Employee Engagement: Driving a Return on Investment

“The CEO was telling me the other day that he enjoyed coming to work every day. So do I. It’s a marvellous place. Everyone is encouraged to innovate. Everyone is encouraged to critique each other. That means even the CEO is not free from critique. I could not believe it when I started work there. I love it.” said the manager of a local council department at the start of our meeting.

She was entirely proud of her organisation and clearly willing to work extra hours and put in extra effort, having met us at 8:00am and planning to work until around 6:00pm that day.

She was, in Human Resource parlance, “Engaged”.

Engaged employees feel like they have a stake in the organisation’s success and act in a manner that demonstrates their desire to put in efforts well beyond the expectation set for their role.


Studies show the benefits of engaging employees.

One study (Mercer) of 12,500 employees in a US financial services firm revealed that the greatest drivers of engagement were:

  1. The chance to do challenging work
  2. Access to needed information
  3. Ability to reach career goals
  4. Access to needed training.

It also found that increasing the favourable scores of these drivers by 5% resulted in an increase of 3% in retention rates, saving $3m p.a. through annual cost savings associated with recruiting, training and customer retention.

Another study (Corporate Leadership Council Executive Board, 2007) demonstrated that in highly engaged workforces:

  • Employees that work harder are nine times less likely to leave
  • The average three years’ revenue growth is 20.1% against an industry standard of 8.9%
  • EBITA growth is three times the industry average.

A Gallup study (2006, Harter, Schmidt, Killham, & Asplund) reviewing data from over 23 thousand business units showed that those with the highest engagement scores (top 25%) averaged 18% higher productivity than those with the lowest engagement scores (bottom 25%) and also:

  • 31% in turnover for high-turnover companies (those with 60% or higher annualised turnover)
  • 51% in turnover for low-turnover companies (those with 40% or lower annualised turnover
  • 12% in customer loyalty/engagement
  • 62% in safety incidents
  • 51% in shrinkage
  • 18% in productivity
  • 12% in profitability.

The Royal Bank of Scotland has linked customer service to employee engagement, with a 7 percentage point difference in customer service scores between the top 10% of business units and the bottom 10%, ranked by employee engagement in 2011.


One might expect that such returns on investment require huge investments in time and resources.

This is not so.

What is required, however, is a commitment from managers to follow some simple guidelines which include, but are not limited to:

  1. Give frequent, accurate and specific feedback which emphasises an employee’s strengths over their weaknesses
  2. Be clear about performance expectations and the purpose of their role
  3. Match employees’ fit for their role by taking into account their passion over their skills and knowledge
  4. Align the employee’s personal vision with the corporate vision and strategy
  5. Help employees define and solve day-to-day problems
  6. Build networks of employees with other talented co-workers
  7. Demonstrate commitment to employee development
  8. Be open with communications
  9. Reward flexibility and innovation.

Management Commitment

Each of these tasks is simple. Sure, they do require some thought, and need to be developed and undertaken in a structured manner, with formal measurement of the effectiveness of the activities, so that continuous improvement processes can make adjustments to reduce the deviation from the desired outcomes.

So, if you are the kind of manager who makes announcements rather than takes concrete action, you are likely to fail. However, if you are the kind of manager who is engaged yourself in the activities required to drive engagement, you will reap almost immediate rewards.



(2007, November 4th). Retrieved October 13th , 2013, from Corporate Leadership Council Executive Board

Harter, J. K., Schmidt, L. F., Killham, E. A., & Asplund, M. J. (n.d.). Q12 Meta – Analyis. Retrieved October 13th, 2013

Mercer. (n.d.). Engaging employees to drive global business success: Insights from Mercer’s What’s Working Research. Retrieved October 11th , 2013

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