Employee Engagement = Improved Financial Performance

A highly engaged workforce translates into improved financial performance for companies. You’d expect that, wouldn’t you? Yet many companies with command and control structures still don’t get it.

Because jobs are scarce now, senior management of these laggards don’t feel the need to engage with employees to reach the shared goal of making the company great. As a result, according to an Aon Hewitt study, companies that don’t fit its “Best Employers” category are losing shareholder value.

Smart companies understand, however, that an engaged workforce is a productive workforce.

Employee Engagement Correlates to Shareholder Returns

Organizations with high levels of engagement (65% or greater) continue to outperform the total stock market index and posted total shareholder returns 22% higher than average in 2010, according to the study by the human resource consulting firm. On the other hand, companies with low engagement (45% or less) had a total shareholder return that was 28% lower than the average, as illustrated in this graph.

The study shows the key drivers of employee engagement in this graph.

Note that study respondents from Aon Hewitt’s employee engagement database say that pay is only half as important as career opportunities.  So simply giving employees a raise isn’t as important as putting systems in place that reward employees with opportunities to build their careers in the organization.

If you are an employer, are you engaging with your employees and offering them the opportunities to grow? If you are an employee, do you feel stuck in place? Maybe it’s time to move on.

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  1. Jeannette, thanks so much for sharing Aon Hewitt’s research with your blog readers. Companies are looking for “real” data to support spending time and dollars investing in their associates and this research demonstrates that it does positively affect the bottom-line. As you mention, just giving staff increases will not generate enthusiasm, it needs be coupled with a clear career path of future opportunities. Everyone knows that you can’t have high customer satisfaction unless you have a happy work force and those companies that have engaged and motivated staff will have a heads-up on their competition for retaining their customers, as well as their dedicated associates. Richard Shapiro, The Center For Client Retention @richardrshapiro

    • Rich — thanks for your comment. Customer retention is your specialty and, having worked with so many companies, your comments get right to the heart of the matter.

  2. In first reading this post I found myself wondering how “engagment” is defined. Years ago,when I worked as a nurse, I was engaged in taking care of my patients. Though a hospital is an organization, corporate type engagement was not, still is not a concept that I fully understand.

    At the same time, I’m reminded of the book Drive by Daniel Pink. He discusses what I believe is engagement. For example he mentioned successful corporations having “FED-EX” days in which employees put routine responsibilities aside and replace them with brainstorming sessions that could yield ideas toward future corporate growth. It was a win for the employees, and the corporation. Everyone was happy and that certainly makes sense!

    • Keyuri — the example you give of successful companies setting aside days for employees to brainstorm ideas that could help the company grow is exactly the type of behavior that companies need to adopt to fully engage their employees. A company’s employees are eager to give more than is expected if only the company will offer them the chance to contribute. It seems so obvious, but many companies don’t do it. They don’t value the brainpower and eagerness of their employees who want to help make a difference. Management is missing out on a great resource.