Employee engagement has a powerful effect on productivity. Actively engaged employees tend to be happier, more connected to the company, and aligned with the mission of the company. As a result, they are more focused and driven, putting in extra time and effort to help the organization succeed.
The best way to model a productivity gain resulting from employee engagement is to approximate the increase as a percent value. Even a small percentage can result in a very large benefit for the company. For example, if an employee arrives 15 minutes early to structure their workday, you can determine what percentage of their time that is and assign a dollar value to that.
Employee engagement has a significant impact on talent retention. Highly engaged employees tend to be invested in their work. They aren’t showing up simply to get a paycheck, but because they care about the work they’re doing. That means staying a little later to finish a project or proactively seeking solutions when challenges arise. They are also less likely to leave the organization.
On the other hand, there is little that can incentivize employees to stay if they are not engaged. Replacing these employees is costly: According to Deloitte, the average cost to replace an employee is $7,000.
When quantifying talent retention as it relates to employee engagement, focus on cost savings. Cost savings come from the time spent writing a job description, posting and sourcing new applicants, screening, scheduling and conducting interviews, lost time waiting on acceptance, onboarding time of the new hire before they’re productive, etc. All of these can also be factored in when calculating the cost savings of retaining existing talent rather than hiring a new replacement.
Customer Lifetime Value
There is a direct correlation between how engaged an employee is and their willingness to go the extra mile for your customers. Case in point: Over 80% of HR professionals say employee engagement has a high or very high impact on customer service. A highly engaged customer service rep is more motivated to find a solution, follow up afterward, be positive, and more resilient in the face of frustration or criticism. Over time, employee engagement translates to higher levels of customer satisfaction, which in turn results in lower levels of customer churn or loss rate.
Emotionally committed employees enjoy being at work. They consistently arrive on time — maybe even early — and put in a full day’s work. They don’t call in sick on Friday afternoons or watch the clock obsessively as the workday comes to a close. The below calculation will help you model the cost savings that your company can hope to see through reduced absenteeism.