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Financial Impact of Employee Engagement

Employee engagement done well provides organizations with important advantages in an age where an organization’s talent makes all the difference.

Employee engagement has generated enormous interest among practitioners and academicians over the decades. Countless literature is available to explain the emergence, management, and consequences of employee engagement.

The birth and development of engagement theory started as an exploration into the psychological meaningfulness of employees’ work, and the relationship between the organization and its employees.

Why Employee Engagement Matter?

According to Gallup’s State of The Global Workplace report (2017), 85% of employees worldwide are not engaged or are actively disengaged in their job. Only 15% of employees worldwide are engaged at work. This represents a major barrier to productivity for organizations everywhere.

Gallup has completed nine meta-analyses of the relationship between employee engagement and performance over the past two decades. The most recent study included more than 82,000 teams in 230 organizations -- and 1.8 million employees -- across 49 industries and in 73 different countries.

Improving employee engagement is not simply about improving productivity — although organizations with a high level of engagement do report 22% higher productivity, according to Gallup State of The Global Workplace report (2017).

Engagement promotes:

Innovation: Engaged employees think about ways to enhance the work they do, rather than just performing the bare minimum required.

Higher Employee Retention Rates: Employee turnover can be a big business cost. According to the Society for Human Resource Management, the average cost of hiring a new employee is estimated to be $4,200 (Kwon & Park,2019).

Higher Customer Loyalty: Employees who are happy and fulfilled in their work provide superior customer service.

Safer Work Environment: Another benefit of employee engagement is that the workplace will become a safer place to work and visit. The statistics tell us that disengaged workers have 49 percent more accidents and 60 percent more errors and defects than their engaged colleagues.


Kwon, K., & Park, J. (2019). The life cycle of employee engagement theory in HRD research. Advances in Developing Human Resources, 21(3), 352-370.

Gallup’s State of The Global Workplace report (2017). Retrieved from:


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