The ROI Of Employee Engagement

Can you afford NOT to invest in something that will immediately increase your bottom line?

Over the last few years, employee engagement has been a huge buzzword in HR. It seems to be everywhere—in webinars, at conferences (remember conferences? Those things we used to go to with perhaps several thousand other strangers and all breathe on each other? Ah...pre-Covid times were so quaint), on LinkedIn...the list can go on and on. It might feel like you can’t seem to go a day without hearing about it somewhere. Maybe you even hear about employee engagement in meetings you’re having at work as an HR professional, and you’re wondering exactly how you can talk about it to stakeholders in such a way as to provide proof that it influences the bottom line in a big way. 
 

Some might think engagement is difficult to talk about in the same breath as ROI. I mean, we know engagement helps, but what are some facts that can really drive that home? Turns out there is some pretty solid research to help you make the case for employee engagement in your company, and here are a few of the most salient points you’ll want to take note of.

Engagement Increases Productivity

Companies that don’t invest in employee engagement are losing much of the potential returns from that investment every year in sunk costs and lost opportunities—all because employees are actively checked out from work.  

A strong engagement strategy boosts employee productivity, which in turn can generate more revenue per employee. Now, if you shuddered at the phrase “revenue per employee,” you’re not alone. It’s kind of a gross idea, to reduce employees to mere numbers. Engagement is more about the human element than it is about a number, and most HR professionals understand that on a fundamental level—that employees aren’t just a number on a spreadsheet. Employees are not merely drones working to increase your company’s revenue, and no matter what they shouldn’t be viewed that way or worse, treated that way. But rest assured, that’s not what we’re talking about here. 

Still, though, let’s be real: employees, in general, work to earn money so they can live a life and have some financial stability. Companies exist because they provide a product or a service, and they, in turn, get money for that, then pay their employees to do the work that generates the product or service. It’s a big happy symbiotic relationship, one that depends on productivity both of the company and the employee. And if the employee is more productive, the company will be, too. 

So this begs the all-important question: if an employee is more engaged, how much more productivity will that provide in terms of those incredibly impersonal–but necessary–numbers? 

Here’s the low down: increasing the engagement of your employees boosts productivity by 17%¹ . Depending on how much revenue your employees generate on average per year, this could be a big boost to your company overall. 

Engagement Influences Turnover

Retention is a perennial concern for most HR professionals. Considering the cost in both money and time to source and hire someone for a position, it’s a wonder we don’t focus MORE on retention. And if that wasn’t enough, average tenure at an average company is rapidly declining. In fact, the average stay of Millennials at a company is down to a mere 2.8 years!²

The average company experiences 15% turnover³  in their employee base every year. And, as was said, the cost of an employee leaving is huge. When an employee leaves it can cost the company approximately one-third of that worker’s annual salary in recruiter fees, temporary workers, and lost productivity to replace just one employee. Now just think if 15% of your workforce is leaving every year...that’s definitely cause for you to sit up in your chair.

With a good engagement strategy, organizations can reduce the turnover rate by nearly 40%⁴.  That’s a big deal, and can have a massive impact on cost savings. Think about it this way: if you didn’t have employees leaving as often, you wouldn’t have to pay to get another employee up and running, right? That’s why effective engagement influences turnover—because engaged employees are generally happier employees, and won’t want to leave the organization. 

Engagement Impacts Absenteeism

Absenteeism is “the practice of staying away from work or school without good reason—or reason at all.” Absenteeism means not going to work without good reason, and often without providing a reason at all, because you just don’t feel like going. In school, they called that “sluffing” (did I just reveal my age by using that word? Probably) and you’d get docked points for it, which for a grade-hungry kid like me was worrisome. 

Work is no different than school in this respect. When employees are absent without cause, it can really do a number on overall productivity. However, when employees are engaged, it reduces absenteeism by nearly 41%⁵ , which can play a big part in keeping things hopping at work. 

The Bottom Line

Companies that choose to invest in employee engagement efforts reap the rewards on everything from an improved culture to increased revenue—and that’s just the beginning. The great thing about engagement is that it can start small, even with a simple, heartfelt appreciation of effort. When something so easy has such a huge impact, the question then becomes: can you afford NOT to invest in something that will immediately increase your bottom line? 

Notes
¹ https://www.quantumworkplace.com/future-of-work/14-benefits-of-employee-engagement-backed-by-research
² https://www.bls.gov/news.release/pdf/tenure.pdf
³ https://www.bls.gov/news.release/pdf/jolts.pdf
⁴ https://www.shrm.org/hr-today/news/all-things-work/Pages/to-have-and-to-hold.aspx

Bronson Dameron is a long-time advocate of employee recognition and engagement (having had several not-so-great jobs in his past), and is passionate about the employee experience and people in general. Bronson now works with Awardco to work to try and improve the lives of the people around him in any way possible. Visit www.award.co Connect Bronson Dameron