On average, it costs an organisation £12,000 to replace an employee, with the cost rising higher the higher position the employee has. For example, to replace a CEO, the costs could surpass £213,000. Employees are the most valuable resource in an organisation, but many organisations aren’t prioritising employee engagement, instead only paying lip service. Research has shown that companies with engaged employees outperform those without by up to 202%. So why aren’t businesses focusing on engaging employees?
Here are 5 reasons why businesses should be focusing on employee engagement:
- Increased staff retention
- Increased productivity
- Increase in profit
- Better work-life balance
- Increased customer satisfaction
1. Increased staff retention
Losing an employee can result in loss of talent, recruitment expenses, the cost of training a new employee and the cost of lost opportunities, to name but a few. Retaining employees reduces HR costs, promotes company growth from within and improves customer service. Engaging employees will make them 87% less likely to leave, as they don’t have a reason to look elsewhere for work.
2. Increased productivity
Gallup’s 2016 meta-analysis finds that firms with high levels of employee engagement report 20% higher productivity. This is due to engaged employees turning up to work with purpose, passion and a love of their jobs. Engaged employees are more likely to work harder as they believe in the values of the company, they feel respected and valued and want to help the company thrive.
3. Increase in profit
MIT’s Sloan Review finds that firms with high levels of employee engagement report higher profit growth (10–15%) than firms with low levels of employee engagement (0–1%). This is largely an indirect effect created through the other benefits of employee engagement. By increasing employee retention, productivity and customer satisfaction, profitability is increased. Engaged staff generally work harder, inspire customer loyalty and stay with an organisation. Ultimately, this increases revenue and reduces costs.
4. Better work-life balance
61% of employees are burned out on the job. This means that they are experiencing high levels of stress resulting in poor physical and mental health. Having a good work-life balance increases employee morale and results in reduced absenteeism and increased productivity. Unfortunately, a lack of work-life balance is the reason that 27% of people leave their current jobs. The key to implementing a better work-life balance isn’t just about gimmicks like free massages and giving you a day off on your birthday, it’s about enabling flexible working and investing in wellness strategies – ask your staff what they need and try and accommodate.
5. Increased customer satisfaction
“To win in the marketplace, you must first win in the workplace” – Doug Conant, former CEO of Campbell Soup
The service an employee delivers to a customer is linked to how engaged they are with their organisation. Happy employees equal happy customers – this is demonstrated in a survey by Gallup that found that companies in the top quartile of employee engagement experience 10% higher customer ratings. Engaged employees spread their enthusiasm and passion for a company to customers, therefore providing the best possible service. Satisfied customers also have the same effect on employees. Positive customer experiences can reinforce how employees feel about the value and purpose of their work. It’s a win, win situation!
Employee engagement is a vital part of any successful organisation. Businesses should focus on the happiness of their customers, and where possible, seek to implement it into their corporate strategies. Avoid misconceptions around employee engagement and find out more about how to implement employee engagement strategies into your organisation by reading our blog on How to boost your business’ employee engagement levels.