A 2006/7 Watson Wyatt research study suggests that employee engagement has a strong impact on an organization’s bottom line. Unfortunately, a number of myths, misconceptions and false assumptions are leading employers down the wrong path when it comes to building employee engagement. As a result, many are investing time and money in ways that will do little to increase engagement levels. In doing so, these employers are missing out on an opportunity to motivate and focus employees in ways that have a real impact on productivity and financial performance.

In particular, many companies overestimate the importance of the supervisor in driving engagement. In fact, senior leadership and the frequency with which senior managers communicate with employees are far more important drivers of engagement. Understanding this and acting upon it can deliver substantial improvements in financial performance and productivity.

The study also shows that while employee engagement provides a solid foundation for financial success, employers should look beyond engagement if they are going to achieve superior financial performance. The ultimate goal should be employee effectiveness, which builds on the engagement foundation by giving employees the training, resources, tools and equipment to work effectively and by creating an environment where the organization demonstrates its values, and creates a culture of trust and ethical behaviour.

Key Findings

• Engagement is a leading indicator of financial performance. Companies that increase their engagement levels can expect to significantly improve their subsequent financial performance.
• Despite the conventional wisdom that immediate supervisors play a key role in driving retention and engagement, strong senior leaders who communicate effectively and frequently are a far more important factor.
• Senior management is receiving lower marks than in the past from employees on instilling confidence in long-term business success, making decisions in a timely manner, making changes to enhance competitiveness and grow the business, and controlling costs.
• Communication makes a positive difference in employee engagement. High-engagement employees receive communication from their supervisors and senior management far more frequently than low-engagement employees.
• Employees are concerned about changes to health care benefits and pension plans. Top- performing employees are far more likely to cite benefits as an important reason for leaving than employers realize.
• Organizations that have created strong engagement shouldn’t rest on their laurels. By going beyond engagement to employee effectiveness, these organizations can continue to earn superior total returns to shareholders.

A complete copy of this study can be purchased online from Watson Wyatt.

*Reprinted by permission