Employee engagement ROI: Why it pays to invest in your people
If you ever underestimated the power of employee engagement, here’s your sign to pay closer attention to it. It’s a key factor in a company’s success, and if you take it full circle, it also reflects a well-run organization. And while maintaining employee engagement requires thought and resources, it’s a worthwhile investment that pays off in the long run.
Organizations that prioritize and actively work towards increasing employee engagement are proven to retain people who consistently do their best work. So, when only good things come from high employee engagement, making it part of your business strategy is a no-brainer.
Discover why employee engagement is a worthwhile investment
What is employee engagement, really?
When we think about what employee engagement means, the first thing that usually comes to mind is that engaged employees are happy people who feel a sense of purpose and emotional connection with the company they work for. They’re invested in their work, committed to their goals, and aligned with the values of their company — and it shows.
The high-level view of employee engagement is straightforward. But what does it really mean and what goes into it? We’ve been studying it since the beginning of Officevibe, and here are the 10 key factors of employee engagement that portray how employees feel and how invested they are in their roles:
- Personal growth
- Relationship with manager
- Relationship with peers
When you dive into each, you can uncover the areas of employee engagement that are on the rise, and those that need to catch up. Finding these gaps is the foundation of a great employee engagement strategy and is the first step towards making disengaged employees happier at work and more productive.
Breaking down the return on investment of employee engagement
Employee engagement contributes to a healthy and thriving company culture, but it’s also really great for business. Employees who feel good about their contribution to the company tend to be proud of their work and feel valued, and the impacts of this are felt across the board.
By definition, employee engagement ROI is the financial profit companies gain from investing in employee engagement strategies. Employee engagement ROI can be evaluated similarly to how you calculate any other investment. So simply put, this involves dividing the profits earned on the investment by the cost of the investment itself.
While it sounds simple on paper, there are a slew of employee engagement outcomes that lead to higher employee productivity, and ultimately profitability for the business. From higher employee satisfaction (and a lower employee turnover rate) to the positive effect it has on customer satisfaction and relationships, the ROI of employee engagement matters greatly.
But before we get into measuring employee engagement ROI, let’s break it down:
The higher the engagement, the lower the employee turnover rate
When it comes to employee turnover and employee engagement, the equation is simple: engaged employees are less likely to leave their job. That’s why it’s so important to prioritize employee engagement, satisfaction, and development.
What if your top talent isn’t your most engaged talent? When you have disengaged employees, you risk losing them, which can be a huge detriment to your company. An employee who leaves an organization takes the knowledge they gained about your products, brand, processes, and customers with them. And while you may be able to train a new hire, getting them to where their predecessor was will take months, if not years.
High turnover really does take a toll on a business’s success. Not only are there many hard costs associated with turnover, but it also heavily impacts the team and their ability to perform. When employees are constantly in and out, it rattles team dynamics and employee morale, leading to lost productivity and a harder time reaching corporate objectives.
Employee engagement efforts can help you retain star employees, and subsequently minimize the heavy costs of turnover. If you invest in your employees, they’ll be more invested in the company and committed to sticking around and doing great work.
💡As much as the world has changed, there’s still a lot you can do to retain talent. Don’t stand on the sidelines until things settle. Try these 5 proven strategies to reduce employee turnover.
Highly engaged employees create greater customer satisfaction
Customer satisfaction and customer loyalty can make or break a business. So if your customers have great relationships with your company and your employees, you’re in a great spot.
When employees are passionate about their work, own their responsibilities, and feel engaged, they’re more likely to go above and beyond the call of duty to deliver great service and ensure customer needs are exceeded. They want your customers to have a positive experience, and your customers feel it.
In fact, engaged employees don’t even have to try extra hard to improve customer satisfaction and business outcomes. Research by Oxford University’s Said Business School shows that simply being in a better mood does the job, and even increases the likelihood of employees converting calls into sales.
What it boils down to once again is that nurturing your own relationships with your employees is a springboard for business success. In the words of Sir Richard Branson, “take care of your employees and they will take care of your customers”. It’s a positive domino effect. High employee engagement leads to solid customer relationships, which lead to a stronger ROI of employee engagement and more stable revenue for your company.
Engaged employees are innovative employees
Innovation and creativity are undoubtedly keys to success for any business. What’s the correlation between employee engagement and creativity, you might be wondering? Well, when you give your employees the encouragement and opportunity to push boundaries, your company gets the competitive advantage.
Employees who are disengaged are less likely to contribute their ideas to the company, which can result in inhibited innovation and growth. The ability to innovate is an essential factor in staying competitive and boosting the ROI of employee engagement.
Tracking employee engagement with Officevibe to reduce turnover
Sharethrough, a digital technology company, grew their team from 65 to 160 employees and counting following a merger and strong growth trajectory. With these major changes and a new, fully distributed team, their VP of People & Culture, Natacha Brind’Amour, needed the right tools and processes to keep her team happy, engaged, and productive.
Cue Officevibe. The tool that helped Natacha and Sharethrough gather all the information they needed to truly understand and act on employee sentiment.
“Tools like Officevibe that are 100% anonymous really helped us learn about our teams and make sure that we didn’t have any blind spots.” – Natasha Brind’Amour, VP of People & Culture at Sharethrough
The result? Sharethrough has been able to maintain a great turnover rate while sustaining above 30% annual year-over-year growth and completing a transformative merger in 2021.
Want to learn more about how Sharethrough used Officevibe to maintain its growth? Read the full story.
Best practices for improving employee engagement ROI
Knowing how important employee engagement is, it may come as a surprise to some that only 21% of employees are engaged at work. While most companies may want an engaged workforce, many of them don’t actively do what it takes to get there.
Employee engagement doesn’t happen out of nowhere. It starts with a great engagement strategy and requires at least a small investment — be it time, money, or both. And as we explored above, it pays to invest in your people.
It’s important to recognize employee engagement initiatives as a strategic priority and to act accordingly. Things like engagement surveys, regular feedback, individual development plans, and clear expectations on how each employee can progress within the organization should all be part of an effective engagement strategy.
Now that we have a clear understanding of why it’s important to invest in your employee engagement, we can take a look at some of the best practices your company can implement to gain momentum and level up.
1. Set clear expectations
Employee engagement stems from how well employees understand their role and team expectations, why their role matters, and how to meet and exceed the expectations put in place for them. When expectations are laid out clearly, employees fully understand what they need to do and how it has a positive impact on the business.
2. Tap into what motivates your employees
Directly asking your employees what motivates them through frequent surveys can help you map out an effective employee engagement program. These surveys can help you establish clear paths for success based on what motivates them to stay engaged and grow.
Once you understand what drives people at work, assigning tasks and projects won’t be based on current skill alone. You’ll quickly learn that interest and desire to learn are big factors to improve employee productivity and can be the basis of a great professional development plan.
When you’re ready to craft a more in-depth plan, you can schedule a career development talk to see exactly where employees envision their future.
3. Lead by example
Leaders should do just that: lead by example. Engagement starts from the top, so if employees see that their leaders aren’t engaged, it will ultimately trickle down and affect everyone else. Managers who don’t appear to be engaged themselves can’t expect their employees to be either.
As a manager, it’s so important to be the cheerleader your team needs and to reflect the culture you’re trying to build. Always remember that highly engaged teams start at the top.
4. Establish a feedback loop
When it comes to keeping employees engaged, consistent feedback is essential. But it’s also what you do with it and how you respond to feedback that really matters. As a business, you need to demonstrate that you’re taking the feedback seriously and putting it to good use. This will ultimately help you build trust with your employees by showing them that you take their input seriously and are actively working towards addressing their concerns.
Embed feedback as part of your culture, so you can keep a pulse on what is happening, identify what’s influencing turnover, and nip it in the bud before it gets ahead of you.
Ready to give it a go? These top strategies to create a feedback loop are sure to create a virtuous cycle of employee engagement.
5. Create a culture of recognition
A quick way to disengage your team is to leave them feeling unappreciated, especially when they do exceptional work. No one wants to feel like their efforts are for naught. It makes motivation plummet, which can have a big impact on employee satisfaction and performance.
The flip side of the coin is that you can significantly improve employee engagement (and reap all of its benefits) by recognizing and celebrating employees with intention. Recognition is a powerful thing in the workplace, and in life in general. It satisfies our fundamental human need to feel valued, while instilling pride and purpose. So if increasing employee engagement is your end game, you shouldn’t skimp out on building a culture of recognition.
Employee recognition can be embedded in all aspects of work. With these tried-and-true tips to improve recognition in the workplace, it’ll never be an afterthought again.
6. Conduct exit and stay interviews
Like we touched on before, the more engaged employees are, the less likely they are to leave. While it’s routine for most organizations to do exit interviews when people leave, it’s just as crucial to perform stay interviews with employees who are still actively with the company.
The information you gather from the stay interviews is valuable for your engagement and retention strategies. Before employees become dissatisfied and look for opportunities elsewhere, tap into what matters to them and leverage the information to keep employees engaged and retain top talent.
Psst: Avoid getting to the exit interview stage by checking in with regular stay interviews. Guide the conversation with these six stay interview questions, so you can uncover what’s keeping employees committed to their jobs, or what’s causing them to feel disengaged.
Putting specific actions into play
Successful employee engagement strategies are constantly in motion. To identify what’s working and where there’s room for improvement, you need to measure and assess engagement with your employees, and you must do it consistently.
Officevibe’s employee engagement solution offers comprehensive tools for gauging current levels of engagement and employee productivity, which are vital to help you identify strengths, weaknesses, and opportunities.
The employee engagement software can help you implement these best practices, build an effective engagement strategy, maintain a highly engaged workforce, and prevent employee turnover. It opens the door to frequent, honest feedback from your employees so that you can increase the ROI of employee engagement. Progress and business success are in your hands.
Time for the question of the hour: how much can you really save by investing in employee engagement? Try our brand-new employee experience ROI calculator to find out.
Would you be interested in receiving our newsletter directly in your inbox?