Employee engagement has emerged as a key performance indicator. Studies show that highly engaged employees increase customer satisfaction, productivity, and profitability, while decreasing turnover, absenteeism, and safety incidents.
Employees feel most engaged when they have strong relationships with their direct managers. A few key drivers in these employee-manager relationships are discussions about responsibility and accountability and assistance with goal setting. Frequent and simple performance reviews can guide these manager-employee discussions, while simultaneously increasing engagement.
Recurrent performance reviews and appropriate manager follow-up are proven to directly increase employee engagement. In turn, increased employee engagement is proven to yield positive firm performance. Productivity increases by 21%, while profitability increases by 22% when employees are engaged. With only 13% of employees engaged worldwide, 83% of HR managers feel their performance review process needs to be improved.
Harvard Business Review: The Performance Management Revolution
Additional Contributing Authors: Gamble Ouzts, Betsy Curry
This report is part of the Human Capital Management Minute series. To view all featured Minutes, please click here.
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