How Does Employee Engagement Impact Performance?

John Krautzel
Posted by in Career Advice

Employee engagement is a concept that tries to measure how employees remain involved in their work. Gallup reports that just 33 percent of employees remain engaged at work, which led many companies to increase investment in technological tools, software and apps to measure engagement. Perhaps the most important metric for you to investigate is the relationship between engagement and how it impacts performance.

What Is Employee Engagement?

The Society for Human Resource Management defines employee engagement as the connection and commitment that employees show toward their employers. Better engagement leads to higher levels of productivity. Gallup adds that more highly engaged workers show enthusiasm for their jobs.

Having engaged employees means workers invest more of their energy and efforts into the job beyond just getting a paycheck. Workers actually care about their employment, co-workers and fulfilling the overall mission of the company. Recognizing how engagement affects productivity is the key to understanding how to invest in your workers.


A survey from Gallup and the University of Iowa in 2009 revealed that the least-engaged employees had a drop of productivity at 18 percent. The same research showed that absenteeism rose 37 percent among the lowest quartile of engaged employees. In 2013, missed workdays due to a lack of engagement cost American firms a total of $84 billion.

A company's stock grows an average of 3.9 times higher in terms of earnings per share among publicly traded companies that foster employee engagement versus those that don't. Higher stock values tend to have more investment and more working capital.

Engagement impacts performance with regards to turnover rates. Workers who lack engagement have a turnover rate 12 times higher versus those who are engaged, whereas engaged employees are 36 percent more likely to stay with their firms. This has a profound effect on performance when top employees leave to find other work. The cost of turnover can reach up to 150 percent of an employee's salary, which means investing in ways to keep workers on the job is a vital thing to save on labor costs while increasing profits.

How to Foster Engagement

Foster employee engagement from an organizational standpoint. Ask questions and get feedback from workers as to why they show up to work every day. Insights you gain might clue managers into the types of benefits that employees want as a reward for their hard work. Surveys and questionnaires come into play as you develop an overall strategy with clear, measurable goals as a way to track the progress of individuals and teams.

Regular communication among managers and their teams is important because supervisors need to keep an eye on anyone who seems to be losing interest. One-on-one meetings, perhaps every two weeks or a month, can help with identifying problems before they become unmanageable. These meetings should not be punitive in nature, but are just conversations to help solve a problem.

Employee engagement is a part of an overall performance management strategy, which means you must continually improve this process. That's why managers need to check with their teams on a regular basis when engagement is part of a company's overall culture. Likewise, productivity should increase with each improvement.

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