Business Leadership Today

The Three Key Elements of Employee Engagement


John Spence, Contributor

In hundreds of studies carried out in thousands of companies, looking at millions of employees, the evidence is overwhelming and irrefutable: highly engaged employees are the single most significant driver of customer satisfaction and loyalty, which is, in turn, the number one driver of organizational profitability and long-term success.

With engagement being so vital to the success of organizations, it’s essential to develop an understanding of the key elements that drive and help organizations maintain high levels of engagement.

The three key elements of employee engagement are a strong organizational culture where leaders demonstrate care for employees, a sense of purpose that provides a meaningful connection between the work an employee does and the success of the organization, and opportunities for personal and professional growth.

This article will explore what it takes to build a high engagement culture and look at action steps you can implement immediately to increase engagement in your business.

Engagement By the Numbers

We know that happy employees lead to happy customers and higher profits. How much higher?

The findings range from 104-320% higher. In addition, engaged companies grow profits up to three times faster than their competitors. And given that we are in a war for talent, it is essential to note that highly engaged employees are 87% less likely to leave the organization.

On the downside, research shows that companies with poor engagement scores earn an operating income that is 32.7% lower than companies with more engaged employees.

Another number that hurts is that a disengaged employee costs an organization approximately $3,400 for every $10,000 in annual salary. To make matters worse, a recent Gallup poll indicates that more than 70% of employees are either disengaged or actively disengaged.

These staggering numbers clearly show that the cost of low employee engagement can negatively impact an organization’s bottom line. The ROI of a highly engaged workforce, on the other hand, is impressive.

What Keeps Top Talent Engaged? 

Several years ago, I did a research study where I interviewed more than 10,000 high-potential employees at top companies worldwide. These are what I call “voluntary” employees.

These employees are so good at what they do that they could get a job at any company they want to work at. They don’t come back every day to work at the company because they have to; they stay working there because they want to.

So, I asked them, “What is it about your company that keeps you so loyal and engaged?” They told me six factors.

1. Fair pay. Pay came off the table as a significant motivator if they were getting 10% above or below what they would make to do the same job at any other organization. Sure, people like to make a lot of money, but they are willing to take less if the organization delivers on the following five factors.

2. Challenging, meaningful work. Pay and position did not matter nearly as much to these people as working for an important purpose. They needed to feel that they were pursuing a worthy cause and contributing to a greater purpose beyond their daily job duties. As they say at Apple, they want to put a dent in the universe.

3. Cool colleagues. “A” players only want to play with other “A” players. They want to be challenged to do their best work every day with team members striving for excellence. If you put talented people on a team with mediocre performers, it destroys their motivation and engagement.

4. Winning culture. Culture is critical in creating a highly engaged workforce. Culture is the primary reason people join a company, stay in the company, or decide to leave the company.

5. Personal and professional growth. These super-talented employees expected their companies to invest in their development. They wanted training, a coach, a mentor, and other things to help them constantly improve. Also, they needed a clear career path. They wanted to know where they might be in the organization five to seven years into the future.

6. Working for a leader they trust, respect, and admire. This was by far the most critical factor in keeping exceptionally talented people engaged. Roughly 80% of people that quit their job do not quit the hours, the pay, or the workload. They quit their immediate boss.

As a leader, you must be aware that you live under a microscope. People watch everything you do. They listen to everything you say. They watch to see what you don’t do and listen to hear what you don’t say.

To keep talented people on the team, every leader must be a living example of what they want to see in a culture. They must exhibit competence, curiosity, honesty, authenticity, teamwork, customer focus, and high levels of accountability. As goes the leadership team, so goes the entire company.

In more than 30 years of working with companies worldwide, I have found that all the factors mentioned here are vital for employee satisfaction.

But, when it comes to engaging employees, keeping the three key elements of engagement (winning culture, meaningful work, and growth) in mind when crafting a people-focused culture and strategies that put people over profits will allow you to significantly increase employee engagement, reduce turnover, boost productivity, and increase profits.

Culture Eats Strategy for Breakfast, Lunch, and Dinner

The most important factor that can either help a company or destroy it is its culture. Culture, in turn, determines an organization’s ability to build and maintain a team of highly engaged employees.

Corporate culture represents the written and unwritten rules of behavior, teamwork, values, ethics, and priorities that permeate an organization. Culture can be nurtured, supported, encouraged, and guided but never mandated or controlled.

It is immediately evident when you interact with an organization with a great corporate culture. People are happy, the place hums, there’s positive energy flowing, and excitement at every level. There is a strong sense of camaraderie, esprit de corps, and evident pride in the products employees build and the services they deliver.

In organizations with a negative culture, you find turf guarding, finger-pointing, politicking, and rumormongering.

Even if the financial benefits of a positive corporate culture weren’t enough to convince you, it just makes sense that no one who is exceptionally talented would be engaged in an organization with a dysfunctional corporate culture.

Let me state this very simply: the customer’s experience will never exceed the employee’s experience.

Your company’s future is directly determined by the quality of the people you can attract, grow, and keep on your team.

Many years ago, I was having lunch with one of America’s most successful business owners. He’d grown up on a small dairy farm where he and his parents scratched to make a decent living.

When I met him, he owned 73 car dealerships and several other businesses. Whenever I get to be around someone of this caliber, I try to learn as much as possible. Near the end of lunch, I asked him, “What is the most important thing you’ve ever learned in business?”

He didn’t hesitate. He leaned over and said, “It’s all about people, people, people. You can kid yourself about a lot of the things in your business, John, but it all comes down to having great people and taking great care of them.”

The best way to ensure your employees are having a positive experience, is for top leadership to demonstrate that they care about and value employees and the work they do.

Modeling core values, providing opportunities for recognition and regular feedback, setting realistic goals and practices to measure employee progress, and providing the autonomy employees need to do their work should be part of your plan for fostering a caring culture that engages employees, and maintaining an engaging culture should be a core strategy in your business.

Action Steps

  • Look for creative ways to make working in the organization fun.
  • Treat people with respect.
  • Refuse to tolerate mediocrity.
  • Celebrate often.
  • Make a point of catching people doing things right.
  • Give genuine, specific praise to individuals at least once every seven to ten days.
  • Give people the necessary training and support they need to do their jobs well, then give them the freedom to do their job without micromanagement.
  • Ensure that people’s actions are in alignment with the organization’s values.
  • Tell stories about team members that live organizational values.
  • Reward employees who embody the key elements of the culture.
  • Do employee engagement surveys at least once a year to measure how well you are delivering on the promises of your organization’s mission, vision, and values.
  • Really listen to feedback from employees, and be sure to act on the results from the surveys.
  • Keep your finger on the pulse of the culture. Adjust quickly if things begin to turn negative.

Purpose Drives Passion and Performance

This is mentioned above as one of the six factors that attract and engage top talent, but I want to go deeper.

A powerful driver of employee engagement is to work for an organization that helps workers find purpose. Working with a sense of purpose increases motivation, morale, productivity, and overall job satisfaction. Many employees are willing to trade fancy titles and some income to feel like they are contributing to the greater good of society.

The best way to engage employees in the organization’s purpose is to show them precisely how their work makes a difference in the lives of others.

I have a good friend that owns a prosthetics company. Whenever they fit someone with a new leg, they ask that person to walk through the entire back office so that the folks in accounting and shipping can directly see the impact they have made in improving that patient’s life.

For some companies making this connection is obvious. For other companies, where the work might be more mundane, the organization’s involvement in a meaningful cause boosts engagement.

Perhaps everyone participates in the breast cancer awareness walk or helps build homes for Habitat for Humanity. An employee who feels like their work or company is making a positive contribution to the world is significantly more engaged and more committed to the organization’s success.

Action Steps

  • If possible, bring your employees into direct contact with the people they are helping.
  • Give tangible examples of how their work has changed people’s lives for the better.
  • Give special awards to people who go above and beyond to support the organization’s purpose.
  • Give people multiple opportunities to get involved in activities that support the purpose.
  • Tell stories about people who have demonstrated a strong commitment to the purpose.
  • Have senior executives talk about how essential the purpose is to them personally and the organization.
  • Encourage employees to share the organization’s purpose with customers to help them understand what your organization is committed to.

Growth and Development Opportunities Help Your Team Thrive

As a leader, you should always be providing opportunities for your people to build on their knowledge and skills. Professional development opportunities are a must-have if you want an engaged high-performance team that has an innovation mindset. 

Learning opportunities not only improve performance and support a culture of innovation, but they are also important to attracting and retaining top talent. Keep in mind, many talented job seekers look for development opportunities in an organization’s culture when considering whether or not they’ll be a good fit.  

Here are some more important statistics to consider. LinkedIn recently compiled research that showed that employees who spend time learning on the job are 47% less likely to be stressed, 39% more likely to feel productive and successful, 23% more able to take on additional responsibilities, and 21% more likely to feel confident and happy.

The ROI on continuous learning in the workplace shouldn’t be underestimated—this is an investment companies can’t afford not to make.

When employees are given the opportunity and encouragement they need to develop their skills and expand their knowledge, they will be happier and more engaged in their jobs and more satisfied in their personal lives.

Action Steps

  • Invest in a variety of training and development opportunities for all employees, at all levels of the business.
  • Give people opportunities to work on new projects that will keep them challenged.
  • Show people a direct line from the learning they are doing to the positive impact they are creating for the organization, customers, and the community.
  • Make your organization a talent magnet by establishing your organization’s reputation for constant learning and development and use it as a recruitment tool.
  • Work with key employees on creating a solid career path and identify learning and development opportunities that will help them along this path.
  • Invest specifically in advanced leadership training for everyone in leadership positions.

In Conclusion

It is impossible to run a successful business without highly engaged employees.

As I mentioned at the beginning of this article, in an average business, greater than 70% of employees are not engaged in their work or the company they work for. I also shared some spectacular numbers delivered by engaged employees.

If you follow the action steps I have laid out, I am confident that you will see a significant positive impact on your organization and in the lives of your employees.

John Spence is a keynote speaker, consultant, and executive coach, who was named by the American Management Association as one of America’s Top 50 Leaders to Watch along with Sergey Brin and Larry Page of Google and Jeff Bezos of Amazon.  He is the author of the acclaimed book on business excellence, Awesomely Simple.

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