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The Link Between Employee Engagement and Performance

The Link Between Employee Engagement and Performance


Employees can make or break an organization. Your HR team has probably painstakingly invested time and resources into recruiting the best talent. It isn’t unreasonable, therefore, for them to expect that these highly qualified individuals will continuously contribute to the organization’s lasting success.

Here’s the ugly truth: Skills and experience don’t guarantee stellar employee performance. Workplace culture and employee engagement are critical to sustaining a high level of employee performance.

Why Employee Engagement Really Matters

Employee engagement needs to go beyond a cool-looking foosball table in the break room, or shiny incentives like flexible work hours or bringing your dog to work. Employees who are truly engaged will be motivated to do their best work every day and stay with a company who is taking employee engagement seriously.

For engaged employees who are happy and completely committed to their work, it’s more than just a paycheck – it’s the dedication towards their employers and role that makes them passionate about their work, which is often reflected in their individual outcomes.

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While employee engagement focuses on employee happiness, satisfaction, and well-being, employee engagement programs are also closely tied to tangible metrics like retention, turnover, absenteeism, profit, and productivity.

Employee engagement can have a significant impact on a business’ performance. Below we dive into 4 areas where it has the greatest influence.

Greater Innovation

When you gather a company’s values and behaviors together, you get its company culture. At a high-level, you can describe different cultures in a single world.
That word may be “competitive”, “high-performance”, “customer-centric”, “sales-driven”. The list goes on and on.

In any case, an organization’s culture is indicative of a few key factors:

• Which behaviors lead to promotions, raises, and recognition for employees
• Where senior leadership invests most of the organization’s resources (e.g. operations, product development, sales, customer service)
• Whether employees believe their time at a specific organization is an integral part of achieving their life goals or just a paycheck until a better opportunity comes up
• How individuals within the organization approach specific business, product, and customer problems
• Whether employees feel comfortable enough to pursue innovative projects and solutions and challenge the status quo

When there’s a positive company culture that gives a microphone to different voices, encourages innovative projects (even when success isn’t guaranteed), and gives employees the tools they need to succeed, employees are more engaged.

manager woman leading brainstorming meeting 1

Boosted Productivity

By now we’ve established that engaged employees are happy, invested in the success of the company, and motivated by the company’s work and mission, but how does this lead to greater productivity?

In the knowledge economy, the most significant inputs are people (aka their skills) and time. Engaged employees want to discuss projects with colleagues, make connections with others in the organization, and spend time solving interesting problems. When you’re interested in the work that you’re doing, it’s easier to stay on task.

As a result, the time that the organization invested in is spent on work-related tasks rather than non-work tasks. In addition, engaged employees are healthier and happier. This means they have lower rates of absenteeism or presenteeism (being physically present at work but not mentally productive due to illness, exhaustion, or low morale).

colleagues giving fist bump

Reduced Turnover

Employee turnover costs organizations a lot of time and money. It can cost a significant portion of a worker’s annual salary just to replace them. Turnover also affects the productivity of the other people on your team. While you’re looking for a replacement, other employees have to compensate for the missing employee by adding their tasks to their workload.

And if it’s a small team, that work may disproportionately fall on the shoulders of one employee. If this isn’t handled properly, it can impact the employee satisfaction and engagement of your other employees creating a dangerous domino effect. Employee engagement important for reducing turnover and improving retention rates but you might be wondering why.

First, consider what makes people want to leave an organization:

• Lack of opportunities for upskilling and professional development
• Unclear career progression plan or career trajectory within the company
• Poor relationship with manager that lacks trust, support, and open communication
• Feeling overworked and underappreciated
• Micromanagement from managers and minimal role autonomy
It’s interesting considering that the best drivers of employee engagement are:
• Skills training and professional development opportunities
• Clear career progression plan and achievement milestones
• Managers who provide constructive feedback, solicit feedback, and listen to employees’ needs and aspirations
• Managers that appropriately distribute workloads and recognize and reward outstanding employees
• Work environments that gives employees the freedom to work in the way that’s best for them

In other words, the benefit of employee engagement is its ability to address the factors that make employees want to leave.

And by addressing these factors, employers reduce their turnover rate.

friendly confident business coach speaking before audience

Increased Customer Satisfaction

You know what they say: Happy employee’s equal happy customers. In today’s hyper-fragmented market, this is more important than ever. Companies have a lot working against them like fickle customers, countless competitors offering similar products and services, and a generation of consumers accustomed to customization and personalization.

As a result, the best way to compete is by offering outstanding customer service. Organizations today need to make customers feel special by cultivating a company-customer relationship that doesn’t feel transactional. Of course, companies are complex organizations and it’s difficult to have one-on-one interactions with every customer. To solve this problem, companies have invested in technology to seamlessly interact with customers across multiple digital platforms.

That said, while these help facilitate interactions, they can’t replace quality human interactions. And no amount of technology can simulate engaging and compassionate customer service representatives. An engaged workforce that feels respected, appreciated, and recognized feels the need to go the extra mile for customers. They aren’t simply going through the motions. They show empathy, actively listen to customer problems, and proactively seek solutions. As a result, they turn even the most contentious customer interactions into positive experiences.

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The Bottom Line

When employees feel like their organization is investing in them, they match that investment by looking for ways to improve the organization, too. This is a big reason why employee engagement is important. It creates a culture of continuous improvement.

When employees believe that their opinions are welcome and their efforts will be recognized, they’re eager to look for areas where they can improve processes and add value.

Your organization can only thrive if your employees are consistently performing at their best. The key to ensuring that this happens is to strike the right balance between employee engagement and a positive workplace culture. You can’t have one without the other.

Through a strategic partnership, we can help you raise engagement levels -- and improve business outcomes.

About Great Place to Work®

Great Place to Work® is the Global Authority on Workplace Culture. We make it easy to survey your employees, uncover actionable insights and get recognized for your great company culture. Learn more about Great Place to Work Certification.


Lauren O'Donnell