Does it pay to have employees actively engaged?

18 April 2006

Some of the easiest decisions in management are whether to give a person a pay rise, but it can be a more complex management task to keep that employee switched on and contributing to the team.

Which pays bigger dividends – more pay or better employee communication? It seems the pay rise comes way down the list as a motivator.

Towers Perrin, a multi-focus consulting firm, has studied this issue for some time and its recent work in the US looks at employee engagement in the context of downsizing and pay cuts – yet even in this climate a study of 35,000 workers found that they wanted to help their organisation succeed.

This "willing to help" attitude of employees is a true HR asset and should appear on the balance sheet or somewhere in the annual report, if only to remind management not to fritter employee goodwill away. Management in the US still has a long way to go, for even with the positive starting point of employees, only around 20 per cent are "actively engaged" in their work. The Gallup Organisation finds similar outcomes to Towers Perrin.

Does it pay off to have employees actively engaged?
The Zell Lurie Entrepreneurship Centre at the University of Michigan studied over 300 firms over a five-year period to find the differences between high performers and low performers. The high performers had a strong focus on employee energy and involvement (read communication), on culture and rewards and on organisational structure. The low performers on the other hand focused on product, technology and capital market expectations. They made a strong case for the link between good employee management and communication, and business results.