The Impact of Employee Engagement on Productivity

Although many companies think of employee engagement as an intangible feeling of job satisfaction, it translates into concrete employee behaviors that drive the company’s success. 

Positive emotions related to their jobs - like job satisfaction, happiness, and fulfillment - make employees more emotionally connected to their job and their workplace. 

But ultimately, those feelings translate into an active and enthusiastic participation in the life and growth of the company. That’s what employee engagement really means. 

With that said, it’s easy to see that employee engagement and productivity, just like employee engagement and performance, are closely related and have an almost direct correlation. 

The Correlation Between Employee Engagement and Productivity

An engaged workforce is your most valuable asset for sustained and efficient productivity. 

Naturally, unengaged employees are less likely to give their best to their jobs, which can affect their day-to-day performance, have a detrimental impact on overall productivity, and slow down innovation in your company. 

When your team lacks engagement, they won't rally behind significant changes or new innovative solutions your company may introduce. Even if you have a stellar product, if your employees aren't enthusiastic about it, you'll encounter a lot of internal problems that can slow down your growth as a company and negatively impact your bottom line. 

Need more convincing that employee engagement and productivity are closely related? Take a look at the numbers. 

Employee Engagement and Productivity Statistics

Engaged employees have a positive impact on the company’s productivity and revenue growth. 

According to Deloitte’s Engaging the Workforce survey: 

• Disengaged employees cost American businesses $300 billion annually in lost productivity.
• Engaged workers are 57% more effective. 
• Organizations with highly engaged employees experienced a 3-year revenue growth rate 2.3 times greater than average. 

On the other hand, Gallup found that companies with a highly engaged workforce experience: 

• 23% greater profitability, 
• 14% increase in overall productivity,
• 18% increase in productive sales, 
• 81% lower absenteeism rates, 
• 66% increase in employee well-being. 

On the other hand, most disengaged employees struggle with work-related stress and burnout, which naturally lowers their productivity. 

Gallup’s State of the Global Workforce 2023 report found that nearly 60% of employees are disengaged and “quiet quitting” (being physically present in their work but doing the bare minimum). 

How Does Employee Engagement Increase Productivity?

Engaged employees are more productive. But what does that really mean? How does it translate into concrete actions and tangible results for your company? 

While many companies think of employee engagement as a general feeling of enthusiasm and satisfaction at work, it’s more than that. Engaged employees not only feel more emotionally connected to their jobs, but they also behave differently. 

Here’s how. 

Happy and Motivated Employees

High employee engagement translates into a purpose-driven workforce that is motivated to give their best every day. Since engaged employees are also more invested in the life of the company and care about its growth and success, they aren’t afraid to discuss internal processes, find solutions to improve them, and suggest out-of-the-box ideas. 

Employee engagement is also closely related to how valued and appreciated they feel by their managers and the company in general. The more valued they feel, the prouder they are to be part of the company culture, and, as a result, they become the company’s biggest ambassadors. 

Lower Employee Turnover Rate

Naturally, unhappy employees are more likely to leave their jobs. According to Deloitte’s Engaging the Workforce research, engaged employees are 87% less likely to leave a company than unengaged employees. 

Consequently, it also means higher employee retention and talent acquisition because happy employees are more likely to recommend their company as a great place to work. 

Moreover, a company with an already effective employee engagement strategy is better positioned to keep new hires engaged right from the start and maintain this level of engagement over time, which ultimately increases the likelihood that they'll stay with the company for a long time. 

Better Customer Experience

There is a direct correlation between employee engagement and customer satisfaction. 

Unhappy employees often translate into unhappy customers. When employees who interact directly with the customers seem negative, tired, and reluctant to provide a good quality service, customers can sense their dissatisfaction, which often leads to a poor experience. 

On the other hand, happy employees are more likely to go the extra mile to meet customer needs, provide excellent service, and contribute to an overall positive customer experience.

What's more, engaged employees not only fulfill their job responsibilities but also become brand ambassadors, embodying the values and ethos of the company. 

Innovative Work Approach

Another direct result of an engaged workforce is a culture of innovation within the company. 

Unengaged employees simply don't care about the company's progress, growth, and success, which means they won't make any effort to drive it forward. 

Yet, engaged employees do care and want to be part of the company's growth and success. 

This means they're proactive in suggesting ideas, unafraid to voice dissenting opinions, and ready to embrace innovation and new initiatives. This forward-thinking mindset is what drives the company's long-term success.

What's more, engaged employees are inherently more open to change and progress, whether it involves adopting new technological tools, embracing digitalization, or incorporating artificial intelligence into their daily workflows. 

If your employees are already engaged, they'll be happy to have a place to share their ideas. And if they aren't, providing them with such a place can contribute to increasing engagement.