See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/281967834

The Impact of Employee Engagement on Organization's Productivity

Conference Paper · December 2013

CITATIONS READS
2 33,535

1 author:

Chandra Sekhar Patro

Gayatri Vidya Parishad College of Engineering
60 PUBLICATIONS   74 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Product Design and Development View project

All content following this page was uploaded by Chandra Sekhar Patro on 21 September 2015.

The user has requested enhancement of the downloaded file.

 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

The Impact of Employee Engagement on Organization’s Productivity

Chandra Sekhar Patro

Department of Management Studies,
VITS College of Engineering,
Visakhapatnam
patrocs@gmail.com

Abstract
Employee engagement has emerged as a popular organizational concept in recent years. It is
the level of commitment and involvement an employee has towards their organization and its
values and beliefs. An engaged employee is aware of business context, and works with
colleagues to improve performance within the job for the benefit of the organization. Employee
engagement initiative has a direct impact on the organization's productivity. All organizations
want their employees to be engaged in their work. Employee engagement is linked to customer
satisfaction which is linked to an organization's financial success. Engagement comes about
when enough people care about doing a good job and care about what the organisation is
trying to achieve and how it goes about doing it. This caring attitude and behaviour only comes
about when people get satisfaction from the jobs they do believe that the organisation
supports them and work with an effective HR manager.

In this paper a literature review from various research findings and corporate practices are
employed using a descriptive study technique. It projects the impact of employee engagement
on organization’s productivity. It also presents the factors influencing the employee
engagement and organizational outcomes.

Keywords: Employee Engagement, Organisation, Outcomes, Productivity, Retention.

ISBN: 978-81-922146-5-8 1
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

Introduction:
Over the past decade, many authors have written on the topic ‘Employee Engagement’. Kahn (1990) was
the first to coin the term engagement as he described how people can “use varying degrees of their
selves – physically, cognitively and emotionally in work role performances”. Employee engagement is
not the only term used to describe the positive attitudes and behaviour of employees at work. Other
terms commonly used are ‘commitment’, ‘organisation citizenship behaviour’ and the ‘psychological
contract’. The policy and practice implications of employee engagement are often captured in ‘high
involvement work practices’ and ‘high performance working’.

Employee Engagement is arguably the most critical metric for organizations in the 21 st Century.
Employee engagement is directly influenced by growth of the organization, value addition experienced
by employees and employee perception of the organization. HR practitioners believe that the
engagement challenge has a lot to do with how employee feels about the about work experience and
how he or she is treated in the organization. It has a lot to do with emotions which are fundamentally
related to drive bottom line success in a company. Employee engagement initiative has a direct impact
on the organization's productivity.

The concept of engagement has naturally evolved from past research on high involvement,
empowerment, job motivation, organizational commitment, and trust. The key factors in engagement
are such as alignment of employees toward strategy; enabling employees to have the capability to
engage them-selves; and creating the sense of engagement. This multi-faceted nature of employee
engagement is well captured by the Employee Engagement Consortium at Kingston University. The
researchers say that: ‘fundamental to the concept of employee engagement is the idea that all
employees can make a contribution to the successful functioning and continuous improvement of
organizational processes. Engagement is about creating opportunities for employees to connect with
their colleagues, managers and the wider organisation. It is about creating an environment where
employees are motivated to want to connect with their work and really care about doing a good job’.

Literature Review:
This literature review is examined peer-reviewed journal articles, working papers, textbooks, and other
published resources relevant to employee engagement. Rothbard (2001) defines engagement as
psychological presence and, furthermore, states that it involves two critical components: attention and
absorption. Attention refers to cognitive availability and the amount of time one spends thinking about
a role, while absorption means being engrossed in a role and refers to the intensity of one's focus on a
role. According to Maslach et al. (2001), six areas of work-life lead to either burnout or engagement:
workload, control, rewards and recognition, community and social support, perceived fairness and
values. They argue that job engagement is associated with a sustainable workload, feelings of choice
and control, appropriate recognition and reward, a supportive work community, fairness and justice,
and meaningful and valued work

According to Holbeche and Springett (2003), people’s perceptions of ‘meaning’ with regard to the
workplace are clearly linked to their levels of engagement and, ultimately, their performance. They

ISBN: 978-81-922146-5-8 2
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

argue that employees actively seek meaning through their work and, unless organisations try to provide
a sense of meaning, employees are likely to quit. Robinson et al. (2004) define employee engagement as
“a positive attitude held by the employee towards the organization and its value. An engaged employee
is aware of business context, and works with colleagues to improve performance within the job for the
benefit of the organization. The organization must work to develop and nurture engagement, which
requires a two-way relationship between employer and employee.”

Buckingham and Coffman (2005) said, pay and benefits are equally important to every employee, good
or bad. A company’s pay should at least be comparable to the market average. However, bringing pay
and benefits package up to market levels, which is a sensible first step, will not take a company very far-
they are like tickets to the ballpark, they can get the company into the game, but can’t help it win. Saks
(2006) argues that one way for individuals to repay their organisation is through their level of
engagement. In other words, employees will choose to engage themselves to varying degrees and in
response to the resources they receive from their organisation. Bringing oneself more fully into one’s
work roles and devoting greater amounts of cognitive, emotional, and physical resources is a very
profound way for individuals to respond to an organization’s actions.

According to Pech and Slade (2006), globalization, speed, and ambiguity in the business landscape
demand the highest levels of fitness to facilitate organizational survival. In such volatile environments,
competitors with the correct combination of economic output, trust, innovation and leadership have the
greatest prospects of survival. Penna (2007) researchers have also come up with a new model they
called “Hierarchy of engagement” which resembles Maslow’s need hierarchy model. In the bottom line
there are basic needs of pay and benefits. Once an employee satisfied these needs, then the employee
looks to development opportunities, the possibility for promotion and then leadership style will be
introduced to the mix in the model. Finally, when all the above cited lower level aspirations have been
satisfied the employee looks to an alignment of value-meaning, which is displayed by a true sense of
connection, a common purpose and a shared sense of meaning at work.

Mone and London (2010) defined employee engagement is “a condition of employee who feels
involved, committed, passionate, and empowered and demonstrates those feelings in work behavior”. It
is thus the level of commitment and involvement an employee has towards their organization and its
values. The organization must work to develop and nurture engagement, which requires a two-way
relationship between employer and employee. Thus, employee engagement is a barometer that
determines the association of a person with the organization.

Engagement Impact On Organization’s Productivity:

Employee’s knowledge of how well an organization’s assets are being managed has a positive impact on
engagement. There is a strong link between productivity and engagement. Employees’ knowledge of an
organization’s productivity levels also has positive impact on engagement. Employee Engagement
depends on four major conditions in the workplace such as organization’s culture, continuous
reinforcement of people focused policies, meaningful metrics and organizational performance.

ISBN: 978-81-922146-5-8 3
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

1. Corporate culture helps an organization to connect with the employees, gives them
empowerment in decision making process and develops them to shoulder greater
responsibilities.

2. Continuous reinforcement happens when an organization frames policies which act as facilitator
towards accomplishment of goals by the employees and thereby the organization itself.

3. Meaningful metrics refers to devising performance measurement criterion in such a way that
employees are clear about their goals.

4. Organizational performance leads to pride, job satisfaction, trust and a sense of belongingness
to the organization.

Employees should have the feeling that they possess the right kind of physical, cognitive and emotional
resources to perform their job at optimum level. An organization should also know how to project and
communicate the success stories of the organization to the employees. Thus employees are able to
relate their individual performances with the success and also understand how their performance has a
direct impact on the performance of the organization as a whole. This contributes towards enhanced
employee engagement. High engagement leads to higher financial performance, higher productivity,
higher customer satisfaction and lower manpower turnover.

The University of Wisconsin conducted a research in association with Right management’s in 2008­2009
global benchmarking study revealed a significant relationship between engagement and key
organizational metrics. This research studied 3200 employees’ from 343 companies and examined
factors such as relationship between engagement and key organizational indices. Figure.2 shows the
employee engagement impact on organization’s productivity.

Top Engagement impact

Figure.2. Top on Productivity Top
Bottom
Quartile, Quartile, Bottom
Quartile,
Bottom
Quartile,
Satisfied Satisfied Quartile,
Recommen
Quartile,
Satisfied
with my with my Recommen d my
Satisfied
withorganisat…
my present … d my
organisat…
with my Bottom Quartile
organisat…
organisat… present…
Top Quartile

ISBN: 978-81-922146-5-8 4
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

Factors Influencing Employee Engagement:

There are some critical factors which lead to employee engagement, which are common to all types of
organizations. These factors create a feeling of valued and involved among the employees. The factors
which influence employee engagement are:

1. Recruitment & Selection : The recruitment and selection process involves identifying
potential employees, making offers of employment to them and trying to persuade them to
accept those offers. While recruiting employees for desirable jobs, organizations enhance their
engagement by maximizing the person-job fit and commitment by providing growth and
advancement opportunities to employees in return for their loyalty.

2.Job Designing : Job characteristics encompassing challenge, variety and autonomy are more likely
to provide psychological meaningfulness, and a condition for employee engagement. Job becomes
meaningful and attractive to employee as it provides him variety and challenge, thereby affecting his
level of engagement.

3.Career Development Opportunities : Organizations with high levels of engagement provide

employees with opportunities to develop their abilities, learn new skills, acquire new knowledge and
realize their potential. Career development influences engagement for employees and retaining the
most talented employees and providing opportunities for personal development.

3.Leadership : Employees need to feel that the core values for which their companies stand are
unambiguous and clear. Successful organizations show respect for each employee’s qualities and
contribution regardless of their job level. A company’s ethical standards also lead to engagement of an
individual.

4.Empowerment: Employees want to be involved in decisions that affect their work. The leaders of
high engagement workplaces create a trustful and challenging environment, in which employees are
encouraged to give input and innovative ideas to move the organization forward.

5.Equal and Fair Opportunities : The employee engagement levels would be high if their
superiors provide equal opportunities for growth and advancement to all the employees. Employees feel
that they are not discriminated in any aspects within the organization.

6.Training and Development : It is another important area which contributes to employee

engagement. Redundancy of skills has been cited as one of the reasons for employee turnover, thereby
indicating the necessity for training, re-training and multi-skill training. Through training will help new
and current employees acquire the knowledge and skills they need to perform their jobs.

7.Performance Management : Performance management processes provide conditions for

employee engagement. Performance management encourages managers to have a focus on roles and
responsibilities of employees and to include them in the goal-setting process. It promotes acceptance of
challenging objectives, and also recognizes and encourages contributions that exceed expectations.

ISBN: 978-81-922146-5-8 5
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

8.Incentives and Compensation : Compensation is said to have a major influence on the

employees’ conceptions of their employment relationship. Compensation consists of financial elements
but may also include nonfinancial elements or perks, such as on-site day care, employee assistance
programs, subsidized cafeterias, travel discounts, company picnics and so on. The organization should
have a proper compensation management system so that the employees are motivated to work in the
organization.

9.Health and Safety : Research indicates that the engagement levels are low if the employee does
not feel secure while working. Therefore every organization should adopt appropriate methods and
systems for the health and safety of their employees.

10.Job Satisfaction : Only a satisfied employee can become an engaged employee. Therefore it is
very essential for an organization to see to it that the job given to the employee matches his career
goals which will make him enjoy his work and he would ultimately be satisfied with his job.

11.Communication: The organization should follow the open door policy. There should be both
upward and downward communication with the use of appropriate communication channels in the
organization. If the employee is given a say in the decision making and has the right to be heard by his
boss than the engagement levels are likely to be high.

Organisational Outcomes Of Employee Engagement:

Employee engagement is a critical part of organizational success. Employee engagement predicts the
employee outcomes, organizational success, and financial performance. The impact of engagement or
disengagement can manifest itself through productivity and organizational performance, outcomes for
customers of the organization, employee retention rates and organizational culture. A framework of the
factors influencing employee engagement and the organizational outcomes of employee engagement is
shown in Figure.3.

Factors Organization Outcomes

1) Recruitment & Selection

2) Job Designing 1. Higher profits and
3) Career Development productivity
4) Leadership 2. Improved Quality
5) Empowerment Employee 3. Customer Loyalty
6) Equal & Fair Opportunities Engagemen 4. Financial Success
7) Training and Development 5. Employee Performance
8) Performance Management 6. Commitment &
9) Incentives & Compensation Motivation
10) Health and Safety 7. Employee Retention
11) Job Satisfaction 8. Organisation Culture
12) Communication
9. Manager self-efficacy
Figure.3. Framework of Factors and Outcomes of Employee Engagement

ISBN: 978-81-922146-5-8 6
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

1.Higher profits and productivity : Proper employee engagement will help in incurring higher
profits and at the same the productivity also increases. Engagement allows for the possibility that
organisations with growth and profit increases bring about a very engaged workforce, not the other way
around. As profits go up, the potential for pay or bonus rises also increases which is likely to elicit a
positive feeling in employees and may thus increase their feeling of attachment to the organisation.

1.Improved Quality: The quality can be improved when proper opportunities are given the
employees. Employee engagement helps in maintaining the improved quality of the
organisation and this will be influenced on the customer satisfaction. When the organisation
commits towards effective engagement the quality levels also increases.
2.Customer Loyalty : The employees who are happy in their work are more likely to create loyal
customers. Engaged employees tend to have a better understanding of how to meet customer needs
and as a result, customer loyalty tends to be better in organisations where the employees are engaged.
Ultimately, this may lead to what is sometimes termed ‘customer engagement’, where there is a mental
and emotional connection between the organisation and the customer.

3.Financial Success : Effective employee engagement will be having a higher effect on the
organization’s financial success. Employee engagement predicts the employee outcomes, organizational
success, and financial performance.

4.Employee Performance : Engagement affects employee performance. ‘Engaged employees work

harder, are more loyal and are more likely to go the ‘extra mile’ for the corporation. Engagement is an
‘illusive force’ that motivates an individual to achieve higher levels of performance.

5.Commitment & Motivation : High levels of engagement at work support employees in ‘taking
initiative and pursuing learning. Individual level engagement is too complex to be able to reliably explain
much performance and that engagement surveys measure the symptoms of performance rather than
the causes. By providing incentive plans the employees are motivate towards the increase in
productivity.

6.Employee Retention: Employee retention policies have received the lion's share of the
spotlight. This focus on retention however has spawned several studies on engagement, since
retaining employees is dependent upon the need to engage them. Hence, engagement studies are
beginning to take center stage. Many researchers have suggested that employees who are happy
in their work are more likely to stay in the organisation.
7.Organisation Culture : Organizational culture is a significant driver of employee engagement,
where employees must be expected to work together and provide a voice for the customer within the
organization. Engaged employees are more likely to advocate the organisation as a place to work and
actively promote its products and services.

ISBN: 978-81-922146-5-8 7
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

8. The employees who are engaged in their organisation and their work are more likely to respond
positively to their managers, demonstrate good performance and achieve success. This then helps their
manager to be more effective and successful, which in turn increases the manager’s self‐efficacy.

9.Successful organizational change : Employee engagement might play a key role in aiding the
successful implementation of organizational change and may be particularly important to enabling
organizational agility in companies forced to adapt to the changing market. It is found that their
engagement improvement initiatives had led to time savings when introducing new policies and
implementing change.

Conclusion
After reviewing the various research and survey findings of employee engagement, it can be certainly
concluded that high levels of employee engagement will lead to improved employee commitment &
involvement towards job and thus creating a motivated workforce, that will work together to achieve
the common goals of the organization . Acquiring skilled workforce is just not enough in today's
changing economy like ours; instead a lot needs to be done to retain, involve and make them committed
to the organization and its goals. Thus, engagement is a state where an individual is not only
intellectually committed but has great emotional attachment with his/her job that goes above and
beyond the call of duty so as to further the interest of the company.

The organizations should not only provide their employees with great infrastructure and other facilities
but also freedom to make their work exciting and also are providing them an environment wherein they
can say good-bye to a monotonous work. They should focus on retention as an outcome of three HR
focus areas such as employee motivation, career growth & remuneration, and compensation. Thus
working in a safe and cooperative environment adds to the engagement level of an employee.

References
Bakker, A.B., & Leiter, M.P. (2010). Work engagement: a handbook of essential theory and research.
New York, NY: Psychology Press.

Bakker, A., & Schaufeli, W. (2008). Positive organizational behavior: engaged employees in flourishing
organizations. Journal of Organizational Behavior. 29(2). 147-154.

Bernardin, John. H. (2003). Human Resource Management – An experiential approach. New Delhi. India:
Tata McGraw Hill Publishing Company Limited.

Buckingham, M., & Coffman, C. (1999). First, break all the rules: What the world’s greatest managers do
differently. New York, NY: Simon & Shuster.

Buckingham M., and Coffman C. (2005). First, break all the rules. London. UK: Pocket Books.

ISBN: 978-81-922146-5-8 8
 2nd International Conference on
Managing Human Resources at the Workplace, December 13-14, 2013

Coffman, C., & Gonzalez-Molina, G. (2002). Follow this path: How the world’s greatest organizations
drive growth by unleashing human potential. New York, NY: Warner Books.

Hay Group’s survey research division. (2009). Engaging and enabling employees to improve performance
outcome. Hay Group Insight.

Holbeche, L., & Springett, N. (2003). In Search of Meaning in the Workplace. Horsham, Roffey Park.

Leena, P. Singh, & Binita, P. ( ). Employee Engagement in Indian Scenario - A Case Study of Tata Tele
Services Limited (TTSL). DRIEMS Business Review. 1(1). 62-73.

Maslach, C., Schaufelli, W.B., & Leiter, M.P. (2001), Job burnout. Annual Review of Psychology. 52. 397-
422.

Mone, Edward M., & London, M. (2010). Employee engagement: Through effective performance
management. A practical guide for managers. Routledge Press. NY.

Pech, R., & Slade, B. (2006). Employee disengagement: is there evidence of a growing problem?
Handbook Bus. Strat. 7:1.

Rees, C., Alfers, K., Gatenby, M., Soane, E., & Truss, K. (2009). Work organisation, employee voice and
engagement: exploring connections. Paper given at the British Universities Industrial Relations
Association Annual Conference, Cardiff July 2009.

Robinson, D., Perryman, S., & Hayday, S. (2004). The Drivers of Employee Engagement Report 408.
Institute for Employment Studies. UK.

Rothbard, N.P. (2001). Enriching or depleting? The dynamics of engagement in work and family roles.
Admin. Sci. Q., 46: 655-684.

Saks, A.M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial
Psychology. 21(6). 600-619.

ISBN: 978-81-922146-5-8 9

View publication stats