17 Benefits of employee engagement: Why it is important

21 min read
Simple, employee engagement makes employees engaged
Simple, employee engagement makes employees engaged. 

Ever wondered why some companies seem to have a highly engaged workforce that is eager to go above and beyond while others struggle to keep their employees engaged?

The answer is complicated yet simple—Employee engagement.

Employee engagement is a critical component of any successful business and can significantly impact productivity, retention, and overall performance. However, it can be challenging for companies to know how to foster employee engagement effectively.

In this blog, we will explore the benefits of employee engagement and how it can help organizations achieve their goals. So, keep reading.

Table of contents -

What is employee engagement and its importance?

Why is employee engagement important?
Why is employee engagement important?

Employee engagement is the degree to which your employees are invested and motivated to contribute to your company's success. It is their emotional and intellectual commitment towards their work, colleagues, and the organization as a whole.

Engaged employees are passionate about their job, feel valued and recognized for their efforts, and have a sense of belonging and purpose. They are more likely to go the extra mile, take on additional responsibilities, and work collaboratively with their colleagues.

On the other hand, disengaged employees are demotivated, lack enthusiasm, and are indifferent to their work and the company. They may show up for work but are not invested in their job, which can lead to low productivity, poor performance, and higher turnover rates.

So, employee engagement is crucial for several reasons. Firstly, highly engaged organizations are more productive and efficient, leading to better business outcomes.

Secondly, they are more likely to maintain and provide excellent customer relationships and service, positively impacting your company's reputation and revenue. But employee engagement can differ according to the industry; here’s how.

Why engagement matters at the company level?

Happy employees, happy company. 

Regardless of the industry, employee engagement has a significant impact. Highly engaged employees are more productive, provide better customer service, have higher retention rates, and positively impact the bottom line.

In contrast, less engaged employees can lead to poor performance, high turnover rates, and increased costs. By prioritizing employee engagement, you can create a positive work environment, foster a culture of innovation, and achieve your business goals.

Here are how a few industries that benefit from employee engagement and thereby have faster growth even in tough times:

Financial industry

The financial service industry is a fast-paced and competitive field that demands high employee engagement levels. Employee engagement is particularly crucial in the financial industry because of its impact on the bottom line.

Customer trust and loyalty are critical in the financial industry, and employee engagement plays a significant role in building these relationships.

An engaged employee is more likely to go above and beyond for their customers, resulting in higher customer satisfaction rates and loyalty. This, in turn, leads to more significant revenues and profitability for the financial institution.

Here is a case study on how CultureMonkey drives team engagement in a Fin-Tech company.

Financial Services Case Study CultureMonkey by Kailash on Scribd

Retail industry

In the retail industry, employee engagement is crucial to maintaining customer satisfaction and loyalty, increasing sales, and driving profitability. Engaged employees are more likely to provide excellent customer service, resulting in higher customer satisfaction rates and increased sales.

In addition, engaged employees are more likely to stay with their organization, reducing the costs associated with turnover and improving the business's overall stability.

The retail industry is highly competitive, and employee engagement can provide a competitive advantage. Engaged employees are more likely to be productive, innovate, and come up with new ideas that can drive business growth and success.

Here is a case study on how CultureMonkey drives employee engagement and reduces attrition in a Retail company.

Retail Case Study CultureMonkey by Santhosh Kumar on Scribd

Manufacturing industry

Engaged employees are more likely to be productive, innovative and provide higher-quality work in manufacturing industries.

Employee engagement is essential to maintaining product quality and meeting production goals in the manufacturing industry. Engaged employees are more likely to take ownership of their work and feel a sense of pride in their contributions, resulting in higher-quality products and increased productivity.

Furthermore, employee engagement is critical for creating a safe work environment in the manufacturing industry. Engaged employees are likely to follow safety procedures and protocols, reducing the risk of workplace accidents and injuries.

Here is a case study on how CultureMonkey helps identify trends in employee attrition in Manufacturing companies.

Manufacturing Industry Case Study CultureMonkey by Santhosh Kumar on Scribd

Healthcare industry

In the healthcare industry, employee engagement is just as crucial as in the manufacturing sector.

Imagine a world where healthcare professionals are not just going through the motions, but actively invested in their work.

Engaged healthcare employees bring a whole array of benefits to the table. They're more likely to be productive, innovative, and deliver top-notch care.

When healthcare professionals feel a sense of ownership and pride in their contributions, patient outcomes improve, and the quality of care skyrockets.

Moreover, in an industry where safety is paramount, engaged employees are the ultimate allies. They diligently follow protocols and procedures, significantly reducing the risk of accidents and injuries.


In the fast-paced and ever-evolving world of technology, employee engagement is the secret sauce for staying ahead in the game.

Engaged tech professionals are like the magicians of innovation, conjuring up groundbreaking solutions and pushing the boundaries of what's possible.

When tech employees feel connected to their work and the company's mission, they become more productive and driven to excel. Innovation thrives in an environment where creativity is nurtured, and engaged employees bring fresh perspectives and ingenious ideas to the table.

Moreover, in an industry known for its talent war, employee engagement becomes the armor against turnover. Retaining top tech talent is easier when they feel valued and supported in their roles.

What is the main purpose of employee engagement?

What is the main purpose of employee engagement?
What is the main purpose of employee engagement?

Ah, the elusive enigma of employee engagement! You might be wondering, "What's the main purpose behind this buzzword that's been circulating like wildfire in the corporate world?" Well, let's unravel the mystery together!

The main purpose of employee engagement is like a compass guiding organizations toward success. At its core, it's all about creating a workplace where employees feel a genuine connection to their roles, their teams, and the company's mission.

It's not just about having happy-hour Fridays or a foosball table in the breakroom (though those are nice perks!). It's about fostering a sense of purpose, pride, and passion in the hearts of the workforce.

Engaged employees are like the dream team every company dreams of having. They are motivated, committed, and willing to go the extra mile to achieve greatness. When employees are engaged, they don't just work for a paycheck; they work for a purpose. And that purpose can move mountains.

Think about it! Engaged employees are more productive, innovative, and customer-focused. They take ownership of their work, become brand ambassadors, and deliver exceptional results. They're not afraid to speak up with ideas and solutions, knowing their voices are heard and valued.

But it's not a one-sided affair. Companies that prioritize employee engagement reap the rewards of higher retention rates, lower absenteeism, and increased profitability. It's a win-win situation!

So, there you have it—the main purpose of employee engagement is to create a workplace where employees are connected, inspired, and eager to make a difference.

How does engagement influence employee performance?

Employee engagement effect on productivity
Employee engagement effect on productivity

You see, engaged employees aren't just clock punchers; they're like eager athletes sprinting toward the finish line of success. When employees feel a deep sense of connection to their work and the company's purpose, they unleash their full potential.

It's like the domino effect of excellence. Engaged employees are more focused, driven, and committed to delivering top-notch results. They take pride in their contributions and strive for continuous improvement.

But hold on, there's more! Employee engagement also boosts creativity and innovation. When employees are emotionally invested in their roles, they feel comfortable exploring new ideas and taking calculated risks.

The impact on the overall workplace culture is phenomenal. Engaged employees inspire their peers and create a positive ripple effect. Suddenly, you've got a team of enthusiastic go-getters, all fueling each other's brilliance.

And the best part? When performance rises, so does productivity and customer satisfaction. Engaged employees are attentive to the needs of clients and go above and beyond to exceed expectations.

Key benefits of employee engagement that you should know

Reasons why employee engagement important. 

Now, irrespective of the industry, here are 11 crucial employee engagement benefits:

1.  Increased productivity

Low employee productivity can significantly impact a company's core, resulting in decreased revenue, missed deadlines, and missed opportunities. In addition, low productivity can lead to employee burnout, disengagement, and turnover, creating a negative cycle that can be challenging to break.

Employee engagement is critical in increasing productivity, as engaged workers are more likely to be motivated, productive, and committed to their work. They are also more likely to collaborate with colleagues, share ideas and knowledge, and take ownership of their work, resulting in higher quality work and increased productivity.

2. Reduced absenteeism

When employees are absent, it can lead to missed deadlines, increased workload for remaining employees, and decreased employee morale, drastically reducing the overall company productivity.

Employee engagement is essential in reducing absenteeism as engaged employees are more likely to feel connected to their work and their organization, resulting in a stronger commitment to attendance and higher accountability.

They are also more likely to take ownership of their work, resulting in a greater sense of responsibility for their job duties and attendance.

3. Improved job satisfaction

Lower job satisfaction can result in a range of negative consequences for a company, leading to decreased productivity, lower quality work, higher employee turnover, and ultimately, hurting the company's bottom line.

Employee engagement is a powerful tool that can help improve job satisfaction, and employees who are engaged are more likely to feel fulfilled and satisfied with their work, resulting in a greater sense of purpose and meaning in their job.

When employees feel valued and invested, they are more likely to remain committed to their job, resulting in higher job satisfaction and, ultimately, better job performance.

Engaged employees are also more likely to have a positive attitude towards their work, co-workers, and the company as a whole.

4. Higher employee retention rates

Did you know that US spends nearly $2.9M everyday, just to looking for replacement workers?

So yes, employee retention is crucial for any organization, as high employee turnover can lead to increased costs, decreased productivity, and a loss of valuable knowledge and skills. Low employee retention rates can be a significant problem for companies, especially in industries with high demand for skilled labor.

When employees feel connected to their work and their company, they are more likely to stay.

Well engaged employees are also more likely to be productive and help satisfied employees to contribute to a positive company culture. But not just these—companies reap a multitude of benefits from higher employee retention rates.

Firstly, reduced turnover means lower recruitment and training costs, leading to significant cost savings and with the above statistics, US spends 1.1B every year to look for replacements. So, it's a huge win!

Employees who stay with the company for longer periods also contribute to a stable and experienced workforce and efficiency.

And yes, there are several ways to increase employee engagement and retention, such as providing opportunities for growth and development, recognizing and rewarding performance, promoting work-life balance, and fostering a sense of community within the workplace.

So, investing in employee engagement is essential for attracting and retaining top talent and creating a positive workplace culture that benefits both employees and the company.

5. Enhanced creativity and innovation

Creativity and innovation are vital for any organization's long-term success and growth. Companies that fail to foster a culture of creativity and innovation can quickly become stagnant and fall behind their competitors. Employee disengagement is one of the main reasons for a company's lack of creativity and innovation.

When employees are disengaged, they may not be motivated to share their ideas, experiment with new approaches or take risks, which ultimately stunts creativity and innovation. In contrast, when employees are engaged, they are more likely to be invested in their work and committed to finding new and better ways to solve problems.

Engaged employees are more likely to think outside the box and share their ideas, leading to a more diverse and innovative approach to problem-solving.

A culture of employee engagement encourages employees to feel comfortable sharing their thoughts, opinions, and ideas, which can lead to breakthrough innovations and a competitive edge.

By promoting a culture of engagement, organizations are encouraging employees to share their ideas and collaborate on new solutions, leading to more significant creativity, innovation, and, ultimately, success.

6. Increased employee loyalty

Employee loyalty is essential in building a sustainable and thriving business. A lack of loyalty towards the company can lead to negative consequences such as high employee turnover, low productivity, and weak organizational culture.

Employees who feel connected to the company's mission, values, and goals are likely to stay engaged, motivated, and loyal to the organization.

Employee engagement initiatives can help to build a strong bond between employees and the company. Engaged employees are more likely to feel valued, recognized, and respected, increasing their loyalty towards the organization.

Companies can boost employee engagement by frequently measuring eNPS of your employees to gauge their loyalty levels and offer opportunities for personal and professional growth, providing regular employee feedback and recognition, to improve employee loyalty.

Employees who are engaged and loyal become ambassadors for the company, promoting the organization's products or services to their networks and contributing to a positive brand image.

Furthermore, loyal employees are less likely to leave the company, reducing the costs associated with recruitment, hiring, and training new staff.

7. Improved employee communication

Effective communication is crucial for any organization to succeed, and a lack of communication among employees can severely impact a company's growth. Employees who don't communicate effectively may struggle to collaborate on projects, share important information, and coordinate tasks.

This can lead to delays, missed deadlines, and errors that can negatively affect the company's bottom line.

Clear communication channels within employees, ensures that employees understand their roles, responsibilities, and company objectives, aligning them with the organization's mission.

This alignment enhances productivity and reduces misunderstandings, minimizing errors and delays. But to how effectively improve communication? Employee engagement programs are the go-to solution.

Employee engagement programs can significantly improve employee communication. When employees are engaged, they feel more connected to the company's mission and values, which can foster better relationships and collaboration among them.

An engaged workforce is likely to share their ideas, ask for feedback, and communicate with their colleagues, leading to more effective teamwork and better outcomes.

Employee engagement programs that promote regular feedback and communication channels, such as open-door policies, regular team meetings, and one-on-one sessions with managers, can also help improve employee engagement and communication.

By giving employees the opportunity to voice their concerns and provide feedback, companies can address communication barriers and create a more open and transparent workplace culture.

8. Improved organizational culture

A company's workplace culture is a crucial factor in determining its success. Poor or non-existent workplace culture can lead to low morale, decreased productivity, and high turnover rates.

Employees who feel disconnected from their work and colleagues are less likely to be engaged and motivated. This is where employee engagement comes into play.

Employee engagement can help build and improve organizational culture. Employees who feel connected to their work, colleagues, and the company's values are more likely to stay engaged and motivated. They feel like they are part of something bigger and are working towards a common goal.

So, by fostering employee engagement, organizations can build a positive workplace culture that leads to increased productivity, creativity, and employee retention.

9. Greater teamwork and collaboration

In today's fast-paced and competitive business world, teamwork and collaboration are essential for a company's success. The lack of cooperation among employees can lead to missed deadlines and poor-quality work.

When employees work in silos, they are unable to leverage each other's strengths, resulting in a stagnant and unproductive work environment.

Companies benefit significantly from fostering greater teamwork and collaboration among employees.

A collaborative work environment cultivates open communication and trust, leading to enhanced problem-solving and decision-making processes. When employees collaborate, they pool their diverse skills, knowledge, and perspectives, resulting in more innovative and creative solutions to challenges.

And employee engagement helps foster a culture of collaboration and teamwork. Engaged employees are motivated to work together and share ideas, knowledge, and skills, resulting in increased productivity.

Engaged employees are more likely to build meaningful relationships with their colleagues and form strong bonds based on trust and respect. This helps break down silos and helps in cross-functional, leading to more cohesive and effective team performance.

​​10. Improved employee performance

​​Employee performance is critical to the success of any company, but a lack of employee performance can significantly affect the organization's bottom line. When employees are disengaged, they may not be motivated to perform their best, leading to poor productivity and subpar work quality.

This can have a ripple effect on the entire company, causing delays, errors, and even lost business opportunities.

Fortunately, the benefits of employee engagement can also help improve employee performance. When employees are engaged, they feel a sense of purpose and are more likely to be motivated to perform their best.

They are more willing to go above and beyond their job duties and take pride in their work. Engaged employees are also more likely to feel valued by their employer, boosting their morale and leading to higher job satisfaction.

Furthermore, engaged employees are more likely to receive feedback and coaching from their managers, which can help them improve their skills and knowledge. Regular feedback can also help employees understand their strengths and areas for improvement, which can help them take ownership of their work and strive for better results.

11. Enhanced effective leadership

A lack of leadership can lead to poor decision-making, lack of direction, and low morale among employees, resulting in poor company performance. However, employee experience can play a significant role in enhancing effective leadership.

When employees are engaged, they are more likely to feel connected to the company's mission, goals, and values, which creates a sense of purpose and direction. Engaged employees are also more likely to trust their leaders and believe in their ability to lead effectively.

This trust and belief can lead to better communication between employees and leaders, creating a more collaborative and productive work environment.

Engaged employees also tend to be more proactive and take the initiative to improve their work and overall company performance. This increased initiative can help leaders identify areas for improvement, and employees can provide valuable feedback and ideas for innovation.

12. Enhanced employee well-being

Employee well-being goes beyond physical health; it encompasses mental, emotional, and social aspects. Engaged employees often experience improved well-being, as their sense of purpose and fulfillment in their work translates into reduced stress levels and increased job satisfaction.

When employees feel genuinely valued and supported by their organization, they are more likely to have a positive outlook on their work and life.

Organizations can promote employee well-being through various engagement initiatives. Providing access to mental health resources, offering work-life balance options, and encouraging regular breaks are essential steps.

Additionally, fostering a culture that prioritizes employee wellness and recognizes the importance of self-care can contribute to enhanced well-being.

13. Increased customer satisfaction

In today's competitive business landscape, customer satisfaction is a key differentiator for success. Engaged employees play a pivotal role in delivering exceptional customer experiences. When employees feel connected to their work and the organization's values, they are more likely to go the extra mile to meet customer needs.

Employee engagement programs that emphasize customer-centric values and empower employees to make decisions that benefit clients can lead to remarkable improvements in customer satisfaction. A workforce that is aligned with the company's customer service objectives creates a consistent and positive brand image.

Customer satisfaction, in turn, drives customer loyalty and repeat business. Satisfied customers are more likely to become loyal advocates, recommending the company to others and providing invaluable word-of-mouth marketing.

14. Greater employee alignment with company values

Company values serve as the guiding principles that shape an organization's culture and behavior. Engaged employees tend to resonate strongly with these values, feeling a deep sense of connection and purpose in their work.

This alignment ensures that employees are not merely going through the motions but genuinely living out the organization's values in their day-to-day activities.

When employees are aligned with company values, they become enthusiastic brand ambassadors. They promote the organization's values internally, fostering a positive and collaborative work environment.

Building and nurturing this alignment requires a comprehensive approach. Organizations can reinforce their values through regular communication, recognition of employees who exemplify these values, and integrating them into various aspects of the employee experience.

15. Higher employee referrals

Engaged employees are not only dedicated to their own work but also take pride in their organization. As brand advocates, they are more likely to recommend their workplace to friends, family, and acquaintances.

Employee referrals serve as a powerful and cost-effective recruitment tool, as referred candidates tend to align better with the company culture and requirements.

To encourage employee referrals, organizations can implement referral programs that offer incentives for successful referrals.

Recognizing and rewarding employees for bringing in top talent not only reinforces engagement but also fosters a sense of ownership and camaraderie among the workforce.

Moreover, employees who refer candidates are invested in the success of their referrals, resulting in increased onboarding support and mentoring.

16. Improved employee resilience

In a rapidly changing business landscape, resilience is a vital trait for organizations and their employees. Engaged employees demonstrate higher resilience during challenging times, as their sense of purpose and commitment fuels their determination to overcome obstacles.

A culture of employee engagement provides a supportive environment where employees feel empowered to voice their concerns and collaborate on solutions.

This open and transparent communication fosters a sense of collective responsibility, enabling the organization to adapt quickly and effectively.

Engaged employees are more likely to embrace change as an opportunity for growth and innovation.

17. Increased employee creativity

Employee creativity and innovation are essential for driving organizational growth and competitive advantage. Engaged employees feel psychologically safe to express their creativity and share innovative ideas without fear of judgment or criticism.

Fostering a culture of employee engagement encourages open communication, where employees are encouraged to contribute their perspectives and suggestions.

Providing dedicated forums for idea-sharing, such as brainstorming sessions or innovation workshops, further nurtures creativity.

Organizations that prioritize employee engagement create an environment where employees feel inspired to think outside the box and experiment with novel approaches.

As employees collaborate and build on each other's ideas, the organization benefits from a rich pool of creative solutions to complex challenges.

Benefits of employee engagement programs and activities

Why companies should focus more on employee advocacy.
Why companies should focus more on employee advocacy.

Employee engagement is more than just a buzzword in today's corporate world. It is critical to maintaining healthy, happy employees and a productive workforce.

Employee engagement programs and activities can bring an organization a wide range of benefits, including increased employee retention rates, improved productivity, better communication, and higher job satisfaction.

Engagement programs provide opportunities for employees to develop new skills, explore new roles, and gain a deeper understanding of the company's mission and values. Employees who feel valued and appreciated are more likely to remain loyal to the company, reducing turnover rates and recruitment costs.

They can also boost employee motivation, leading to improved productivity and efficiency. By providing employees with regular feedback, recognition, and support, they are more likely to feel empowered and motivated to contribute their best work.

Moreover, employee engagement activities can improve communication within an organization. Employees who feel connected and engaged are more likely to share their thoughts, ideas, and feedback, creating a more collaborative and inclusive workplace culture.

Benefits of employee engagement survey