I realized early on that if you create a company where employees enjoy coming to work as much as going home, and where there’s a high level of engagement, mutual trust and respect, no one can beat you.

These wise words come from Paul Silvis, co-founder of Restek, one of our 2007 Top Small Workplace winners.

The driving philosophy behind Winning Workplaces has always been that investing wisely to build a healthy, collaborative work culture not only benefits individual employees, it just makes good business sense. This is why, over the past seven years, we have profiled and honored hundreds of inspiring business leaders from around the nation.

It is nice to know that that mainstream media is picking up on this trend. This year, over a two-month span, TIME magazine has run a couple of articles about how executives are making the connection that employee engagement is key to business success. Even in these lean times, employers are investing significant resources in order to create the kind of work cultures where employees are routinely inspired to “go the extra mile.”

They are investing these dollars because of the mounting evidence that it produces real results. One article in TIME, “The Rage to Engage,” quotes Alex Edmans, a finance professor at the University of Pennsylvania’s Wharton School: “People used to think HR was just a cost center and not a source of value creation.” In fact, in direct contrast to this mindset, Edmans’ study of the Fortune 100 Best Companies to Work For found that these firms’ stock price from 1998-2005 rose an average 14 percent per year as compared to 6 percent for the market overall.

So while employee engagement has been a hot topic in certain corporate circles and will, we believe, remain so, it is not a concept that is easily definable and articulated. This is due to the various ways we define employee engagement and the factors thought to drive it.

In 2006 the business membership and research organization The Conference Board provided a valuable service by publishing its seminal reportEmployee Engagement: A Review of Current research and Its Implications. Today it remains an important contribution worth revisiting.

From 2003 to 2005, 12 major studies on employee engagement had been published by top research firms such as Gallup, Towers Perrin, Blessing White, the Corporate Leadership Council and others.

The definition of employee engagement varied slightly in each study. Some definitions emphasized employees’ cognitive connection to their job or their company looking at, for example, satisfaction and commitment and their impact on how hard an employee is willing to work. Other studies focused on how “emotionally attached” employees feel toward their work, company, co-workers, etc. Still others accentuated behavioral outcomes regardless of causes, such as how committed the employees is to staying with his/her company.

The Conference Board came up with its own composite definition based on all this data. Employee engagement, they argue, is “a heightened emotional connection that an employee feels for his or her organization, that influences him or her to exert greater discretionary effort to his or her work.”

These various studies also identified up to 26 separate factors thought to drive employee engagement. At least a third (four) of the studies agreed on eight key drivers:

  1. Trust and integrity
  2. Nature of the job
  3. Line of sight between employee performance and company performance
  4. Career growth opportunities
  5. Pride about the company
  6. Camaraderie with coworkers/team members
  7. Employee development
  8. Relationship with one’s manager

Across all the studies, there was general agreement that one of the strongest drivers of employee engagement involved the direct relationship with one’s manager. One study stated that “outstanding loyalty (engagement) is the direct result of words and deeds – the decisions and practices of committed managers.”

So the evidence is out there and mounting that employee engagement is strongly correlated to performance outcomes from retention, productivity, customer service and customer loyalty – and even increased profit margins and revenue growth rates.
While differences varied from study to study, highly engaged employees were shown to outperform their disengaged counterparts by between 20 and close to 30 percent. This is something we’ve seen in our own research, our evaluation of the exemplary practices of the strongest Top Small Workplaces applicants – typified by Silvis’ quote above.

We can argue about the elements that make engagement of employees by leadership most effective and beneficial for both stakeholders. We can even quibble over whether “employee engagement” is the best term, as employee experience management consultant McDaniel Partners did in a recent post on their Employee Factor blog.

What we should agree to not disagree about, though, is that it must be integrated into the business strategy. In other words, in today’s lean times, as the factors that prevent U.S. businesses from turning and maintaining a profit become more acute, it will be the firms that achieve the highest level of engagement that will have the greatest potential for emerging on the other side – battle scarred, perhaps, but with an intact, strong workforce in tow.

Restek’s Paul Silvis will join SmartPak CEO Paal Gisholt in a webinar on fostering trust in the workplace on July 29. You won’t want to miss it.