How an Increase in Employee Engagement Can Lead to an Increase in Sales

Employee engagement as a concept has become extremely popular over the last decade, particularly in the commercial business world. Research points to the positive outcomes organisations can benefit from by making engagement strategies a priority. It is still difficult to reach an exact definition of the term ’employee engagement’, but the Institute of Employment Studies describes it as:

“A positive attitude held by the employee towards the organisation and its values.”

It goes on to outline the phenomenon as something that means a member of staff will be aware of the ‘business context’, and works as part of a team with other employees to boost the company’s performance in the job they do.

A business team with positive attitude

Analysis from Aon Hewitt, the research firm specialising in Human Resources, continues to suggest that the positive benefits go far beyond simply creating a happy workforce. In fact, the resulting cohesive team and increased employee effort can significantly impact upon company-wide growth and Return on Investment (ROI).

2014 global employee engagement trends infographic
Via AON Hewitt

The firm goes further to point out the importance of developing a more detailed understanding of engagement, including the key aspects or ‘engagement drivers’ organisations should focus on as part of continued improvement, as well as action planning that is effective and meaningful. More information can be found here but key findings to date are outlined below.

Key finding

Using information collected between 2008 and 2012 from 94 global organisations (representing almost nine million employees), Aon Hewitt investigated the correlation between employee engagement and financial performance.

The results from this employee satisfaction survey showed a significant positive relationship between improved employee engagement and a subsequent growth in sales. The study suggested that every 0.6 % sales increase could be attributed to an incremental percentage point of engaged employees. For example, a $5 billion company was able to increase operating income by $20 million per 1 percent rise in engagement.

In addition, the research also led to the discovery of an association between Total Shareholder Return (TSR) and the level of employee engagement. They found that TSR was 50% higher than average for organisations with the most engaged employees (those in the top 25% and achieving at least 72% engagement).

What is more, to reaffirm the point, it was also found that firms with the least engaged employees (in the bottom 25% with a maximum of 46% engagement) experienced TSR at 50% below the average.

Teamworking and collaborating

These important findings are not a one off. They are reflected in the work of a number of other respected global analyst firms. As such, leaders should not deny the significance of engaging their employees and the importance of creating a work environment and company culture that encourages it.

In order to achieve this organisations must start by communicating with employees, outlining their roles and responsibilities more clearly and, importantly, offering recognition when they do their job well. This reinforces organisational values, but also helps them to see their own value within the company, giving them a greater sense of purpose and meaning in their role.