Impact Of Employee Engagement On Organizational Performance

Organizational Performance Definition

Organizational Behaviour is largely concerned with the management of the people at the workplace and to ensure that the relationships formed at the workplace work out the best for the long term goal achievement of the organization. The primary aim of the given paper is to analyze the impact of Employee Engagement on Organizational Performance. The paper aims to undertake this objective with the help of a review of various journals, academic sources and business reviews along with other relevant literature. Employee engagement has been known to have a strong impact on the motivational aspect of the employee which can then have an impact on the performance of the firm on the whole. Hence, through the review of literature the impact of one on the other will be assessed and supported through theoretical examples.

The organizational performance can be rightfully defined as the results of an organizations operations and actions which take place during a particular time period. It measures whether the organization will be able to achieve its objectives and goals which it has set out for itself. The organizational performance tends to measure the actual results which an organization achieves as compared to its intended outputs as well as goals which it had set down for its welfare. Organizational performance can be stated to be a broad construct which tends to measure what the actions of the firm are, what constituencies do they build and what are their aims and objectives with respect to the long run of the organization. Organizational Performance can be stated to be an important area of study as it helps in understanding the factors which contribute to the overall welfare of the organization and the manner in which the different organizational members are to act in order to ensure a better performance for the overall welfare of the firm. Organizational performance can also be stated to be the work related activities of an employee and the manner in which those activities are performed, the outcome of which is measured with respect to perspectives like market and financial performance.

Miner (2015), states that the organizational performance generally covers the performance of the firm in three main dimensions. The first dimension is primarily concerned with the financial performance. The financial performance is concerned with return on the assets, profits and the return on investment. The second aspect is the market performance which considerably deals with the market share, sales and other customer related data. Lastly the third aspect deals with the shareholders’ value like the economic value added, returns and other related metrics. According to Pinder (2014), the different specialists in the field are largely concerned with the performance of the firm at large. They have taken out various metrics as well as key measures to measure the performance known as the Balanced Scorecard method.

Different authors have approached the concept of Organizational Performance in different perspectives like Patro (2013), states that organizational performance is concerned more with the way in which the different employees in a firm tend to perform and the output achieved, whereas authors like Pinder (2014), believe that Organizational performance is concerned with the financial outcomes which a firm achieves at large. However, there are authors like Salanova, Agut and Peiró (2005), who believe that Organizational Performance are not related to employee engagement.

Dimensions of Organizational Performance

However, for the purpose of the report, the review will concentrate on the overall welfare of the organizational performance like the profits, customers earned and the value added.  It is believed that an organization is a paradigm of various aspects which range from topics like profits, customer satisfaction, goodwill of the firm and the employee satisfaction. Hence, just checking the performance of the firm in one dimension is not enough and for the welfare of the firm, it is important that all the aspects of the firm are covered adequately in order to ensure success in the long run.

The concept of employee engagement can be rightfully described as the enthusiasm which the different employees tend to feel with respect to the work they do and also the degree to which they are passionate about the whole task which is allotted to them at their workplace. In an organization it is very important for the employees to be engaged so as to ensure that they contribute well towards the success of the firm at large. The different employees who are engaged tend to attach themselves to the work physically, cognitively and in an emotional manner at large.  The topic of employee engagement is an essential topic to review because an engaged employee works harder for the success of the firm and hence, this should be the objective of every organization to ensure that the different employees remain motivated at large and well engaged.

According to Kompaso and Sridevi (2010), employee engagement tends to extend beyond the activities and the general events which the employees are supposed to organize in the firm but is largely related to the performance. Employee engagement is known to be an essential driver of the performance and the employees who tend to remain engaged in the firm fit in easily and contribute towards better decision making. It can also be noted that as Miner (2015), stated the organizations which have an engaged employee base tend to help the firm in fighting against competition and these firms tend to have a high earning per share along with a recovery rate which is fast.

Govindappa and Manjula (2015), mention that the engagement of the employees is often a key point of differentiation when it comes to the concept of innovation and growth. Kompaso and Sridevi (2010), state that employee engagement needs to be measured at a workplace at large and the best way to do so is by conducting a survey which is best suited to the overall welfare of the firm.  Anitha (2014), States that there are various benefits of employee engagement which can be defined as better home life, greater employee loyalty, lower absenteeism, increased safety of employees and other related benefits. Hence, as this has a large number of benefits for the firm at large, it is suggested that the concept of employee engagement is taken seriously in the firms.

 Gelade and Ivery (2003), mention that the employee engagement surveys need to be validated statistically and benchmarked against the other organizations in the same field so as to assess the success of the system and the level of engagement which is provided by the different employees. Moreover, the best time to measure an employee engagement is when the engagement is at the full scale and that the flow of the momentum is at its maximum.  Although there are various perceptions with respect to the employee engagement in a firm, the purpose of the paper is to analyze the overall engagement of the employees in all aspects at large which will then contribute towards understanding whether the firms in the filed can perform well or not.

Perspectives on Organizational Performance

The employee engagement is believed to have a strong impact on organizational performance. According to Devi (2017), when the different employees are passionate about the work which they tend to perform at large in the selected workplace then they tend to ensure that their individual performance increases considerably. When the individual performance increases, it takes a collective effort on the side of the firm to improve the overall performance of the organization. The employee engagement decides the level of commitment which exists in an organization at large and how this commitment can ultimately bring long term benefits for the firm at large. The engagement of the employees largely contributes towards better productivity and the increased productivity at the workplace is known to have a good impact on the organizational performance. Moreover, as stated earlier Bakker and Schaufeli (2008), agree that the reason why organizational performance increases is not only with respect to the productivity of the organization but also with respect to other factors like reduced absenteeism, a positive work culture, special connection with the company, higher satisfaction rate and better profits.

From the given analysis, it can be rightfully understand that there are various papers which weight on the positive impact of employee engagement on the organizational performance and along with this there are various papers which tend to lay down that there exists a normal relationship between the employee engagement and the performance of the firm at large (Bakker and Demerouti 2008). The main quantitative analysis which was used in a majority of these papers are the surveys and interviews which were then analyzed on the basis of correlation and regression tools. The articles which did not reflect any strong statistical relations reflected that not employee engagement but employee motivation works well for the firm at large but the studies which reflected a strong correlation showed that the organizations who perform well are largely driven by the engagement of the employees and that in around 72% of the cases it has been witnessed that the firms which have an adequate employee engagement program tend to perform much better than those who do not (Hbr.org 2018). Moreover, not only just organizational performance but the employee engagement is considered to have a huge impact on the overall performance fronts like customer satisfaction, better profits and better in house performance. Moreover, it tends to foster an environment which is very suitable for the firm at large. Hence, it is suggested that the different employers aim to improve the engagement of the employees at the workplace.

Conclusion

Therefore, from the given analysis it can be rightfully stated that the concept of employee engagement can be considered to be very important for the welfare of the organization and it also assist the firm to ensure that the employees are happy as well as satisfied with the given set of work which they are allotted and the values which they have at the workplace. Hence, it can be understood that a good level of employee engagement can be taken to be an essential contributor to organizational performance and that different firms need to take measures like motivation, bonuses, interesting work culture and flexible timings so that the engagement of the employees increases and thereby has a positive impact on the overall performance of the organization. The given review of literature tends to examine the individual concepts of employee engagement and organizational performance along with the impact of engagement on the overall performance of the workplace. As per the analysis of the various studies, it could be understood that employee engagement has a positive impact on the performance of the workplace.

References

Anitha, J., 2014. Determinants of employee engagement and their impact on employee performance. International journal of productivity and performance management, 63(3), p.308.

Bakker, A.B. and Demerouti, E., 2008. Towards a model of work engagement. Career development international, 13(3), pp.209-223.

Bakker, A.B. and Schaufeli, W.B., 2008. Positive organizational behavior: Engaged employees in flourishing organizations. Journal of Organizational Behavior: The International Journal of Industrial, Occupational and Organizational Psychology and Behavior, 29(2), pp.147-154.

Devi, S., 2017. Impact of employee engagement on organizational performance: A study of select private sector banks. International Journal of Commerce and Management Research, pp.10-13.

Gelade, G.A. and Ivery, M., 2003. The impact of human resource management and work climate on organizational performance. Personnel psychology, 56(2), pp.383-404.

Govindappa, D. and Manjula, V., 2015. Impact of employee engagement on organizational success: A study in TATA Advanced Materials Limited, Bengaluru.

Hbr.org. ,2018. The Impact of Employee Engagement on Performance  [online] Available at:  https://hbr.org/resources/pdfs/comm/achievers/hbr_achievers_report_sep13.pdf ( Retrived on: 20 Oct. 2018).

Kompaso, S.M. and Sridevi, M.S., 2010. Employee engagement: The key to improving performance. International journal of business and management, 5(12), p.89.

Miner, J.B., 2015. Organizational behavior 1: Essential theories of motivation and leadership. Routledge.

Patro, C.S., 2013. The impact of employee engagement on organization’s productivity. In Proceedings of 2nd International Conference on Managing Human Resources at the Workplace, Mysore, India.

Pinder, C.C., 2014. Work motivation in organizational behavior. Psychology Press.

Salanova, M., Agut, S. and Peiró, J.M., 2005. Linking organizational resources and work engagement to employee performance and customer loyalty: the mediation of service climate. Journal of applied Psychology, 90(6), p.1217.

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