Employee engagement is not just a buzzword, it’s a crucial factor in achieving business success. The concept of employee engagement is a BIG topic, Google it and it brings back around half a billion results! This post is intended to answers the question ‘what is employee engagement?’. We provide an overview of everything you need to know about employee engagement, what it means and why it matters.
Why employee engagement is more than job satisfaction
Back in the 90s, HR professionals used to talk about employee satisfaction, the logic being that if employees are satisfied then they will be more motivated and work harder.
However, job satisfaction is not the full story….We ran an employee survey for a Council several years ago and the results showed that everyone was really satisfied with their job and with the Council. There were two problems.
- The first problem was that performance across the Council was low. Individually, people just did what they needed to and no more. Council services were also not rated well by residents.
- The second problem was that very few people left – the pay was good, the pension was good, and it was conveniently located to where most staff lived.
This meant that the majority of people came to work each day, did what was said in their job description, didn’t upset the apple cart and leave. Nobody was challenging how to do things better, bringing new ideas or shaking things up.
This phenomenon is known as ‘presenteeism’ or ‘quiet quitting’ where people turn up to work each day, but don’t actually contribute a huge amount to the organisation.
The idea of engagement began to emerge when people began to realise that employees simply being satisfied with their work does not actually always result in higher levels of performance and productivity, there must be something else. Satisfaction is still important, but it is a baseline, a starting point.
Why is employee engagement important?
Employee engagement is important because it directly affects a company’s productivity, profitability, and overall success. Engaged employees are more committed to their work and the goals of the organisation, leading to higher levels of productivity and job satisfaction.
They are also more likely to stay with their employer for a longer amount of time, reducing turnover rates and associated costs. In addition, engaged employees are more likely to provide excellent customer service, leading to increased customer loyalty and revenue for the company.
Research by Gallup revealed that engaged teams lead to 21% higher profitability and 20% higher productivity. Employee engagement plays a vital role in shaping performance outcomes, affecting everything from staff retention to customer satisfaction. Engaged employees are more innovative, contributing creative ideas and finding efficient ways to improve their workflow.
Studies by the Corporate Leadership Council indicate that engagement has a high correlation with employee performance. They found that highly engaged employees are 87% less likely to leave their organisation, significantly reducing turnover costs. Additionally, employee engagement contributes to improved mental and physical well-being, reducing absenteeism by up to 41%, according to Gallup.
Overall, investing in employee engagement can help create a positive work environment that fosters growth and success for both individuals and the organisation as a whole.
When employees are engaged, they become advocates for the business, offering a superior level of service that benefits clients and customers alike. The ripple effects of high engagement levels are far-reaching:
- Increased Productivity: Engaged employees show greater initiative and are 17% more productive than their disengaged counterparts, as noted in a Harvard Business Review study.
- Better Customer Satisfaction: Bain & Company reports that companies with engaged employees benefit from 30% higher customer loyalty scores. Happy employees naturally provide better customer experiences, leading to repeat business.
- Reduced Turnover: An engaged workforce tends to have much lower turnover rates. The Society for Human Resource Management (SHRM) estimates that replacing an employee can cost anywhere from 50% to 200% of their annual salary. By keeping employees engaged, companies save significantly on recruitment, training, and onboarding costs.
The Psychology behind employee engagement
Psychology can offer some insights into what motivates employees to feel connected, committed, and engaged at work and there are some key psychological models that help explain the things that impact employee engagement.
These can be summarised as follows:
Autonomy: The Need for Control
Autonomy is central to human motivation and is one of the three basic psychological needs outlined in Deci and Ryan’s Self-Determination Theory (SDT). This theory posits that when individuals feel a sense of control over their actions, their motivation becomes intrinsic—meaning they engage in tasks because they find them inherently interesting or satisfying, rather than because of external pressures.
The application of autonomy in the workplace fosters engagement. Employees who have a say in how they complete their tasks are more motivated and invested in their work. According to Hackman and Oldham’s Job Characteristics Model, autonomy not only enhances responsibility but also boosts motivation, leading to greater engagement with your job.
Competence: The Importance of Accomplishment
A sense of competence is crucial for employees to feel engaged. When individuals believe they are effective at their job, they are more likely to approach tasks with enthusiasm. This ties into SDT’s assertion that the need for competence is fundamental to motivation.
Relatedness: The Power of Social Connections
The need for relatedness, another component of SDT, is fulfilled when employees feel a sense of belonging and connection with their peers. Social bonds at work not only increase job satisfaction but also reinforce a sense of shared purpose. Strong peer relationships and a sense of belonging are directly correlated with increased motivation to complete tasks. Managers can foster relatedness by encouraging peer recognition and collaboration, which in turn boosts engagement.
Recognition: More Than Just a “Thank You”
Recognition is a critical driver of engagement, with studies showing that employees who feel recognised are more likely to stay with their employer. Effective recognition must be timely, sincere, and specific. A personalised approach—such as immediate feedback on a job well done or a thoughtful handwritten note—can be more impactful than broad, impersonal gestures.
Regular recognition of accomplishments, even small ones, fosters a sense of competence, thereby enhancing engagement. The “Progress Principle” highlights that consistent progress, rather than sporadic major achievements, contributes to sustained engagement.
When recognition is embedded into the company culture, it becomes a powerful tool for engagement. Implementing peer-to-peer recognition systems, where employees can acknowledge each other’s achievements, further strengthens a culture of appreciation.
Psychological Safety: Freedom of Opinions
Psychological safety is the belief that one can express ideas, concerns, or mistakes without fear of negative repercussions. William Kahn’s research on engagement first identified the importance of psychological safety, showing that employees who feel safe are more likely to engage with their tasks.
Where employees feel safe organisations are also likely to perform to a higher level. Organisations with a culture that encourages open dialogue foster greater innovation and engagement. Google’s research also emphasised psychological safety as a critical element of high-performing teams. When employees feel that their contributions are valued and that they are supported by their peers and managers, they are more likely to be engaged.
Growth and Development: Continuous Learning
Opportunities for growth and development are essential to sustaining employee engagement. Employees who feel that their organisation is investing in their skills and career are more likely to remain engaged and committed. This ties into Hackman and Oldham’s theory, which emphasises the need for skill variety and task significance as drivers of motivation.
Organisations that offer structured learning and development programs create a sense of purpose and challenge, allowing employees to stretch their capabilities and grow. Moreover, a culture of learning promotes psychological safety by encouraging experimentation and learning from failure.
Meaningful Work: Aligning with Personal Values
Finally, meaningful work is one of the strongest predictors of employee engagement. Psychological meaningfulness, as defined by Kahn and expanded upon in Hackman and Oldham’s work, refers to the extent to which employees feel that their work contributes to something larger than themselves. When tasks are aligned with an individual’s values and skill set, engagement is enhanced.
Organisations can help employees find meaning by providing context for their tasks, connecting their day-to-day responsibilities to the company’s broader goals. This not only helps employees see the impact of their work but also fosters a sense of purpose.
A realworld definition of employee engagement
There are many definitions of employee engagement. As we have already outlined employee engagement is more than just job satisfaction or motivation, it is a state where employees feel valued, appreciated, and connected to their company’s goals and objectives.
We try not to overthink it and describe engaged employees as those who would say:
I feel committed to my work and committed to the organisation
A realworld model of employee engagement
There is no single recognised model of engagement. You can tell this by the amount of literature on the subject and the number of companies who proudly present ‘their’ model of engagement. What’s more if there was a single model then all organisations would adopt the same model!
Our own research explored the factors that tend to impact engagement across a range of organisations. No surprise we identified the same types of factors that most other research has found. However, a few key things became apparent.
Engagement is not just about the job
Engagement is a function of how connected people are to their work and to the organisation they work for. Employees can have a high level of commitment to their work, but a low level of commitment to the organisation, and vice versa.
The sweetspot is where people have a high level of commitment to their work AND to the organisation.
These people are likely to: –
- contribute lots and perform well
- behave in a way that is consistent with the organisation’s values and culture.
- stick around and progress their career with the organisation.
These are the people you need to retain as these people are hard to find and will only join you where they feel certain you can offer them what they want.
At the other extreme are people who don’t really care about their job and don’t really care about the organisation. These are the people in the red box – low commitment to the job and low commitment to the organisation. They are most likely to leave to go to a completely different job, in a completely different organisation just for a slightly higher pay rate.
The tricky ones are the people in the amber boxes – the ones who are EITHER committed to their work OR to the organisation, but not both at the same time.
- Those who are committed to the organisation, but not their work will tend to coast along, not really performing, but not upsetting the apple cart.
- Those who are committed to their work, but not the organisation are the ones who are likely to be seen as high performers, but are at the most risk of leaving. These are often high performers who will go to a different organisation if they do not feel as though they are being treated well.
Engagement is an outcome
It is what you get when all of the other aspects of the employee experience are positive.
Engagement is the result of the whole employee experience
There is no single lever to pull or magic initiative that will improve employee engagement. There are multiple ‘touchpoints’ that all act as inputs into how engaged people feel. All need to be present and in balance for people to feel fully engaged.
The things that impact engagement vary from one organisation to another, and vary over time
In our view it would be dangerous to try to model what other people do to create engagement in their organisations. Although most organisations face similar challenges, the industry they operate in presents unique challenges and the context they operate in will vary from organisation to organisation.
For these reasons, engagement needs to be viewed, and measured, differently depending on each organisation’s specific context, challenges and needs. This is why all of our employee surveys are tailored to the organisation – there is no one size fits all.
How to measure employee engagement
Measuring employee engagement is critical to developing a comprehensive understanding of workforce performance. The measurement process involves collecting and analysing data related to job satisfaction, motivation, commitment, organisational culture, and other factors that contribute to the overall level of engagement within the organisation.
The most common approach is to use an employee experience survey. There are different types of employee experience surveys across the whole employee lifecycle.
Employee experience surveys need to be carefully designed, but they will provide valuable insight into workplace culture and identify areas where improvements may be necessary.
Regularly measuring employee engagement ensures that an organisation can continuously review its strategies and create new interventions that will positively impact its employees’ engagement and ultimately lead to business success.
In conclusion
Whilst there is no single unifying model of employee engagement that will apply to every organisation, there are some common factors that apply to most organisations.
The trick is to make sure your employee engagement surveys are measuring the specific things that are relevant to your organisation, which is why we recommend ensuring your experience survey questions are tailored to your organisation.