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What Is Employee Engagement?

How many of your employees are just going through the motions at work? And what impact do they have on your business? Employee engagement has a ripple effect in organizations, with the potential to dramatically improve or worsen retention, productivity, customer satisfaction, and profitability.

According to Gallup, only 33% of U.S. employees are engaged at work and 17% are actively disengaged. Recognizing its competitive advantage, improving employee engagement has become a top business priority for many executives and HR leaders.

The benefits of employee engagement hinge on several factors including workforce mental health. Employees who are dealing with unaddressed mental health challenges may be unable to fully engage, especially if they feel like a company isn’t concerned about those struggles. A solid starting point for increasing employee engagement is taking a closer look at what employees need in terms of mental health support and creating a healthy work culture.

What is employee engagement?

Employee engagement is how connected and committed employees feel toward their company. It’s a mental and emotional attachment. When employees are engaged, they genuinely enjoy what they do and want to contribute to the company’s success.

Engaged employees are:

  • Focused
  • Proactive
  • Purpose-driven
  • Team-oriented
  • Driven to grow, learn, and improve
  • Solution-oriented
  • Adaptable
  • Willing to go above and beyond

On the other hand, disengaged employees feel disconnected from their work. They might grumble about their tasks, put in minimum effort, or lack enthusiasm for connecting with colleagues.

What is employee engagement vs. employee satisfaction?

Employee satisfaction is an indicator of how happy employees are at work, often due to organizational factors like pay, benefits, and job security. It doesn’t capture their motivation or emotional commitment. For example, some employees may be satisfied with a job because it meets their pay requirements, but feel little emotional connection, passion, or drive to advance company goals. Employee engagement can be an indicator of satisfaction, but they aren’t the same thing.

What is employee engagement vs. employee experience?

Employee experience reflects the employee’s journey with a company, from hiring to departure. Employee engagement depends on the psychological needs that fuel job performance, such as clear expectations, adequate resources, and a sense of purpose. Employee engagement is one part of employee experience.

Three types of employee engagement

Employee engagement isn’t all or nothing—most employees fall on a spectrum. Gallup defines three types of employee engagement:

#1 Engaged

Employees are enthusiastic about their work and emotionally invested in helping the company meet its goals. They have a zest for owning difficult projects and contributing new ideas.

Example: Layla eagerly stepped up to tackle the development of a new software application, a project that would not only stretch her skills but also impact the company’s efficiency and innovation.

#2 Not engaged

Employees do their job but lack passion, energy, or emotional attachment to their work.

Example: Mohammed consistently delivers on his assigned tasks but hesitates to participate in cross-functional projects that would expose him to new technologies and skills. He’s reluctant to step out of his comfort zone and pursue professional development opportunities.

#3 Actively disengaged

Employees feel unhappy or resentful about work, which can lead them to undermine their co-workers.

Example: Nora’s persistent negativity affects her morale and creates a toxic environment in the workplace. Her constant complaints, blame-shifting, and job-hunting dampen the team’s spirits and hinder productivity.

Why is employee engagement important?

Disengaged employees cost companies across the globe as much as 8.8 trillion. Keeping employees engaged pays off in better business outcomes. Here are a few proven benefits of employee engagement:

#1 Employee well-being

The relationship between employee engagement and well-being goes two ways. Engaged workplaces encourage employees to focus on their health. As a result, engaged employees tend to eat well, exercise more, and are less likely to have chronic health conditions than disengaged employees.

Employees who feel well are better able to focus on work. Engaged employees are more likely than disengaged employees to participate in employer wellness programs and have happier home lives, contributing to overall well-being.

#2 Retention

Why do people quit their jobs? One poll found the top reasons include bad managers, unchallenging work, and poor fit with their co-workers or company culture—all factors tied to employee engagement. Teams with low engagement have turnover rates that are 18% to 43% higher than teams with high engagement.

#3 Productivity

In one study, high work engagement drove a 20% increase in employee productivity. When employees are engaged at work, businesses have realized a 41% decrease in absenteeism, which is frequent or unearned time away from work.

#4 Higher-quality work

Engaged employees are more invested in their work and more connected to their environment, which can lead to safer, higher-quality work. For example, highly engaged companies see 41% fewer quality defects and 48% fewer safety incidents.

#5 Customer satisfaction

Happier employees care deeply about their jobs and clients, so they provide better customer service. On average, a 1-point increase in company rating correlates to a 1.3-point increase in customer satisfaction.

#6 Company profitability

Highly engaged teams generate 20% higher sales and 21% greater profitability than disengaged teams. Research has found that organizations with higher employee engagement are linked with a 24.5% higher share price than low engagement. More belief in a company’s products is associated with 33% higher share price growth.

Drivers of employee engagement

Many company leaders believe employees are focused primarily on pay and benefits. But trust, communication, benefits, and other organizational factors are also important in keeping employees engaged at work. Drivers of employee engagement fall into two categories: factors within the organization’s control and behaviors of employees’ managers.

Organizational Drivers Management Drivers
Commitment of leadership to create a great place to work Clear expectations
Trust in leadership Adequate resources/equipment
Belief in the company’s future success Opportunities to use unique skills, learn, and grow
Fitting in with the organization’s plans Feedback and recognition for good work
Valuing people as the company’s most important resource Meaningful work, with freedom to make decisions
Investing in employees to foster their success Feeling valued, respected, heard, and cared about as a person

Unleash your employees’ potential

Ready to transform your workplace? Take steps to improve employee engagement and watch your business thrive with motivated, passionate teams driving success.

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Learn how to improve employee engagement.

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About the reviewer
Keren Wasserman

Keren is the organizational development program manager on the workforce transformation team at Lyra Health. Keren has a master's degree in social work from the University of Chicago and has worked as a management consultant focused on large-scale change management implementations. She lives in Seattle where she spends her free time hiking, soaking up the PNW's most glorious mountain views.

Clinically reviewed by
Keren Wasserman
Organizational Development Program Manager
By The Lyra Team
6 of June 2024 - 5 min read
Mental health at work
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