What is Employee Engagement?

Updated on December 22nd, 2021
What is Employee Engagement?

You always go the extra mile for your employees. But, do they reciprocate those efforts? Employee engagement is the key – and it’s more than pizza parties and a pat on the back. 

What is Employee Engagement?

Employee engagement is the approach an organization takes to create an environment and culture that strengthens the emotional connection an employee feels with their organization. This usually occurs when there is a positive employee experience. If you're interested in learning more via video, then watch below. Otherwise, skip ahead.

This attachment can motivate them to go the extra mile every day, understand and efficiently execute their role in the organization, and feel enthusiastic about their work.

Some managers confuse employee engagement with employee satisfaction.

They are, in fact, two separate things - and here’s how they differ:

You may have a satisfied employee, but that doesn’t guarantee that they’re doing more than simply what’s needed.

However, if the same employee is engaged, it could contribute a lot towards their overall performance - enabling them to effectively carry out their tasks.

They may even prepare or plan out future tasks, find ways to optimize various processes or assist other teams with their projects, and more.

This ‘engagement,’ as a result, adds value to the organization and contributes to its long-term growth and sustainability.

How to Recognize Engaged Employees

Engaged employees work for more than just a paycheck.

Instead, they’re driven by their passion to go above and beyond the call of duty and achieve milestone after milestone for their organization.

So, as a manager, recognizing engaged employees and identifying the disengaged ones can go a long way in determining your team’s weak strengths & weaknesses.

Employee Engagement – What Do the Stats Say?

Let’s have a look at a few statistics to get an idea:

  • According to a report published by Gallup, highly engaged teams generated 21% higher profits.
  • The Engagement Institute found that disengaged employees cost US companies somewhere between $450 to $550 billion per year.
  • A 2017 Gallup report stated that engaged employees can boost productivity by 17%.
  • According to one report, organizations that focus on employee engagement reduced turnover rates by 40%.
  • A more engaged business unit is 12% more focused on customer advocacy.
  • Employee engagement can reduce workplace absenteeism by 50%.

Why Does Employee Engagement Matter?

Let’s discuss the benefits of engagement from the perspectives of, both, employers and employees.

For Employers

1. Engaged employees are emotionally invested

An employee who has an emotional connection with their employer and the organization (and its strategic goals) understand that they’re part of something bigger than themselves.

Such individuals are self-motivated, enthusiastic about their jobs, and find satisfaction in working for the betterment of the organization – all of which are characteristics of an ideal profile. However, sparking an emotional connection works like a cycle – as a leader, you must first develop a strong emotional intelligence yourself to engage your employees, which in turn can strengthen the positive feelings they have for their work.

For example, Komatsu – a Japanese manufacturer of construction equipment – experienced a 37% rise in employee engagement after investing in a month-long leadership development program that focused on EI skills.

2. Employee engagement boosts productivity

While experimenting with different measures to increase the productivity of their teams, such as indoor plants and wearable gadgets, to name a few, employers forget one thing – some of those measures don’t engage their employees in any way.

An employee who’s engaged will always strive to complete their tasks on time, and then some.

The concern of an engaged employee isn’t limited to their own job – they care about the organization as a whole and contribute wherever they can.

This means that they’re motivated to volunteer and make discretionary efforts, which result in greater satisfaction and higher productivity, as proven by Gallup’s research.

3. Employee Engagement can reduce your turnover rate

Your employee turnover rate can play a huge role in your organization's success. According to one of Gallup’s reports, the turnover rate for millennial-employees alone costs the US economy somewhere around $30.5 billion per year – which includes everything, from hiring expenses to the cost of training new employees.

Since Millennials became the largest generation in the US workforce, overtaking Gen X'ers in 2016, it’s time employers addressed this issue of high costs resulting from employee turnover.

Employee engagement is the key to retaining your team and keeping that turnover rate under control.

On average, engaged employees remain more content with their existing jobs when compared to their disengaged colleagues.

Gallup found that organizations with engaged units experienced 67% lower turnover rates than those with disengaged and unmotivated employees.

4. Employee engagement can cut down workplace absenteeism

According to Centers for Disease Control and Prevention (CDC), US employers collectively lose $225.8 billion each year because of employee absenteeism.

This loss results from a combination of direct and indirect costs associated with low productivity, such as overtime bonuses, loss of sales, etc.

While there can be a number of reasons for workplace absenteeism – with sickness being the obvious one – low morale and stress are two culprits most employers miss, which are both textbook symptoms of disengagement. Bereavement leave was not taken into account for this study. 

As per Gallup’s findings, companies that focus on employee engagement experience lower employee absenteeism.

Employees who aren’t engaged might not feel motivated to show up for work every day, let alone give 100%.

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5. It can improve customer satisfaction

Engaged employees are more passionate about serving customers.

They’re consistent with their efforts in dealing with the public, regardless of the day or time.

An engaged employee will interact with a customer at 5 PM with the same enthusiasm and energy as they would at 11 AM.

Although, in a perfect world, every person in your organization should be engaged, employees who regularly come in contact with customers (like sales agents, customer reps, cashiers, etc.) must be all in if you want to deliver delightful experiences.

Since all buyers expect to be treated like royalty, having an engaged team of professionals that go above and beyond can help you create strong, fruitful relationships, strengthen your brand’s image, and retain your customers.

In fact, according to one source, seven out of ten people will spend about 13% more on a company with superior customer service.

6. Engaged employees are motivated to grow and learn

Apart from the promise of a steady paycheck, work-life balance, and some other employee incentives, the modern workforce expects growth opportunities from their employers.

It’s easier to motivate engaged employees to learn and get them on board with training and development programs.

Such employees seek challenges and ways to grow as professionals to take their careers to the next level.

They strive to make an impact and prioritize the growth of the company above all else.

For Employees

Employee disengagement usually comes with a high cost. Here’s how your employees can benefit from engagement:

1. Employee engagement can make your workforce happier

On average, organizations that view their employees as resources, rather than individuals, report lower satisfaction, morale, and productivity.

A key characteristic of organizations that promote employee engagement is that they don’t resort to traditional, harsh methods of ensuring productivity and performance, such as strict punishment policies.

Instead, they use tactics like one-on-one feedback sessions, creative reward policies, and recognition for a job well done, among others.

Employee-oriented tactics such as these not only result in better working environments, higher productivity, and lower stress, but it also makes the employees happier.

2. Engagement can positively affect the personal lives of your employees

Empathy is one of the most crucial leadership skills.

A good leader is one who cares for more than how their employees perform at work in terms of efficiency and numbers.

They go one step ahead and attempt to counsel them.

While the idea isn’t to push employees towards discussing personal matters, managers can leave positive impacts on their employees’ personal lives.

Believe it or not, but engagement can actually make an employee’s life at home happier.

This is backed by an interesting Kansas State study, which concluded that engaged and motivated employees led happier lives at home.

According to this study, positive experiences in the workplace can “facilitate” family interactions and influence personal lives.

3. It can make employees healthier

Apart from mental health, employee engagement can also contribute towards your team’s physical fitness.

Another interesting report by Gallup – which focused on the relationship between employee engagement and the physiology of workers – found that engaged employees exercise more and lead healthier lifestyles.

By comparing three categories of employees, labeled “Engaged,” “Not Engaged,” and “Actively Disengaged,” they found:

  • 54% of “Engaged” employees said that they exercised at least 30 minutes each day, whereas 59% said that they ate healthy meals the day before the survey.
  • 49% of “Not Engaged” employees exercised and 54% followed a healthy diet.
  • 45% of “Actively Disengaged” employees reported exercising for 30 minutes daily, whereas 53% consumed healthy foods.

Also, previous research by Gallup found that engaged employees are “less likely to be obese and develop chronic diseases.

8 Tips to Foster a Culture of Employee Engagement

The benefits that come with engaging your employees are tempting, but how can you, as a manager, foster a culture of employee engagement?

Here are some tips to get you started:

1.   Devise a formal on-boarding and training process

You have to engage every employee from day one.

New employees expect complete clarity on what’s expected of them – their exact set of responsibilities and how their roles fit into the bigger picture.

Never assume that they don’t need detailed information, regardless of their previous experience.

By going through an on-boarding process and receiving these guidelines, your new employees won’t feel frustrated or confused.

In fact, from day one, they’ll be motivated to take initiative and try to make an impact.

To make the on-boarding process smoother, follow these tips:

  • Communicate the workplace culture – which includes the organization’s values and norms.
  • Schedule one-on-one meetings with other team members/introduce them to the gang.
  • Create an employee handbook for the fresh fish and assign a mentor/buddy.
  • Assign simple and easy tasks in the beginning – don’t test-drive their responsibilities all at once.
  • Familiarize them with the tools that your company uses, for example, a CMS, CRM platform, etc.

Apart from the onboarding process, you also need to establish an effective training program.

The program should target all of your employees – old and new.

Here are some pointers to help you train your employees the right way:

  • Start by assessing the areas that need improvement, for example, cybersecurity, workplace ethics, etc. For all new employees, you may follow a standard training protocol.
  • Communicate the learning objectives of the training program. For example, if the program focuses on new software, let your employees know the benefits of familiarizing themselves with the new platform and how it could benefit the whole organization in the long run.
  • Design learning material that is easy to comprehend. You can make slideshows, PDF files, and video lessons, among others.
  • If you have a large workforce to train, consider investing in a decent learning management system.

2.   Acknowledge all of your employees

It’s impossible to engage/establish an emotional connection with someone if they don’t acknowledge you.

While acknowledging your employees won’t guarantee engagement by itself, a lack thereof will result in disengagement.

As a manager, you already have a lot on your plate. Praising your team for every little accomplishment might seem exhausting and unnecessary.

However, it can work wonders for morale.

A 2013 Globoforce study found that 89% of employees felt more motivated when told that whatever they were doing was right.

While that may raise some questions regarding constructive feedback, it points towards a simple act of acknowledgment and the effects of micromanagement (more on that later).

Follow these tips to acknowledge your employees:

  • Greet whoever crosses your path and ask them about their day.
  • Praise and reward your employees who go the extra mile in front of the whole team.
  • From time to time, remind your employees about the significance of their roles and how their efforts keep the business afloat.
  • Involve them in decision-making processes and ask for their opinions to show that they matter.

3.   Set and communicate your company’s goals

Running a business without goals is like shooting darts in the dark.

Where new employees need to be told how they’d contribute towards the overall success of the team, existing employees need to be constantly updated and reminded about the company’s existing goals.

However, it all starts with you. First, you have to define your goals.

A tried and tested way is to break down your long-term goals into smaller ones, that lead the organization closer to success, one step at a time.

Follow these tips to set your goals:

  • Analyze what your company needs to get to the next level. A goal that doesn’t help your company grow isn’t worth the effort.
  • Use the S.M.A.R.T. technique i.e. make your goals specific, measurable, achievable/actionable, realistic, and time-bound. A good example of a SMART goal is: “closing X sales by the end of the 2nd quarter.”
  • Set monthly, quarterly, semi-annually, and annual goals to make your vision attainable.
  • Involve your employees in the goal-setting process to engage them.
  • When you’re done setting your goals, create plans to achieve them. For example, if your goal is to “generate X amount of leads in Y months,” one of your plans could be to create a lead generation piece to encourage people to sign up.

Once you’ve set your company goals and created a game plan, you must communicate them.

Follow these tips:

  • Have meetings once a week or twice a month to discuss progress, provide a refresher on existing goals, and/or discuss future goals.
  • If you’re using a project management or team collaboration tool such as Asana, Slack, or Trello, you can create a separate folder/card where you can list down all relevant, organizational goals.
  • Get a whiteboard or a pin board for your workplace on which you can write/pin the goals for your employees to see. To make things fun, hang a metallic bell next to the board and have one of your employees ring it every time you achieve a major milestone.

4.   Provide the resources necessary to achieve goals

At times, employees are motivated and ready to buckle down and get things done. However, they’re not given the proper tools/resources necessary to do their jobs comfortably.

These resources could be anything, including a fast computer with working peripherals, software that makes the job easier, guides/manuals to help employees succeed, or even coffee on tap.

When employees aren’t provided with these resources, they can get frustrated, stressed, and demotivated – all of which can result in disengagement.

To steer clear of this problem, do the following:

  • Create a separate monthly budget for the provision and maintenance of critical resources.
  • Assess what the team needs from time to time. You can have one-on-one meetings with your employees and ask them what they need. If it’s in the best interest of the company, consider getting those things.

5.   Remove barriers to communication (between employees and top management)

According to a study by The McKinsey Global Institute, organizations where employees felt connected experienced a 20-25% increase in productivity.

This connection starts by removing barriers to communication.

Working in silos and removing healthy inter-department interactions may not be good for engagement.

Apart from that, the top management needs to be more transparent and open to communication.

In a nutshell, managers need to be approachable and available to provide their counseling and guidance.

All of this will result in a cooperative environment, where every individual is engaged.

Here are some tips to promote open communication in the workplace:

  • Have group meetings every other week or month, where all employees are encouraged to speak up and add to the discussion.
  • Encourage managers to provide counseling sessions to the employees.
  • Don’t hold back from sharing valuable feedback and encourage your employees to do the same.

6.   Promote two-way communication in the workplace

Managers shouldn’t be the only ones to give feedback.

To engage a workforce, the top management must be open to receiving feedback from the employees.

For that, the managers need to establish a culture of two-way and open communication.

If employees feel reluctant to share their viewpoints or voice their concerns, it’ll stress them out or even make them resentful, which can result in lower engagement.

So, it falls upon you – the manager – to take initiative and encourage your workers to discuss whatever is on their minds.

To promote open communication within the workplace, you can:

  • Be extra careful while hiring managers/team leads. Make sure they’re open to receiving constructive criticism from their teams. Train your existing managers to accept and process feedback without getting personal.
  • Design engagement surveys and have employees fill them out every month, quarter, or year. You can include both open-ended and close-ended questions like, “Is there anything you’d like to suggest to the management?” or “On a scale of 1 to 5, how satisfied are you?”
  • Keep an “open door” policy and lead by example.

7.   Provide feedback on a regular basis

Do you provide enough feedback to your employees?

Is that feedback constructive in any way?

How much feedback is too much? At what point does feedback begin to backfire?

These are some of the questions that every manager needs to ask themselves.

A great way to engage your employees is to have one-on-one feedback sessions, where you break down their performance and discuss their strengths and weaknesses.

It’s not realistic to expect managers to provide individual feedback to a team of 100 professionals.

However, designating an hour every week or two to provide quick feedback to one unit is reasonable.

Here are some more tips to give feedback the right way:

  • Highlight the progress and other accomplishments of an employee, even if the overall feedback is negative.
  • Have performance evaluation interviews at the end of every month, quarter, or year, during which employees are given in-depth feedback.

8.   Don’t micromanage

Micromanagement is perhaps the biggest killer of employee engagement.

When employees are told to perform even the slightest tasks in certain ways, it could be discouraging and lead to a lack of productivity.

While it’s true that certain jobs require workers to follow standard operating procedures, in most cases, close supervision and a “my-way” attitude from managers can lower morale.

In every job – especially those that require creative input – a level of autonomy should always be there.

And that autonomy shouldn’t be limited to setting goals and personal schedules – it should be practiced in most day-to-day tasks without any consequences.

Another aspect of micromanagement is providing too much feedback and being overcritical.

In an experiment conducted in 2007, two groups were tested in an inventory management simulation. Group A was given more feedback than group B.

The result – group B performed 11% better than group A.

Here are some tips to avoid being a micro-manager:

  • During meetings, discuss matters with an open mind, and look to learn something new.
  • Realize that there could be more than one “right way” of doing certain things, and allow your employees to use their creativity to do them. For example, if an employee prefers to use a certain layout and shortcuts for software, let them do it, as long as it doesn’t interfere with their work.
  • While creating or revising SOPs, encourage your employees to provide any suggestions or overall feedback.

The 5 Hottest Employee Engagement Trends to Follow

Here are 5 employee engagement trends that you can leverage to take your organization to the next level:

1.   Unique financial incentives

According to classical theories of management, money is the biggest motivator for any workforce.

While that’s no longer relevant in today’s landscape, financial assistance, such as medical coverage, can go a long way in engaging employees.

However, some companies are providing this financial assistance in unique ways, catering to the needs of the modern workforce.

A good example is student loan repayment.

Some organizations are offering to repay the student loans of their employees through different platforms like FutureFuel.

This special benefit has shown promising results in terms of satisfaction and retention. In fact, according to a survey, 86% of employees would want to work for you for 5 or more years if you offered to help pay off their college loans.

So, think beyond medical insurance and free lunches, and come up with a unique way to financially assist your employees.

2.   Working for a cause

Another thing that drives engagement in today’s workforce (most of which includes millennials) is involved with causes.

A study found that organizations that focused on their CSR (corporate social responsibility) strategies and worked on different causes found it easier to retain millennial employees.

So, to make your employees feel like they’re part of something bigger than themselves and engage them, consider giving back to the world in other ways.

If you already haven’t, start by creating a CSR strategy.

Keep these tips in mind:

  • Pick one cause that you want to work towards. It’s tempting to work towards multiple causes at once, but you can’t save the world in one go.
  • Train your employees to align their actions with the cause you’re working for, both at work and in their personal lives.
  • Plan small CSR activities throughout the year, such as tree planting, fundraising for a local animal protection group, etc.

3.   Increased flexibility

The modern employee wants to work on their own terms.

According to a recent survey on pay and benefits, 76% of respondents considered a “flexible working schedule” as the most attractive incentive.

Flexibility not only reduces the stress to get the job done in a specific time period, but it also provides a sense of autonomy – both of which are perfect for engaging employees.

In another study, which focused on millennials, 77% of respondents said that a flexible working schedule made them more productive.

So, ditch the mandatory 9 to 5 regime and cut your employees some slack.

4.   Leveraging gamification

At times, employees find it difficult to wrap their heads around certain incentives and company policies.

Modern organizations have come up with a solution to this problem – gamification.

By gamifying your onboarding process, training programs, and other day-to-day tasks, you can experience a rise in employee engagement.

For example, you can leverage an app that tracks the heart rate of employees, and reward them for working out.

You can also gamify assessments, where employees participate in an immersive experience.

5.   Emphasis on employee experience

With a great emphasis on making companies “people-oriented,” more and more organizations are now focusing on their employees’ experiences.

Also known as EX, this concept involves how an employee feels within their workspace and what they observe – which can be deciding factors for engagement.

According to a survey by SHRM, organizations whose employees reported more positive experiences were found to be 400% more profitable.

So, how do you provide the right kind of employee experience? SHRM says that it’s a combination of the following factors:

  • Culture
  • Technology
  • Physical workspace

Building the right culture is a slow process.

However, you can experience results right away if you work on technology and physical workspace.

For starters, with technology, you can provide better tools and ample training.

As for your physical workspace, make sure that your employees aren’t feeling crowded and are working in a safe and pleasant environment.

Wrapping it Up

At the end of the day, it’s engaged employees that are going to help scale your business.

Creating an environment where every employee is motivated to do more for their company can 

be accomplished through the right mindset and tactics.

It all falls on fostering a culture of employee engagement, ditching the traditional management style, and building a team that takes pleasure in showing up to get things done - every single day.



If you are new to Human Resources and are looking to break into an HR role, we recommend taking our HR Certification Courses, where you will learn how to build your skillset in human resources, build your human resources network, craft a great HR resume, and create a successful job search strategy.