As HR professionals, most of us would probably agree that employee engagement has an impact on employee performance. We’ve all seen how engaged employees go the extra mile. And they aren’t merely doing in the hope of a pay rise, or to get a promotion. They actually care more about their work. It’s what psychologists call intrinsic motivation or discretionary effort. So we would expect then that having more engaged employees who perform better should lead to better organisational performance. But is this actually the case, and can it be proved?

Fortunately a lot of research has gone into just this question. Here is a summary of five of the most important studies in this area, which clearly demonstrate the link between employee engagement and individual and organisational performance:

1. Engaged employees perform better

In a global study of 50,000 employees, the Corporate Leadership Council found that those employees who are most committed perform 20% better. These highly engaged employees frequently help others with heavy workloads, volunteer for other duties, and are constantly looking for ways to do their jobs more effectively.

2. The ‘10:6:2’ rule

In another global study, the Corporate Executive Board concluded that companies on average see performance improvements from boosts in engagement. They called it the ‘10:6:2’ rule, as they found that every 10 percent improvement in commitment increases an employee’s effort level by 6 percent, and every 6 percent improvement in effort increases an employee’s performance by 2 percent.

3. Organisations with higher employee engagement are more profitable

In 2012, Gallup performed an analysis of 263 separate research studies across 192 organizations in 49 industries and 34 countries. They studied the top quartile and bottom quartile employee engagement scores and looked at the performance of the organisations within those quartiles. They found that those organisations in the top engagement quartile were on average 22% more profitable than those in the bottom quartile. The top quartile organisations also had 21% higher productivity.

4. Employee engagement improves employee retention

The study mentioned above conducted by the Corporate Leadership Council (number 1) concluded that engaged employees are 87% less likely to leave the organization than disengaged employees. Similarly, a 2004 survey by Towers Perrin showed that 66% of highly engaged employees had no plans to leave their company, and only 3% of them were actively looking, compared to 12% and 31%, respectively, for disengaged employees.

5. Engagement and organisational outcomes – proof of causation

In light of studies such as those listed above, many commentators have questioned whether employee engagement actually causes these outcomes, or whether higher performing organisations have more engaged employees because they are more successful? A 2012 study examined this question and found that it is indeed the former – that employee engagement (‘organisational commitment’) had a more persistent influence on performance than vice versa.

How to improve employee engagement

There are numerous consultancies who make their living from measuring employee engagement and offering advice on how to improve it; indeed it has become a science in itself. However, I’m a big fan of simplicity and one of my favourite approaches to increasing employee engagement is that offered by the US entrepreneur and author, Kevin Kruse, in his book Employee Engagement 2.0. Kevin states that engagement can be boiled down to four things:

  1. Communication
  2. Growth & Development
  3. Recognition & Appreciation
  4. Trust & Confidence

We’ve put together a short guide on how you can tailor your performance management processes to improve employee engagement, using the above four principles, which you can read here.