Employee Engagement Continues to Fall, along with Shareholder Return

Why should you care about employee engagement? Because it directly impacts shareholder return, EPS, financial improvement and competitive advantage.

Hewitt research found a 63% differential in total shareholder return for companies with high employee engagement vs those with low engagement:

“Organizations with high levels of engagement (where 65 percent or more of employees are engaged) outperformed the total stock market index even in volatile economic conditions. During 2009, total shareholder return for these companies was 19 percent higher than the average total shareholder return. Conversely, companies with low engagement (where less than 40 percent of employees are engaged) had a total shareholder return that was 44 percent lower than the average.”

Gallup research found companies in the top 25% for employee engagement have (as compared to bottom 25%):
• 37% less absenteeism
• 25% less employee turnover in high-turnover organizations (such as retail)
• 49% less turnover in low-turnover organizations
• 27% less shrinkage
• 49% fewer safety incidents
• 60% fewer product defects
• 12% higher customer metrics
• 18% higher productivity
• 16% higher profitability

And that’s just the start. Gallup also found :
• EPS exceeds competition by 28% (top 25% for employee engagement)
• EPS exceeds competition by 72% (top 10%)
• Growth trajectory (for financial improvement): 2.5 times the competition (top 25%)
• Growth trajectory: 3.9 times the competition (top 10%)

What did the level of employee engagement mean to companies during the recession?
• Those in the top 25% that were trailing competition before the recession surpassed the competition in 2008.
• Those in the top 10% were already ahead of their competition in 2007, but widened the gap further in 2008.
• Those in the bottom 25% for engagement in 2007, however, followed the same downward trend as their competition during the recession.

Still think employee engagement doesn’t matter?

Strategic recognition is one of the most powerful methods for improving employee engagement. Be sure to check out our new book "Winning with a Culture of Recognition," available on Amazon now!