Employee Engagement Theory: How to Apply It to Grow Your Business

“Employee engagement is at an all-time low.” If you’ve read a few business articles in the last few years, you’ve certainly heard something like this phrase before.

While there are a lot of statistics and advice blogs that aim to help companies engage their employees more effectively, it seems that few strategies are actually working. That’s because employee engagement is a problem that lies at the heart of an organization itself.

In a study by Harvard Business Review, 71% of employees believe that a high level of employee engagement is necessary to bring about success, ranking third on a list of 8 key factors and tying in directly with strong executive leadership. Despite this staggering prevalence of opinion, only 24% believe that employees in their organization are actually highly engaged.

The fact is that engagement is just as important (if not more so) than customer service, productivity, marketing, communication, leadership, and all the other common priorities for driving business success. At the same time, improving employee engagement means improving your approach in all of these areas.

At Criterion, we’ve seen these problems pervade several organizations. While there is plenty of well-respected research out there about employee engagement, it can be tough to make it work in a practical sense. Let’s take a look at how you can apply employee engagement theory to drive success and grow your organization in several ways.

What is Employee Engagement?

Employee engagement can be defined as the emotional connection and level of enthusiasm (or commitment) employees feel toward their organization and the work they do within it.

This is not to be confused with employee happiness. Work can be hard or even stressful at times, yet employees can still be driven to go above and beyond in their performance because they are engaged with the work they do. You can think of it as the level of fulfillment employees experience in their organization and day-to-day work lives.

Kahn’s Theory of Employee Engagement

William A. Khan’s theory of Employee Engagement can shed more light on how this happens. As a professor of organizational behavior at Boston University, Kahn conducted extensive research on the psychology of engagement in the workplace. In his studies, he focused on meaningfulness, safety, and availability as metrics for measuring personal engagement or disengagement. Here’s how he defines each one:

  1. Meaningfulness is defined as the “sense of return on investments of self in role performances.” In other words, this is the sense of purpose and significance that employees derive from their work. Employees who find meaning in their work are more likely to be engaged, motivated, and committed to their organization. If an employee perceives that their work is not meaningful, this can be very demotivating and quickly lead to burnout.
  2. Safety is defined as the “sense of being able to show and employ self without fear of negative consequences to self-image, status, or career.” The level of physical, emotional, and psychological safety that employees perceive in their work environment determines how engaged they are with their work and how comfortable they are with taking risks. A low perception of safety can make employees less likely to go beyond what is expected of them or less likely to express their ideas, leading to disengagement.
  3. Availability is defined as the “sense of possessing the physical, emotional, and psychological resources necessary for investing self in role performances.” This refers to the resources and support that employees have access to in order to do their jobs effectively. Having the resources and support required to do the job well helps employees feel that their work is valued and recognized by their employer. Low availability in this sense can cause frustration and burnout, because success is needlessly difficult to achieve.

After defining and investigating these dimensions, it became understood that employees need three main things in order to be engaged:

  • To feel that they are capable of intellectually driving energy into their role
  • To feel that their workplace is consistent and predictable in relation to consequences associated with behavior
  • To feel valued as a key part of the organization

There are several elements of the workplace that can either incentivize or disincentivize an employee’s investment in a business, such as interpersonal interactions, variety, positions that are less attractive to their self-image, leader behaviors, and their confidence in their individual abilities within the social systems of the workplace.

For example, employees need meaningful tasks, clear goals, and room for creativity in order to feel a sense of ownership with their work. As for safety, individuals that do not fear repercussions for their level of personal engagement feel more safe overall. However, a lack of trust, fear of repercussions, and situations that feel unclear or unpredictable make engagement feel too risky.

Employee Engagement Metrics (How to Measure It)

The first step to fixing any problem is understanding your current state. You’ll first need to measure your own level of employee engagement. However, all of the factors mentioned in Kahn’s theory are difficult to measure directly. This is especially true in a disengaged work environment where employees may feel that being honest is either pointless or threatens their position. So how do you determine areas for improvement?

You may ask your employees to rate their sense of meaningfulness, safety, and availability at work. But how would you know if it was an honest assessment? You can give out an anonymous survey to make honesty feel like a safe option. But in a world of constant surveillance and data breaches, the idea of a truly anonymous survey may be difficult for some employees to believe.

Instead, you’ll want to look at more concrete metrics for an accurate assessment of engagement in your organization. These include:

  • Turnover Rate: This is measured as the number of employees that leave a company within a given amount of time. It is an important metric of employee engagement because it gives a good indication of the health of the company’s culture and workload. A high turnover rate can indicate that employees are not satisfied with their job or their work environment, and are therefore more likely to be disengaged.
  • Retention Rate: Similarly to the turnover rate, the retention rate is another important measurement of employee engagement. The ability of a company to retain employees for long periods of time indicates a healthier work environment. In other words, high retention rates may indicate that employees are engaged and don’t want to leave.
  • Absenteeism: This measures how often employees are absent from work. Absent times are more important when they are unapproved or occur at the last minute before a shift. A high rate of employee absenteeism can indicate issues with workplace culture or imply that employees are not motivated to do their jobs. High absenteeism also causes increased workload for other employees, increasing workplace stress (and potentially disengagement) as a whole. In this way, it can be used to measure engagement on a larger scale.
  • Performance: Employee performance metrics or KPIs are also a good way to measure engagement. Analyzing the performance of your employees based on the quality and efficiency of their work can provide insight into work-life balance, personal motivation, and several other areas that influence engagement.
  • Customer Satisfaction: While it is a less direct way to measure employee engagement, the customer experience is often closely related to your employees’ commitment to serving your target market. The best way to measure this is by sending out customer satisfaction surveys. Most of the time, customers have no reason to lie about how well you performed if the survey is voluntary and easy to participate in. Low scores on these surveys can indicate low internal engagement, which can imply a lack of commitment to serving your customers.

When looking at any metrics, it’s important to look at the bigger picture. A low score in one area may not indicate a problem with employee engagement, but something less pervasive. You might have a low retention rate because you aren’t paying people enough to compete with other employers.  You might not be hiring the right people and thus experience a high turnover rate. You might have one problematic employee that makes people not want to come to work.

However, an abundance of troubling symptoms can help you diagnose the real problem. Employee engagement affects several areas of your business, and the more you are able to measure, the more you can understand how your business is being driven. The good news is, organizations that recognize employee engagement problems can work toward better results with a solid strategy in place.

Can Employee Engagement Really Help My Business Grow?

Yes. By taking a holistic approach to improving engagement, you will likely see metrics improve on all fronts and even use it as a driver for growth.

When you improve employee engagement, you can expect several positive outcomes, such as:

  • Increased Productivity: Businesses that boast high employee engagement have greater levels of productivity (measured at a 14% difference), and lower levels of absenteeism (measured at an 81% difference).
  • Higher Sales and Ratings: Businesses with high employee engagement show a direct correlation to business success, achieving an 18% difference in sales and a 10% difference in customer ratings.
  • More Profit: Businesses with high employee engagement see a 23% difference in profitability.

Overall, workers that are engaged are more likely to stay with their employers and tend to exhibit a greater commitment to quality and safety. When seasoned employees are working hard with fewer costly errors over time, this boosts the success of the company at nearly every level.

How to Improve Employee Engagement

Creating an engaged company culture starts from the top of the organization. There must be a priority that is supported by both open and consistent communication. Employee engagement is fundamental to increased business success, so it must be an intentional part of your business strategy and not just a box to be checked without real support.

To apply this theory, managers can help create a work environment that encourages employees to connect their personal values to the organization's goals. This provides opportunities for employees to use their strengths and abilities in meaningful ways.

Here are nine practical strategies you can implement to drive engagement in your organization:

1. Create Better Training and Onboarding Processes

Engagement begins on each employee’s first day. But it’s easy for new employees to feel overwhelmed with all of the new information and technology introduced during the first few weeks. It is important to make them feel supported as they learn their new role, to give them the best chances for success from the start.

Offering high-quality training and onboarding programs can help new employees feel more prepared and confident in their roles, making them more engaged and motivated to do their best work. You can do this by:

  • Providing resources for them to learn
  • Use peer shadowing and mentorships to teach workflows and job techniques
  • Setting clear expectations from the start about performance standards (and the consequences of not meeting them)

Better onboarding can help employees understand the organization's goals and values and how their work contributes to these goals. This creates a solid foundation for better engagement with new hires. You can foster growth in this area by providing opportunities for continuous learning after the training period. This makes employees feel valued (and therefore engaged), since it shows them you are investing in their professional development.

2. Cultivate a Healthier Community

Better engagement often happens by osmosis. If the culture is engaged and healthy, the people within it become engaged and feed that energy back into the culture.

Like most things, a healthy company culture must start from the top. Leaders can set a positive example for employees by consistently demonstrating the company's values through their own behavior and decisions. When employees emulate this example, they become more connected to the goals of the organization.

Leaders can also provide support and resources to help employees maintain a healthy work-life balance, which can improve morale and engagement. Promoting healthy work habits, encouraging transparency, and providing the space for employees to come together to build healthy work relationships are all great ways to encourage a healthy work culture.

3. Provide Regular Feedback

In order for employees to feel a sense of meaningfulness in their work, they need regular feedback about their performance. This can include positive feedback when employees do something well and constructive feedback to help employees improve and grow. Both are valuable to improving engagement.

It’s also important for leadership and direct managers to establish a relationship of transparency and open communication with employees. This speaks directly to the need for safety in the workplace, making it easier to provide and receive feedback, take risks, and innovate without fear of unjust consequences or ridicule.

Regular one-on-one meetings are the perfect environment for providing and receiving feedback. During these meetings, it’s important to make intentional time for both. Regular feedback from employees can help managers identify any issues or challenges that employees are facing, then direct support and resources to address them.

4. Offer Competitive Compensation

It’s important to make sure your employees are properly compensated for their commitment to your company. Your base compensation structure is a key driver of engagement. In order to retain and engage employees, you’ll want to offer competitive base pay and benefits (possibly commission as well, depending on your industry).

Offering a comprehensive benefits package can make work more meaningful for employees by demonstrating that the company values and supports their well-being. These can also improve employees' sense of safety by providing them with financial security and peace of mind.

However, not all employees need the same compensation. Employees with more difficult, complex, or decision-heavy jobs will need better benefits to justify their work. In the same way, employees that have been employed longer will want to be rewarded for their endurance with the company. You’ll want to create custom pay and benefits packages to satisfy different categories of employees, thus implementing a structure that encourages hard work and long-term commitment.

5. Implement Incentive Structures

Incentives are used as motivation in almost every part of life. The same is true in an engaged workplace. However, if money were enough to create a fully engaged workforce, the only disengaged people would be volunteers.

In reality, incentives take many different forms, and may be more or less effective between individual employees. That’s why it’s important to have a diverse incentive structure tied directly to a performance and engagement strategy.

Rewards and recognition programs help your employees know that their dedication is noticed and appreciated. For instance, things like flexible hours and remote work options (contingent on performance) give employers and the employees something positive in return for going above and beyond what’s expected.

As long as incentives are aligned with healthy behaviors, they are a great way to help employees feel motivated and valued. However, be sure to avoid incentivizing overly-competitive behavior for personal gain between employees — this will make the work environment feel less safe and discourage teamwork or positive relationships.

6. Allow For Creative Freedom

Companies with creative deliverables or goals may fall into a rut of only repeating processes that have worked before. This can take away satisfaction from employees, as they may perceive their creativity or ideas as being undervalued.

Allowing room for employees to have creative freedom and implementing their ideas into a process or deliverable can improve their sense of meaningfulness. This can in turn improve their overall engagement and motivation. When employees are given the freedom to be creative in their work, they may feel more personally fulfilled and satisfied. This leads to a greater sense of and responsibility for their work, as they are able to take ownership of their ideas and see them through to completion.

Creative freedom can also improve employees’ sense of availability, or the feeling that they have the resources and support required to do the job well. For example, if an employee is working on a project that requires a certain tool or program, allowing them the freedom to choose the best tool for the job can help them feel more supported and empowered.

Effective creative freedom means striking a balance between structure and support. For instance, when you have a new project or task, start by setting clear goals first. After that, give employees the autonomy to come up with their own ideas and strategies for achieving those goals. Offer guidance and support when needed, to make sure the ideas are implemented successfully.

7. Encourage Collaboration

When employees feel isolated in their jobs, their sense of community and support plummets. The key to solving this is to create an open and collaborative work environment that allows employees to work together to solve problems and complete projects creatively. Employees that are encouraged to collaborate and work together tend to feel connected to their colleagues and more invested in the success of the team. This can make their work feel more meaningful and satisfying, as they are able to see the impact of their contributions on others.

Collaboration can also improve employees' sense of safety by creating a more inclusive and supportive work environment. When employees are encouraged to share ideas and work together, this often makes them feel more comfortable expressing their ideas without fear of being judged or criticized.

When possible, create opportunities for employees to work together on projects. It often helps to form teams with diverse skills and perspectives and give them the resources and support they need to work together. You can also do this by providing opportunities for employees to learn from one another. Job shadowing, mentoring, and group discussions directly related to completing work responsibilities are all great strategies to implement to achieve better engagement.

8. Codify Your Disciplinary Policies

Discipline is a tough area to tackle in any organization. In the ideal world, everyone will show up to work on time, meet their metrics and KPIs, and do the work to the best of their ability. However, humans aren’t perfect working machines. Mistakes are bound to happen. When they do, it’s important for HR teams to have clear policies and guidelines for how to handle issues like:

  • Underperformance
  • Missed deadlines
  • Tardies and absences
  • Behavioral issues
  • Employee disagreements

It’s important to be consistent in how you handle each type of behavior or situation. If discipline is implemented in an arbitrary or heavy-handed manner, it can create a climate of fear and mistrust. This can undermine employees' sense of safety and well-being.

However, if discipline is implemented objectively and in a fair and consistent manner, it can help create a sense of order and accountability in the workplace. This can foster a greater sense of engagement and motivation among employees. To do this, companies need to establish clear expectations and guidelines for employee behavior and implement fair, transparent consequences for every situation.

The key is to never take an employee’s performance personally or handle it with personal feelings attached. Yelling at an employee is never okay, but some improper ways of handling discipline can be more subtle (i.e. having a condescending tone or addressing employees like children). To be sure, these behaviors still have a powerful effect on engagement. However, it can be more difficult to point them out and treat them effectively. People tend to attach emotions to every action they take, even in a professional setting. When considering engagement (a personal investment in the work), it can be difficult for managers and employees to separate their emotions from a situation that impacts the work and the health of the organization they care about. What’s more, it can be difficult to help team members achieve the level of self-awareness necessary to recognize some of these harmful behaviors.

If you work to create an environment of safe, open communication (often with leaders modeling this behavior), you can start to have more conversations about healthy interactions between team members. Over time, your team will come to understand more about how to treat each other with respect and avoid toxic behaviors that cause disengagement.

9. Remain Flexible in Work

You’ve likely heard about the importance of work-life balance before. As remote and hybrid work became increasingly more popular during and after the COVID-19 pandemic, work-life balance became a key point in discussing employee engagement. That’s because having a healthy work-life balance is important to virtually every aspect of an engaged workplace.

Flexible work options are a great strategy to help employees achieve that balance. When employees are given the option to work from home or flexible hours, you allow them to choose the schedule and location that work best for them. This can help employees feel that their work is more aligned with their personal schedule and values. By providing them the necessary resources for hybrid or remote work, you can help them feel supported, allowing them to customize their office space for focus, productivity, and comfort.

To implement this kind of strategy, you might let employees choose when they start and stop work. You may need to make sure schedules overlap to some degree to allow for collaboration. However, giving people this freedom can allow them to manage their work and personal lives without feeling like they are in conflict.

You can also allow team members to work from home or other locations outside the office. You can do this all the time (full remote) or offer remote work as a reward for meeting performance metrics. You may also do a hybrid schedule where employees work in the office some days and from home other days.

Keep in mind that while remote work can improve engagement, it comes with its own set of engagement challenges. The lack of physical proximity makes conversation and collaboration somewhat less dynamic or natural. In a hybrid setup (with both in-office and remote employees), management may tend to favor employees they see each day in the office over remote employees with whom they only interact digitally. To curb these issues, it’s important to make conversation and collaboration with remote employees an intentional effort. You might create specific chat rooms for discussion or designate times for employees to spend time with one another virtually (via video conferencing or other platforms).

Master Your Engagement Strategy with Criterion HCM

Employee engagement is a critical part of business success, and it’s at the heart of how your company operates. However, problems with engagement tend to be overlooked in favor of more technical measurements of business growth. The truth is that engagement is often the driver behind these outcomes. It’s a personal conviction and investment in doing great work for the good of the organization — something that can’t be replaced with traditional carrot-on-a-stick motivational methods.

But because employee engagement occurs across the whole company culture, it can be difficult to understand. As your organization grows, grasping the status of your entire workforce isn’t something you can do with intuition alone. You need technology designed to give you better visibility into metrics that define the engagement across your workforce. Criterion Human Capital Management is designed to help you with this very problem — and much more.

If you want to build a healthy business that grows, Criterion HCM software can help you:

  • Gain insight about organizational health through powerful workforce analytics
  • Engage top talent by creating and managing custom benefits packages
  • Satisfy employees by running payroll with fewer errors and zero payment delays
  • Implement consistent HR policies with customizable workflows
  • Support employees from day one with custom onboarding and training sequences
  • Improve collaboration with intuitive, customizable communication tools
  • Give employees ownership of their work with self-service time-tracking and more

Criterion is designed to give your organization enterprise-level HCM functionality with an intuitive user interface — all at an affordable price. We also know that every organization’s needs are different. You may have multiple complex workflows or a current system that’s a work in progress. That’s fine with us. We’ll work with you to create a custom HCM solution that matches your desired workflows. We’ll also provide you with the support you need to better engage and manage your employees with this platform.

Learn how Criterion HCM can help you develop an effective engagement strategy with your team. Book a demo today.