Understanding the True Costs and Benefits of Employee Engagement

It seems every employer and HR expert is touting the value of employee engagement. But what are its real costs — and what’s the return on your investment?

“One hundred percent of business leaders state that having a clear people strategy which engages, enables and empowers their staff is critical,” writes Jane Sunley for Director, citing research from Purple Cubed. “Further still, Deloitte’s latest Global Human Capital Trends report stated that engagement and culture have skyrocketed to the No. 1 global business issue.” However, while engagement is important, “86 percent of CEOs admitted they are not developing adequate strategies around engagement, despite seven in 10 agreeing it is key to productivity,” Sunley writes.

Good engagement can affect your company in many different measurable ways, writes Jennifer Costa for Business 2 Community. “Research reveals engaged companies have five times higher shareholder returns over five years,” Costa writes. And according to a 2016 Gallup meta-analysis study, “businesses with employee engagement scores within the top quartile of Gallup’s database have 70 percent fewer safety incidents than those in the bottom quartile.” And, Towers Perrin’s research found “companies with engaged workers have 6 percent higher net profit margins,” Costa writes.

So, want to judge engagement’s value at your workplace? Start measuring what you’re spending and how your bottom line is changing as you do. Chances are, your company doesn’t have enough data to decide employee engagement’s true value. “While HR has long been fascinated with engagement, finance has little priority around investing in it,” according to compensation.blr.com. “Only 8 percent of companies have actually implemented a strategy across their enterprise to measure employee engagement.”

In order to make the leap at your company about how engagement affects your bottom line, start measuring – and make sure your engagement strategy covers the things employees care about. “HR and finance leaders see the biggest potential return on investments (ROI) from HR technology and improved employee benefits,” according to the compensation.blr.com story. “The findings are clear: midsized companies should focus on core HR and benefits — not perks and gimmicks — to create a healthy company culture of engaged employees.”