We know that highly-engaged people are good for business - research tells us that companies that achieve this are 23% more profitable (1) - but the link between employee engagement and performance is stronger than even this eye-watering figure suggests.
When we think about engagement and performance, we might be tempted to ask how this connection works. Does high engagement lead to high performance, or is it the other way around? Actually, it’s more helpful to think of engagement and performance as two points on a continuous loop.
Highly engaged people tend to perform better, which makes them more willing to take part in performance management rituals that lead to higher engagement, like regular 1:1 meetings and feedback. This is largely good news, but it also means that, when there’s a decline in employee experience, performance outcomes can go downhill fast.
Today, we’re sharing some statistics that help us better understand the connection between employee engagement and performance, and will hopefully set you on the path to improving both, in tandem.
9 Statistics that Link Employee Engagement and Performance
1. Highly engaged teams generate 18% more sales.
Research by Gallup shows that employees who are consistently engaged have a greater commitment to quality. Understandably, these employees help their organisations improve customer relationships and obtain impressive organic growth, leading to a 10% difference in customer ratings and an 18% difference in sales (1).
2. Highly engaged teams show 23% greater profitability.
The same piece of Gallup research shows that highly-engaged employees are more present and productive, more attuned to the needs of customers and more observant of processes, standards and systems. When taken together, these behaviours combine to result in a 23% difference in profitability (1).
3. Highly engaged teams show 43% lower turnover.
Research by Gallup shows that engaged employees are more likely to stay with their employers. In high-turnover organisations, highly engaged teams show 18% lower turnover. The gains are even more dramatic in low-turnover organisations, where highly engaged teams achieve a turnover that's 43% lower (1).
4. Highly engaged teams are 14% more productive.
The same Gallup study we mentioned above shows that engaged employees get more done, showing 14% higher productivity. This is also linked to absenteeism, which is 81% lower on highly-engaged teams (1).
5. Employees who feel their voice is heard are 4.6 times more likely to feel empowered to perform their best work.
When we talk about ensuring that employee voices are heard, we tend to think of feedback, praise and surveys. But, as a report by Salesforce found, when these rituals are combined with a greater push for equality and inclusiveness in the workplace, the results can be outstanding, with employees reporting a 400%+ increase in feelings of empowerment to do their job well (2).
6. Disengaged employees cost U.S. companies up to $550 billion a year.
Gallup’s deep dive into how disengaged employees affect the bottom line included an estimation of the cost of lost productivity - $450 billion to $550 billion per year in the United States alone. They add that employees who are emotionally disconnected are not just unproductive, they’re more likely to negatively influence their coworkers, miss work and drive customers away (3).
7. Disengaged employees are costing their companies 34% of their annual salary
When Gallup determined that disengaged employees have higher absenteeism, lower productivity and lead to lower profitability for their companies, they were able to calculate the individual cost of disengagement per employee. They estimate this to be 34% of the employee’s salary. This handy calculator helps you work out the cost of disengagement for your teams, but as an example, for a company of 100 employees with a median salary of $75,000, the cost of disengagement is pretty staggering - $433,500 per year (4).
8. A thriving company culture increases revenue by over 400%
One long-term study found that companies with thriving cultures - ones that encouraged all-around leadership initiatives and that exhibited appreciation for employees - showed a 682% increase in revenue over 11 years, versus 166% for companies with unremarkable company cultures (5).
9. Only 16% of employers are using technology to measure employee engagement.
While teams all over the world are currently using tools like Frankli to boost performance and engagement through rituals like 1:1 meetings, feedback, OKR goal-setting, surveys, reviews and career development, research by Gartner shows that just 16% of teams benefit from a digital tool that tracks engagement. This is great news for teams who have yet to adopt digital engagement tools - investing in a platform like Frankli is an easy way to gain a clear competitive advantage (4).
1. Gallup, Employee Engagement vs. Employee Satisfaction and Organizational Culture. 2. Salesforce, Understand the Business Impact of Inclusive Leadership. 3. Gallup, How to Tackle U.S. Employees' Stagnating Engagement. 4. Calculating the Real Cost of Disengagement. 5. Forbes, Does corporate culture drive financial performance? 6. Gartner, 9 Future of Work Trends Post Covid-19.