Employee Engagement Strongly Related to Corporate Performance

In its annual survey of employees in client companies around the world, Hewitt Associates found the largest drop in employee engagement scores it has ever recorded. The analysis reports a clear link between employee engagement levels and financial performance. Organizations where 65% or more of employees are engaged had total shareholder returns 19% higher than the average total shareholder returns. Companies with less than 40% of employees engaged had total shareholder returns that were 44% lower than the average. The study is based on 900 organizations worldwide. Engagement looks at employee morale, confidence in the organization, career opportunities, rewards and recognition programs, and trust in leadership. The data parallel findings on employee engagement and shareholder returns from the Great Place to Work Institute, which creates the Fortune "100 Best Companies to Work For" lists. While part of the causality is that more successful companies have more engaged employees (it's easier to be engaged in a company doing well than one facing financial problems), the findings fit in with many other studies showing that among predictors of corporate success, engagement is the most powerful but is one of the least seriously attended to by leaders in conventional companies. Fortunately, the employee ownership community takes these issues much more seriously.