Worker engagement may be key to improving profits

2004

Being able to engage your employers really can give you an edge over your competitors, research has suggested.

A study by consultancy Towers Perrin has concluded that companies with higher levels of employee engagement outperform their competitors in terms of profitability.

The finding is particularly important because from April next year firms will have to include employee information in their operating financial reviews, or explain why they have not done so.

The Towers Perrin study analysed engagement levels at companies and their impact on three key financial indicators plus operating margin.

Its results showed that companies with engagement levels above their industry sector's average outperformed their peer group, on aggregate, by 17 per cent in terms of operating margin.

However the report stressed it was not making a direct causal link between employee engagement and profitability, arguing there were too many variables.

But it did suggest there was now clear evidence of a significant relationship between engagement and financial performance.

Senior consultant Chris Charman said: “All companies want to maximise their financial performance, and part of that process involves ensuring that staff are engaged and willing to make that extra effort.

“Managers must first understand what engages their employees and what factors are driving engagement,” he added.