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How Employee Engagement Impacts Your Bottom Line

Written by
George Dickson
George Dickson

Employee engagement has the power to impact nearly every aspect of business, yet a surprising number of leaders dismiss its importance as a tool for influencing the bottom line.

In reality, employee engagement does have bottom-line effects and research indicates that those effects are much larger than you'd expect. If you want numbersreal numbersthat show the effects of employee engagement, you're in the right place.

Here's a small sample of employee engagement's myriad bottom-line effects:

The Economy of Employee Engagement

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The positive engagement impact

Broad influence

In multiple studies spanning countries across the globe, the impact of strong employee engagement repeatedly showed measurable impact in multiple areas.

The effects on some key areas, like improved productivity and lower turnover are more obvious than others, like lowering the number of safety incidents, decreasing theft and shrinkage, as well as improving overall quality and inspiring higher customer ratings. The sheer breadth of employee engagement's reach is an important takeaway here.

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Business fundamentals

Studies have shown that even business fundamentals like operating income are impacted by employee engagement rates.

In one study, companies with high levels of employee engagement improved 19% in operating income, while companies with low levels of employee engagement suffered a 33% decline in operating income.

That's a 52%  performance gap!

Organizations with more than four engaged employees for every one disengaged employee saw 2.6 times more growth in earnings per share.

What other investments can offer that level of return? We'll wait. 😉

Creativity and innovation

In addition to business fundamentals, employee engagement has shown to hold remarkable influence over employee creativity and innovation.

In one study, 59% of engaged employees said their job brings out their most creative ideas. This is in stark contrast to the 3%t of employees who were disengaged.

That's another >50% performance gap!

The damaging effects of poor employee engagement extend beyond creative endeavors and business fundamentals. Organizations with poor employee engagement scored lower in a host of categories.

Business units with poor employee engagement averaged between 31-51% higher turnover.

In addition to higher turnover, they experienced 51% more inventory shrinkage, and 62% more accidents.

Public sector

The impact of employee engagement isn't limited to the private sector.

In one study, 78% of highly engaged public sector staff believed they could have a genuine impact on public services delivery or customer service. That's in comparison to only 29% of disengaged staff.

Improving Employee Engagement

With so many aspects of success riding on your employee engagement initiatives, it makes good business sense to focus time and resources on improving them. There are a number of simple, yet effective tools you can use to measure and improve employee engagement in your company, and improve your bottom line numbers as a result.

Bonusly is an intuitive tool you can use to both measure and improve employee engagement through peer-to-peer recognition and people analytics. You can take a free tour to see for yourself.

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Originally published on June 08, 2015 → Last updated March 9, 2022

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George Dickson

George is dedicated to strengthening organizational cultures with thoughtful leadership and frequent recognition. George formerly managed content and community at Bonusly.

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