We’ve all heard the Gallup stat: 68.5% of employees are not engaged at work. That sounds bad. But is it? Does being engaged at work actually matter when it comes to performance?
A new study by Yale University’s Khwaja and Yang found that employee engagement does in fact make a difference when it comes to sales.
What engagement is
Employee engagement is considered a catch-all term that refers to an employee’s passion for and commitment to the job. In general, there are three main factors to engagement:
- Dedication: feeling enthusiastic and pride towards your work
- Vigor: feeling invested in your work and persisting during challenges
- Absorption: being engrossed in your work
Levels of engagement differ between employees (i.e., how engaged they feel at their jobs in general) as well as day-to-day within an employee.
(Gabriel & Bennett, 2015)
Khwaja and Yang measured customer-focused employee engagement using a survey with items such as, “Our customers will benefit from the changes the company is making,” and, “I know how my job contributes to the success of our business strategies.”
Why engagement leads to more sales
Khwaja and Yang looked at over 33,000 surveys completed by employees at a car rental company from 2010 to 2012.
Their results found a positive relationship between employee engagement and upselling. Higher engagement on customer-focused issues among customer-facing employees has a stronger impact on sales productivity compared to engagement based on non-customer issues.
The effect of high engagement among customer-facing employees was found to account for about 50% of the average value of upselling. That’s a lot!
The role of customer satisfaction
The researchers theorized that highly engaged employees are better at making their customers happy. Using the net promoter score (NPS) as a measure of customer satisfaction, Khwaja and Yang found that NPS was positively related to customer satisfaction.
In addition, the researchers found a positive relationship between NPS and customer loyalty: satisfied customers were not only more likely to buy again, the time between their purchases was shorter.
How to increase engagement
Although engagement has become a popular buzzword, there’s a surprising lack of evidence that engagement-improving initiatives actually work. But based on Industrial-Organizational Psychology theories, Professors Gabriel & Bennett offer some suggestions including:
- Feedback: Increasing the feedback employees receive about their work
- Flexibility: Allowing employees to have more control over when tasks are completed
- Recovery: Encouraging employees to take short breaks to recover their levels of engagement
- Selection: Hiring individuals that fit within the work environment and job role
Research suggests that employees who are more engaged on customer-focused issues are better at making their customers happy and these happy customers in turn are easier to upsell and are more likely to be loyal.
If you want to reap the benefits of higher employee engagement to increase your bottom line, you need to:
- Measure: Use a well-designed survey to assess your employees’ current levels of engagement. Remember that specificity matters – if you want to increase engagement on customer-focused issues, measure engagement on those specific issues.
- Develop: Invest in a theoretically sound engagement-improvement program and give it enough time to have an effect.
- Evaluate: Determine the success of your engagement-improvement efforts by measuring outcomes that actually matter to you (e.g., increased upselling, decreased churn).
And the easiest way to ensure you have engaged employees? Making sure you’re hiring people who are a good fit for the role at your company in the first place.
How do you know if your employees are engaged? Let me know in the comments or tweet @recruit_smarter.
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