The financial rewards of an engaged workforce can be significant for employers, and yet the correlation between higher levels of employee engagement and a company’s bottom line is not necessarily well-understood by senior executives.

According to a new study from Aon Hewitt, a 5% increase in employee engagement can be linked to a 3% increase in revenue growth in the subsequent year. And while that can be good news for employers, is engagement alone enough to drive sustainable performance?

Also see: 12 ways to increase employee engagement

Aon Hewitt’s Trends in Global Employee Engagement study, released today, shows global employee engagement levels reaching only 62% in 2014, up just 1% from the year before. Despite the very modest increase in engagement, the study further shows that employees’ net satisfaction with their work experience plummeted 28% in 2014.

“There has been significant emphasis on increasing engagement over the last several years, but many organizations are overly focused on diagnostics and not on the holistic solutions that address the specific challenges they are facing,” says Ken Oehler, Aon Hewitt’s global engagement practice leader. “The best way to rapidly address low engagement levels is to ‘fix the basics’ in areas like safety or the systems, processes and resources needed to get work done. Beyond these areas, top organizations will create a culture of engagement by focusing on performance, growth and engaging leadership.”

There are many players involved in creating a culture of engagement, but company leaders are the ultimate owners. There are four groups in particular that are critical to engagement success – HR, people managers, senior leadership and, of course, the individual employee.

“Engaging leaders who engage others are not just a nice to have – they are the key ingredient to creating a culture of engagement that sustains business results in an ever-changing and complex global environment,” according to the report. “Companies in which business unit leaders actively intervene following the announcement of engagement results drive engagement and financial performance.”

Also see: The science behind employee engagement

Unfortunately, some of the new research pointed to some disturbing trends — while employee engagement is trending upward, enabling resources and programs are deteriorating. “In fact, we found that the first thing companies with really low engagement should do in order to drive big improvements is to ‘fix the basics’ that enable work to get done,” the report notes.

Other research from Aon Hewitt points to a strong relationship between how employees view their total rewards package and their overall engagement level, which could be key in getting employees back on track to higher engagement levels.

Good pay and benefits, recognition, and honest communication top employees’ lists of desired areas of improvement for employers, according to that research. In addition, employees desire improved career/development opportunities, greater flexibility and stronger leadership.

Also see: Why employee communications, engagement fail as companies grow

Among engaged employees, 60% said their total rewards overall (i.e., everything an employer provides to an employee, including pay, benefits and the work environment) are above or well above what other employers offer, while only 24% of those who are disengaged said so.

Additionally, of the engaged employees, just a little over half view their company’s career development/training programs as better than what other employers offer, while just 19% of disengaged employees would rate these programs as better competitively.

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access