Employee Engagement. A Review of the Most Current Research

October 22, 2007

Empirical research on employee engagement is relatively new. While employee retention has been the focus of discussion, several studies on engagement have been recently conducted - since retaining employees is dependent upon the need to engage them. Hence, engagement studies are becoming an industry focus.

One of the most significant threads in the current research is the discovery that employee engagement is linked to customer satisfaction, which is linked to organizational financial success. Employee engagement and satisfaction distinctly affect the bottom line. This article details the most recent findings of employee engagement research.

What is Employee Engagement?

Employee engagement is about encouraging employees to have a passion for their work, and identifying the organization as more than a place to earn money.

What are the specific benefits of employee engagement, and how is it achieved?

The Forum for People Performance Management and Measurement at Northwestern University released a report in November 2004, "The Impact of Employee Attitudes on Market Response and Financial Performance," which links employee satisfaction to customer satisfaction and a company's financial success. This holds true even if employees have no direct contact with customers. Below are the report's key findings:

  • The key characteristic for explaining employee satisfaction is organizational communication.
  • Employee satisfaction is a key precursor to employee engagement.
  • Organizational culture is a significant driver of employee engagement, where employees must be expected to work together and provide a voice for the customer within the organization.
  • When individuals and teams compete to implement optimal behaviors oriented to the market and its customers, such competition can benefit both the organization and its customers.
  • 64% apply the philosophy of employee engagement to their people practices.
  • Organizations with engaged employees have customers who use their products more.
  • An organization's employees influence the behavior and attitudes of customers, and customers drive an organization's profitability through the purchase and use of its products.

Incentive programs, as a way to engage employees, have been found to increase organizational performance. The International Society for Performance Improvement released a study last year titled, "Incentives, Motivation, & Workplace Performance," which indicated the following benefits of incentive programs:

  • Incentive programs improve performance.
  • Incentive programs engage participants and increase interest in work.
  • Incentive programs attract quality employees.
  • Longer-term programs outperform short-term programs.
  • Executives and employees value incentive programs.
  • Quota-based incentive measures work best.

What are some Best Practices for Engaging Employees?

Best Practices LLC, a research and consultant firm, recently released a new benchmarking report on best practices for engaging employees in their jobs and companies. Based on primary and secondary research of leading worldwide corporations, the report's key findings follow:

  • A reduction in turnover rates by just two percentage points can result in a savings of $3 million annually.
  • An effective performance management system is the cornerstone of engagement - from goal-setting to reward, recognition, and incentive programs.
  • 75% of high performing companies hold managers accountable for engaging their employees. In contrast to 35% across the entire study group that holds managers accountable.
  • High performing companies engage employees by cutting across functional silos to create a sense of connectedness through communities of practice, forming cross-functional teams, and creating common work areas.
  • High performing companies recognize employees for their suggestions, employ group brainstorming and utilize group listservs to enhance feelings of connectedness.
  • Employee and customer loyalty attributes are highly correlated and reflect each other, supporting the premise of the importance of employee engagement.
  • Key factors in engagement include: alignment of employees toward strategy, providing employees the capability to engage themselves, and creating an environment of engagement by fostering the sense that individuals are a part of a greater entity.

Up next: "Employee Engagement and Career Development: A Look at 2014 Research and Data"

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