How Employee Engagement Affects Profitability

July 2021
Employee engagement focuses on measuring the level of motivation that can drive employees to go the extra mile for an organization. In addition to analyzing your company's profitability, you must also be able to gauge staff morale and know how it can impact your bottom line. This impact is usually complicated, but by improving employee engagement you can improve retention, productivity, customer loyalty, and safety, ensuring that your bottom-line is healthy.

Workforce engagement experts have discovered that organizations with highly engaged employees enjoy 26% higher revenue per employee and an increase in returns to shareholders of 13%. A large part of these increases can be attributed to the four following factors that are affected by employee engagement:
  • Retention - Replacing an employee costs one and half times their salary, and it can take the new employee quite some time to adjust to the role and become productive. This is especially evident in sales and marketing, where it can take years for a new employee to generate the kind of revenue that an established one would.
  • Productivity - There is a significant difference between performance-related costs in sales teams with high engagement than those with low levels of engagement. Studies have shown that low-engagement teams can have a difference of over 2 million dollars. It is not only in sales that productivity impacts revenue growth. Engaged employees tend to be more innovative or supportive of other employees. It creates more focused and efficient workers and lowers the cost of production.
  • Customer Loyalty - A satisfied customer will remain loyal, and it takes a highly engaged employee to satisfy a customer. It is a fact that having loyal customers who promote your business helps to grow revenue. You want your employees to strive to cultivate the employee-customer relationship as this will enable your organization to achieve superior results.
  • Safety - Improving employee engagement will affect the human and financial costs of safety incidents in the workplace. Studies indicate that a safer workplace can result in happier working hours, a better retention rate, and more profits, as well as the financial costs associated with the absence of workers due to sickness or injury, go down. Related to safety is the idea of protecting your human capital, which is your most valuable asset. It goes beyond the responsibility of the Human Resources department but should become an integral part of your business strategy.
When you focus on the well-being of your employees, it will determine if your figures will be in the green or red. Are your employees as motivated as they should be?

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