Employee Engagement Affects Companies’ Financial Performance

Employee Engagement Affects Companies’ Financial PerformanceA recent report by Glassdoor confirms what we at Talmetrix have known for a while — that employee engagement has an impact on a company’s financial performance. Companies with highly-engaged employees have better stock performance than average, and companies with poor engagement have worse performance than average.

I’ve been reading about the Glassdoor report and other information about how employee engagement affects the bottom line. Here are some articles and blog posts I found particularly helpful.

Do Satisfied Employees Impact Stock Performance? Glassdoor: “Great companies are highly profitable, often attracting top talent and keeping them with employee-friendly policies. But does the opposite hold as well? Are companies with the unhappiest employees also poor financial performers? Surprisingly, the answer appears to be ‘yes.’ We examined a portfolio of 30 companies with the lowest employee satisfaction as well, and found that they significantly under-performed the stock market since 2009.”

Could a Lack of Employee Engagement Be Hurting Your Bottom Line? The Chronicle Herald: “Employee engagement surveys take the pulse of the organization and let you know what illnesses are festering, if any, in your organization. This can be an uncomfortable door to open but not taking the pulse of the organization doesn’t mean the issues aren’t there. The literature on employee engagement has tied it to so many bottom-line factors for an organization that one could easily argue that the riskier move is to ignore it. Employee engagement has been linked to increased organizational commitment, increased productivity, increased profitability, decreased ‘water cooler’ negativity and a host of other factors.”

Why Great Places to Work Can Also Make Great Investments. The Washington Post: “There are several possible causes for the correlation, [Andrew Chamberlain, Glassdoor’s chief economist] says, though he’s careful to note the exact link is hard to identify without further study. It could be that fast-growing companies have enough cash on hand to make it easy to attract and retain good, satisfied employees. Or, poorly performing companies could put benefits and perks on the chopping block quickly, which could hurt employee morale. It’s also possible that building a more satisfied workforce in itself leads to better results.”

Culture: Why It’s The Hottest Topic In Business Today. Forbes: “People now believe that culture has a direct impact on financial performance. I just talked with two industry analysts who read Glassdoor comments before they publish analyst reports. Both told me they use this data to understand employee sentiment [and] read comments about the CEO as part of their core research. It also helps them compare competitors….Culture is a big and somewhat vague term. Some define it as ‘what happens when nobody is looking.’ In reality, it’s much more complex. Culture is the set of behaviors, values, artifacts, reward systems, and rituals that make up your organization. You can ‘feel’ culture when you visit a company, because it is often evident in people’s behavior, enthusiasm, and the space itself.”

U.S. Employee Engagement Reaches Three-Year High. Gallup: “The percentage of U.S. workers engaged in their jobs rose from an average 31.7% in January to an average 32.9% in February. The latest monthly rate of employee engagement is the highest Gallup has recorded in three years and is a full 1 1/2 percentage points above where it stood in February 2014. The February 2015 estimate is based on Gallup Daily tracking interviews conducted with 5,993 adults employed for an employer. Gallup categorizes workers as engaged based on their responses to key workplace elements that it has found predict important organizational performance outcomes.”

Talmetrix is an employee feedback and insights solution that helps organizations better attract and retain talent to achieve business goals. Our solution makes it easy for organizations to capture employee feedback (feelings) and organizational data (facts) to discover actionable insights. With a unique combination of software, content, data, and advisory support we can help you measure and improve your employee experience. Contact us today to learn how your company can start achieving better business results.

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