Employee Engagement Impact on Revenue Growth

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Highly engaged employees lead to positive outcomes on key performance indicators such as: increased retention, customer loyalty, safety, productivity and overall revenue growth within an organization. Successful, best-practice companies are continuously measuring how engagement levels affect their bottom line because employee engagement is a leading indicator of business growth.

Higher Employee Engagement = Higher Revenue

According to an analysis by Aon Hewitt in their report, “2013 Trends in Global Employee Engagement,” for every 1% increase in employee engagement, you can expect to see an additional 0.6% growth in sales for an organization.

Let’s apply this formula* and look at 3 different scenarios:

Large-Size Company:
A $5 billion company with a gross margin of 55% and 15% operating margin,

  • A 1% engagement improvement would be worth $20 million in operating income.
  • A 5% engagement improvement would be worth $102 million in operating income.
  • A 10% engagement improvement would be worth $204 million in operating income.

 
Medium-Size Company:
A $500 million company with a gross margin of 55% and 15% operating margin,

  • A 1% engagement improvement would be worth $ 2 million in operating income.
  • A 5% engagement improvement would be worth $ 10.2 million in operating income.
  • A 10% engagement improvement would be worth $ 20.4 million in operating income.

 
Small-Size Company:
A $5 million company with a gross margin of 55% and 15% operating margin,

  • A 1% engagement improvement would be worth $ 20,000 in operating income.
  • A 5% engagement improvement would be worth $102,000 in operating income.
  • A 10% engagement improvement would be worth $ 204,000 in operating income.

 

This type of revenue boost supports the long-standing belief that employees are your most valuable asset. Investing in initiatives, programs, software, or tools to boost employee engagement can show a very serious ROI.

“Managing and improving employee engagement is the key to achieving revenue growth and
profitability goals as we move further away from the economic crisis of 2008–2009” (Hewitt, 2013).

The Effects On Business When Employees Are Engaged

A statistic that you may have seen floating around by now from Gallup’s, “State of the American Workplace” report, is that only 30% of the U.S. workforce is engaged in their work. Gallup estimates that active DISENGAGEMENT costs the U.S. $450 billion to $550 billion per year. Another interesting find is companies that are in the top-quartile of high engagement levels are 21% more productive and have 22% higher profitability than those that are in the bottom-quartile.

Benefits of High Employee Engagement

How to Engage Your Employees

Kazoo works tirelessly to research and present ways to increase employee engagement for our readers. Here are two recent reads we hope you find helpful:

 
The best performing companies are the ones that have successful employee engagement strategies in place and who invest in their people. To see how Kazoo’s award-winning employee engagement software can result in a rapid employee engagement lift, take us for a free spin. Request a demo!

*These calculations are estimated based on the Aon Hewitt “Trends in Global Engagement” report.

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