July 9, 2020 | watsimp

The case for making Employee Engagement a key business metric

I once was having a really hard time convincing my CEO, that employee engagement was important. His counter argument was that low employee engagement had low business risk and therefore low priority for him and the leadership team. I left the meeting dejected trying to figure out how to help him understand the impact of low employee engagement. I was finally able to persuade him to change his mind only when I presented to him the full impact of poor employee engagement and backing it up with data!

So what does low employee engagement impact? Most leaders think that the only impact is “employee morale”. It’s like saying that healthy eating is important only because it helps you look good! It is a very short sighted view. In reality, low employee engagement has a long, dark shadow that deeply impacts critical aspects of a business.


Employees are the biggest brand ambassadors for a company. No amount of advertising, PR or brand building creates a world class brand that customers love, if your employees are not brand advocates. When employees are not brand advocates, it significantly impacts a company’s ability to attract talent, partners and customers. Your employee advocacy and brand success is directly proportional to your employee engagement!


How many times have we bemoaned the fact that our team productivity is low? More often than not this poor productivity is blamed on skills and attitude of team members. But even when you change multiple team members, nothing changes! Gallup’s State of the American Workplace report shows that companies with higher employee engagement have 17% higher productivity than companies with lower employee engagement. We often overlook the fact that poor employee engagement has a direct correlation to employee productivity!


Teams that have low employee engagement often have high attrition. The impact of attrition is hidden and manifold. Replacement costs, loss of institutional knowledge, impact on team dynamics, effect on product or customer service quality. The list is long and scary. And every one of these directly affect the business. Unfortunately, the manager action for attrition is usually increasing pay. But just increasing pay is like applying a band aid to hold together a severed finger. It rarely works! Studies have shown that improving engagement can reduce attrition by as much as 59%!


Companies that have low employee engagement are rarely able to create sustainable growth. Leaders forget that, just like it takes a village to raise a child, it takes the contribution of every employee to create and sustain growth. Data shows that companies that focus on employee engagement, have created greater business growth and financial returns. Improved employee engagement can increase sales by nearly 20%. Stock markets returns for investors in companies with high engagement are nearly 1.5X those of lower engagement companies!

It is clear that employee engagement is no longer just a “feel good” vanity metric for organizations. Today it is right there among the top financial metrics that an organization must measure, track and achieve. Just as the financial metrics reflect the “what” the organization has achieved, the employee engagement metrics reflect the impact of the “how”.

Employee Engagement is a lead indicator metric of future and sustainable growth and success of a company and it must become a key business metric!

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