Employee Engagement vs. Employee Satisfaction and Organizational Culture

Creating an engaged workplace culture — one that attracts talent and wins customers — isn’t about keeping employees happy. It’s about aligning them on purpose, performance and what they do best every day. It's true that enthusiastic and energetic employees feel better about their work and workplace. But engagement is not determined by an abstract feeling. Measuring 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.

Only 31% of U.S. employees are engaged, the lowest level in a decade, according to Gallup’s latest State of the Global Workplace report. Engaged employees are emotionally invested in their work and committed to their organization’s success. They show up with energy, purpose and a drive to perform at their best. This engagement isn’t random — it’s built through clear expectations, opportunities to do what they do best, meaningful development and feeling heard. These elements not only create better workplace experiences but also fuel lasting performance.

Employee Engagement Strategies Are Good for Business

Approaching engagement as a business strategy yields clear and better results. Gallup’s meta-analysis (a study of studies) continues to confirm the strong link between employee engagement — as measured by Gallup's employee engagement survey — and business performance across industries and geographies.

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 more than double their 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. Those at the 99^th percentile have nearly five times the success rate of those at the first percentile.

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 experience 78% less absenteeism and 14% higher productivity (based on evaluations and production records). Engaged workers also are more likely to stay with their employers. In high-turnover organizations, engaged business units have 21% less turnover. In low-turnover organizations, they experience 51% less turnover. (High-turnover organizations are those with more than 40% annualized turnover, and low-turnover organizations are those with 40% or lower annualized turnover.)

Customer outcomes: Employees who are engaged consistently show up to work and have a greater commitment to quality and safety. These employees also strengthen customer relationships and contribute to organic growth through better service and consistency. Highly engaged business units achieve 10% higher customer loyalty and 18% higher sales productivity.

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 more observant of processes, standards and systems. When taken together, the behaviors of highly engaged business units result in a 23% increase in profitability.

The cumulative impact of employee engagement can be seen across key business metrics, from retention to revenue:

• 78% less absenteeism
• 14% higher productivity
• 51% lower turnover (low-turnover organizations)
• 21% lower turnover (high-turnover organizations)
• 18% higher sales productivity
• 10% higher customer loyalty
• 23% higher profitability

Creating the Right Organizational 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 and 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 organizations 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. Less than a third of the U.S. workforce is engaged — the lowest level in 10 years. And many organizations come to Gallup with even lower percentages of engagement.

But as they shift their approach, these organizations begin to realize improvements in performance. Winners of the Gallup Exceptional Workplace Award, Gallup’s clients with the highest levels of engagement, average 70% engaged employees. That's more than twice the national average, considering that just 31% of U.S. employees are engaged and 17% are actively disengaged. 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. Employee engagement is a fundamental consideration in their people strategy, not an annual "check-the-box" activity.