Employee Engagement Research

In the Average Organization, 74% of All Employees are Either Unengaged or Actively Disengaged! Operating at Only Two-Thirds Capacity, this Results in a LOSS of About One-Third of the Organization’s Payroll!

Source: The Gallup Organization

That's right! According to research by The Gallup Organization, almost three-quarters of the employees in the average organization are only doing what it takes to just get by...or worse! This means that the average organization is wasting about 1/3 of their payroll. For an average organization of 100 people with a payroll of $3.75 million, the cost of lost productivity is $1.25 million! That doesn't include the cost of lost opportunity or lost customers, and certainly doesn't include the costs of sabotage and other acts of revenge that actively disengaged employees might undertake to "get even" with your organization.

The research by Gallup is not unusual, either. Studies conducted by Walker Information Services on employee loyalty find similar results. Only about one-third of an average organization's employees are "Truly Loyal" while the remainder either feel trapped in their jobs or are planning to leave just as soon as the opportunity arises. And while the trend for 2003 is up slightly over previous years, having only one-third of your staff being truly loyal isn't something to be excited about.

Ongoing research by Watson Wyatt also reveals that having engaged and committed employees can have a significant impact on the bottom line of any organization. Their research found that those organizations that invested in creating a higher "Human Capital Index" were far more likely to have greater shareholder returns than those organizations that scored lower on the HCI.

What is particularly interesting is that those organizations that focused specifically on practices that engaged in practices surrounding "prudent use of resources" found a negative value return. Yet, this is so often the course that most organizations take to control employees. However, the highest area for creating shareholder value is found in the areas of accountability. In other words, allowing employees to take responsibility for their jobs. That means having engaged employees!

* What constitutes a “significant improvement”? A one standard deviation increase. Most answers to HCI questions are on a 1 – 5 scale, so a significant change is a one-scale-point movement from a 1 to a 2, a 2 to a 3, and so on.

Additional research shows that:

Over a period of 11 years

Average Organizations increased revenues by 166%. They were able to increase Profits by only 1%.

Exceptional Organizations were able to increase revenues by 682% and increased profits by 756%!

Source - Corporate Culture and Performance,

Kotter & Heskett

Over a period of 30 years

Exceptional Organizations’ stock out-performed the Average Organization by an average of 6.9 times.

Source - Good to Great, Jim Collins

Over a period of over 50 years

Exceptional Organizations out-performed Average Organizations by over 1500%!

Source - Built to Last, Jim Collins & Jerry Porras

Finally, Towers Perrin since the early 2000’s Towers Perrin has been conducting a series of talent and workforce studies, focusing on the impact that employee engagement has on the performance of organizations. In 2003 they provided some of their most comprehensive research to date in their 2003 Talent Report, Working Today: Understanding What Drives Employee Engagement. In this report they share not only that engagement is a key factor in driving performance, but also share the direct progression links between managers engaging employees, employees engaging customers, resulting in increased financial performance for shareholders.

In 2008 they published their Global Workforce Study, Closing the Engagement Gap: A Roadmap for Driving Superior Business Performance. In this study they expanded the “kinds” of employees by dividing the “unengaged” employees into two group: enrolled, and disenchanted. The later of these groups seem to cross over into the unengaged category. However, the most important finding remains --- in the ten years since Gallup first published their research engagement levels in organizations still remain at a dismal level and hasn’t improved despite the numerous reports, articles and books on the subject.

Obviously, having engaged employees is a key factor in driving organizational performance, on this the research is clear. It is also clear that most organizations still struggle in finding a way to reach and engage their employees.

How did the Exceptional Organizations accomplish their fantastic returns? By having employees that were highly engaged and committed to the organization. You only get engaged employees when there is a high level of Trust throughout the organization at every level. That is what the Organizational Performance Management System is designed to accomplish. For more information about how engagement is impacting your organization contact Resource Development Systems, LLC today. Each day you delay could be costing your organization thousands of dollars!

When you have disciplined people, you don’t need hierarchy. When you have disciplined thought, you don’t need bureaucracy. When you have disciplined action, you don’t need excessive controls.

Jim Collins, Good to Great

Additional information on

Employee Engagement

Jack Welch Business Week Podcast: A Healthy Company?
Jack and Suzy Welch on the vital statistics that really matter --- and one of them is Employee Engagement!

Learn more about how we go about measuring Employee Engagement in your organization with our Work Engagement Survey™.

Go Back To Research

Employee Engagement Research

Other Resources