Employee engagement has a number of implications for an organisation's profitability.
Simply stated, engaged employees are less likely to leave their job. If an employee has no emotional commitment to their job, there is a greater chance that they will leave to pursue a job that offers, for example, higher remuneration or more flexible work conditions (Haid & Sims, 2009; Schaufeli & Bakker, 2004).
Research confirms that engagement lowers employees’ intention to leave. The Corporate Leadership Council (2004) found that the most engaged employees are 87% less likely to leave their organisation. The same study found that the 100 best places to work (according to their research) had an average voluntary turnover rate of 13% as compared with the average of 28.5% of other businesses in the same industries. What’s more, other large scale research has found that 12% of disengaged employees have no intention to leave, while that proportion rises to 66% in engaged employees. Similarly, over half of disengaged employees would consider leaving their current job for another opportunity, while only 25% of highly engaged employees would consider leaving. (Towers Perrin, 2003).
Considering that replacing an employee can cost one and a half times their salary, retention has a significant impact on an organisation’s bottom line. Not only can the costs of replacing employees be a drain on resources, but once new employees are in place they can take several years to generate the same revenue.
Haid, M. & Sims, J. (2009). Employee Engagement: Maximising Organisational Performance. Right Management.Retrieved 15 June 2011, from http://www.right.com/thought-leadership/research
Schaufeli, W.B. and Bakker, A.B. (2004). Job demands, job resources, and their relationship with burnout and engagement: a multi-sample study. Journal of Organizational Behavior, 25, 293-315.
Towers Perrin (2003). Working Today: Understanding What Drives Employee Engagement. The 2003 Towers Perrin Talent Report.Retrieved 15 June 2011, from http://www.towersperrin.com/tp/getwebcachedoc?webc=hrs/usa/2003/200309/talent_2003.pdf