Why is Employee Engagement Important?
Employee engagement has become a hot topic among executives across industries—and with good reason. Employees who give their all are the lifeblood of your business. They go the extra mile to make sure your organization’s objectives get met. They keep your customers happy. And perhaps more importantly, engaged employees stay with your organization, keeping your recruitment costs down.
Although Gallup recently reported that employee engagement is on the rise, that isn’t the whole story. When you look at Gallup’s numbers as a whole, 66% of employees report being “actively disengaged” or “not engaged at all.” In other words, as many as two out of every three members of your team are disinterested in their work.
Can you imagine how much more productive and effective your organization could be if even a portion of that 66 % of workers felt more involved in their work?
Employee engagement is also a challenge within the logistics industry. At Approved, we see its effects play out with many of the customers we work with across diverse industries. In this article, we’ll explore employee engagement further—and offer you some resources to tackle this topic within your organization.
Rising to the Challenge of Employee Engagement
In order to keep tabs on trends in the workplace, Gallup conducts an annual survey of American workers. Its most recent poll revealed that employee engagement has been rising steadily since the early 2000s. While the percentage of engaged American workers hit a low of 26% in 2000 and 2005, it’s recently hit a high of 34% in 2018.
That being said, it’s worth considering the poll’s results as a whole…
Although engagement might be at its highest level in years, the study also reveals that as many as 2 out of 3 workers at your organization may be disengaged from their work at some level.
As a benchmark, it’s also worth noting where top organizations shake out in comparison. Engagement levels at the organizations awarded the 2016 Gallup Great Workplace Award reach 70%—nearly double the percentage reported in the study.
Tackling This Issue Across Industries
Those of us in the logistics industry are no strangers to the challenges of employee engagement. A survey completed by the Workforce Institute at Kronos by Coleman Parkes reports that only 30% of logistics companies they surveyed rate their level of employee engagement as strong.
Difficulties with recruitment and retention—which can be symptoms of an unengaged workforce—also crop up for logistics companies. This is especially true in markets where unemployment is low. ARC Advisory Group recently released a study revealing that 50% of all warehouse job openings have five or fewer applicants. Additionally, many of the applicants have no prior experience, requiring companies to train them from scratch at a high cost.
We’ve also seen our clients in the retail and manufacturing sectors struggle with similar challenges. Knowing that it’s one confronting a wide variety of companies, it’s worth examining this challenge in greater detail.
Taking a Closer Look at the Causes and Effects of Employee Engagement
The first step in solving the challenge of an unengaged workforce starts with understanding what creates highly interested and motivated employees. Whereas many organizations used to look to salaries and promotions as their main motivational tool, many businesses are looking beyond money and titles. Instead, they’re looking deeper to understand what their employees really want, in order to drive employee engagement.
A survey of 200,000 workers completed by the software company TINYpulse may offer some insights. TINYpulse asked the following question of employees at 500+ organizations: “What motivates you to excel and go the extra mile?” The replies may offer you a starting point for exploring this topic within your organization:
- Camaraderie and peer motivation (20%)
- Intrinsic desire to do a good job (17%)
- Feeling encouraged and recognized (13%)
- Having a real impact (10%)
- Growing professionally (8%)iv
Clearly, cultivating these results for your employees requires an investment of time and energy. If you’re doing a quick ROI analysis, consider the following statistics on the impact that engaged employees can have on a business.
#1: Reduced Hiring Costs
Low employee engagement often leads to more turnover. This can cost your company big:
- Replacing an entry-level employee costs between 30% to 50% of the position’s annual salary.
- For a mid-level employee, it can cost you upwards of 150%.
- When it comes to a senior or highly specialized employee, replacing that position can cost your company up to 400% of the annual salary.v
#2: Increased Sales Numbers—and Much, Much More
In addition to helping you recruit top talent and retain your best employees, the level of employee engagement at your organization has far-reaching effects. Gallup reports that companies in the top quartile of employee engagement enjoy:
- 41% lower absenteeism
- 28% less shrinkage
- 70% fewer employee safety incidents
- 17% higher productivity
- 20% higher sales numbers
- 21% higher profitability
Solving This Workplace Challenge Once and For All
Now that you’ve seen the statistics on employee engagement as well as its far-reaching effects, how do you think your organization stacks up? Where do you excel? Where could you improve?
Even though the top American companies boast an employee engagement rate that’s nearly double the national average, even a 10% increase in engagement could have far-reaching effects on your customer loyalty, your sales numbers and your bottom line. In other words, when you invest in your employees and their levels of engagement, you can expect a significant return.
If you’d like to do further research on this topic, some resources you may want to explore include:
- Harvard Business Review: “More Than a Paycheck”
- Patrick Lencioni: The Five Dysfunctions of a Team: A Leadership Fable
- Gallup: “Five Ways to Improve Employee Engagement”
How do you keep your employees engaged in your organization? We’d love to hear from you in the comments below.