Why Employee Engagement Is So Important to Retaining Your Team

By: Rhiân Davies on November 13, 2019

Last year, Gallup reported that 53% of U.S. employees are not engaged with their jobs. This is no surprise given that more than half of HR professionals are feeling challenged when it comes to increasing employee engagement, morale, and satisfaction.

But how important is employee engagement? Given that research by Gartner has shown strong correlation between high employee engagement and “strong performance in terms of average revenue growth, net profit margin, customer satisfaction, and earnings per share,” it’s clear that it’s more important than ever (full content available to clients).

Stay with us as we go through why employee engagement is crucial to business growth, more productive employees, and healthier profits.

Why is employee engagement important?

The importance of employee engagement can’t be reduced to just one outcome: Research has shown that engaged employees perform better, are more productive, and are healthier than disengaged employees.

However, there’s also a middle ground between engaged and disengaged employees. Employee engagement and disengagement doesn’t happen overnight but over a period of time. It can be helpful to think of employee engagement as a sliding scale:


Managing this sliding scale is important to the strength of your workforce and overall organization. Below, we delve a bit deeper into the specifics of the importance of employee engagement for your business.

Disengaged workers spread negativity and discontent

The old saying, “misery loves company” could not be more true when it comes to the workplace. Unless employee disengagement is addressed swiftly, disengagement can spread like wildfire throughout teams. In smaller teams, especially, atmospheres of discontent are picked up on quickly, and colleagues seek out reasons for this disengagement just as fast.

The dissemination of information can shake the foundations of even the strongest teams. For example, imagine the following scenario:

You recently announced that a project, which was formerly the responsibility of one single employee, will now be managed by three members of the team—not including the original project owner.

While two of your employees appear to have taken on this additional responsibility with no issue, the third employee is unhappy that they’ve had to sacrifice time spent on other projects to fulfill this responsibility.

The third employee voices this concern to the other colleagues involved in this project, detailing how the quality of the rest of their work has suffered and how this new project doesn’t align with their career development. Additionally, they comment on how the original project owner now has responsibility for a new project, with higher visibility throughout the organization. They mention that this is because they’re their manager’s “favorite” employee and therefore chosen without merit.

So, what happens next? Maybe one of the employees takes no notice and is actually happy to take on a new project. But, the second employee starts to wonder whether this project really benefits them, or—as their colleague suggested—is just the result of their manager’s favoritism. Slowly, the employee becomes disengaged from the project and eventually starts to question their loyalty to the organization.

How to manage employee disengagement: In this case, it’s clear that management has not successfully communicated to the team exactly how and why this decision was made, and that has given way to speculation—which has ultimately led to a decline in morale. Before making decisions that affect employees’ day-to-day, be honest about the reasons for the changes, emphasize an open-door policy, and explain how this will affect their jobs.

Engaged employees are more loyal to their organizations—which reduces turnover

Employee loyalty is priceless, but it’s easy to breach.

If your employees are bored of their job and aren’t feeling challenged, they’re likely to be one of the 33% of employees who are planning on finding new employment. In fact, according to Gartner’s Global Talent Monitor, only 8% of the global labor force has a high intent to stay at their current job.

Losing a top-performer is every manager’s nightmare, and so keeping them engaged is a number one priority. It’s also costly to replace an employee—somewhere around $15,000 per employee.

How to build employee loyalty through engagement: While employee loyalty is built over time, one of the easiest ways you can build trust is by employing continuous onboarding strategies. Companies that use continuous onboarding show a commitment to an employee’s development, which is crucial in generating and sustaining engagement.

Increased profitability and productivity across the organization

Similar to the service profit chain, the engagement-profit chain describes the chain-reaction effect of discretionary efforts made by engaged employees on profit margins:

Engaged employees lead to

higher service, quality, and productivity, which leads to …

higher customer satisfaction, which leads to …

increased sales […], which leads to …

higher levels of profit, which leads to …

higher shareholder returns (i.e., stock price)

In fact, MIT’s Sloan Review reports that organizations with high levels of employee engagement report higher profits—between 10 and 15%—than firms with low levels. Similarly, highly engaged organizations see around 20% higher sales that organizations with disengaged employees.

Generally, engaged employees are more innovative and collaborative, largely due to their enthusiasm for the work they’re doing, and the workplace they’re doing it. This means that not only do they complete their normal workloads with more passion, they actively seek out ways to improve business outcomes.

According to research, engaged employees are 38% more likely to have above-average productivity, while increasing investment in employee engagement by 10% can increase profits by up to $2,400 per employee per year.

Start your employee engagement journey now

Recognising the importance of employee engagement is only the first step, but a vital one for the health and growth of your organization. Over the coming weeks, we’ll be showing you how to:

  • Create and implement an employee engagement strategy

  • Evaluate your employee engagement efforts

  • Use software to measure employee engagement

  • Craft employee engagement survey questions

  • Implement actions based on employee survey results

In the meantime, if you’re eager to know more now about how software can help support your employee engagement efforts, give us a call now on (844) 675-2849 or fill out this form. Our expert software advisors offer a free 15-minute consultation to give you a full assessment and product recommendations for your needs.