Employee engagement impacts your bottom line.

So here, pick one…

Employee engagement is:

  1. A passing trend
  2. Not that big of a deal
  3. Just another buzzword

How about none of the above?

The words “employee engagement” might be everywhere right now, but it’s the concept that matters.

And that concept can determine whether you lose or gain in areas of sales growth, shareholder return, operating margin, and more.

I guess you could say it’s kind of important.

Here are 7 specific ways employee engagement impacts your bottom line—and tips on how to amp up your engagement levels:

1. Productivity + Profitability

Yes, I sneaked two points into one.

But they usually go hand-in-hand. Where productivity leads, profitability soon follows.

And engaged employees are definitely productive. They are invested in the company mission, they’re focused on their work, and they care about accomplishing their goals.

Of course they get more done.

And if they’re getting things done, they’re also 1) not wasting time (and your money), and 2) boosting company profit.

Companies with high levels of engagement may see a 19% increase in operating income, while companies with low levels of engagement decline by 33%.

And organizations with at least 4 engaged employees for every disengaged employee see about 2.6 times more growth in earnings per share.

Keep it up by doing these two things:

  • Use pulse surveys. Send out short weekly or monthly surveys to gauge where employees are at—and to find out what your employees’ needs actually are. You don’t want to waste a bunch of money on a “problem” only for it to turn out it’s not really a problem at all.
  • Keep analyzing your feedback. Again, you want to boost engagement, but you don’t want to do it by wasting money. If you’re trying something new, like gamification, track your results and sit down every month or so with team leaders to see what’s working and what needs to change.

2. Absenteeism

Think about it.

If you love your job, are you going to go out of your way to miss work?

Probably not.

Low levels of engagement can lead to increases in absenteeism, which can cost about $3,600 per hourly worker, and $2,650 per salaried employee.

Yikes.

Unplanned absences can be especially harmful, disrupting workflow and stressing out co-workers who have to pick up the slack.

Balance things out by:

  • Keeping better track of absences. If it feels like data is slipping through your fingers, try using an app like TrackSmart or WorkDay to help you track absences—and figure out if there are any employees you need to talk to about absence policies.
  • Starting a wellness program. Gallup has found that employee well-being and engagement are linked, where workgroups that are engaged and have high well-being have 38% less sick days than average. If you don’t have a wellness program in place, start out small and focus on one change at a time. Work on offering healthier options in the company cafeteria. Incorporate “down-time” into the schedule so employees can take some breaks. Encourage the use of a gamification-meets-wellness app like SuperBetter, or use a health platform like Keas to manage your new wellness program.

3. Employee Turnover

The ever-revolving door.

It’s a look you’re probably not going for.

But organizations with lower levels of engagement suffer 31-51% more employee turnover than those with more engaged employees.

And for entry-level employees alone, it costs between 30-50% of their annual pay to replace them. Not to mention that constant turnover disrupts workflow as projects get reassigned—and it can’t make it too easy to build a strong workplace community, either.

Unfortunately, if this is you, I can’t tell you how to fix it.

You’ve got to figure out what the problem is first:

  • Do exit interviews. It might be awkward or disappointing, but if you’ve encouraged open and honest communication at work, hopefully exit interviews will help you figure out what’s not working for your employees. Take notes, ask questions, see if you can pinpoint a trend or specific problem area.
  • Take your focus off the money. While 89% of managers think their employees leave for better pay, only 12% of them actually leave for that reason. Don’t assume—that’s how you keep from fixing a problem.
  • Pay attention to your management situation. 75% of employees who quit are quitting their boss, not their job. Be careful to promote people skilled in management, who actively care about their employees. And keep an eye out in case all those employees who quit were working for the same boss. . . .

4. Customer Ratings

Simon Sinek said, “Customers will never love a company until the employees love it first.”

And it’s true.

Happy employees = happy customers.

Engaged employees care about the people they interact with. They go out of their way to help—effort that does not go wasted on customers in need.

Even better news: it goes the other way, too.

It may sound cheesy, but it’s nice knowing your actions make a difference.

Positive experiences with customers do just that: they remind employees that what they do has value and purpose.

Use those experiences to create a positive feedback loop at work—and boost engagement.

Create an update system for sharing positive customer experiences, whether it’s  through a designated thread on the company message boards or via an internal communications app that lets you share directly with your team, like HipChat or Slack.

5. Shrinkage

We’re talking theft, here.

While your average “disengaged” employee might not pocket office supplies or plunder the cash drawer, actively disengaged employees are different story entirely.

Spoiler alert: it’s not pretty.

Actively disengaged employees only take up about 16% of the workforce, but they can be very disruptive, going out of their way to waste managers’ time, sabotaging projects, and stealing supplies or products from inventory.

On the flip side, Gallup has found that companies with high levels of employee engagement see 28% less shrinkage.

Boost those levels and combat shrinkage by creating a welcoming work environment:

  • Ask “How are you?” and mean it. Actively disengaged employees are often disconnected from the people they work with. Change things by taking an active interest in their lives—and not just what you’re paying them to do.
  • Nip gossip in the bud. Yeah, it happens, but remember, peers are a big driving factor for engagement, and rumors, false information, and whispers behind people’s backs don’t create a good environment for making trusting, healthy work relationships. If you have an issue with someone, talk with them directly—and encourage your employees to do the same.
  • Own your mistakes. Actively disengaged employees sometimes hold a grudge against their company, so don’t give them any extra fuel. If you make a bad decision or cause a problem, just admit it, fix it, and definitely don’t blame someone else.

6. Safety Incidents

Disengagement is risky business, you guys.

On average, companies with low engagement levels have 62% more workplace accidents than companies with high engagement levels.

That’s not good for you, and it’s definitely not good for your employees.

Tackle safety issues by upping your communication game!

Part of promoting work safety is communicating safety standards and practices to your employees, but if the message isn’t getting through, you can run into problems.

Go mobile.

Yes, you should probably have safety training and colorful warning signs, but when you need to update your team on a new policy, or warn them about a safety hazard, what’s the fastest, most surefire way you can reach them?

Hint: it’s probably not the company intranet, or even your email system.

7. Product + Service Quality

We’ve been through this before.

Engaged employees are motivated to do well, and want to do work that is purposeful.

They’re focused on the task at hand (so they can catch and fix product problems), and they go out of their way to help customers (which makes for good service.)

And that saves you money, because less defective products means less recalls and customer complaints, and better service means more positive reviews and stronger customer loyalty.

How could you not want that?

You can also help your employees out here by:

  • Cross-training. Improve employee flexibility, teamwork, and their general understanding of how different parts of the company work together. They’ll pick up new skills, be able to handle more situations, and be more able to help pick up the slack if someone suddenly quits or gets sick.
  • Keep important info handy. Sure, you may want your employees to memorize certain pieces of information, but sometimes an unfamiliar situation arises, and employees need to be able to find out what to do. Make sure that important procedural information, contact information, etc. is readily available, and that employees know where to find it.

Conclusion

Customers, turnover, productivity—employee engagement affects it all.

Don’t get too overwhelmed, though.

It’s a lot, for sure, but just get started with one or two areas that are especially problem areas for your company right now. Invest your energy in resolving those issues.

And then just go from there.

Okay, your turn.

How is employee engagement affecting your bottom line? How do you work toward boosting engagement?

I’d love to hear your thoughts!