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Why Is Employee Engagement Important?

Employee engagement has moved beyond being a hot topic of the moment in HR circles to become a ubiquitous pursuit for all types of businesses. Though engagement is widely accepted as a good thing, it’s helpful to take a step back and consider: Why is employee engagement important? What, exactly, are we attempting to achieve by pursuing it?

As a concept, employee engagement has been around for a quarter century. It was a step forward in understanding the employee’s relationship to the organization and has been widely embraced by senior leaders; as a result, it has garnered more attention than most HR initiatives of the past—for good reason.

Numerous studies explain why employee engagement is important:

Organizations with high levels of engagement routinely outperform organizations with lower levels of engagement on a number of important business metrics. The advantages include higher profits, lower employee turnover, and greater customer satisfaction.

These are all positive outcomes, but there is a potential pitfall to the close focus on engagement. The new challenge, now that the concept has gained such wide acceptance, is that engagement has become just another metric and for some, has lost its meaning. When engagement is just a score, does it have the same meaning in the organization?

It’s time for a refresh on the subject, one that focuses not only on why engagement of employees is important, but also why it’s not the only thing that matters. (Tweet this!) A reset is needed if engagement is to be more than just a score.

In this article, we’ll examine why engagement is still important in the context of the employee experience and the general work environment—both of which are critical to building and maintaining engagement.

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Why is Employee Engagement Important?

As noted, organizations with high levels of engagement tend to be more profitable and have lower employee turnover and greater customer satisfaction.

How important is employee engagement? Partnering with one of our clients, Perceptyx found that disengaged employees were two and a half times more likely to voluntarily leave the organization. A focus on creating an engaging work environment would have resulted in nearly 1,000 fewer terminations, saving the organization over $10 million annually.

Clearly, higher levels of employee engagement pay big dividends that are reflected in the bottom line. For business success, then, engagement is a vitally important metric. To achieve it and the benefits it confers, however, we have to first understand what engagement is, and how it can be increased.

What Exactly is Employee Engagement?

Discussions about employee engagement miss the mark when they fail to acknowledge that engagement is an outcome, the end result of a positive employee experience. This failure often leads to relegating engagement to a score or number.

At Perceptyx, we define engagement as a psychological state that can be measured, and that influences employee behavior. Ultimately it comes down to the anticipation of success, which yields willingness to apply discretionary effort on the job—to really engage with the work. The critical outcomes of engagement are increased performance, going above and beyond the basic requirements of the job, and retention of key talent.

That’s what engagement is; the question then is how to achieve it. The first step should be to stop thinking of engagement as a noun and focus on the verb engage. To engage means to attract or involve someone’s attention, or to participate or become involved in an activity, cause, or mission.

Most of us recognize when someone is attempting to engage with us. They show interest in us and our well-being; they seek understanding about what is important to us, our personal goals in life, and what makes us tick. They ask us about ourselves, and pay attention to our answers. We can intuit in these inquiries—and in the way our responses are received—the sincerity of the attempt to engage.

This is why listicles of specific activities for boosting employee engagement miss the point; generic actions cannot generate higher levels of engagement. Weekly pizza parties or ping pong tables might be nice perks, but they are one-size, one-note gestures that fail to take into account what’s most important to employees—because no one asked employees what mattered to them. No one sought to engage with them before deciding what to do. As a result, employees intuit a lack of sincerity in the gesture, and engagement levels remain static or may even decline.

Engagement is a two-way street, so even though it can’t be easily achieved with a rote list of suggested actions or activities, sincere attempts to engage typically elicit a reciprocal response: People generally want to engage with those who show sincere interest in them, and will return the interest. In the context of the employee’s relationship to the organization, that translates into enthusiastically contributing to the organization’s mission.

The bottom line is that improving employee engagement must begin with a sincere desire to engage with employees on the part of the organization. That means not only asking employees about what matters most to them, but listening to what they have to say. Some of our recent research bears this out:

When Perceptyx surveyed more than 1,500 U.S. employees in a 2020 panel study to measure the impact of surveying through the COVID-19 pandemic, employees who were asked for feedback scored higher on all four measures of engagement than those who were not asked.

Percentage of engaged employees during COVID-19

This study measured only the impact of asking for feedback from employees, not actions implemented in response to that feedback. But as noted, asking people about their opinions, feelings, and what’s important to them is the first step to engaging with them. The act of asking communicates interest, so even asking employees for feedback can in and of itself modestly increase levels of engagement.

How can we Increase Employee Engagement?

Asking employees for their opinions is only the first step to engaging with them. To really build engagement, people also need to feel they’ve been heard and understood. Asking isn’t enough; the organization needs to demonstrate that it was listening as well, by continuing the dialogue with employees and taking actions to address issues that matter to them.

We often hear the term “drivers of engagement,” but in our view, that’s an inaccurate perspective. In a previous article, we outlined our belief: Employees fully engage with the organization when the barriers that stand in the way of success are removed. Employees want to engage; it’s human nature to want to be included and involved in achieving good things. The task, then, is identifying what prevents employees from engaging and removing those obstacles.

The problem with reducing employee engagement to a metric or score is the tendency to lose sight of this bigger picture. Engagement is not a number; it results from creating an environment that allows employees to engage. As such, engagement scores are akin to a general health indicator, much like taking a patient’s temperature. The thermometer can tell us the patient has a fever, but it won’t tell us why.

The same is true for engagement: A low score will tell us there’s a problem, but it won’t tell us what the problem is. For that, we must dig deeper, and a narrow focus on an engagement score can cause us to miss nuances in the data. That’s where the barriers to engagement are revealed. Removing those barriers is the key to improving the experience.

The way to influence engagement is by creating the right environment for a positive experience. That experience is the sum total of what it’s like to work in the organization and is a function of the organization’s culture; to improve it we have to understand both the culture and how it is experienced by the employees who operate within it.

This is how we lose our way on engagement when we narrow the focus to a score. The experience of individual employees varies widely, and will be very different for different employees working in different settings. Emphasis on a score can cause us to lose the ability to understand those various employee experiences and what those employees need to be successful and make the organization successful.

While HR is deeply involved in helping to craft the entire employee experience, to do so effectively, there must be a vision for the environment we want to create and the experience must fit with it. Focusing on an engagement score can narrow the actions we take, limiting them to small actions with little impact. To have a bigger impact, we have to broaden our thinking to consider what we want to achieve and take bigger actions. Broadening our perspective—and the actions we take—will have a bigger impact on the success of the organization.

A Silver Lining To The COVID-19 Pandemic

For all its disruption, the pandemic presented us with the opportunity to rethink how we do almost everything, from supply chain management to work settings. In HR, we’ve rethought benefits, working arrangements, and many other things. The current moment offers us a golden opportunity to pull our heads out of the sand and rethink our emphasis when it comes to the employee experience and engagement as well.

That experience is now completely different, whether employees are working from home or in a physical workspace. HR must meet the realities of this altered experience and rethink onboarding, training, communications, feedback, and how we think about engagement and the employee experience.

We need to step back and take a broader view on what we mean by employee experience, and refocus on how we engage employees in the mission of the organization. We need to focus on enabling employees to be more successful, because when employees are successful they are engaged; they want to stay and they attract talent, creating huge recruitment opportunities.

The current moment offers HR an incredible opportunity to impact business success. It should start with a reset on how we think about engagement and why employee engagement is important. It is still linked to the same range of critical business outcomes and offers the same benefits, but it’s time to think more broadly about how to engage and make positive changes in the employee experience. As with all important business strategies, in the wake of the pandemic, we need to think differently about engagement.

Ready for a Reset on Employee Engagement?

At Perceptyx, helping companies identify and remove barriers to engagement is our goal. With custom surveys, an advanced people analytics platform, and expertise in all aspects of survey design, strategy, and communication, we can help you identify what you should be asking employees to improve the experience in your company. Get in touch and let us show you how.

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