There’s no denying it: employee engagement is the fuel that powers a company’s success. It is the key to driving productivity, innovation, and profitability. So how do organizations move the needle on engagement in a cost-effective, scalable way?

This white paper delves into the critical importance of employee engagement and outlines a step- by-step approach to assessing the specific drivers of engagement within your organization. We explore effective strategies for making a difference, including the three pillars of engagement: Relationships, Job Design, and Organizational Environment. By implementing these strategies, companies can cultivate a committed and engaged workforce that will drive business success. So, read on to discover how you can unleash the full potential of your employees and take your business to new heights.

Why employee engagement matters

Employee disengagement is costing the world $7.8 trillion in lost productivity, an amount equal to 11% of global GDP¹. At a business level, low employee engagement can have a significant negative impact on an organization’s ability to retain talent, lowering morale and driving turnover. Employee turnover costs the average company $2.4M, a significant cost for any mid-sized business (assumes 1,000 employees, paid at $30K/year and 40% turnover)².

For employees who stay, low employee engagement has a significant impact on performance and productivity. Being dis-engaged means employees lack energy, which translates into lower morale and motivation. In this state, employees tend to be less productive, less innovative, and less likely to take initiative. They are also less likely to speak positively about their workplace, which can have a detrimental impact on the company’s ability to attract and retain top talent. To put it simply, operating without engaged employees is not much better than operating without employees at all.

_¹ Gallup’s State of the Global Workplace: 2022 Report

² Assumes the cost of replacing an employee at 20% their yearly salary and a company EBITDA of $2M. Employee replacement costs include hiring, onboarding and training the new hire, lost productivity and invested time on behalf of their manager. Center for American Progress, Costs of Turnover 2019.

What is employee engagement anyways and why it’s important?

Employee engagement refers to the level of an employee’s emotional commitment, motivation, and involvement. Towards their work, colleagues, and the organization as a whole.

Engaged employees are enthusiastic about their work. They are dedicated to achieving the company’s goals and feel a sense of belonging and purpose within the organization. They are also more likely to go above and beyond their job requirements and feel a sense of satisfaction in their work.

Creating a culture of engagement is a challenging task that requires consistent investment and effort over time. However, the results are invaluable. According to Gallup, teams scoring in the top quartile on employee engagement saw significant benefits compared with bottom-quartile teams³:

• 10% higher customer loyalty/engagement
• 23% higher profitability
• 18% higher sales
• 14% higher productivity (production records and evaluations)
• 18% lower turnover for high-turnover organizations (those with more than 40% annualized turnover)

Moreover, organizations with a highly engaged workforce grew profits as much as three times faster than their competitors, while also improving operating income by 19% over 12 months. By comparison, businesses with low engagement scores saw operating income declining by 33% over the same period⁴.

³ Gallup’sQ12 Meta-Analysis, 2022

⁴ Towers Watson, 2021

Moonstar’s Employee Engagement Survey

At Moonstar we work hard to build more connected, more knowledgeable and happier frontline workforces. We are pioneers in researching the main drivers to frontline employees’ engagement at work. While there is extensive research about the relationship between the general working population and engagement, there is little knowledge as to what is truly important to frontline workers.

Moonstar’s Employee Engagement Model provides a comprehensive analysis of the three pillars that impact a frontline employee’s experience within the organization: Relationships, Job Design and Organizational Environment.

RELATIONSHIPS

Relationships in a work environment are complex and multifaceted, involving interactions with peers, managers, and the organization as a whole. These relationships have a significant impact on job satisfaction, performance, and overall well-being.

PEER relationships in the workplace are important as they provide social support, collaboration, and teamwork. Having positive relationships with peers can create a more enjoyable work environment, enhance productivity, and foster a sense of belonging.

MANAGER – Relationships with managers are crucial as they affect career growth, work assignments, and feedback on performance. Support, effective communication, clear expectations, and trust are essential elements for building positive relationships with managers. Managers can provide support, guidance, and opportunities for growth, and establishing a positive relationship with them can lead to a more rewarding work experience.

ORGANISATION – The relationship with the organization as a whole is vital. This involves feeling pride in working for the organization and believing in the direction the company is taking. Building a positive relationship with the organization can lead to job satisfaction, engagement, and a sense of purpose.

JOB DESIGN

Job design refers to the way the job is structed and whether it provides the employee with autonomy in the way they perform their work, whether it offers them meaning as well as opportunities to develop. It also encompasses the tools and resources available to them to do their job well.

TOOLS & RESOURCES – understanding what employees need to perform well on the job, granting access to technology, equipment, training, and support.

WORK AUTONOMY – relating to decision-making authority, flexibility in work hours, and the ability to work independently.

OPPORTUNITIES FOR GROWTH – including training and development programs, mentoring, and career advancement opportunities.

MEANING & PURPOSE – providing employees with a clear understanding of how their work contributes to the organization’s goals and values can create a sense of purpose and fulfillment.

EMPLOYEE-JOB FIT – ensuring a high compatibility between employees’ skills, interests, values, and personality traits, and the characteristics of their role ensures they are highly engaged and motivated by their work for longer.

ORGANIZATIONAL ENVIRONMENT

An organizational environment refers to the overall culture, values, norms, and practices that exist within a workplace. In our model three factors contribute to shaping the organizational environment: compensation and benefits, psychological safety and job stability.

COMPENSATION & BENEFITS – referring to the monetary and non-monetary rewards that employees receive in exchange for their work. A comprehensive compensation and benefits package can significantly impact an organization’s ability to attract, retain and motivate employees. It can also influence employee engagement, job satisfaction, and organizational commitment.

PSYCHOLOGICAL SAFETY – defined by the extent to which employees feel safe and comfortable expressing their ideas, concerns, and feedback without fear of negative consequences. Creating a psychologically safe work environment is essential for fostering open communication, innovation, and creativity.

RECOGNITION – referring to the quality and frequency of appreciation received for a job well done or for going above and beyond the job description. Consistent recognition serves as a powerful catalyst for increased motivation, loyalty and commitment.

WORK-LIFE BALANCE – defined by the extent to which company culture encourages employees to effectively manage their time and energy to meet the demands of both professional commitments and personal life. This translates to reduced stress, increased productivity and engagement.

We tested 53 items across four key outcomes:

• Engagement
• Job satisfaction
• Stress
• Balance

Our sample of 774 frontline employees spanned the US, UK and Romania. On average, employees had a tenure of 4-5 years, earned between EUR 15,000-35,000 and the average age was 39 years old. In our sample, 49% of employees identified as female and close to 90% worked on a team.

Our research results showed that several key predictors were highly correlated with the four outcomes we tested for: Engagement, Job Satisfaction, Stress and Turnover.

In the below table, predictors are ordered under each outcome such that the predictors in orange are strongly correlated with the outcome, while the ones in black are moderately correlated.

This data can inform companies as to which employee related areas, if improved, can have the biggest impact on employees’ engagement and therefore on a company’s future growth.

To maximize employee engagement and drive growth, companies must know where they stand on the three pillars that impact frontline employees: Relationships, Job Design, and Organizational Environment. Remember that every company is unique in this respect, and the strength of these drivers fluctuates over time. By pinpointing areas for improvement in real time, companies can prioritize initiatives that can enhance employee engagement and propel the organization forward.

Tackling Engagement.
Learn. Nudge. Repeat.

Employee engagement plays a crucial role in influencing productivity, retention rates, and overall well-being of employees. When engagement levels are low, it often signals underperformance of the business as a whole.

So, what sets apart companies with highly engaged employees from those with disengaged employees? It is their unwavering commitment and consistent efforts towards promoting employee engagement as a fundamental aspect of their organizational culture.

An active dedication towards engagement can be summed up in three action steps:

1. Learn
2. Nudge
3. Repeat

1.LEARN

To create an engaging workplace culture, there is no one-size-fits-all solution. Engagement drivers vary between industries and companies. So what are the drivers of engagement specific to your organization? What are the main predictors within your workforce that are most correlated with Engagement, Job Satisfaction, Stress and Turnover?

In the past, organisations used to rely on a single measure to evaluate HR success – eNPS. Employee Net Promoter Score (eNPS) may offer broad insights, but it is insufficient for truly understanding the specifics of your workforce. Engagement levels can differ within an organization, based on factors such as role, age, gender, the quality of managers within departments and so on.

2. NUDGE

Nudges are a powerful tool for inspiring learning in the flow of work. They are short, non-intrusive micro-interventions that meet people exactly where they are, making it easy to improve in small steps.

NUDGES WORK BECAUSE THEY ARE BASED ON THE THREE PRINCIPLES OF EFFECTIVE LEARNING.

BESPOKE: Nudges are specific to each employee’s challenges. They are just in time suggestions and contain straightforward moments of reflection and recommendations that make it easy to immediately take the small steps that sum up to profound improvements. By meeting employees where they are, nudges help them overcome the barriers that often prevent them from engaging in ongoing learning and development.

CONTINUOUS: They run weekly over a course of several months coaching every employee on how to constructively think through their challenges by addressing them from multiple angles. Rather than a one-time event or intervention, nudges are continuous.

ALIGNED: Nudging extends to managers given the importance of the employee-manager relationship. In fact, each set of employee nudges comes with a corresponding set of manager nudges. These nudges serve as coaching tools to guide managers on how to best support their team in addressing and resolving challenges before they escalate to a point where employees disengage and consider leaving their team.

“Great things are done by a series of small things brought together”

Vincent van Gogh

3.REPEAT

Engagement is a continuous process, not a one-time event. Technology can significantly improve the levels of engagement in a company which in turn drive significant business results, but it requires ongoing learning and responsiveness. After learning where your employees stand on the most impactful engagement predictors, take action via Nudging, measure its impact and continue the feedback and training loop. The cycle must be continuous to maintain progress: Learn. Nudge. Repeat.

“Some people want it to happen, some wish it would happen, others make it happen”

Michael Jordan

How Moonstar’s Nudges work
An example of driving growth

Growth is one of the main drivers of employee engagement in any company. Moonstar’s Nudges tackling Growth automatically run over two months, coaching both employees and managers how to plan for their career. Employees gain insight into how to build a career plan and take ownership of their career paths, while managers learn how to effectively support their teams.

Conclusion

Employee disengagement costs businesses millions every year in low productivity, reduced innovation, low morale, absenteeism, and turnover. But investing in employee engagement pays off in higher profits, productivity, and a positive work environment. Valuing and supporting employees create a committed and engaged workforce that drives business success.

At Moonstar we believe that employee engagement is one of the biggest drivers of success in any company. This is why we make it easy for companies to better motivate, connect to and invest in their teams. Moonstar is at the forefront of improving frontline employee engagement. We’re dedicated to building more connected, knowledgeable, and happier frontline workforces.

Our pioneering research into what truly matters to frontline workers resulted in our Employee Engagement Model. The three pillars that impact a frontline employee’s experience within an organization: Relationships, Job Design, and Organizational Environment, are essential to understand in order to start a meaningful employee engagement program in any company.

Moonstar’s Learn, Nudge, Repeat insights and coaching platform helps companies discover what impacts employee engagement. Nudges are then used to coach employees and managers to take action, while the platform gathers continuous feedback in the background to improve engagement, job satisfaction, stress and ultimately turnover. This continuous process in the flow of work leads to a more engaged workforce and a better bottom line.