Understanding the Basics: What Is Employee Engagement?

The term “employee engagement” is a popular HR topic, but what does it actually mean? In this article we’ll cover the essentials, including the relationship between employee engagement and employee experience, and how people leaders can measure engagement.

When we talk about engagement outside of the workplace, we’re usually referring to an enthusiastic and well-intentioned commitment. We feel engaged with our passions, our hobbies, and, significantly, with our friends, family, and partners. In the most fruitful and productive instances, that engagement is two-sided. Employee engagement is no different. 

Employees actively want to feel engaged at their workplace and in the wider organization. For your people to give their best, they need to believe that your company is aiming at the right goals—both from an economic standpoint and a social one—and that their individual function is essential in helping reach those same objectives. They need to believe their best work is both recognized and valued. 

In the shifting world of work, engaging your employees has garnered a new significance. In August 2021, our report “The Great Regeneration: Turning the Tide on Employee Resignations” found that 27% of employees had engagement scores that suggested they were at risk of attrition. With face-to-face interactions perpetually waxing and waning and the effects of the Great Resignation still being felt across a whole host of different industries, a renewed focus on employee engagement answers the problems raised by increasingly fragmented workplaces.

At Workday we believe prioritizing employee engagement is an opportunity for a more productive future. In this introduction to employee engagement, we unpack the differences between employee engagement and other concepts, including employee experience and employee satisfaction, outline the key business benefits, and explain how companies can develop their own roadmap for tracking and measuring employee sentiment.

What Is Employee Engagement in 2022?

Before endeavoring to improve employee engagement, your organization has to have a clear answer to the question, what is employee engagement? 

In short, employee engagement refers to the degree to which an employee feels connected to their work, their colleagues, and the wider business. Engagement doesn’t refer solely to any one aspect of an employee’s working life—it’s the full picture, from hiring practices, to the software they use to perform their work; or even the snack situation in the kitchen.

Our latest report found that 27% of employees had engagement scores that suggested they were at risk of attrition.

An engaged employee brings their full self to work, often performing well beyond their required duties and showing a high degree of commitment. That means they identify areas where they can use their skills effectively to grow, take pride in their working space, and evangelize the business to those outside it. When they make discretionary effort (i.e. acting beyond their workload), they do so not out of obligation, but out of a genuine desire to contribute more to the company. 

By contrast, a disengaged employee will rarely surpass the minimum required of them—and frequently dip below that. Beyond their own workload, they won’t seek out further means to contribute to the wider business and culture. Because they don’t see a future for themselves at the organization, they’re happy to maintain the status quo. Our “Employee Expectations Report 2021” showed that the employee engagement score for employees who remain with a business is 13% higher than the average score of departing employees. 

In most instances, a discussion of employee engagement takes a wide-angle view, assessing the average employee sentiment across the entire company. A more nuanced discussion of employee engagement necessarily includes a cross-sectional consideration, analyzing how different factors (such as seniority level, department, and team leader) affect employee engagement. From there, you can then begin to understand the drivers of employee engagement and identify where improvement is required.

What Is the Difference Between Employee Engagement and Employee Experience?

When discussing company employee engagement, we usually do so within the framework of overall employee experience. Where employee experience is often defined as the journey each employee goes on from onboarding to exit, employee engagement is a reflection of the quality of that journey. However, while a positive employee experience is fundamental to a higher average level of employee engagement, engagement requires its own consideration and solutions. 

Since employee engagement and employee experience have a degree of overlap, you may sometimes see them incorrectly being used interchangeably when discussing company culture, but the two are conceptually distinct. The similarity in naming can often lead to further confusion, hence the acronym for employee experience is EX and for employee engagement is EE. 

Employee engagement and employee experience are perhaps best understood under a wider umbrella—the employee value proposition. That proposition is a promise from the employer to the employee, one that covers the unique sum of benefits offered to employees in exchange for their committed engagement, extending beyond their workplace experience to cover external brand perceptions and the businesses’ ethical behavior.

This theoretical framework not only covers what employees feel, say, and do (and why), but further frames the relationships between these two stakeholders in terms of a partnership—a two-way commitment that can’t be reduced to working conditions and engagement outcomes. By thinking of the relationship between employers and employees in more complex terms, both employee engagement and employee experience benefit long term. 

What Is the Difference Between Employee Engagement and Employee Satisfaction?

The confusion raised by similar terminology continues when we attempt to define employee engagement and employee satisfaction. While employee engagement and employee satisfaction are frequently treated as distinct areas of focus, the two actually share a significant conceptual overlap—in fact, employee satisfaction is best understood as the emotional component of engagement.

Put simply, employee satisfaction refers to how happy an employee is with their overall working life. Since employee engagement is representative of the emotional commitment between an employee and their employer (even though it is often measured via observable behaviors), a satisfied employee will largely also be an engaged one.

While there are instances where an employee may be more satisfied than engaged—such as someone with strong workplace social connections, but who feels that their work is disconnected from the overall company strategy—satisfaction is generally a strong proxy measure for engagement. Like engagement, employee satisfaction is based on an employee’s relationship with the company as a whole, including factors like their workplace relationships, rewards package, opportunities for growth, and overall workload. 

The ideal scenario, unsurprisingly, is one where employees are both satisfied and engaged. A satisfied employee may be content with their light workload and company benefits, but an employee who is highly engaged and satisfied will be a full-fledged company advocate, with a strong work ethic and even stronger internal prospects. By measuring employee satisfaction as part of an employee engagement survey, businesses can promote employees who are emotionally invested in the company and its culture. 

What Is Employee Voice?

You may have also heard people discussing “employee voice” in relation to “employee engagement” (including us!). In this context, employee voice refers to the means by which employees communicate among their own teams, their business leaders, and the wider business. A key facet of employee engagement is how much you enable your employees to express themselves. The more opportunities there are for employees to voice their opinions, the more engaged your employees are likely to be—especially if you take action on their views.

Improving workplace communication is critical for employee engagement. Employee voice covers in-person communication methods, such as all company meetings and one-on-one catch ups, and digital communication methods, such as instant messaging platforms, emails, and exit surveys. The most effective method for capturing employee engagement data? Confidential employee surveys.

As we stated at the start of this blog post, the most fruitful engagement is two-sided. For employees to feel integral to the decision-making process, they need the opportunity to voice their thoughts and share their experiences and visibility over the resultant actions taken, both at a team and company level. That’s why using a platform that enables active listening and informed manager actions creates actively engaged employees.

Why Is Employee Engagement Important?

Our working definition of employee engagement makes it easy to see its potential importance, whether it’s the transformative prospect of a workforce that actively cares about the company they work for, or the opportunities raised by employees being able to vocalize their thoughts and feelings on how the organization is run. But what do those factors mean practically?

At a base level, ensuring your employees are engaged means providing them with the tools they need to do their job, giving them room for meaningful growth and development, and acknowledging their successes with the appropriate recognition and reward—while also tying those successes back to the larger company goals.

In practice, positive employee engagement has many implications, covering the divide between employees who only see value in their salary and employees who feel actively valued by their employer. 

While there are clear social and ethical reasons for pursuing a higher level of employee engagement, it’s equally important to acknowledge the potential impact such actions will have on business outcomes and performance. The good news? That’s where the case for measuring employee engagement shines. 

What Are the Business Benefits of Engaged Employees?

Data consistently shows that a company with higher employee engagement will outperform competitors where engagement is lower. 

According to Harvard Business Review, when employees feel like they belong, they perform 56% better, turnover risk drops 50%, and sick days usage is reduced by 75%. For a 10,000-person company, this would result in annual savings of more than $52 million. That sense of belonging is an essential part of employee engagement—employees with a higher level of workplace belonging further showed a 167% increase in their employer net promoter score, or eNPS.

Using a platform that enables active listening and informed manager actions creates actively engaged employees.

Not only are there benefits to nurturing engagement, but there are major drawbacks to disengagement. When comparing businesses in the top quartile of employee engagement with the bottom quartile, a 2020 study from Gallup reported an 81% reduction in absenteeism, an 18% reduction in turnover for high-turnover organizations, and a 43% reduction in turnover for low-turnover organizations. By reducing those negative outcomes, you further emphasize the net positive outcomes.

Nurturing internal talent, creating space for them to learn, and ensuring their contributions to the organization are recognized are all essential for retention. According to Workday benchmarking, global annual voluntary attrition steadily increased from 14% in April 2021 to 19% in October 2021. At a time when the job market is still struggling and the future impact of the Great Resignation is still unclear, ensuring your existing employees feel heard can help combat the job market pressures employers face.

Employee engagement is no longer solely the purview of HR leadership teams. For an organization to function at its best, leaders at every level need to appreciate what makes employee engagement important and how increased engagement will help support talent across the organization.

How Can You Measure Employee Engagement?

Since employee engagement is a complex concept, there are a handful of different schools of thought on methods of measuring employee engagement. At Workday, we use a comprehensive workplace survey platform, Workday Peakon Employee Voice, that measures employee perceptions across a number of topics, each related to their experiences at work (covering autonomy, growth, reward, environment, and so on), as well as a measure of engagement as a critical outcome. 

Questions are answered on a scale of zero to 10, giving businesses the flexibility to either measure engagement and its drivers as a mean score out of 10 (to one decimal place), or to instead use the popular eNPS scoring system. The latter allows the data to be shown in terms of “promoters, neturals, and detractors,” which can be especially useful if the organization also uses net promoter scores NPS) for its customer satisfaction metric.

As with any business metric, key performance indicator, or objective, employee engagement is best understood when it’s measured regularly and reliably. While annual employee surveys may give you some insights into the shifts in employee sentiment year-on-year, employee engagement often shifts far more quickly. That’s why your technology and methodology need to be just as fluid and reactive.

How Do You Create an Employee Engagement Survey? 

The obvious place to start an employee engagement survey is with a question, but the employee engagement journey starts long before that. How well defined is your engagement methodology? Do you have buy-in from essential business stakeholders? Are there clearly defined business goals behind your employee engagement strategy?  

The most important part of the planning stage is preparing your organization for a fundamental shift in how employee data is collected. Start by outlining why data gathered annually lacks relevance and how the business will benefit from taking a full-year view of employee engagement. Without the proper runway necessary for business-wide comprehension and acceptance, such a seismic change might result in negative responses, rather than positive ones. 

Before creating your employee engagement survey, you also need a comprehensive understanding of what the goals of your organizational strategy are. Ensure those goals are tied to the engagement surveys and their outcomes, in turn facilitating the enactment of the overall strategy through the act of creating and distributing the survey. Then, as the feedback cycle of the survey results in more data surrounding the success of your strategy, you can use that data to hone and improve the realization of your company objectives.

The final step from an operational perspective is ensuring that people leaders and their employees are equipped with the proper tools and solution to process the data, and take action. The 2021 Edelman Trust Barometer Report found that 40% of the 33,000 respondents ranked employees as the most important stakeholders for an organization, compared to the 34% who said customers. As significant stakeholders within your business, ensuring each employees’ comprehension of the survey process is pivotal.

What Are the Drivers of Employee Engagement?

While a strong grounding in the theory of employee engagement is important, to truly understand the ensuing insights, you need to grasp the drivers behind it. Creating actionable insights from your employee engagement survey requires you to collect information on the related causal factors: What we refer to as the 14 drivers of employee engagement

Based on a long history of validated academic research, we used these 14 drivers to create our core question set, comprising 45 questions. Whatever method you use to measure employee engagement, these drivers (or very similar ones) should form the basis of any comprehensive employee engagement survey.

  1. Accomplishment: Ensuring each employee is making regular progress.
  2. Autonomy: Recognizing autonomy as a fundamental human need.
  3. Environment: Creating a positive in-person, remote, or hybrid workplace environment.
  4. Freedom of Opinions: Promoting psychological safety in the workplace.
  5. Goal Setting: Keeping employees engaged with clear, autonomous goals.
  6. Growth: Creating a culture of learning and development.
  7. Management Support: Building manager relationships based on empathy.
  8. Meaningful Work: Providing purpose, challenge, and respect in the workplace.
  9. Organizational Fit: Understanding the value of shared goals and aspirations.
  10. Peer Relationships: Developing strong team relationships and a sense of belonging.
  11. Recognition: Recognizing why recognition is more than an occasional “thank you.”
  12. Reward: Acknowledging the importance of employee compensation for performance.
  13. Strategy: Inspiring your employees with inclusive and decisive communication.
  14. Workload: Keeping workloads manageable and avoiding burnout.

Where some surveys ask all of these questions together, particularly if the survey is taken on an annual basis, the latest methodologies suggest taking a more targeted approach. By sending samples of questions automatically to different employees regularly, you develop an up-to-date view of employee sentiment and engagement, while avoiding individual survey burnout.

How Can You Measure Employee Engagement Accurately?

Setting up a regular cadence for your employee engagement survey is a strong starting point, but what do you do about the results and scores you receive as a result? Taking a company-wide average might seem like the best route for assessing your engagement level, but such nuanced data requires an equally nuanced approach.

At Workday, we ask employees to respond to survey questions on a scale of zero to 10. As opposed to text-based options, scores out of 10 are well understood across different cultures, ensuring your employees have a shared experience that transcends location or language and enabling stronger benchmarking. 

A further benefit of the mean score generated by a scale of zero to 10 is that the resultant averages can be recorded on a 10-point scale to one decimal place, effectively making it a 100-point scale. That makes even incremental changes in sentiment far easier to detect, especially when taken over an extended period. For the purpose of reporting, this scale also makes percentage differentials easier to report. 

For businesses who already favor the NPS methodology when interpreting their customer data, a scale of zero to 10 also enables you to easily convert the findings into an eNPS score. Zero to 10 employee engagement survey scores can be divided into three groups: Detractors (scores from zero to 6), Passives (scores from 7 to 8), and Promoters (scores from 9 to 10). 

  • A Detractor is actively disengaged with their working experience and is in need of direct support from their team leaders, and the organization as a whole.
  • A Passive employee may not appear disengaged in their work, but they still have concerns that are preventing them from bringing their full self to work.
  • A Promoter is the best-case scenario, indicating an employee who has realized their full potential and is motivated in forwarding the success of the organization.

The organizations with the most inclusive employee experience, the strongest support for team managers, and the most involved employee feedback process will have workers who predominantly sit in the promoter category. Regardless, what’s important is knowing which employees are struggling and how you can better support them. 

While accurate and appropriate measurement is important, it’s even more important to recognize that these figures are ultimately a means to an end. Using these results as a starting point, you can then start highlighting focus areas, and taking real actionable change. That’s how you give your HR department and people leaders the tools they need to promote higher business performance and success.

How Can You Improve Employee Engagement?

Regardless of your organization’s stage in your employee engagement journey, you probably have one question: How can I improve employee engagement? 

A 2022 study by Gallup found that employee engagement in the U.S. had dropped for the first time in a decade, with the percentage of actively engaged employees falling from 36% in 2020, to 34% in 2021. Given that the chaos and tumult of 2020 didn’t see engagement levels falter, those figures should act as a wake-up call. Employees are expecting more from their employers.

Improving employee engagement is a complex process, but the guiding principles are simple. By actively listening to your employees, either regularly or in real time, you can further create actionable up-to-date insights. Those same insights can then be used to enable effective actions across your organization, creating a feedback loop for further engagement and improvement.

Here are five essential steps to consider with your employee engagement strategy, whether you’re well versed in the world of employee surveys, or you’re still figuring out how to put your best foot forward. Through it all, consider the varying experiences of each team and enable them through the support and leadership of your managers. That way, you’ll set them up for success—and your organization, too.  

  1. Incorporate an employee feedback solution into your employees’ routine. Continuous participation is essential to success. By making monthly or even weekly listening “business as usual,” you ensure that your people see the significance their viewpoints hold to the business. That means incorporating the survey into their natural workspace flow, considering the proper HR service delivery, and providing integrations with other existing solutions.

  2. Empower your people to contribute to the conversation confidentially. All results and scores should be confidential, which extends to any written feedback employees may provide. In Workday Peakon Employee Voice, employees are given the opportunity to leave confidential written comments, in addition to zero to 10 scores. This promotes psychological safety, promoting greater confidence in the responses you receive.

  3. Create experiences that proactively support employees. Reacting to problems as they arise is sometimes a necessity, but the best approach is a proactive one. Solutions like Workday Journeys provide organizations the ability to deliver personalized guidance through moments that matter, whether in their career, personal life, or a blend of both. Strong engagement rests on your ability to help support employees from onboarding through the rest of their professional growth. 

  4. Empower managers to take action. Employee engagement can’t be managed from the top down—your people leaders at each level of the organization have to have visibility on engagement data and how best to respond to it. By enabling them to learn how best to interpret the data and make the resultant actions trackable, you’ll create a successful feedback loop for each team.

  5. Make scores, data, and action transparent. Ensure that all your employees have access to the gathered data on a shared platform, regardless of whether it’s positive or negative. If a number of people give a low score in response to a particular engagement driver, acknowledge it as an area that needs attention, create further space to discuss it, and report back on progress made. Creating a culture of continuous feedback and improvement will benefit your organization long term. 

By only measuring output and efficiency, we miss the most important aspect of an employee’s daily working experience: The sincerity of their passion for their workplace. Whether referring to an employee’s enthusiasm toward their work, their working environment, or their corresponding belief in the organization’s mission statement, employee engagement is fundamental to understanding the relationship between your company and your employees.

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