Job satisfaction
  4. Meeting career goals
  5. Suggestions for company improvement

Driving success through employee engagement

Taking the aspirations, thoughts, and concerns of employees seriously can pay dividends for organizations. In fact, a study by Gallup found that highly engaged teams are 21% more profitable and have 59% less turnover.

As businesses look towards the future—especially in a post-COVID workplace—employee engagement will be a key differentiator. From attracting top talent to retaining employees and saving costs, businesses that prioritize engagement will experience more success than those that don’t.

Exploring work from home? Check out these 5 steps on sustaining a remote workforce.Read the blog

Originally published Dec 01, 2020, updated Jan 18, 2023

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