Employee Engagement Shows Positive Benefits

Engagement of employees is becoming more critical than ever as companies seek to maximize their investments in human resources, according to Todd Hanson, president and founder of the ROI Engagement Alliance and Brad Callahan, vice president of business solutions for Marketing Innovators.

They discussed the importance and measurement of employee engagement during a recent webinar.

To show the positive impact of employee engagement, they pointed to the following figures from Employee Engagement: Market Review, Buyer's Guide and Provider Profiles, Bersin & Associates:

  • Seven hundred twenty million dollars spent annually on improving engagement, an amount expected to double because integrating engagement into on-going HR programs is critical to sustained high engagement levels
  • Seventy-one percent of HR execs that use scorecards incorporate engagement

They pointed out that high engagement organizations realize five times higher shareholder return and three times higher operating income than companies without strong employee engagement. The stock prices of companies with engaged employees outperform peers by 2.5-1 and outperform companies with low engagement by a factor of five.

In addition to the positive effects of employee engagement, companies also need to consider the negative effect of employee disengagement, which they estimate costs the U.S. economy as much as $350 billion.

About 60 percent of companies have an engagement program in place to recognize length of service or anniversaries. A similar percentage has a wellness engagement program.

While more than 70 percent of companies measure employee engagement a little more than a third of that percentage measure actual ROI, the presenters said.

Most of the companies who don’t conduct more in-depth of employee engagement cite lack of resources to do so, result measurement is the key to improvement, they said.

The ROI Institute has developed a methodology for these measurements, including evaluation planning, data collection, data analysis and then reporting.

The ROI methodology has been adopted by over 3,000 organizations in manufacturing, service, non-profit, and government settings and in more than 50 countries

In addition to measurement, communication is an essential element of any engagement program, Callahan said. Combined, communications and measurement provide the basis for evaluating initial success of the program.

Measurement and results of any engagement program needs to look at what participants know how to do as a result of the program, including familiarity with terms, concepts and processes, general understanding of concepts, processes, etc., and ability to demonstrate specific skills.

Callahan added that program goals should evolve over time. While some benefits may be garnered in the first 30 days, others will need to be realized over 60 or 90 days.

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