job engagement: why it's important and how to improve it

Job Engagement: Why It’s Important and How to Improve ItDarryl R. Roberts and Thomas O. Davenport

© 2002 Wiley Periodicals, Inc.Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/ert.10048

People who are engaged in their jobs—those who are enthusiastic and involved

in their day-to-day work—tend to do betterwork. This statement makes intuitive senseto most people and is our basic premise inthis article. We cover three main questionsrelated to this premise. First, what specifi-cally does job engagement mean? Second,what is the economic case for the impor-tance of job engagement—in other words,what is the hard evidence that job engage-ment really matters? Third, what can bedone to improve job engagement? Through-out this article, we focus on employee sur-veys as an important means of measuringand improving job engagement.

WHAT JOB ENGAGEMENT MEANS

We define job engagement as a person’s en-thusiasm and involvement in his or her job.People who are highly engaged in their jobsidentify personally with the job and are moti-vated by the work itself. They tend to workharder and more productively than othersand are more likely to produce the resultstheir customers and organizations want. Forinstance, engaged employees report that:

• Their jobs make good use of their skillsand abilities;

• Their work is challenging and stimulat-ing; and

• Their work provides them with a sense ofpersonal accomplishment.

Job engagement is related to organizationalcommitment, but the two have important dif-ferences. Organizational commitment is mostcommonly defined in terms of an individual’sidentification with the organization’s goalsand values, willingness to exert effort for theorganization, and desire to continue as part ofthe organization.1 For example, those who arehigh in organizational commitment say that:

• They would recommend the company toa close friend as a good place to work;

• They are proud to work for the com-pany; and

• They think the company is doing what ittakes to be a leader in its industry.

All else being equal, people who are en-gaged in their jobs tend to be committed totheir organizations, and vice versa. In fact, inmany organizations, job engagement and orga-nizational commitment are closely relatedoften enough that it makes sense to talk abouta more general outcome—organizational en-gagement—that combines key elements of jobengagement and organizational commitment.

Job engagement and organizational com-mitment do not always track closely together,however—people can be engaged in their jobsbut not committed to their organizations. A

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Employment Relations Today

good example of this is Silicon Valley engi-neers, especially during the late 1990s Inter-net boom—in many cases, these people wereenthusiastic about their work but liable toswitch companies without a second thought.People can also be committed to their organi-zations but not engaged in their jobs. Weimagine many readers have encountered aclassic example of this at least once: a time-serving employee, just going through the mo-tions of the job day-to-day with a low level ofjob engagement, but highly committed to theorganization until full retirement benefits orother “golden handcuffs” kick in.

The research literature provides moresystematic evidence that job engagementand organizational commitment are relatedbut not identical. For example, StevenBrown2 conducted a statistical review (meta-analysis) of 212 studies concerned with jobinvolvement, defined as “engagement of coreaspects of the self in the job.” The correla-tion of job involvement and organizationalcommitment, statistically aggregated across71 studies covering over 26,000 people, was0.496. To put this in perspective, correla-tions range from 0 (meaning two things areunrelated) to 1 (meaning two things are per-fectly related). A correlation of 0.496 indi-cates that job engagement and organizationalcommitment are related to each other in arelatively strong way—generally people highon one are high on the other—but that it isstill quite possible for people to be high onone and low on the other.

There are other related ideas as well. Oneis occupational commitment—the extent towhich people identify with their occupations,

Darryl R. Roberts and Thomas O. Davenport22

a concept that extends beyond a person’s cur-rent job and current organization.3 Discussioncontinues in the research literature abouthow these various concepts relate to eachother. Our purpose in mentioning things re-lated to job engagement is not to delve intoall the nuances of how these ideas relate toeach other, but simply to make it clear thatour focus is specifically on the enthusiasmand involvement people have regarding theirday-to-day work, not their views about theirorganization or occupation more generally.

BENEFITS OF JOB ENGAGEMENT

There is strong evidence suggesting thathigher levels of job engagement lead to out-comes that organizations value. People whoare engaged in their work are more likely tomeet the needs of their customers, therebyimproving customer loyalty, sales, and profits.People high in work engagement are also lesslikely to leave the organization, reducing theconsiderable costs and disruption of turnover.There is also evidence that people who areengaged in their work keep a closer eye oncosts. In the following, we will describe tworecent published studies and one recent casestudy from our own work that illustrate thebenefits of job engagement.

Selected Published Evidence

Probably the best evidence on the benefits ofjob engagement comes from linkage analysisstudies. Linkage analysis is a powerfulmethod for developing fact-based insightsabout the connections between job engage-ment (and other employee attitudes and be-haviors) and business outcomes. We conductlinkage analysis by first building a databasethat contains both employee data and busi-

There is strong evidence suggesting that higher levels of jobengagement lead to outcomes that organizations value.

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ness outcome data (e.g., customer loyalty,sales growth, profitability). A database withinformation from multiple time periods isbest, as this allows exploration of time lags inrelationships. This is important for two rea-sons. First, it often takes time for changes inemployee attitudes and behaviors to filterthrough to customer and financial outcomes.Second, data from multiple time periods per-mits more accurate determination about whatis causing what. That is, if we observe thatjob engagement at one point in time is re-lated to financial results at a later point intime, we can have higher confidence that jobengagement is contributing to financial re-sults and not the other way around.

Once a linkage database is in place, organi-zations can use statistical analyses to quantifythe linkages between employee factors andbusiness outcomes, and to identify actionareas on the employee side likely to have thegreatest impact on business outcomes. For ex-ample, linkage analysis can answer questionssuch as, “If job engagement improves by 5 per-cent, how much is customer loyalty likely toimprove (all else being equal)? And, what arethe best ways to improve job engagement?”Quantifying the linkages between specific em-ployee factors and business outcomes helps indetermining what the potential return on in-vestment might be from various actions. This,in turn, enables companies to make better de-cisions about where to invest resources.

One of the best known published linkageanalyses was conducted by Sears as part of its1990s turnaround.4 The analysis incorporateddata from multiple time periods. After consid-erable analysis, Sears developed two employeeattitude measures—one focused on job engage-ment (with questions such as “I like the kindof work I do”) and one focused on organiza-tional commitment (with questions such as “I

Job Engagement: Why It’s Important and How to Improve It 23

feel good about the future of the company”).Sears found that both these measures were re-lated to customer and financial outcomes.Specifically, a 5-point improvement in em-ployee attitudes would drive a 1.3-point im-provement in customer satisfaction, whichwould then drive a 0.5 percent increase in rev-enue growth (e.g., from 5 percent revenuegrowth to 5.5 percent revenue growth).

In another recent linkage analysis incorpo-rating data from multiple time periods,telecommunications firm GTE (now part ofVerizon Communications) built a seven-itememployee engagement index from employeesurvey data. When GTE’s network servicesunit (a 60,000-employee organization) lookedat linkages between employee engagementand customer outcomes, it found that a 1 per-cent increase in employee engagement wasassociated with an increase in customer satis-faction of almost 0.5 percent.5

Case Study

We have conducted linkage analysis withclients in a variety of industries, includingsoftware, retail, property management, ho-tels, and media. A recent project with a spe-cialty retailer (Case 1) illustrates the financialbenefits of job engagement. In this work, wemeasured job engagement of store employeeswith a three-item survey index and measuredorganizational commitment with anotherthree-item survey index. We also had em-ployee turnover and financial performancedata for each store. The data covered multi-ple time periods, so we were able to look at

Quantifying the linkages between specific employee factorsand business outcomes helps in determining what the poten-tial return on investment might be from various actions.


the linkages between measures over time.The results we discuss here refer to job en-gagement and organizational commitment atone point in time, and employee turnoverand financial results six months later.

We found a statistically significant rela-tionship between job engagement, employeeturnover intentions, and actual turnoverstatistics. Stores with high job engagementhad low turnover, and stores with low jobengagement had high turnover. There wasnot a statistically significant relationship be-tween organizational commitment andturnover—for store employees in this particu-lar organization, it was job engagement, notmore general views about the organization,that related to turnover.

The relationship between job engagementand turnover was almost one-to-one. For exam-ple, a 5 percent increase in job engagementwas associated with a 4.7 percent reduction inturnover. Reduced turnover, in turn, improvedstore profitability in two ways:

1. Through reduced turnover costs (costs of sep-arating exiting employees and finding andhiring new employees). The organization es-timated turnover costs at approximately10 percent of a store employee’s annualpay. This is a fairly typical, although con-servative, figure for jobs of this nature.Some organizations estimate higherturnover costs for jobs of this kind, andmost organizations estimate much highercosts of turnover for professional andmanagerial jobs (in some cases a multipleof annual pay).


2. Through reduced levels of missing merchan-dise (shrinkage) and other costs. There werestatistically significant relationships be-tween turnover and several significantcost items. Stores with lower turnover hadlower costs, and stores with higherturnover had higher costs.

The difference in financial performancebetween stores low and high in turnoverwas quite large in this organization. Wecompared the lowest 25 percent of stores, interms of turnover rates, with the highest 25percent and found that turnover costs wereover $25,000 higher per year, per store, inthe high-turnover stores. Shrinkage andother costs were also more than $25,000higher per year, per store, in high-turnoverstores. In total then, costs were over$50,000 per year higher in high-turnoverstores. To put this figure in perspective, netprofit per store—given the single-digit mar-gins in the stores, which are common in theindustry—is well below $100,000 per yearin this organization.

WHAT DRIVES JOB ENGAGEMENT

In order to improve job engagement, organi-zations must know what drives it—in otherwords, what are the leverage points withthe greatest impact on employees’ engage-ment in their work. We have seen somecommon patterns of what drives job engage-ment in our client work. To illustrate this,we describe two other companies we haveworked with recently and identify somecommon themes across the cases. Weshould note that our focus here, as in ourclient work, is on things that organizationscan change over a reasonable period of timeto increase peoples’ engagement in their

We found a statistically significant relationship betweenjob engagement, employee turnover intentions, and actualturnover statistics.

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jobs. Evidence also suggests that some rela-tively stable personality traits can influencejob attitudes.6 Looking at personality traits,however, tends to be more useful for selec-tion decisions and matching people to jobsthan for improving overall levels of job en-gagement in organizations.

In each case, we used statistical analysisto look at relationships between a job en-gagement measure and other questions onemployee surveys. The goal of the analyseswas to identify a short list of items with thegreatest linkage to job engagement. Thethree analyses provided clear evidenceabout what drives job engagement, explain-ing 50 to 60 percent of the variation in jobengagement. The multiple-item measures ofjob engagement used in each case also hadgood statistical reliability (people answeredthe individual questions measuring job en-gagement in a consistent way, so the multi-ple-item indices formed cohesive, meaning-ful measures).

Three key drivers of job engagementemerged at the specialty retailer in Case 1:

1. “The company provides me with oppor-tunities to learn new skills and developmyself”;

2. “If the company is financially successful, Iwill share in that success”; and

3. “The company offers a positive, fun workenvironment.”

Increased Engagement for BiotechnologyFirm

This case study (Case 2) is about a biotech-nology firm. The analysis of job engagementdrivers was similar to the case of the spe-cialty retailer—we built a three-item job en-gagement index and identified the key drivers


of job engagement. In this case, we foundfour key drivers:

1. “I will have opportunities to advance inmy company in the future”;

2. “Overall, I am satisfied with the learningand developmental opportunities at mycompany”;

3. “I consider my department’s goals to bemy own”; and

4. “Employees receive recognition for theircontributions to a job well done.”

The first year we worked with the com-pany, the overall score on the job engage-ment index was 67 percent favorable (on av-erage, 67 percent of employees respondedfavorably to the three questions, answering“agree” or “agree strongly” to positivelyphrased items). The next year, the overallscore on the index had increased substan-tially, to 76 percent favorable. This showsthat it is possible to achieve real gains in jobengagement over a relatively short period oftime. Employees also reported more favor-able views in the second year regardingturnover intentions—they reported a higherlikelihood of staying with the company inboth the short term (next 12 months) andlong term (career).

Although there were, no doubt, a numberof reasons for the substantial improvementin job engagement, it is encouraging to notethat the interventions specifically undertakenby this firm were modest in scope (that is, interms of the time and money involved). Thechanges were carefully targeted, however.

Looking at personality traits, however, tends to be moreuseful for selection decisions and matching people tojobs than for improving overall levels of job engagementin organizations.



The company also had a disciplined processfor following up on the initial survey. For ex-ample, each manager fed back the local sur-vey results to his or her unit, and managerswere held accountable for working withtheir teams to identify priorities and take ac-tion. The company also did a good job ofcommunicating changes as they were hap-pening, so it got credit for taking action inthe eyes of most employees. We have con-cluded that the carefully targeted nature ofthe company-level changes, together with afocused process for local action, allowed thecompany to achieve substantial results withrelatively modest investments. Some specificinterventions at the company level are sum-marized in Exhibit 1.

Engaging a Global Workforce

This case (Case 3) focuses on a wholesaler.The work covered employees in the UnitedStates and six other countries. Key drivers ofjob engagement in this organization included:

1. “I will have opportunities to advance inthe company in the future”;

2. “The company helps me identify skillsand competencies I will need to succeedat the company”;

3. “My immediate supervisor helps me man-age my career”;

4. “The company fosters a sense of employeeownership in its success”;

5. “I am satisfied with my level of involve-ment in decisions that affect my work”;

6. “I am proud of the quality of work thatwe do”;

7. “In my job, I feel encouraged to look fornew and innovative ways of doingthings”;

8. “My immediate supervisor is effective atmotivating me to do my best”; and

9. “I have the appropriate amount of deci-sion-making authority to do my job well.”

Interestingly, the set of key drivers at thiscompany broadly resembles those in the firsttwo cases, even though the data are from aglobal workforce in this case, and from a U.S.workforce in the first two cases. How job en-gagement drivers might differ across geogra-phies, industries, and so on is outside thescope of this article. However, it is encourag-ing to note—for those who want to take rela-tively straightforward action to improve jobengagement—that the drivers of job engage-ment appeared to be generally similar acrossthese three companies in different industriesand geographies.

Action Areas Interventions Career & learning opportunities Enhanced process for posting open positions

companywide

Goals Enhanced communication about the goal-setting processNew procedures to reduce changes in goals

Recognition & work environment Series of employee meetings, focus groups to improve day-to-day work environment for people

Exhibit 1.

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Summary of Job Engagement Drivers

The drivers of job engagement in the casestudies fall into three categories that we havelabeled career development, identificationwith the organization, and rewarding workenvironment. These drivers are summarizedin Exhibit 2.

The career development drivers all focuson opportunities for employees to learn andenhance career development for the future.The message seems to be: The better peoplefeel about their longer-term career develop-ment, the more engaged they will be in theirwork today. To some extent, this may be be-cause people have understood the signals

many companies have been sending that em-ployees cannot count on companies to pro-vide job stability and that individuals, there-fore, need to look out for their own futureemployability. Although organizations cantake many different actions to improve ca-reer development, the case of the biotech-nology firm shows that even modest inter-ventions can improve employees’ views notonly about career growth, but also aboutidentification with the organization and thework environment.

Identification with the organization—asense of employee ownership in the wordsof one survey item—also enhances job en-gagement. As we described earlier, identifi-

Job Engagement CaseDriver Category Study Job Engagement Drivers

Career 1 Company provides opportunities to learn skills/develop myselfDevelopment 2 Will have opportunities to advance in my company in the future

3 Satisfied with learning & development opportunities at my companyWill have opportunities to advance in my company in the futureCompany helps me identify skills/competencies I need to succeedSupervisor helps me manage my career

Identification 1 If company is financially successful, will share in successWith 2 Consider my department’s goals to be my ownOrganization 3 Company fosters a sense of employee ownership in its success

Satisfied with my involvement in decisions that affect my workProud of the quality of work we do

Rewarding 1 Company offers a positive, fun work environmentWork 2 Employees receive recognition for their contributionsEnvironment 3 Feel encouraged to look for new and better ways of doing things

Supervisor is effective at motivating me to do my bestHave the decision-making authority to do my job well

Exhibit 2.


cation is one part of how organizationalcommitment is most commonly defined(along with willingness to exert effort for theorganization, and desire to continue mem-bership in the organization). The key pointhere is that organizational commitment is re-lated to job engagement. Organizations thatwant to improve job engagement must con-sider ways to enhance how people identifywith the organization.

Finally, the more rewarding the day-to-daywork environment, the more engaged peoplewill be in their work. This makes intuitivesense and also highlights the important rolesmanagers have in improving job engagement.Things like a fun work environment, recog-nition, and decision-making authority arelikely to be strongly influenced by a person’sdirect manager. For that matter, managersalso have an important role to play in en-hancing career development and identifica-tion with the organization.

CONCLUSION

Job engagement makes an important contri-bution to organizational performance. Whenpeople feel engaged in their work, they tendto work harder and more effectively, take ac-tions that meet customer needs, and con-tribute to financial results. Evidence contin-ues to emerge about the economic benefits ofjob engagement, but it seems clear from whatwe know today that it is worth paying atten-tion to. The case studies we reviewed alsoprovide some general guidance into typical


key drivers of job engagement. To get morespecific guidance, organizations can use em-ployee research to assess how engaged theiremployees are and what are the greatestleverage points for improving job engagementfor their employees specifically. They canalso use linkage analysis—combining em-ployee research with customer and financialdata—to quantify the economic impact of jobengagement in an organizationally specificway and to assess the potential costs and ben-efits of making various changes to improvejob engagement.

NOTES

1. Mathieu, J.E., & Zajac, D.M. (1990). A review and meta-analysis of the antecedents, correlates and consequencesof organizational commitment. Psychological Bulletin, 108(2), 171–194.

2. Brown, S.P. (1996.) A meta-analysis and review of organi-zational research on job involvement. Psychological Bul-letin, 120 (2), 235–255.

3. Lee, K., Carswell, J.J., & Allen, N.J. (2000.) A meta-ana-lytic review of occupational commitment: Relations withperson- and work-related variables. Journal of AppliedPsychology, 85 (5), 799–811.

4. Rucci, A.J., Kirn, S.P., & Quinn, R.T. (1998,January–February). The employee-customer-profit chain atSears. Harvard Business Review, 76 (1), 82–97.

5. Becker, B.E., Huselid, M.A., & Ulrich, D. (2001). The HRscorecard: Linking people, strategy, and performance.Boston: Harvard Business School Press.

6. Staw, B.M., Bell, N.E., & Clausen, J.A. (1986). The dispo-sitional approach to job attitudes: A lifetime longitudinaltest. Administrative Science Quarterly, 31 (1) , 56–77.

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Darryl R. Roberts is a consultant with Towers Perrin in Irvine, California. His majorfocus is helping clients use employee research to drive improvements in employee engage-ment and commitment, customer loyalty, and financial performance. He is coauthor of thebook Work Culture, Organizational Performance, and Business Success: Measurementand Management (Quorum, 1998). He can be reached at [email protected]. Thomas O.Davenport is a principal with Towers Perrin in San Francisco. He leads Towers Perrin’sOrganization and Employee Research practice in the western United States. He focusesmuch of his attention on helping clients improve the people-focused elements of businessstrategy implementation. He is author of the book Human Capital: What It Is and WhyPeople Invest in It (Jossey-Bass, 1999). His e-mail address is [email protected].

job engagement: why it's important and how to improve it

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