Employee Engagement: Do Engaged Employees Have a Positive Impact on a Company’s Financial Performance?

The recent stats would say yes. For example, the publicly traded company’s listed in this year’s Fortune 100 Best Companies to work for, outperformed the S&P 2 to 1. A great culture is great for business.

Other studies on the topic are equally as compelling:

A study out of Cornell University summarizes the concept of developing an Employment Value Proposition: a powerful approach to help employees internalize corporate values, shape corporate culture, engage employees and align talent management to business strategies. When employees are engaged and aligned with the employing company, the following bottom line results were recorded:

  • Talent acquisition: Ability to access 60% vs. 40% of labor market
  • Turnover rate: lowered from 10% vs. 16%
  • Compensation: 26% (lower) cost advantage
  • Commitment: increased from 9% to 38% level

Source: Is There a Strong Correlation for Companies with a Strong Employment Brand Between Employee Engagement Levels and Bottom Line Results? Park and Zhou, Cornell University, Spring 2013

A similar study produced by the Temkin Group in August 2013, shows that just 55% of U.S. employees are moderately or highly engaged, with the largest decline in engagement from the youngest group of employees in the study, those between 18 and 24 years old.

The study finds that engaged employees are extremely valuable. When compared with disengaged employees, highly engaged employees are more than three times as likely to do something good for their employer even if it’s not expected of them:

  • Almost three times as likely to make a recommendation about an improvement at work
  • More than 2.5 times as likely to stay late at work if something needs to be done
  • More than two times as likely to help someone else at work.

“Engaged employees are incredibly valuable assets,” said Aimee Lucas, customer experience transformist and vice president of Temkin Group, in a news release. “It’s not a coincidence that high performing companies have considerably more engaged employees than their peers.”

According to Deloitte’s third annual Global Human Capital Trends 2015 report, lack of employee engagement is the top issue currently facing 87% of HR and business leaders – yet the majority of organizations are still failing to take action to improve their culture, potentially jeopardizing future growth.

“As the demand for talent picks up, the balance of power in business is rapidly shifting from the employer to the employee,” says Josh Bersin, principal and founder of Bersin by Deloitte.

These three studies provide me with the following perspective:

  • 2015 represents a very different employment mentality than the recession of 2008/9 when employers held the reigns
  • An investment in a company’s Internal Brand offers significant benefits: financial, cultural and operational.
  • A clear Employment Value Proposition can be very effective in recruiting top talent and increasing the commitment and effectiveness across all employees.
  • With the current economic climate and compelling data on the value of creating an Employment Brand, HR leaders and top executives will be placing a greater priority of aligning an organization around a compelling corporate purpose and the benefit it can offer employees.