How Does Employee Engagement Affect Performance?

Are happy employees engaged employees? Truthfully, it doesn’t matter (to performance) if your team is happy or not. It is important to have happy employees; denying them so could easily result in a change in employer. When the workday comes to a close, however, what drives business growth? Some companies have taken a high interest in prioritizing the engagement levels of their team in order to drive performance demands. Here are a few ways employee engagement affects performance. 

High Engagement Drives Growth

Most organizations are – in the very least – open to the idea of growth. However, chances are, if your employees are just shy of engaged at work, the company will be this close to getting that big new client. According to The Impact of Employee Engagement on Performance, a study by HBR, 71% of respondents agree that employee engagement is very important to the overall success of the organization. [1]

While engagement does drive individual performance, it drives performance on a company-wide level as well. One strategy for organizational engagement isn’t a cure-all for every organization. It’s a delicate combination of company goals, values, culture and what drives the team. Since these are different with every organization, there’s not a one-size-fits-all solution. Aon Hewitt noted in theirTrends in Global Employee Engagement survey:

“Striving to maintain a higher level of employee engagement not only contributes toward short-term survival during economic volatility, but also is a key factor for longer-term business performance and better positioning when market conditions become favorable. The companies that get engagement right can enjoy a surplus of competitive advantage in talent strategy and business results that is hard for others to replicate.” [2]

Prioritizing Employee Engagement

The importance an organization places on engagement, the investment in engagement, has an impact on how involved employees are. In fact, the companies with engaged employees outperform those that don’t by about 202%. [3] It stands to reason then, that if your organization wants to increase performance, you have to increase the investment into the development of employee engagement. After all, engaged employees are performing employees.

Happiness Does Not Equal Engagement

The idea that engaged employees are happy is a fallacy. Employee happiness is important, but it doesn’t produce impacts to the bottom line. Your team needs to be engaged in order to affect performance. Maren Hogan, CEO of Red Branch Media, said:

“[Employee happiness] doesn’t mean much. There’s no proof that happy employees will do anything great for your company. While I don’t want to deny employees’ happiness, I’d rather have engaged employees. Those are the people who drive the numbers up – people who are passionate and maybe even a little frustrated when change doesn’t occur.”[4]

It’s not enough to provide your team employee lunches, a game room complete with vintage Pac-Man, or the latest and greatest technology. Employees have to have the tools they need in order to truly perform at their best, regardless of what perks will make the office breaming with cultural benefits.

While keeping employees happy is important to keeping attrition low, it’s not important to performance. What drives performance, is engagement; how your employees work can increase organizational growth. In order to increase performance, you – as a business leader – have to invest time and resources into ensuring your employees have the tools they need in order to perform at their best. Engagement is a fragile and delicate workplace entity, but it is necessary for the overall health of your workforce.

[1] – HBR: The Impact of Employee Engagement on Performance
[2] – Aon Hewitt: 2013 Trends in Global Employee Engagement
[3] – Dale Carnegie: The Importance of Employee Engagement
[4] – Forbes: Employee Engagement Doesn’t Equal Employee Happiness

Bio: Chris Arringdale

Chris Arringdale is the Co-Founder and President of Reviewsnap, an onlineperformance appraisal software that allows you to customize performance management, competencies, rating scales and review periods. Reviewsnap serves more than 1,200 customers worldwide including, Penske Racing, CubeSmart, PrimeSource and Nonprofit HR Solutions.

Views: 475

Comment by Daniel Fogel on July 31, 2015 at 11:18am

Thanks for posting Chris!   I think that engagement at its core starts with clear, honest, and direct communication, but it's not enough to just say your piece - the message has to be received as well to be effective and build some trust.  When I talk to people about when they were most engaged on the job, the answers frequently refer back to honest communication and trust with their direct supervisor.  The differences between how someone responds when asked about the best boss they've ever worked for and the worst can give a pretty clear roadmap of what to do and what not to do to improve engagement.


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