Contemporary

Issues in HR

Engaged employees may often

feel better about themselves and
about their work, but are there any
known organizational benefits to
Assignment
having an engaged workforce?
(Beardwell and Thompson,
2014:403).

2222162_MGT 5210_HRM 1

1 Introduction
The success of an organization mainly depends on performance of its employees.
This essay discusses the role of employee engagement towards the
success/failure of an organisation and how it can be a positive or negative thing
for employees. It begins with the understanding of employee engagement and
its role in work field. Then effects of employee engagement, both positive and
negative, have been discussed. Next, an attempt is made to understand its effect
on organization; how an organization can benefit from employee engagement
and what does the evidence suggest. And finally, results of different studies has
been analysed to see if engaged workforce is really beneficial for an
organization.

2 Employee Engagement
Employee Engagement has been discussed for more than 20 years but its
significance to HRM
has only been acknowledge now (Truss et al, 2013).
Whenever, factors effecting the performance of an organization are discussed,
employee engagement plays important part in it. So, before discussing its

effects, we need to understand what employee engagement means. There

is no fixed definition of employee engagement. It has been defined
differently but main idea is same. Scarlet surveys have defined it as an
individuals degree of positive or negative emotional attachment to his
job, colleagues and organization which profoundly influences his
willingness to learn and perform at work. It can be said that employee
engagement is about employees involvement in their work which pushes
them to learn more in the organization. When considering employee
engagement, it is not only employees emotionally engagement to the
organization, it also involves cognitive and physical engagement (CIPD,
2006). Cognitive engagement means focusing while working i.e. they are
fully focused on what they are doing and are not distracted while working.
Whereas, physical engagement means putting in extra efforts to achieve
organizational goals. So, it can be said that employee engagement means
employees complete and honest involvement while working.

3 Effects of Employee Engagement

There are many factors which impacts on the organizational performance, profits
and goal achievements whereas, employee engagement is the most powerful
factor which can drastically change the shape of the organisation. Employee
Engagement does not only affect the organization but it also have a huge impact
on employees. Some of the effects on employees and organizations are
described below.

3.1 Effects on Employees

3.1.1 Personal Satisfaction
Engaged employees feel happy about themselves and their work. It brings
personal satisfaction in them. They become connected to the organization and
feel like its their responsibility to work towards organisational success.
1

2222162_MGT 5210_HRM 1
Employees who are not fully engaged can also be happy but engaged employees
are more likely to be happy and satisfied. Employee engagement fulfils five basic
human needs: meaning, growth, connection, impact and autonomy which results
in satisfaction for employees (Charles Rogel, 2015). These needs can only be
satisfied if employees are fully focused and think that they are making an impact
towards the organisational success.

3.1.2 Respected
In engaged employee workforce, employees are appreciated and are motivated
to make a difference. They give their opinions openly and their opinions are
heard. Because of this appreciation and approval, they feel valued and
respected. This sense of being respected, keep them motivated and passionate
about their work.

3.1.3 Safety
Engaged employees are more connected at work and there are less chances for
them to experience accidents at work. According to Robert J. Vance, engaged
employees at MolsonCoors are five times less likely to have an accident than
non-engaged employees (1976). This is because of the reason that they are
focused and mentally present while working. This minimises the chances of
accidents and thus making it safer for the employees.

3.1.4 Better health

According to Tom Rath & Jim Harter (2010), if the employees are more engaged,
they will be healthier. They conducted a test in which, health of 168 employees
were monitored. Engaged employees were less stressed and showed
improvement in their blood pressure and cholesterol level whereas, disengaged
employees were twice depressed than engaged employees. This is because,
engaged employees enjoy doing their job and it does not become a burden on
them. So, they do not feel stressed whereas, disengaged employees do not enjoy
doing their job and take it as a burden which result in increase of blood pressure
and cholesterol level. This shows that employee engagement improves the
health of the employees.

3.2 Effects on Organisation

There are so many studies showing the positive effects of employee engagement
on organizational success. But going into details, we need to look into factors
which brings success in an organisation. According to Harvard business review,
some of the major factors which bring success to an organisation are its
customer service, effective communication, employee engagement and more as
you can see in the figure 1. This figure shows how many people think which
factor is most likely to bring success to an organisation. 80% of the people think
customer service is the most important thing and percentage of the people
thinking that employee engagement is the most important thing is 71%.

2222162_MGT 5210_HRM 1
Now, lets see the effects
engagement
on

of
organisation.

employee

Figure 1-Factors most likely to bring success (Harvard

Business Review, 2013)

3.2.1 Creativity and

innovation
Employee
Engagement
bring
creativity
and
innovation in the company.
Engaged employees feel
more
motivated
and
passionate about their job.
They
feel as a part of the
organization
and
work
efficiently to bring new
services and product in the company. According to
Amabile
(1998), one of the three key component of creativity is motivation. As,
employees are more engaged, they will be more motivated, hence increasing
creativity and innovation in the company. About 59% of the engaged employees
says that they have their most creative ideas while working (Gallup, 2007).
CIPD (2010) analysed companies innovative behaviour and found that about a
quarter of the respondent have
never involved in innovative work
behaviour
whereas,
38%
had
innovative ideas few times a year. As
you can see in the figure 2, about
15% of the employees
show innovative work on weekly or
daily basis. Their data
showed that as the employee
engagement
increases, employees become more
enthusiastic
to
find new instruments, methods and
techniques
to implement in the company hence
increasing innovation in the company.

3.2.2 Productivity
Productivity of the company depends
on
the
performance of the employees in
the
company.
As
employees
become
more
Figure 2: Innovative work behaviour (CIPD, 2010)
engaged,
their
performance
increases because they become willing to go an extra mile to achieve
organizational goals. They become more involved which result in less
absenteeism and increase in productivity of the company. According to Gallup
study (2006) for more than 23 thousand business units, companies with highest
employee engagement showed 18% higher performance than those who showed
lowest engaged scores. Whereas, a report from one of fortune 100
manufacturing companies showed that those companies with poor engagement
have higher quality errors (Bruce Rayton, 2012). As, employees become more
engaged, their attention to the company increases and they become more
productive.

3.2.3 Retention
Employees who are engaged to the company tends to stay in the organization
and that helps to retain the talent in the company. This decreases the turnover of
3

2222162_MGT 5210_HRM 1
the company and attracts the new talent to the company. Studies of CLC reports
show that companies with high employee engagement can reduce the staff
turnover by 87%, whereas, disengaged employees are 4 time more likely to
leave an organization than an average employee (CLC, 2008). This way company
has to spend more time and resources to train new recruiters. So, if employees
will be engaged, it will save money and resource of the company. According to
Hay, companies which have engaged workforce show 40% lower turnover rate
than companies having disengaged workforce.

3.2.4 Profitability
Profitability of a company can be increased by lowering cost or making system
more efficient and increasing the productivity. As, employees will be more
engaged, they will become more efficient and productive hence increasing the
profitability of the company. According to Wyatt Watson (2008/09), rate of
revenue per person is 26% higher for engaged employees. That shows that
productivity is directly related to the employee engagement. Companies failing
to have engaged employee are losing money. In UK retail sector only, companies
are losing 628 million per year because they are unable to inspire their
employees (Breadwell and Thompson, 2014). Studies also show that by investing
10% more on staff management, nearly 49 billion growth in profit can be
achieved in UK business sector (Breadwell and Thompson, 2014). Similarly, due
to disengagement, USA is losing about $300 billion which is referred as
Engagement gap (Alan M. Saks, 2006).

3.2.5 Customer satisfaction

Customer satisfaction is one of the most important thing for the success of an
organisation. Those companies with highest customer satisfaction works with the
motive that The Customer is always right. To achieve the highest customer
satisfaction, engaged workforce is required as they have positive attitudes while
working. When they interact with the customer, their positive attitude result in
higher customer satisfaction. All the customers observed this discretion while
interacting with the employees whereas, non-customers felt this by observing
the consistency and quality of the products (Gallup, 2010). Studies on more than
23000 showed that customer advocacy for the companies in the top quartile of
employee engagement is 12% higher than those in the bottom quartile (Gallup,
2006). Even, employee also have the same mind-set that customer satisfaction
and employee engagement go hand in hand. In 2007, 78% of Engaged
employees in UK public sector believed that they could make a difference on
customer service while the number of disengaged employees who were feeling
the same way were 29% (Bruce Rayton, 2012). So, engaged employees
increases the customer satisfaction, hence, improving the performance of the
organization.

3.2.6 Employee Satisfaction

The level of satisfaction increases as the employee engagement increases. When
employee becomes more engaged, they become more loyal to the organization
and work hard for achieving organizational goals. These satisfied employees
thinks very highly of the organisation and talks positive about the organisation to
4

2222162_MGT 5210_HRM 1
their friends and family, which improves the image of the organisation. These
satisfied employees do their job more effectively and becomes an asset for the
organisation.

4 Results suggest
The main idea of all these studies are same. Employee engagement is certainly a
positive thing for an organization. It bring happiness and satisfaction for the
employees at the same time, increase the performance of the company.
Employee engagement can result in commitment and involvement of the
employees towards their job and create a motivated workforce-which can
achieve organizational goals by working together. Employees remain focused,
determined and motivated which result in good performance for the
organisation. So, if an organization wants to improve its performance,
profitability and customer services, they must have to increase their employee
engagement. Employee engagement depends on four major condition of the
company; organizational performance, organizational culture, people focused
policies and meaningful metrics (Siddhanta and Roy, 2010). These things have
major impact towards the degree of engagement in an organization.
Organizational performance increase the level of satisfaction, accomplishment,
sense of belonging and trust. Whereas, organizational culture makes employees
more responsible as, it empowers employee towards decision making process.
Similarly reinforcement of policies and meaningful metrics results in increased
employee engagement. These policies may include appraisal on performance,
training and career development, communication, health and safety etc.
(Breadwell and Thompson, 2014).
Studies also shows that there are some downside to employee engagement. It
cannot always be a positive thing for the employees. Characteristics of a job can
either be categorized as job resource or job demand. Those components of the
job which results in motivation, self-development and personal growth are the
job resource components whereas, job demand characteristics results in burnout,
exhaustion, stress and strain (Demerouti et al., 2001). Every employee has a
limited amount of energy and resources. So, to remain engaged for a long period
of time can become difficult. Engaged employees may invest all their energy in
their work life and may left with little to none for their personal life. This will
interfere with their personal life (Halbesleben, Harvey and Bolino, 2009).
Percentage of actively engaged employees across 18 countries is 21% only
(Breadwell and Thompson, 2014) and percentage of partially engaged employees
is 41%. To increase this number and to make it enduring, continuous
reinforcement of employee focused policies is required. As suggested by john
Purcell (2010) that employee engagement is long lasting and more important
than other initiative like quality improvement etc.
All these studies show that the outcome of employee engagement for all the
types of industry is same (increase in performance, profitability etc.) whereas,
every company has to opt. different strategies to implement employee
engagement as every company has its own approach and definition (MacLeod
and Clarke, 2009). According to CIPD (2010), there is not so much difference in
the strategies of public and private sectors but it will vary from one industry to

2222162_MGT 5210_HRM 1
other. But, they have observed that organisation in public sector are more likely
to collaborate and share with the expansion of employee engagement.

5 Conclusion:
After analysing the evidences, it can be concluded that, employee engagement is
positive thing for both employees and organization. It bring personal satisfaction,
makes them more responsible and improves their health. Engaged employees
demonstrate three general attributes: (1) they always say positive things about
the organization to their family, friends and customers. (2) They are connected
and loyal to the organization, so they do not tend to leave the organization. (3)
They are willing to go an extra mile to improve the performance of the
organization (Siddhanta and Roy, 2010). Employee engagement may interfere
with the personal life of the employees, but overall, employees feel satisfied and
valued. It has become essential for organizational success (MacLeod and Clarke,
2009, p33). It increases the performance, profitability and customer satisfaction
and brings innovation and creativity in an organisation. It is one of the strongest
component which can move organisation towards its success.

5.1 References
1. Alan M. Saks, (2006),"Antecedents and consequences of employee
engagement", Journal of Managerial Psychology, Vol. 21 Iss 7 pp. 600
619
2. Breadwell, J. and Thompson, A. 2014. Human Resource Management A
Contemporary Approach. 7th edition. Harlow, England: Pearson. pp 395
3. CIPD. (2006). Reflections on employee engagement. London: Chartered
Institute of Personnel and Development
4. CIPS .(2010). Creating an engaged workforce. London: Chartered
Institute of Personnel and Development
5. Demerouti, E., Bakker, A.B., Nachreiner, F. & Schaufeli, W.B. (2001). Job
demands resources model of burnout. Journal of Applied Psychology,
86(3), pp. 499-512.SCARLETT
6. eXplorance Inc. 2013. 6 WAYS YOU CAN BENEFIT FROM EMPLOYEE
ENGAGEMENT [online]. [Accessed: 23 rd Nov 2015]. Available from:
6

2222162_MGT 5210_HRM 1

http://www.explorance.com/6-ways-you-can-benefit-from-employeeengagement-2/
7. Gallup (2006). Engagement predicts earnings per share. Washington :
Gallup Press
8. Harvard Business review analytical service. 2013. The Impact of
Employee Engagement on Performance, Harvard Business School
Publishing
9. Harter, J., Schmidt, F., Asplund, J., Killham, E. and Agrawal, S. (2010).
Causal Impact of Employee Work Perceptions on the Bottom Line of
Organisations, Perspectives on Psychological Science 5(4): 378-389.
10. Halbesleben, J.R.B., Harvey, J. & Bolino, M. (2009). Too engaged? A
conservation of resources view of the relationship between work
engagement and work interference with family. Journal of Applied
Psychology, 94(6), 1452-1465.
11. MacLeod, D. Clarke N. (2009). Engaging for Success: Enhancing
performance through employee engagement. London: BIS
12. Purcell, J. 2010. Building employee engagement. Acas policy
discussion paper.
13. Rayton, B. 2012. The Evidence: Employee Engagement Task Force
Nailing the evidence workgroup. University of Bath School of
Management
14. Robert J. Vance, 1976, Employee Engagement and Commitment. 2 nd
edition. New York: John Wiley & Sons
15. Rogel, C. 2015. 5 Personal Benefits of Employee Engagement
[online].
[Accessed
23rd
Nov
2015].
Available
from:
https://www.decision-wise.com/5-personal-benefits-employeeengagement/
16. Rath, T. & Harter, J. 2010. Wellbeing: The Five Essential Elements.
Washington : Gallup Press
17. SURVEYS INTERNATIONAL. 2011. WHAT IS EMPLOYEE ENGAGEMENT?
[Online]. [Accessed: 23rd Nov 2015]. Available from:
http://www.scarlettsurveys.com/papers-and-studies/white-papers/whatis-employee-engagement
18. Siddhanta, A. and Roy, D. 2010. Employee engagement-Engaging
the 21st century workforce. ISSN 2229 3795, pp. 170-189
19. Truss et al (2013) Employee engagement, organisational
performance and individual well-being: exploring the evidence,
developing the theory. The International Journal of Human Resource
Management, 24:14, 2657-266
20. Teresa Amabile, 1998, How to kill creativity. [Online]. [Accessed: 23 rd
Nov 2015]. Available from: https://hbr.org/1998/09/how-to-kill-creativity