Why is employee engagement valuable? Gallup said it best: "Simply put, engaged employees produce better business outcomes than other employees do -- across industries, company sizes and nationalities, and in good economic times and bad." Engaged employees can save your company money in a number of ways, from both a retention and productivity perspective. Here are the top four financial benefits that your company will realize from having stronger employee engagement:
1. Better retention
Engaged employees quit their jobs less often and stay longer. An Achievers’ survey found that 74 percent of employees were planning to switch jobs in 2018. What would have motivated them to stay? The survey revealed 74 percent wanted more “interesting work” and 69 percent wanted more “recognition and reward”. It takes time to learn exactly what motivates each employee, but when you find out how to engage them, they will be with your company in the long run.
2. Dedicated customer service
How helpful do you feel when you're bored, frustrated or alienated? If someone asks you for assistance with something that you don't feel involved in, you might just do the minimum. Engaged employees, on the other hand, share their enthusiasm with customers and are motivated to go the extra mile to solve problems. The Northwestern University Forum for People Performance Management and Measurement shared that organizations with engaged employees have customers who use the company’s products and services more often and with higher satisfaction than customers of companies with disengaged employees.
3. Less absenteeism
Chronically absent employees can be harder on your company than actual turnover of positions, and Harvard Business Review reports that absenteeism is 37 percent higher among disengaged workers. If someone quits, you can hire a replacement and get the position up and running again. With absent employees, however, you can't fill the position with someone else, but you still have to see that the tasks are completed. This has a boomerang effect of stressing out your other team members because they have to do their own work as well as that of their absent colleague.
4. Fewer accidents
Nothing drains your company's accounts faster than an accident. In the U.S., employers pay nearly $1 billion per week for direct workers' compensation costs. Additional costs include medical and legal services, lost productivity, damage to your brand, and the cost of an accident investigation. There's no way to make every workplace perfectly safe, so in many settings everything depends on workers who care and pay attention. Businesses with highly engaged workers have 70 percent fewer accidents than companies with poor employee engagement.
Employee engagement goes beyond salary compensation
If employee engagement is so crucial, how do you nurture it? Like all emotional issues, it's complicated. Each worker has their own set of circumstances and their own internal equation for happiness. However, you can simplify the complexity down to one single word: Recognition.
The nature of labor is that a worker provides something that the outside world is willing to pay for. However, a paycheck alone is not sufficient to build a positive work culture. SparkHire CEO Josh Tolan has investigated the nature of best-practice recognition. He cites a Kronos study showing that 55 percent of workers reported that a simple "thank you" was the most motivating on-the-job factor for them.
This kind of interpersonal employee reward actually proves more powerful than the figures on a paycheck: The same study notes that one-quarter of employees who receive a pay raise do not find that it increases their level of happiness or motivation. Another 30 percent said that a raise had a transient effect on their well-being which lasted one month or less. Tolan writes, "Long-term employee happiness and overall job satisfaction can't be achieved through superficial means, like a pay raise." Instead, he recommends that managers "show appreciation for a job well done."
Recognition is key to positive workplace culture
Stanford faculty member Emma Seppala, Ph.D. provides additional evidence that recognition and rewards have the biggest impact on employee well-being. Seppala describes the way that a positive workplace culture fosters employee happiness. In such a culture, she notes, "[Colleagues] treat one another with respect, gratitude, trust and integrity." In this type of environment, employees' ability to think creatively is amplified and they are better able to bounce back from the inevitable stresses that are associated with any workplace. Seppala also notes that a positive culture will be successful in attracting good workers, and in building employee loyalty.
Glassdoor Chief Economist Andrew Chamberlain agrees with Seppala. In Harvard Business Review, he writes, "One of the most striking results we've found is that, across all income levels, the top predictor of workplace satisfaction is not pay; It is the culture and values of the organization."
Create a win-win situation
Regardless of whether you're a manager or a minion, you want your workplace to be a pleasant place to spend your days. Using employee recognition to build a good workplace culture will not only improve your own experience, it will also bolster your business's bottom line and employee engagement levels. What's not to like, when financial wisdom and good feelings converge? To learn more about best practices in recognizing your employees, download our e-book: "The Power of Employee Appreciation."
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