There's a big problem with employee engagement.

The benefits of engaging employees are widely publicized. Engaged employees are more productive, stay longer, and provide better customer service. You may have also heard that disengaged employees cost companies billions of dollars per year. Or is it trillions?

Gallup's popular employee engagement index has hardly moved despite these benefits. The index sat at 30 percent in 2006 when I gave my first presentation on employee engagement. In 2018, it was up to just 34 percent.

Unfortunately, employee engagement is a mushy concept. What exactly is it? And how exactly do you improve?

This guide will demystify employee engagement. You'll learn exactly what it is, why engaged employees are critical, and how to improve engagement step-by-step.

A team of engaged employees sitting at a conference table, celebrating a recent success.

What is employee engagement?

The lack of a definition hampers a lot of employee engagement initiatives. Leaders agree on the abstract concept, but aren't quite sure what to do.

Even leading consulting firms disagree on the definition.

Is it employee satisfaction?
Commitment to the company?
An emotional connection to the job?

It’s important to gain clear agreement on the meaning of employee engagement. You can't measure, improve, or sustain something if you can't define it.

Here’s the definition we’ll use for the purposes of this guide:

An engaged employee is deliberately contributing to organizational success.

I like this definition because it's specific. It lays out a clear description of what engagement looks like. You need to do three things if you want to engage people:

Define organizational success.
Share that definition with employees.
Help employees contribute.

We'll take a closer look at each step in just a moment. But first, let's look at the impact of having engaged employees.

Why is employee engagement important?

The case for employee engagement is not a philosophical one. Engaged employees perform their jobs better and contribute more to the organization's success.

Don't just rely on vague statistics or anecdotes.

You need to make the case for employee engagement using hard numbers if you want to get executive buy-in. This means calculating the true financial impact of engagement if at all possible.

Start by identifying key metrics that are likely affected by employee engagement. In other words, what is the impact of employees doing their jobs well? Examples include:

Productivity
Quality
Customer satisfaction
Revenue
Cost savings

You can also look at the secondary costs of engagement. Here are a few examples of those:

Turnover. Disengaged employees are more likely to leave.
Theft. Disengaged employees are more likely to steal.
Harassment. Disengaged employees are more likely to harass others.

Once you identify the metrics affected by employee engagement, use these metrics to assess the financial impact. For example, a hospital decided to focus on employee turnover. Their annual turnover rate for nursing staff was 30 percent compared to an industry average of 20 percent.

The hospital took the following steps to calculate a hard dollar estimate that their CFO endorsed:

Calculated the hard cost of turnover using this worksheet.
Calculated the cost of turnover at 30 percent.
Calculated the cost if turnover was just 20 percent.

The difference between #2 and #3 equaled the potential amount the hospital could save by reducing nursing turnover through employee engagement. The CFO calculated that reducing turnover from 30 down to 20 percent would result $100,000 in hard cost savings.

He acknowledged this was a very conservative number. It didn’t account for hard-to-measure soft costs such as improved patient outcomes. By the CFO’s own estimate, the potential soft cost savings were $1,000,000.

Translating employee engagement into financial impact will get your executives' attention!

Need some additional ideas? Here are 13 ways to calculate the true cost of customer service.

How do you engage employees?

An engaged employee is deliberately contributing to organizational success. You can engage employees by doing three things:

Define organizational success
Share that definition with employees
Help employees contribute

Let's break this down and take a closer look at each step.

Step 1: Define Organizational Success

In customer-focused organizations, success is defined by a customer service vision statement. This is a shared definition of outstanding customer service (or experience) that gets everyone on the same page. The customer service vision often does double duty as the corporate mission, vision, or brand statement.

There are three characteristics of a good customer service vision:

It's simple and easily understood.
It's focused on customers.
It reflects both who you are now, and who you aspire to be in the future.

Here's an example from Convo, an app-based video relay service for deaf and hard of hearing people:

Our mission is to connect humans through universal communication solutions shaped by visual and cultural experiences.

Notice Convo's customer service vision matches all three characteristics:

Simple: it's just one sentence.
Customer-focused: it describes what Convo wants to do for people.
Authentic: this is what Convo is already doing, and wants to do more.

You can use this guide to create a customer service vision for your organization, department, or team.

Step 2: Share the definition with employees

Employees can't be expected to contribute to organizational success unless they know what makes the organization successful. This is why it's critical to share the customer service vision with employees.

It's not enough for employees to be aware that the customer service vision exists. They need to use it to guide their work.

You'll know you've shared the vision successfully when employees can answer three questions about it:

What is the vision?
What does it mean?
How do I personally contribute?

Here's a sample communication plan from The Service Culture Handbook:

Phase One: Announcement

Share the customer service vision via company-wide communication from the CEO.
Reinforce the vision via messaging from the corporate communications department.
Display the vision on signage ad posters at all company locations.

Phase Two: Initial Training

Hold town hall-style kick-off meetings at each location to discuss the vision.
Create one-page job aids to distribute to all employees.
Provide employees with mugs, t-shirts, and other swag to support the vision.

Phase Three: In-Depth Training

Integrate the customer service vision into existing training programs.
Have managers follow up with employees after the training to observe them using the vision to guide their daily work.
Integrate the vision into an existing employee feedback form used by managers to coach employees on their performance.

This is just an example. You can use any approach that works for your organization's unique culture and situation.

Help employees contribute

Most employees want to do a good job. The challenge is knowing exactly how and being empowered to do great work.

Employees lose their natural motivation when they aren't empowered. People start jobs with high hopes and good intentions, but that enthusiasm is ground down over time through poor products, bad policies, a lack of resources, and poor leadership.

Eventually, employees develop an issue called learned helplessness, where they accept that failure is a foregone conclusion so they stop trying.

In other words, the employee becomes disengaged.

Empowering employees means enabling them to do great work. There are three elements to this: