The Case for Employee Engagement: How It Leads to Revenue, ROI and More
We already know that customer experience is the new competitive differentiator for most businesses but, now, we’re learning that in order to achieve good customer experience, employees must be engaged. While experts are buzzing about the topic everywhere, it’s important to ask: What does employee engagement mean exactly?
Defining Employee Engagement
Definitions for employee engagement vary from expert to expert. For example, Claire Schooley, Principal Analyst for Forrester Research Inc., in a webinar with the Human Capital Institute, defined engaged employees as those who “… are willing to devote extra time to their jobs to increase the company’s reputation with customers, translating into better customer service.”  Whereas, Gartner, states that, “A variety of different factors make up employee engagement, such as organization employee fit, direct manager-employee fit, job fit, motivation, energy, dedication, organizational support, work life balance, and belief in strategy and values.” 
Despite the differing interpretations, what’s common throughout all current research is that engaged employees not only do a better job than their disengaged counterparts, but they bring other valuable rewards to a business, including increased revenue, lower turnover and ROI.
“Employees with higher levels of engagement care more about customers,” reports Gartner. “It is not surprising, therefore, that many organisations have discovered that employee engagement scores correlate strongly with customer satisfaction scores.” In fact, a 2012 Gallup study found that there were multiple benefits to employee engagement, such as:
- lower absenteeism
- lower turnover
- fewer safety incidents
- fewer quality incidents
Additionally, when the study compared the lowest ranked companies for employee engagement with the top ranked companies, they found that companies better at engaging employees had:
- 10% higher customer metrics
- 21% higher productivity
- 22% higher profitability
Similarly, Forbes reported that revenues increased by an average of 22.2% for the 2014 Fortune 100 Best Companies to Work For, while Sears, now famed for implementing a strategic employee and business resuscitation programme that helped them recover from financial disaster in the 90s, found that employees with a 5-point improvement in attitude were able to drive a 1.3 improvement in customer satisfaction—two metrics that the company correlate to 0.5% increase in revenue. For perspective, the 1993 Sears turnaround resulted in $752 million in sales, “… an increase of more than 9% in existing stores, and market share gains in apparel, appliances and electronics. Sears as a while had one of its most profitable years ever. The resurrection produced a total shareholder return for the year of 56%.”
Perhaps the most compelling research comes from Gallup’s study which, using two approaches, estimated that, “The lower productivity of actively disengaged workers penalizes U.S. economics performance by about $300 billion, or a figure nearly equal to the nation’s defense budget.”
Employee Engagement: Brands Still Struggling to Get It Right
Even with research pointing to lucrative outcomes, many brands still struggle to engage their employees. Many forgo investments in strategies and technologies that measure the employee experience for varied reasons, but they are often related to a lack of knowledge surrounding the topic, difficulty getting buy-ins from executive players, or a disbelief that engagement programmes can actually achieve ROI.
But, as has been the case with customer experience, the tides are changing rapidly and brands who neglect to invest in this innovation will fall behind in a customer and employee empowered world. They’ll miss out on the billions of dollars in revenue that can be earned by creating happy and engaged workers, and they’ll disappoint customers who will find better experiences with brands who excel at both customer and employee experience (for, as we now know, the two are co-dependent). More importantly, they’ll become one of “those companies” that garners a reputation for treating employees poorly. From low scores on review sites to bad press (have you read the New York Times article about Amazon’s “bruising” employee treatment?) a disengaged work force, whether for profit or not, isn’t desirable by any means—begging the question: Why wouldn’t you want to invest in employee engagement? It’s a win-win scenario on all fronts.
Not sure where to begin with your employee engagement strategy? Read our blog post “Why Employee Engagement Matters to CX” and get the round-up of Monthly Must Reads on this topic.
 “It’s Time To Rethink Your Employee Engagement Strategy.” Live Webinar March 15th, 2016 – 3:00 pm to 4:00 pm EDT, Presented by: Human Capital Institute, posted by EdmontonPM, March 10.
 Gartner Inc., “How to Get Your Customer Service Employees to Care About the Customer,” April 2015.  Gartner Inc., “How to Get Your Customer Service Employees to Care About the Customer,” April 2015
 Biro, Meghan M. “Happy Employees = Hefty Profits.” www.forbes.com Jan 19, 2014.
 A. Rucci, S. Kirn, R. Quinn, “The EmployeeCustomerProfit Chain at Sears,” Harvard Business Review, January 1998.
 Gallup, “Q12 Employee Engagement.” www.gallup.de/182726/q12employeeengagement.aspx.