Upgrade to Chrome Upgrade to Firefox Upgrade to Internet Explorer Upgrade to Safari

20th August 2019

What is the ROI of Employee Engagement

We know employee engagement drives performance on an individual level, that much is undeniable, but what about on a larger scale? 

Do companies with regular employee engagement training days outperform those with none?

Do engaged employees work more efficiently and improve your bottom line?

If not, then employee engagement is the biggest scam in history, but this can’t be the case, right?

With outlets like Forbes singing about the benefits of employee engagement on a regular basis and most of the world’s most successful companies engaging in employee engagement strategies, of course, it can’t!

But that doesn’t mean every single employee engagement event bears fruit.

So how can you measure the ROI of employee engagement to see whether your current strategy is spurring growth or simply wasting money?

We’ve got you covered. We’ve been around the block a few times when it comes to employee engagement, and we’ve assembled some facts and statistics here to help you measure the ROI of employee engagement.

But first – how do these types of training help your company’s day to day operations?

 

The Benefits of Employee Engagement

Here are just a few of the benefits that you can expect to be a direct result of employee engagement training:

Improved Productivity

Engaged employees simply do more work. Not because they’ve been trained to, but because they take more pride in their company and the work they do for it. 

A Gallup study from 2016 found 17% higher productivity and 21% higher profitability in companies with employee engagement strategies when compared to those without.

Higher Sales

Companies with engaged employees also see higher sales. 

A Gallup report on The State of the American Workplace found that organizations with high engagement saw on average 20% higher sales than those without. This is theorised not just to be related to increased training and engagement, but also a result of genuine increased belief in the products and services offered by the organization.

Better Customer Support

Customer service is more than ever, and disengaged employees can’t be expected to care enough to provide top-level service. Engaged employees have a more positive outlook on their company, their seniors, their work, and turn up with a spring in their step. This results in more positive interactions, genuine enthusiasm, and a willingness to help people. 

These are all things that can be passed on to the customer and provide a great image of your company.

Higher Employee Retention

When employees are disengaged, feel undervalued, or don’t get challenged, they simply leave. 

A 2017 study found that 46% of employees would accept another job offer if one arose, even if they weren’t actively looking for a new job.

Engaged employees feel more at home, more loyal, and therefore are much more likely to stick around.

Decreased Absences

The occasional day off isn’t a bad thing. Everybody needs a break sometimes, and this desire can be seen as an employee feeling safe in their position at the company, and in their ability to keep up with their workload.

However, regular absences are a different story and can cost a business a lot of money.

Workplaces with high engagement see on average 41% less absenteeism, and this is reflected directly in company financials too.

These are just a few of the benefits an organization can expect to experience from a quality employee engagement strategy, but how does this translate into numbers?

Let’s take a look at the return on investment you can expect:

 

The ROI of Employee Engagement

The first thing to consider when looking at this, is how much does disengagement cost?

On average, disengaged employees cost their workplaces $3,400 for every $10,000 they get paid. In other words, 34% of their salary is a waste of money.

On a larger scale, disengaged employees cost the US economy $350 billion per year in simple loss of productivity.

These numbers alone show a strong return on investment, but let’s go deeper:

Operating Income

Engaged employees don’t just mean more sales, increased productivity and better customer service, it also means less wasted time. When a large portion of a company’s workforce is engaged, it should be clear how these differences mount up.

Engage for Success, a voluntary organisation that conducted research into employee engagement for the UK government found that organizations with engaged workforces, on average, experienced 19.2% growth over 12 months.

The same study ascertained that companies with disengaged employees on average earned 32.7% less than those with engaged employees.

Net Income & Profitability

Of course, improved productivity and decreased waste also has a major impact here.

The Corporate Leadership Council, in an employee engagement study for St. Cloud University, Minnesota, found that the profits of engaged companies grow on average 300% faster than those with disengaged staff.

In terms of net income, they also tend to earn around 200% more than companies with less engaged employees.

Productivity

While we’ve already discussed productivity to an extent, this is the backbone of how company’s measure the success of their employees.

80% of doctor’s appointments are, directly or indirectly, caused by stress. Therefore, engagement and sense of belonging directly translate into productivity. 

A Warwick University study unrelated to corporate environments or the workplace studied the connection between human happiness and productivity and found that happy humans are typically 12% more productive.

That may sound like a small amount, but if every employee in your organization was 12% more productive, the effects on your company’s growth and the bottom line would quite clearly be huge.

The Cost of Replacing Employees

As we discussed above, engagement measurably improves employee retention and loyalty.

Combining this knowledge with the fact that it costs, on average, 20% of a staff member’s yearly salary to replace them, and you start to get a more complete picture of the situation.

This is without looking into the costs and time losses related to onboarding, advertising job vacancies, and the fact that seeing beloved team members leave can indeed make others worry about job security and consider looking elsewhere themselves.

These are just a few ways in which employee engagement provides a return on investment.

Since so many of these factors interact with each other and can compound each other, the ROI is likely even bigger than we think.

To keep on top of the game, and learn more and more about how and why to keep your employees positive, happy and engaged, check back here for more dives into the research!

Want to learn more now? Check out our 5 Simple Ways to Master Engagement in Your Team!

You might be interested in:

Workplace Engagement Choirs Image

Workplace Engagement Choir Programmes

Our inspire choirs are tangible employee engagement programmes

Close

Adventurous Engagement Live

Discover how taking an interactive human approach creates happy workplaces.

Join the experience.

Tuesday 12th November 2019
9am-1pm
Central London

Register
Close
  • This field is for validation purposes and should be left unchanged.