Employee Engagement: What It Is and Why It Matters

In today's fast-paced and competitive business environment, employee engagement has emerged as a key driver of organizational success. Employee engagement refers to the emotional commitment and involvement an employee has toward their organization and its goals. It is characterized by employees who are motivated, passionate, and dedicated to their work, leading to higher levels of productivity and performance.

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Employee engagement is a crucial part of many successful businesses, as it's associated with many positive outcomes, including:

• Higher productivity: Engaged employees are more likely to be invested in their work.

• Improved retention: Engaged employees are more likely to stay with the organization, reducing turnover costs and preserving organizational knowledge.

• Better customer satisfaction: Engaged employees often provide better customer service, leading to higher customer satisfaction and loyalty.

• Greater profitability: Organizations with high levels of employee engagement tend to have higher profitability due to the combined effects of increased productivity and customer satisfaction.

• Enhanced innovation: Engaged employees are more likely to contribute innovative ideas and solutions, driving organizational growth and adaptability.

In this article, we will explore the factors that influence employee engagement, the crucial role learning and development plays in nurturing an engaged workforce, and the strategies organizations can implement to foster a culture of engagement.

What is employee engagement?

Employee engagement is a common term that refers to employees' commitment, enthusiasm, and dedication to their organization. This is often an emotional commitment and includes being devoted to the business goals and values and being motivated to help the business succeed. When employees have higher engagement in their positions, they are more likely to immerse themselves in the company culture and perform at a higher level. 

Employee engagement vs. employee satisfaction

Key differences exist between employee engagement and employee satisfaction. Employees may be satisfied in their position if they have a clean and comfortable workplace, perks, and colleagues they enjoy spending time with. Employee satisfaction and happiness don’t reflect productivity and commitment to the company. A satisfied employee may be willing to leave your company or not put in extra effort to meet goals. 

While building employee engagement and satisfaction are essential, business professionals sometimes miss the mark by focusing solely on employee satisfaction. Engaged employees are satisfied and focus on helping their organization improve. This could involve developing new ideas, looking for ways to improve processes, or assisting colleagues in completing projects. Employers and business professionals can benefit their employees and organization by focusing more on employee engagement.

Characteristics of engaged employees

While employee engagement will look different in each organization, several overarching characteristics are often present in environments of high employee engagement. In such environments, employees:

• Clearly understand their job responsibilities and are enthusiastic about their positions

• Are willing and eager to contribute to company success

• Are emotionally invested in their organization

• Are productive in their position

• Are optimistic

• Are team-oriented

• Show passion for expanding their skills

• Are loyal to their organization

• Know what success looks like in their position and are motivated to succeed

According to an Aon Hewitt engagement report, an organization can measure employee engagement using three metrics: Say, Stay, and Strive [1]. 

“Say” refers to employees speaking positively about their organization and employer. This is driven by company reputation, employee value proposition (EVP), and work fulfillment. EVP represents what an employer can offer its employees in terms of value.

“Stay” refers to the desire of an employee to stay at their organization. This is associated with EVP, work fulfillment, company reputation, and career opportunities. 

“Strive” refers to an employee’s willingness to make extra efforts to help the company succeed. This desire to go “above and beyond” has the highest association with EVP, performance management, and work fulfillment. 

Factors that influence employee engagement

Several factors contribute to employee engagement, such as employee resources, expectations, recognition, compensation, and purpose. In 2019, Gallup found employee engagement was at 35 percent–its highest level since it began tracking the metric in 2000 [2]. According to Gallup, employee engagement is highly affected by factors such as:

• Whether an employee is clear about their role

• Whether employees have the resources needed to succeed

• Opportunities for employees to perform at their best

• Strong coworker relationships

• Freedom within the role to make decisions

• Opportunities for employees to grow within the role

• Clear company missions and purpose

Organizations with a clear purpose and brand could create a feeling of unity. This helps give employees a sense of purpose, commitment, and belonging within the company. Leaders within these organizations also connect the overarching purpose with everyday operations, which acts as an extra layer of employee motivation and recognition.

Employee engagement is also highest at companies with clear communication at every level, including designing training practices suited for employees' strengths and specific job roles. Managers and bosses also help develop employees, encouraging them to grow and expand their responsibilities rather than relying on top-down commands. Employees who feel they can build their skills and grow professionally will likely feel more committed and motivated.

How employee engagement can improve the workplace

Companies reap benefits when employees are highly engaged. Employees are the team members that often push the business's mission forward, so companies with higher employee engagement would see greater success on average. Top benefits reported from higher employee engagement include:

• Increase profitability

• Lower rates of absenteeism

• Loyal employees

• Greater employee focus

• Improved customer loyalty

• Higher levels of open communication between staff

• Stronger teams better equipped to overcome obstacles

• More innovation

These improvements have been consistent over years of data collection related to employee engagement. According to Gallup’s database of over 50 years worth of employee engagement research, companies with higher employee engagement see the following improvements [3]:

• 18 percent increase in productivity  

• 10 percent increase in customer loyalty and engagement

• 23 percent increase in profitability  

• 81 percent decrease in absenteeism  

• 64 percent decrease in safety incidents 

Examples from companies with high employee engagement

Employee engagement is crucial to company success and a focus of many industry leaders. Taking the time to build community, strengthen company values, clearly communicate with employees, and develop an environment conducive to employee growth can help take your business to the next level. Examples of employee engagement strategies seen at top companies include:

Regularly checking on employee opinions: Microsoft sends a “Daily Pulse” survey to capture how employees feel each day.

Creating a professional work environment designed for creativity: Alphabet Inc. uses an 80-20 method, where employees spend 80 percent of their time handling typical work tasks and 20 percent of their time on creative thinking.

Fostering employee wellness: Salesforce Inc. offers employees $100 per month for wellness activities, such as fitness classes, nutrition, therapy, and more.

Increasing employee recognition: Cisco Systems has an Employee Recognition Initiative designed to recognize employees for their personal and professional achievements. 

Next steps

Learn more about employee engagement and other business strategies with the University of Colorado Boulder’s Accountability and Employee Engagement, part of the Principles of Leadership: Leading Technical Organizations Specialization, or with the University of Michigan's Reigniting Employee Engagement course.

Ready to boost engagement at your company? Give your team access to a catalog of 8,000+ engaging courses and hands-on Guided Projects to help them develop impactful skills. Learn more about Coursera for Business.