Happy Workers, Happy Business: How Employee Engagement Increases Profitability

Aug 25, 2017


Are your employees engaged?

Happy, engaged employees don’t just make the office a more pleasant place to be, they also improve your bottom line.

Keep reading to learn about how employee engagement boosts profitability. In this post, we’re also sharing some great tips for improving employee engagement.

Effects of Employee Engagement on Profitability

For a few years now, a variety of groups have been studying the ways that employee engagement benefits the overall workplace. So far, these studies have yielded some interesting results.

In 2014, a study from Boston Consulting Group surveyed over 200,000 people to find out what employees care about at work. The group found that the number one factor for employee happiness is feeling appreciated.

A study from Glassdoor found similar results. More than 80% of employees say that they are motivated to work harder when they feel appreciated by their bosses.

When employees work harder, they produce more, which often leads to an increase in profitability.

In 2016, a study by Gallup found that employee engagement positively affects key performance outcomes. Gallup’s study found that highly engaged employees lead to the following:

  • A 10% increase in customer loyalty/engagement
  • A 21% increase in profitability
  • A 20% increase in productivity

Highly engaged employees also result in a 40% reduction in employee turnover. A decrease in turnover also saves companies thousands of dollars per year.

For example, replacing an employee can cost between six and nine months’ salary.

If you lose a position that pays $40,000 a year, you can rack up $20-30,000 in replacement costs. This is in addition to losses in productivity and team morale. These are harder to quantify, but no less important.

How To Measure Engagement

Okay, so you understand that engagement is important for your bottom line. But how can you tell if your employees are engaged?

Engagement Vs. Satisfaction

One of the first things you need to realize is that employee satisfaction is different than employee engagement.

Employees can be satisfied — they like their paycheck, they don’t mind coming into work every day, etc. — without being engaged. Engaged employees want to go the extra mile and are more invested in their work. They’re passionate about making the company better. They’re not just focused on collecting their paycheck and punching out the second the clock strikes five.

Engaged employees also feel an emotional connection to their job. Because of this connection, they are more likely to collaborate to improve business processes and outcomes. They may also feel empowered to come up with innovative solutions. Finally, they are often charged with positive energy and are more productive.

All these things add up to a better work environment and, of course, increased profitability.

Tips for Measuring Engagement Effectively

There are three key components of employee engagement:

  • A meaningful vision
  • A sense of purpose
  • Great relationships

To best measure the components of engagement discussed above, you’ll need to change the types of questions you ask your employees.

For example, rather than asking if they’re satisfied with certain perks or benefits, ask questions that help you determine what makes them want to stay at your company.

These types of questions should start during the interview process. Ask potential new hires what makes them successful or motivated to do their best work. Then, take these answers into account for your everyday engagement efforts.

Some questions you can ask to get a better idea of how your employees are feeling about their job include:

  • Do you know what is expected of you at work?
  • Do your opinions seem to count?
  • Do you have the materials you need?
  • Do you have the opportunity to use your talents?
  • Are your co-workers committed to doing quality work?

You may also ask:

  • Have you received recognition or praise?
  • Does your supervisor care about you as a person?
  • Has someone talked to you about your progress?
  • Does someone at work encourage your development?
  • Have you had opportunities to learn and grow in the last year?

Finally, ask:

  • Does your manager inspire you?
  • Do you feel proud to tell people where you work?
  • Do you trust the information you’re given?
  • Do you feel valued for the work you do?

How to Implement an Employee Engagement Survey

Now that you know more about the kinds of questions to ask, it’s time to implement a survey in a meaningful way that will lead to increased profitability.

Anonymity is important for these types of surveys. It encourages honesty without fear of retaliation.

It also helps to build up a sense of excitement around the survey. Talk about why the responses matter to you.

What to do with the Results

If your employees go to the trouble of filling out the engagement survey but you don’t do anything with the results, they’re probably going to doubt that you really care about their engagement.

That being said, it’s important to act on your employees’ feedback in a timely manner if you want to really increase engagement and profitability.

Go through the data you’ve collected and look for patterns in your employees’ responses. Of the three components of engagement discussed above, which is your weakest? Future vision, sense of purpose, or great relationships?

Start with your weakest area first. This will lead to big improvements early on.

Also, remember to keep revisiting this data as you move forward. Losing sight of your goals will cause you to stunt your business growth and hurt profitability.

Tips For Increasing Engagement

Give these tips for increasing engagement a try today.

Show Appreciation

Pay attention to your employees and compliment them when they do something that adds value to the company.

It doesn’t have to be a huge thing. Maybe they’ve put a lot of effort into a project, or maybe they came up with a creative solution to a problem.

Your method of showing appreciation doesn’t have to be a huge production, either. In fact, sometimes it’s better not to make a big deal out of something in front of everyone.

Depending on the employee’s personality, public recognition might be embarrassing for them. Think about the person you want to recognize, and decide if they might prefer a personal thank you or more public recognition.

Taking into account your employee’s unique personality type will also show them that you care.

Offer Incentives

Sometimes people need a little extra push, and small incentives can go a long way. Even budget-friendly incentives like offering free mentoring or a special assignment will make a big difference.

Offer Clarity

Make sure your employees know why they’re doing something. Your company’s mission, vision, and values should be perfectly clear. That way, everyone knows what they’re working towards.

Furthermore, it’s important to make sure that your employees understand what’s expected of them. Explain how their role contributes to the company’s overall mission.

Show That You Care

Communicate with your employees, both in groups and one-on-one. Get to know — and then remember — their likes, dislikes, and goals for the future.

By doing this, you’ll get to understand your employees better. This will help you be a more effective leader.

Meanwhile, they’ll know that you care about them as people and don’t just see them as a cog in a machine.

At the same time, it’s important to let your employees get to know you as well. Maybe you need to let them know that you struggle with time management or emotional burnout. No matter what, you need to show them that you’re human. This way, they can relate to you on a deeper level.

Seek Opinions

If your employees feel like their opinions matter, they’re going to be more inclined to collaborate to make the company better.

Help Them Grow

Take time to learn about your employees’ goals within the company. Then, help them achieve them. Offer connections and support, teach them a new skill, mentor and provide them with new opportunities.

Bring out the best in your employees to benefit your company as a whole. When you take the time to help your employees improve, they’re more likely to be loyal and work harder for you.

Trust Them

Don’t micromanage. Give your employees the freedom they need to grow and improve.

Be Accountable

Hold yourself accountable and follow through on commitments you make. This shows your employees that you respect and value them. It also makes them more likely to trust you.

Welcome New Employees

It’s important to get new employees off on the right foot. Introduce yourself to them and welcome them to the team. Meet with them and get them acclimated to the culture of your business immediately.

Be Authentic

Show employees that you genuinely care about their happiness and engagement. If they think your efforts are fake or forced, your profitability isn’t going to see much of a boost.


You know why employee engagement is so important. Now, it’s time to apply the steps discussed above to improve the culture of your company and increase profitability.

What are you going to do today to increase employee engagement?




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