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Sage: Why does employee engagement matter and what is it?

Engagement | Sage Employee Benefits | 5-minute read

Posted on: Thursday September 29, 2022

by Karen Thornley, Chief Product and Partnerships Officer

According to the CIPD there appears to be no common understanding of employee engagement. Some definitions focus on employee behaviour or employee attitudes, some on employee feelings, some on conditions of work, and what the organisation does for them.

Many authors say various combinations of all these things, yet others define engagement as a situation in which one of these things causes another - such as attitudes cause behaviour. So, there is a wide range of opinions on what constitutes engagement. 

According to Gallup, engaged employees are "those involved in, are enthusiastic about, and committed to their work and workplace".

According to Willis Towers Watson, employee engagement is all about "employees' willingness and ability to contribute to company success".

Clearly, there are challenges with so many differing definitions, but one thing is for sure – is that Employee engagement is a firmly established topic that is vital for your business to succeed. 

Fundamentally, it is the belief that if employees have good quality jobs, are motivated, well managed, rewarded, valued, and believe in the company, they will be happier, healthier, and more likely to perform better. This in turn means increased productivity, delivering better services, and increasing their motivation and innovation.

Many assume that employees’ only real drive is money - but according to a survey conducted by the Job site Indeed, they found employees would sacrifice almost £2,000 from their salary for greater levels of flexibility/happiness at work and a good work-life balance.

The reality is there is no one element that can influence engagement; it is a collection of strategies that work together to build a compelling employee offer.

Why does it matter?

Well, employee engagement has a real impact on business success, it is reported low levels of employee engagement result in increased employee turnover, higher absence, and key talent leaving the company, which in turn means an increased need to recruit, onboard, and train new employees, all of which come at a cost. 

  • Research shows that sickness taken due to mental health costs the UK economy over £8 billion per year, so under-investing in employee wellbeing carries significant risks for both businesses and employees. 
  • Burned-out employees are 63% more likely to take a sick day. (Gallup)
  • While 50% of employees agree that managers who help with career development drive up their level of engagement, only 29% of employees are actually happy with their Career Advancement Opportunities.
  • Gallup estimates front-line managers account for at least 70% of the variance in employee engagement scores.

What does good look like?

Well, here is some food for thought:

  • Companies that value their employees and treat them as their greatest asset, create sustainable competitive advantage and long-term strength, and outperform those who don’t by more than 200% (The Dale Carnegie Training Course for driving employee engagement)
  • Companies with a highly engaged workforce are 21% more profitable.
  • Those with highly engaged teams sell 20% more than teams with low engagement Companies that effectively turn feedback into action have an 80% employee engagement rate.
  • Mindful and happy employees are 12% more productive.
  • 37% of employees consider recognition the most important - A recent report by Bonusly ‘Employee Engagement & Modern Workplace Report’ shows that 84% of highly engaged employees were recognised the last time they went above and beyond at work compared to only 25% of actively disengaged employees.
  • And finally, Company Culture - While workplace culture and employee engagement are two separate entities, they are interrelated. When organisations incorporate the two into their mission, culture and engagement thrive.

So, clearly, culture has a significant impact on engagement levels and the statistics tell us that any investment you make into boosting employee engagement is likely to see positive returns. 

Author: Emer Bucukoglu, Senior Reward Consultant – Innecto Reward Consultancy

Innecto, part of the Personal Group family, can work with you to help identify your current employee engagement strategy and enable the development of tailored approaches that will make the most impact. To find out more, email (emer.bucukoglu@innecto.com)

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