The Right Culture: Not Just About Employee Satisfaction

Creating a great workplace culture that has star employees who know how to win new customers isn't about making employees happy or content -- and organizations falter when they think it is.

It's true that enthusiastic and energetic employees feel better about their work and workplace. But engagement is not determined by an abstract feeling. Using an employee satisfaction survey to measure workers' contentment or happiness levels, as well as catering to their wants, often fails to achieve the underlying goal of employee engagement: improved business outcomes.

Organizations have more success with engagement and improve business performance when they treat employees as stakeholders of their own future and the company's future. This means focusing on concrete performance management activities, such as clarifying work expectations, getting people what they need to do their work, providing development and promoting positive coworker relationships.

In 2022, only 32% of the U.S. workforce was engaged. Disengaged workers are indifferent and neither like nor dislike their job. They represent a risk, and that risk can tilt either way -- good or bad.

Many employees who are not engaged want a reason to be inspired. They are the "show me" group that needs an extra push to perform at their best. While positive feelings, such as happiness, are usually byproducts of engagement, they shouldn't be confused with the primary outcomes. Rather, the primary emphasis should be on elements that engage workers and drive results, such as clarity of expectations, the opportunity to do what they do best, development and opinions counting.

A Business Strategy

Approaching engagement as a business strategy yields clear and better results. Gallup's 10^th version of our meta-analysis (a study of studies) determines the relationship of engagement -- as measured by Gallup's Q¹² employee engagement survey -- to business/work unit profitability, productivity, employee retention and customer perception.

Despite massive changes in the economy and technology, the results of the most recent meta-analysis are consistent with the results of each previous version. Simply put, engaged employees produce better business outcomes than other employees do -- across industries, company sizes and nationalities, and in good economic times and bad.

Business or work units that score in the top quartile of their organization in employee engagement have nearly double the odds of success (based on a composite of financial, customer, retention, safety, quality, shrinkage and absenteeism metrics) when compared with those in the bottom quartile.

When compared with business units in the bottom quartile of engagement, those in the top quartile realize improvements in the following areas, among others:

Showing up and staying: Engaged employees make it a point to show up to work and do more work -- highly engaged business units realize an 81% reduction in absenteeism and an 18% increase in productivity (sales). Engaged workers also are more likely to stay with their employers. In high-turnover organizations, highly engaged business units achieve 18% less turnover. In low-turnover organizations, the gains are even more dramatic: Highly engaged business units achieve 43% less turnover.

Customer outcomes: Employees who are engaged consistently show up to work and have a greater commitment to quality and safety. Understandably, these employees also help their organizations improve customer relationships and obtain impressive organic growth. Highly engaged business units achieve a 10% increase in loyalty/engagement ratings and an 18% increase in sales.

Profit: The previous outcomes collide to bring organizations increased profitability. Engaged employees are more present and productive; they are more attuned to the needs of customers; and they are more observant of processes, standards and systems. When taken together, the behaviors of highly engaged business units result in 23% greater profitability.

Creating the Right Culture Is Possible

Employee engagement has long been a concern in the U.S. workforce, but -- perhaps now more than ever -- it represents a vital component of employee attraction and retention. For the modern workforce, an engaging work environment is a fundamental expectation, a baseline requirement. Many employees refuse to settle for an organization that does not strategically prioritize engagement. For leaders, this means a culture of engagement is no longer an option -- it is an urgent need.

Creating a culture of engagement requires more than completing an annual employee survey and then leaving managers on their own, hoping they will learn something from the survey results that will change the way they manage. It requires an organization to take a close look at how critical engagement elements align with their performance development and human capital strategies.

Engaging employees takes work and commitment, but it is not impossible. Just 23% of the global workforce is engaged. And many organizations come to Gallup with even lower percentages of engaged employees.

But as they shift their approach, these organizations begin to realize improvements in performance. The average engagement level among the winners of the Gallup Exceptional Workplace Award is 72% (based on Q¹² employee engagement surveys administered between Jan. 1 and Dec. 31, 2022). On average, these 57 world-class organizations have 18 engaged employees for every one actively disengaged employee -- 10 times the rate in the U.S. and 16 times the global average.

Highly engaged organizations share common philosophies and practices. Among other things:

• They know creating a culture of engagement starts at the top.
• Their leaders are aligned in prioritizing engagement as a competitive, strategic point of differentiation.
• They communicate openly and consistently.
• They place the utmost importance on using the right metrics and on hiring and developing great managers.

Highly engaged organizations also hold their managers accountable -- not just for their team's measured engagement level, but also for how it relates to their team's overall performance. They ensure that managers are engaging employees from the first minute of their first day at work.

These organizations have well-defined and comprehensive development programs for leaders and managers, and they focus on the development of individuals and teams. Measuring employee engagement and acting on the results is a fundamental consideration in their people strategy, not an annual "check-the-box" activity.