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Understanding Employee Engagement & Why it Matters

Employee Engagement is a term we hear often but is not always easily understood. Ask anyone what engagement means and the answer will vary from employee happiness to employee satisfaction, and everything in between.

The reality is that employee engagement is neither of these things. After all, employees may be ‘happy’ to come to work (and enjoy game rooms, paid birthday leave and free massages etc.), however are not necessarily motivated to work hard. So too, ‘satisfied’ employees may show up without complaint, however are often not inspired to go the extra mile, or do whatever it takes to get the job done. Both happy and satisfied employees can be easily lured away from an organisation by the temptation of increased pay, improved career opportunities or flexible work arrangements. Therefore, happy and satisfied isn't enough (Kruse, 2012).

True employee engagement is the level of enthusiasm and emotional connection employees have for an organisation; the measure or how motivated they are to put in extra effort when needed, and how genuinely committed they are to staying (Croswell, 2021). Engaged employees actually care about their work and the organisation they work for. They don’t work purely for the money or for career advancement, they work on behalf of the organisation’s goals. When engaged they maximise their ‘discretionary effort’, doing whatever it takes to positively influence organisational performance (Kruse, 2012).

Not only does overall performance improve with engaged employees, but there is an even bigger payoff – retention! In a competitive market, it’s in business best interest to hang on to talent, and to keep organisationally acquired skills and knowledge where they belong. Simply stated, engaged employees are less likely to leave.

Employees stay working where they feel their input is valued and appreciated, and where they are nurtured and encouraged to develop. Investing in employee engagement and talent management solutions results in lower staff turnover and provides businesses with a uniquely committed and qualified talent base.

According to a 2019 study by LinkedIn, 94% of employees said they would stay at a long-term job if their employer invested in their learning and development. Additionally, the study found that one quarter of Gen Z and Millenials place a lack of learning and development as their number one reason for leaving a job; and this group accounts for over half of today’s workforce (Employment Hero 2020).

Furthermore, considering that replacing an employee can cost one and a half times their salary, retention has a significant impact on an organisation’s bottom line. Not only can the cost of replacing employees drain resources, but once new hires are in place they can take several years to generate the same revenue.

Similarly, another reason to focus on employee engagement and retaining valuable resources is the impact on company culture. High-turnover organisations have a hard time developing and cultivating their desired culture because there are fewer long-term employees to demonstrate the positive behaviours the support this culture. This is further compounded by valued employees observing the frequency of turnover, prompting them to question why they are staying, and looking for more stable opportunities elsewhere.

A further and often overlooked factor in employee engagement is mental health. 91% of Australians believe that mental health in the workplace is important, and yet only 52% believe their workplace is mentally healthy (Employment Hero, 2020). Ignoring mental health will be at the employers peril, because when it fails to be addressed, employees leave.

Therefore employers must look to ensure that employees have the support they need to take care of their mental health. Long working hours, unrealistic workloads, poor working relationships, unsupportive culture, and difficulties with leadership can all play a part in creating or embedding issues with anxiety, stress, depression and self-esteem, which in turn affects individual output and overall organisational performance (Sodexo, 2020). So not only is supporting a mentally healthy workplace the right thing to do, it’s good for the bottom line.

If you would like to understand more about the value of employee engagement and best practice for your business please reach out. We are experts in designing and mapping your employee journey across the employee life cycle, building in engagement at every touch point. Reach out for a complimentary chat today.


24 HR Trends for 2020 and Beyond. Employment Hero, 2020.

What is Employee Engagement. Kevin Kruse, 2012. Forbes

What is employee engagement? Alexis Croswell, 2021, Culture Amp.

Is There a Link Between Employee Engagement and Mental Health. Sodexo, 2020.

Why Employee Engagement is Key to Company Success

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