3 Ways Employee Engagement Drives Your Bottom Line

Passionate, invested, and all-around happy employees — those are the effects of having a highly engaged workforce. And for your business? Employee engagement is the driving factor behind numerous aspects of company success, which in turn drives your bottom line. Here are the three most important ones in no particular order.

#1: Absenteeism

Gallup found that work units with the highest level of employee engagement outperformed those with the lowest levels. But the real surprise was with absenteeism — highly engaged units had nearly 40% less absenteeism than their lower-performing counterparts. So engaged employees show up to work more often.

And that’s really a no-brainer. An employee who’s passionate about their work and driven to contribute to their team will be excited to step through the company doors every day. What about someone who feels the opposite? Factors like stress can make them prone to sickness easily. Even worse, disinterest can keep them from coming into work despite feeling healthy.

#2: Employee Retention

Engaged employees show up more and they stick around longer. That same Gallup research discovered that companies with high levels of engagement enjoyed lower turnover:

  • A reduction of 25% in high-turnover organizations
  • A reduction of 65% in low-turnover organizations

Turnover is expensive. The Center for American Progress estimates that losing an employee whose annual earnings is between $30,000 and $50,000 can cost up to 20% of that employee’s salary. Let’s do some math: that would cost an organization between $6,000 and $10,000 per person. Now calculate how much you’d potentially lose if an executive manager quit.

These numbers don’t take into consideration the intangible losses such as the knowledge employees take with them or the productivity lost while training a new hire.

#3: Customer Satisfaction

Here’s one commonly overlooked factor. Employee engagement can actually affect your customers. Engagement plays a role in every aspect of your business, from sales people trying to win over customers to those creating the actual product.

Frankly put, if these employees weren’t enthusiastic about their work, customers will feel the effect. Engaged employees will be able to provide better service, make higher-quality products, and generate the innovative energy that keeps companies at the top of their industry. Organizations that have over 50% employee engagement keep over 80% of their customers, according to Demand Metric.

Measuring Engagement

There’s no real magic bullet, but engagement will help employees miss fewer days, cut turnover, and keep customers happier.

And one of the best ways to boost engagement is to measure it. Ask for employee feedback. Leverage an anonymous pulsing survey that will allow them to tell you how they truly feel. These tools help leaders keep track of the ebbs and flows of employee engagement, so you’re never surprised by any day-to-day changes. If you show your employees that you’re invested in them, they’ll return the favor and invest in your company as well.

About the Author

David Niu is the Founder and CEO of TINYpulse, an employee engagement survey solution that empowers leaders with actionable feedback to make positive changes in their workplaces. David is a serial entrepreneur, having founded and successfully sold two prior businesses, NetConversions and BuddyTV. He attended the University of California at Berkeley for his BA and the Wharton School at the University of Pennsylvania for his MBA. He was named a “40 Under 40” recipient by the Puget Sound Business Journal and is actively involved in the Entrepreneurs’ Organization. David is also the author of Careercation: Trading Briefcase for Suitcase to Find Entrepreneurial Happiness. Follow David on Twitter @davidniu.