Why Should Employers Care About Employee Engagement?

Posted by Kristina Cowan

Most workers around the world are not engaged by their work.

That's according to a recent Towers Perrin study, which finds only 21 percent of employees engaged by their work, meaning they're willing to put in extra effort to help their companies succeed. Meanwhile, 38 percent of workers are partly to fully disengaged.

The study shows that companies with many engaged workers are more likely to retain their top talent and succeed financially than companies with many disengaged workers. The study isn't the only one to uncover a link between employee engagement and companies' financial success. A Wall Street Journal article reports that Hewitt Associates and the Conference Board have released studies reaching the same conclusion: Engaged employees boost the bottom line.

Companies should strive to spur employees toward higher levels of engagement. But how?

Engagement Flows from the Top

Julie Gebauer, head of Towers Perrin's Workforce Effectiveness practice, says it's up to companies to instigate change.

One of the study's key findings is that the organization itself is the most powerful influencer of employee engagement. Personal values and work experience factors have less of an impact on engagement than what the company does -- particularly the extent to which employees believe senior management is sincerely interested in their well-being. This was the number one element driving engagement on a global basis and also in the U.S.

She notes that employees are eager to invest more of themselves in their work, as long as they see a benefit for themselves. Companies need to harness this untapped resource, she says, by finding their own "engagement recipe."

Gebauer offers sound advice companies should follow. It's quid pro quo, with management investing in its workers, and workers investing right back. And everyone wins. Employees are happier with their jobs and not constantly job hunting, customers enjoy better service, and employers gain bigger profits and stay competitive.

It is an attainable goal, as shown by several companies in the WSJ piece, including First Horizon National Corp., Acuity and Xerox Corp.; each experienced success after investing more in employees.

The Towers Perrin Study

According to the Towers Perrin study, firms with the highest percentage of engaged employees collectively increased operating income 19 percent and earnings per share 28 percent year to year. Companies with the lowest percentage of engaged employees showed year-to-year decreases of 33 percent in operating income and 11 percent in earnings per share. 

The study is based on two data sources. The first is a Web-based survey given to 88,612 workers in 18 countries, including 42,486 in the United States. The second is an annually updated employee database, drawing on information from 2 million employees at companies with both above- and below-average financial performance.

• Wooing The Workforce (Forbes)
• Rules of Engagement (The Wall Street Journal)
• An Interview with Julie Gebauer on Towers Perrin’s Just Released Global Workforce Study (Q&A on the Towers Perrin Web site)
• Towers Perrin Study Finds Significant "Engagement Gap" Among Global Workforce (News release)
• 2007 Global Workforce Study (Fact sheet)
• Careers: On Again, Off Again Engagement (Rusty Weston's blog at Fast Company)

Comments

[Employee Engagement Guy]

The Institute for Corporate Productivity did a similar study on employee engagement, with similar results. It's staggering (but not surprising) the small percentage of works who are thoroughly engaged.