12 Research-Backed Benefits of Employee Engagement for Small Businesses

Feli Oliveros

With limited resources, small business owners may think that investing in employee engagement is out of the question. There are always fires to put out, unplanned expenses to cover, and initiatives that should’ve been launched yesterday. 

As a result, employee engagement ideas tend to get pushed to the bottom of an organization’s to-do list. 

Contrary to what you might think, however, employee engagement should be a priority for small businesses that want to make an impact with limited funds. This is because employee engagement influences nearly every part of an organization—and sometimes in ways you don’t expect. 

Here, we’ll show you just how far-reaching the effects of employee engagement are—and why it’s worth investing in, no matter the size of your business. But first, let’s look at what employee engagement actually means.

What is employee engagement?

Employee engagement measures an employee’s mental and emotional commitment to their work, the company they work for, and its goals and values. 

An employee’s perspective on each of these points influences their behavior and the effort they put into activities like meeting team goals, collaborating with colleagues, providing feedback to managers, and seeking out new responsibilities in the workplace. 

Highly-engaged employees care about their teammates and the work they do, adopt attitudes and behaviors that reflect their organization’s values, and commit themselves to the company’s success. 

What are some benefits of employee engagement?

Much—if not all—of a company’s value and business success is driven by its workforce, which means that investing in employee engagement is one of the most effective ways to enact positive change throughout an organization. 

Below are 12 ways your small business benefits when you make employee engagement a priority. 

1. Lower turnover rates

Employees are expensive to replace. A survey conducted by Express Employment Professionals found that businesses lose an average of $26,511 every year, just from lost productivity and recruiting costs due to employee turnover

Of course, there’s also the indirect costs a small business incurs when replacing an employee: the loss of institutional knowledge, the cost of hiring and training a replacement, as well as the dip in productivity and team performance while the new hire gets up to speed. The time and money you spend on hiring new employees would be better directed toward company growth instead.

But when you fully engage your employees, they become emotionally committed to your business. They won’t actively seek out new opportunities, and if they’re satisfied with the work they do and how they’re compensated for it, they’re likely to turn down offers from recruiters too. After all, why would they risk losing a guaranteed good thing for an opportunity they’re not completely sure is better?

2. Greater employee loyalty

Nowadays, it’s difficult to keep workers committed to one company for the long term. And it’s easy to see why. 

Research shows that employees who jump from one new job to the next increase their overall compensation faster than those who stay with one employer for many years. In fact, 29% of workers who changed jobs during the COVID-19 pandemic reported making over 30% more in their new role. 

Younger workers in particular tend to stay at a company for as long as it meets their needs and career goals. Once they feel they’ve hit a ceiling or their employer doesn’t meet their expectations anymore, it’s on to the next opportunity. 

All of this means that your small business must keep employees engaged if you want them to stick around. When employees have a sense of purpose and clear professional development goals, they’re willing to invest more of their time, effort, brainpower, and career in the company’s success.

3. Increased employee productivity

Getting your employees more engaged with their work is an easy way to increase their productivity as well. That’s because engaged employees are 17% more productive, according to a report from Gallup

Engaged employees are personally invested in their role and responsibilities. They immerse themselves in their day-to-day tasks and are proud of the results they achieve, all because they enjoy what they do.

Increased employee engagement is great news for teams too. Because an engaged workforce shares common goals, team performance, collaboration, and camaraderie all increase as well.

4. Lower absenteeism

Taking a day off every once in a while is expected, and even encouraged, when an employee needs a break. But continued absences impact the performance of the employee in question, their team’s productivity and morale, and your company’s bottom line.

Engaging your workforce is the remedy to this organizational ailment. Another Gallup survey revealed that top-performing teams were 81% less likely to experience employee absenteeism than companies with low engagement.

This is because an engaged workforce shows enthusiasm for meeting its employer’s objectives. When engaged employees show up for the day, they’re fully present and ready to work. They’ll reach their goals (and sometimes even surpass them), all while only taking days off when they need to.

5. Safer work environment

Employee engagement can even result in fewer safety incidents for your company. Highly-engaged employees pay attention to their surroundings and proactively take action when they discover issues. These qualities make them and their colleagues less likely to get involved in workplace accidents. 

In the early 2000s, the Society for Human Resources Management (SHRM) Foundation conducted a study on employee engagement at beverage company Molson Coors. Its findings? Engaged employees were five times less likely to have a safety incident, and seven times less likely to have a lost-time safety incident, than non-engaged employees. Additionally, by improving employee engagement, the company went on to save $1,721,760 in safety costs in a single year. 

6. Better quality work 

Disengaged employees expend far less effort in their work compared to highly-engaged team members. They’re less likely to check their work for errors, and when they do find mistakes, they may not have the energy needed to correct them. This poses a problem for your revenue and your reputation, particularly when these employees work in a client-facing role or deal with sensitive information.

Engaged employees, on the other hand, put out higher-quality work and make fewer mistakes than their less-engaged colleagues. These workers pursue excellence in their daily duties and take painstaking efforts to ensure their work is correct, accurate, and up to par with their exact expectations. According to one report, 57% of employees are even more willing to work overtime for a company they trust. 

Because they’re passionate about their job, engaged workers also seek out ways to improve the company’s processes and innovate the way their team does things—which is especially important for small businesses, as this creativity allows them to compete with larger corporations and ultimately increase their revenue.

7. Higher customer satisfaction

Think of the last time you had a memorable interaction with a business. Maybe it was the barista at your coffee shop who’d greet you with a smile and your usual order, even on busy mornings. Or perhaps one of your vendors sent you a gift to congratulate you on reaching a business milestone, even though you only mentioned it in passing. 

Customer service that goes above and beyond expectations transforms even casual consumers into loyal supporters and advocates. And here’s some good news for you: Small businesses are well-positioned to provide the personalized touch that makes these moments so special. 

If this is how you want your customers to feel after interacting with your business, it’s important to invest in your employee experience.

Employees who care deeply about their job treat customer relationships with care, and they go the extra mile to give shoppers the experience they deserve. When these customers act as brand ambassadors to those in their network, it drives increases in revenue and brand recognition for your small business. 

Software company Verint found that, after having an amazing customer experience, retail shoppers are more likely to support the brand in the future. In particular:

  • 88% of respondents are likely to make a repeat purchase
  • 82% are likely to recommend the brand to family and friends
  • 68% are likely to join a loyalty program
  • 63% are likely to write a positive review

8. Reduced employee stress

Stress in the workplace is inevitable. What matters for small business owners and managers, however, is how it’s dealt with.

Less-engaged employees are more likely to be thrown off by work-related stress and obstacles, and they have difficulty regaining motivation and getting back on task afterward. 

For highly-engaged employees, most workplace roadblocks are simply a minor hindrance because they’re able to take a step back and look at the bigger picture. These workers also tend to be more self-aware. This helps them identify when they’re stressed out, determine when they need assistance, and ask for support accordingly.

Research shows that having employees who know how to adequately deal with stress is important for your profits too: According to the American Institute of Stress, workplace stress costs US businesses $300 million annually. 

9. Reduced risk of burnout

If workplace stress is left unchecked for long enough, that stress turns into employee burnout—an issue that plagues many businesses today. Findings from Gallup showed that companies lose $322 billion annually due to turnover and lost productivity from employee burnout. 

Employee burnout is characterized by physical and mental exhaustion, reduced productivity, as well as a lack of engagement, motivation, satisfaction, and sense of accomplishment with work. Although it’s often caused by long-term stress, a perceived lack of control, recognition, or support can also trigger burnout.

Once an employee has burnout, it’s hard to treat. However, you can reduce your organization’s chances of being affected by preventing stress and task overload from overwhelming your team. 

10. Happier and healthier employees 

Because small businesses have much fewer employees than large corporations do, teamwork and collaboration is crucial to achieving business goals on schedule. Disengaged employees hinder the creation of positive relationships in the workplace, and bring down morale due to their cynicism and lack of interest in the work. 

Unfortunately, these workers bring their mental and emotional baggage into their personal lives too. Employees who are stressed because of work report that it negatively affects their:

  • Home life (71%)
  • Well-being (64%)
  • Relationships (62%)

Happy employees have higher levels of energy for their work days and their personal lives—which also means they’re more likely to eat healthier, exercise more often, and tend to their mental health. As a result, they’re present, positive, and able to fully participate in their families and other relationships. 

11. Stronger employer brand 

When a company properly engages its workforce and treats employees well, those workers go on to tell their network how much they enjoy their work and how great of a company their employer is. 

After all, employees who say their company’s mission, vision, and values align with theirs are much more likely to say their work makes them feel accomplished; they’re also much more likely to recommend their employers as a great place to work.

Engaged employees will also sing your company’s praises on websites like LinkedIn and Glassdoor—which gets more eyes on your small business from prospective employees who wouldn’t have heard of you otherwise.

When your employees are also your brand ambassadors, you save on recruitment costs because more candidates who are a good fit for your company begin to seek you out, instead of the other way around. 

12. Higher profitability 

As seen above, when employees perform at the highest level, businesses see improvements across the entire organization—from retention rates to productivity and even workplace accidents. 

So, it’s no surprise that investing in employee engagement also increases a company’s sales and profits too. Gallup found that companies that focus on employee engagement see up to 20% higher sales and 21% higher profitability. 

Small business owners invest significant resources into increasing their profits. When you focus on employee engagement, your employees will do their part in helping you achieve this goal too.

How to improve employee engagement in your small business

1. Make work-life balance a priority

Overwhelm, overwork, and a lack of proper boundaries contribute to increased work stress levels and prevent employees from doing their best work. 

This is especially true for remote and distributed teams, as it can be tempting to keep working when there’s no clear distinction between your professional and personal lives. Bloomberg research indicated that people who worked from home during the pandemic were logging three more hours a day on average. 

Make work-life balance an integral part of your company culture—and model it from the top down. For instance, you may decide to set boundaries by enforcing no work communication after hours. Start by encouraging employees to immediately log off when the work day ends, and leave non-urgent messages for the following day. 

Most importantly, make sure you hold yourself accountable to these guidelines as well. When you tell employees to enjoy their time off but expect them to reply after hours, it sends a message that they need to be available around the clock—regardless of what your company handbook says.

So, encourage your employees to turn off their work notifications at the end of each workday, and don’t be afraid to turn yours off too. 

2. Set and achieve goals together with your team

Employees are more engaged when they feel they’re making meaningful contributions to their team and to the company as a whole. Get them started on the right path by setting goals with each team, and then again on an individual level with each employee. 

This helps each team member get clear on exactly what they should be working towards on an everyday basis. And when you connect individual and team objectives back to your company’s goals, you give employees meaning and context to their daily responsibilities. 

This, in turn, increases employee satisfaction and engagement, because each team member has a fuller understanding of their role within the organization.

3. Recognize and reward your employees

Employee recognition from peers and managers reinforces the belief that a team member’s work is meaningful and contributes to the betterment of the company. It also helps employees enjoy what they do and perform at their best every time they show up for work.

A survey from Eagle Hill Consulting revealed that employees who receive recognition for their work are more likely to: 

  • Go above and beyond their responsibilities (53%)
  • Stay with their organization (48%)
  • Be more motivated to support their team (43%)
  • Go above and beyond for customers (38%)

So, take the time to recognize employees on a regular basis for completed projects, milestones, work anniversaries, innovative breakthroughs, and other successes. 

Want satisfied employees? Start by measuring employee engagement

Employee engagement is tricky to measure. In some organizations, engagement levels are glaringly obvious, but in most cases, it’s hard to know for sure. This is where employee engagement surveys come in. 

Employee engagement surveys measure the level of engagement in your workforce. After all, you can’t make improvements in your organization if you don’t know where you stand. 

Because engagement fluctuates over time, they’re also a helpful tool to gauge the success of the employee engagement strategies you’ve implemented, and whether they need tweaking to further align with your workforce’s needs and expectations.

Gusto’s insights and reporting feature helps you do just that. Rather than guessing what your employees are thinking or feeling, send them anonymous team surveys to gauge their sentiments on different aspects of your organization, such as employee morale, teamwork, and employee happiness. 

If you’d like to learn more about this feature and how it can support your small business, get in touch with our support team today.

Feli Oliveros Feli Oliveros is a freelance finance and business writer with experience covering personal and small business finance. In 2015 she graduated from UCLA, where she earned her bachelor’s degree in English and minored in Anthropology.
Back to top