When we talk about the workplace, phrases like “happy employees drive business success” often come up. Many business owners and HR managers focus heavily on boosting employee satisfaction, believing that a satisfied workforce will lead to higher profits. However, research shows that while employee satisfaction is important, it isn't the ultimate driver of business success—employee engagement and alignment are. In this blog post, we explore the critical differences and how you can truly measure employee engagement to boost your company’s performance.
Employee Engagement vs. Employee Satisfaction
It's crucial to understand that employee engagement and employee satisfaction are not the same. Satisfaction refers to how content your employees are with their jobs, including benefits, environment, and work-life balance. On the other hand, engagement is about how emotionally invested they are in their work and the company’s mission. Engaged employees genuinely care about their role and strive to contribute to the company’s goals. Simply put, they go beyond just doing their jobs—they actively want the business to succeed.
According to research by MIT Sloan, employee satisfaction is only one part of the equation and contributes to about 25% of what drives business performance. The other 75% comes from engagement and alignment, where employees align their actions to the broader business strategy and objectives. In the absence of alignment, you may have happy workers, but they may not necessarily be productive or focused on business success.
Why Measuring Employee Engagement Matters
The first step to improving employee engagement is understanding how to measure employee engagement effectively. Unfortunately, fewer than half of companies worldwide measure engagement against business performance. If you aren’t measuring, it’s impossible to know where you stand or how to improve.
To get meaningful insights, the measurement process should be:
Anonymous: Employees are more likely to provide honest feedback if their responses are confidential.
Validated and Reliable: Ensure that the assessment tool you use is trustworthy and can consistently provide actionable insights.
Benchmarkable: It should allow you to compare your results with industry standards or other businesses in your country. This gives context to where your company stands and highlights areas for growth.
STAR Workplace offers an excellent platform for measuring engagement in a structured way. It benchmarks your data against over 900 Australian businesses, making it easier to see how well your employees align with national standards.
How to Measure Employee Engagement: Key Components
Effective engagement surveys cover four key areas:
Employee Satisfaction: Measuring satisfaction is the base level of understanding. It ensures your employees are generally content with their work environment.
Employee Alignment: Are employees aware of and committed to the company's strategic goals? Engaged employees align their actions to meet both personal and organizational objectives.
Employee Commitment/Loyalty: This measures how dedicated employees are to staying with your company. High employee turnover can significantly reduce profitability, which is why this component is vital.
Employee Performance: Are employees meeting or exceeding their performance targets? Tracking and coaching employees through formal performance processes can identify growth opportunities.
Each of these areas needs to be assessed at least annually, preferably at off-peak times to avoid survey fatigue. Surveys should be well-structured and linked to business outcomes, ensuring that employees understand how their feedback will be used to improve both their work environment and the company as a whole.
The Cost of Ignoring Engagement
Many businesses focus heavily on improving employee satisfaction, but without engagement and alignment, the gains are limited. Imagine having 77% of your workforce disengaged—this is a reality for many Australian companies today. Disengaged employees are either indifferent or actively working against the company’s interests, leading to unsustainable labor costs.
When employee engagement is high, businesses experience improvements in revenue growth, customer satisfaction, and profitability. Studies have repeatedly shown that companies with the highest levels of employee engagement significantly outpace their competitors in financial performance. High engagement correlates with better margins, reduced absenteeism, and higher retention rates—all of which directly impact the bottom line.
Tips for Building Employee Engagement
If you want to boost engagement in your workplace, consider implementing the following strategies:
Leadership Training: Train managers and supervisors to focus on both individual and team growth. Managers have a profound impact on engagement, and poor management is often the leading cause of turnover.
Create a Strong Vision, Mission, and Values: Alignment starts with a shared understanding of what the company stands for. When employees understand the mission, they are more likely to align their actions accordingly.
Involve Employees in Strategic Planning: A cross-section of employees should contribute to building the company’s business plan. This helps foster a sense of ownership and ensures that employees feel valued.
Frequent Updates: Regularly update employees on the company’s progress towards its goals. Transparency helps build trust and keeps everyone aligned.
Recognition Programs: Publicly recognize employees for behaviors that align with your company’s mission and values. Recognition fosters engagement by showing employees that their efforts are valued.
Conducting an Employee Engagement Survey
One effective method to understand your employees better is to conduct an employee engagement survey. To achieve the best results, make sure the survey covers not just satisfaction but also alignment, loyalty, and performance metrics. The STAR Workplace Program offers this holistic view, helping businesses understand their employees in the context of the National HR Framework.
When conducting surveys, anonymity is crucial to ensuring honest responses, especially when the HR manager is leading the survey. This way, employees feel safe sharing their true thoughts without fear of repercussions. It’s also important to conduct these surveys annually rather than more frequently. Conducting them at an off-peak time of the year will ensure employees can provide thoughtful responses without distraction or burnout.
The Financial Benefits of Engagement
Addressing employee engagement is not just about making your workplace a happier environment—it’s about financial results. High engagement rates lead to lower absenteeism, reduced turnover, and less shrinkage (loss of inventory). The cost of conducting an employee engagement survey is minimal compared to the potential financial loss due to a disengaged workforce. Business owners should consider the cost of doing nothing and weigh it against the relatively small investment of an effective engagement program.
Making It Happen
To truly benefit from your workforce, start by measuring engagement with the right tools. Satisfied employees are great, but engaged and aligned employees are what will help you achieve lasting business success. By implementing engagement strategies and consistently aligning your people with your business goals, you set a foundation for long-term profitability.
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