5 factors of employee engagement to increase team performance

factors of employee engagement
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Engaged employees make the difference between a company that’s just getting along and one that’s built to excel. So how can we go beyond office pizza parties to get to the emotional core of our employees? And what are the most important factors of employee engagement?

Do a quick search for employee engagement best practices, and you’ll find listicle upon listicle of enthusiastic yet vague instructions. That’s precisely why we’ve taken it upon ourselves to parse the information-dense studies and come to you with five critical factors of employee engagement, complete with real-life examples.

Let’s get started!

What is employee engagement?

Well, first, let’s dispel a common misconception: engagement is not the same thing as work satisfaction.

According to Forbes, while employee happiness and satisfaction can be essential aspects of a productive workplace, boosting employee engagement has the potential to trump them both.

Here’s the definition: “Employee engagement is the emotional commitment the employee has to the organization and its goals.”

While employee happiness could inspire your team to whistle a jaunty tune and job satisfaction might cut down on tardiness, the real value of employee engagement is that it will increase each employee’s drive to succeed in their role

This drive leads team members to put forth more discretionary effort—in other words, they’ll go out of their way to do what it takes to succeed in the role without being asked. 

Looking for proof? Let’s get to some statistics.

Why is employee engagement so critical?

Here’s what the latest research has to say:

  • A study by Korn Ferry (formerly Hay Group) used an engaged performance diagnostic survey to compare their employees’ level of engagement with how much revenue they generated. Their five most engaged offices generated an average of $72,000 more revenue per consultant than those in the five least engaged offices. 

  • According to Towers Perrin research, companies with engaged employees earn 6% higher net profit margins than their disengaged counterparts.

  • The Engagement Institute found that disengaged employees can cost companies up to $550 billion per year.

  • Gallup reports that a highly engaged workforce generates 21% greater profitability.

Ultimately, disengaged employees might clock in and clock out, but they won’t be proactive about pushing your organization forward. 

What are the primary factors of employee engagement? 

So how can you find committed employees and increase your current employees’ drive to succeed? Thankfully, there’s a wide breadth of research based on this exact question.

factors of employee engagement

Factor 1: hire mindfully

Let’s start at the beginning of the employee journey: recruitment. 

Not to alarm you, but a bad hire can cost an average of $15,0000, and over half of employees will quit a job within six months if they realize the company is not a good fit.

Increasingly, businesses screen job candidates using realistic work scenarios so that recruiters can better understand how the candidates will perform and for the candidate to get a better idea of the job. Successfully hiring people by looking beyond their technical skills and background in this way ensures a talent pipeline of engaged and involved employees.

Of course, before you can do that, you have to source a pool of qualified applicants.

So how can you identify employees who will excel? The first step is to assess the whole candidate. As director of talent strategy Gayle Norton says, “People can have all the skills and knowledge in the world, but if they aren’t motivated to do the job or aren’t the right personality fit for the work, they won’t last.”

That’s where pre-employment skills assessments come in. Roughly 82% of companies are now using pre-employment skills tests to pick the best-fit candidates. Many companies now use these tests at the top of the funnel before reviewing CVs and cover letters. Companies can tailor these assessments to any role’s specific needs in a mix of soft and hard skills.

While hard skills tests will ensure that a programmer knows Python or that an engineer can do the math, soft skills tests will provide insight into a wide range of candidate aptitude for a role. For example, there are tests that evaluate cognitive ability, situational judgment, programming skills, software skills, and language proficiency.

And, since employees who align with company values are 13% more productive, consider evaluating each candidate’s personality, culture fit, and values to determine whether they will be a culture add.

At the end of the day, no amount of restructuring, perks, and training will turn around a worker who simply isn’t the best fit for the role or who won’t feel aligned with the company. 

Factor 2: define your company culture

Building a company culture requires much more effort than adding fun office perks. As much as your employees may enjoy a good ping pong table in the breakroom, it won’t bring them any closer to the organization’s central mission.

Even after you’ve hired candidates that are aligned with your culture, they must understand what that culture is. Otherwise, you’ve got directionless employees on your hands, taking care of daily tasks with neither an awareness of the greater mission nor the motivation to fulfill it.

According to the Ivey Business Journal’s 10 C’s of employee engagement (don’t worry, we won’t slog through all ten!), clarity is essential to an informed and motivated workforce.  As the authors say, “success in life and organizations is, to a great extent, determined by how clear individuals are about their goals and what they want to achieve.” 

So, how can you make that happen?

The first step is to decide how you want employees, customers, and potential customers to perceive your brand. Then, develop a list of values that align with that aspiration and live by them. 

For example, when General Dynamics wanted to re-engage its team after restructuring led to a loss of nearly a third of its workforce, the company implemented a program to redefine its standards and values based on employee feedback. 

After a series of diagnostic surveys and targeted initiatives, GD carried out several changes, like listing employee successes in their company newsletter. After redefining their values based on employee input, the success stories highlighted workers exceeding company objectives.

In this example, not only did the company give its employees ownership over their mission and culture (thereby educating them on the organization’s vision), they also rewarded those who actively committed to the culture.

Factor 3: get employees involved

Alison M. Konrad, Professor at the Ivey Business School in London, Ontario, is all about what she calls high-involvement work practices, which come together to build employee engagement. She wrote an extensive article on the subject, but it all comes down to four principles: power, information, knowledge, and rewards. 

Here’s what that looks like: 

  • Giving employees the power to impact their organization could mean implementing forums or suggestion systems that management then acts upon.

  • Disseminating information means providing employees with relevant and specific data to both their role (no matter how small) and the trajectory of the company as a whole.

  • Improving knowledge involves implementing the appropriate training and development for employees to succeed. 

  • Giving rewards requires timely, pointed incentives to encourage employee contributions.

Now, how would these four points combine to create an engaged workplace?

Chrysler plants did it when implementing “modern operating agreements” in their factories. These agreements changed the organization’s internal workings by reducing job classifications, specifying pay to skills within each classification, establishing consultation committees, and reorganizing work teams. 

Chrysler followed the four principles in Konrad’s article, and, in the end, 76% of their employees agreed that they preferred the new system over their old one.

And nobody is better suited to empower and encourage an employee than their direct manager, which brings us to the fourth of the five factors of employee engagement.

Factor 4: cultivate inspirational leadership

You might’ve heard it said that people leave managers, not companies. Well, it turns out that this saying is popular because it’s true!

Going back to those 10 C’s we mentioned before, the very first of the Cs stands for connect: “Leaders must show that they value employees.” No matter how much a company works to communicate its culture and vision or to foster high involvement, an employee isn’t going to perform if they’ve got a bad manager.

So how can you train good leaders? First of all, make sure you’re hiring the right people for leadership positions and then increase dialogue and transparency. 

For example, General Dynamics implemented another initiative, changing performance management from a once-yearly conversation to multiple discussions several times a year. 

The discussions covered varied topics, rather than a rigid performance assessment, including career trajectory, potential problems, wellbeing, and more. After this change, employees reported better work relationships, higher motivation, and a clearer vision of the company as a whole.

Inspiring leadership usually comes down to a time investment on the part of company leaders.

Like the CEO of WestJet Airlines, Clive Beddoe, who took extra time explaining strategy and initiatives to his employees even though he was late to give a speech. By using his time to listen, answer questions, and connect with his team, he provided a strong example of inspirational leadership.

Still, leaders can’t connect with anybody unless they know how to communicate.

Factor 5: foster clear communication

Guess what folks, it’s another of those 10 C’s! Two, actually: convey and congratulate. It all comes down to is crystal clear communication.

‘Convey’ means relaying expectations and feedback to employees that apply to what they’ve been up to, while ‘congratulate’ means offering as much specific, positive feedback as you would criticism.

In their study, the Hay Group got right to the point when they said, “feedback is key to giving employees a sense of where they’re going, but many organizations are remarkably bad at giving it.” Ouch.

When managers get better at the ‘convey’ aspect of communication, they learn to break down processes into digestible steps, define actionable goals, practice active listening, and pay attention to their employees’ progress. 

Once that’s figured out, feedback should go both ways: immediate reactions to poor performance as well as speedy praise for a job well done.

How does this look in action? Taking a step outside of the business world, UCLA basketball coach John Wooden was known for keeping detailed notes on each of his players, from minor improvements to game-winning achievements. He then sat down with his players and offered consistent, detailed feedback, which showed he paid attention to what they were doing and gave them a needed sense of direction.

So, it comes as no surprise that 60% of employees claim they’re more productive when they understand more about what leaders are thinking, where the company is going, and what they can do to impact it.

Of course, all of this goes hand in hand with our last factor on inspirational leadership and bringing in candidates who know how to communicate. None of these factors work in a vacuum! 

Increase employee engagement with these 5 factors

There’s no quick fix for building your organization’s employee engagement. It takes time to build high-performing teams, and everyone has to buy in. The most successful companies in this article were ready to take in input from all across their workforce and implement multiple initiatives.

By implementing initiatives based on these five factors of employee engagement, you’ll be well on your way to having happier, more driven employees.

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