Studies have long suggested that employees who are engaged are more productive and more likely to care about the quality of their work. As a result, employee engagement is an important component for business growth.

For instance, Deloitte’s 2015 Global Human Capital Trends study¹ revealed that organizations that prioritize employee engagement, organizational fit, and strong leadership outperform their peers both financially and in terms of attracting top talent.But while the immediate benefits of engagement are clear, business leaders are yet to understand its impact on long-term organizational performance.

Indeed, over the last few years, employee engagement has become a key measure of success for many organizations.

A recent report from Deloitte suggests that 87% of HR professionals and business leaders consider culture and engagement as their most important challenge, even surpassing leadership.

But what does this mean for the long-term health and competitiveness of an organization? Could prioritizing employee engagement over and above other key business objectives actually distract leaders from focusing on the other issues that drive performance and growth?

STRATEGIC PRIORITIES

Take the case of a business going through a transformation, be it a change of guard at board level or developing new products; naturally, leaders wish to keep staff morale up during these periods.

Yet if high employee engagement is prioritized above all other factors, senior management may shy away from difficult strategic decisions that adversely impact staff morale.

For example, cutting back on employee benefits or closing offices, even if this is in the best interests of the business in the long run, is a difficult sell to those affected and those that remain. Unfortunately, it does not alter the fact that it might well be the right call to make.

Over time, a company may pay a high price for letting the effect of employee engagement levels on decision making take front and center stage: while engagement is, of course, important, it must not be achieved at the expense of doing what is best for the business.

Senior managers have a role as both custodians and nurturers of the enterprise’s fortunes. The implication of this is often overlooked: focusing on the here and now is vital, and a large part of what their performance is judged on, but their value is ultimately weighed by whether or not they steer the ship on a course that will continue long after their captaincy is over.

And the contribution of employee engagement must be viewed through this lens.

ENGAGEMENT AND RETENTION

No one is arguing that engagement cannot help fulfil short-term objectives, but it falls short of making an impact on a company’s long-term goals – just look at retention.

Aon’s most recent Trends in global employee engagement report revealed that although there has been a rise in the overall number of engaged employees, the proportion of workers intending to remain with their current employers has not changed.

So, despite many companies investing heavily in engagement initiatives, this has had very little impact on staff loyalty.

Valuing engagement above performance is equal to becoming preoccupied with the symptom rather than the cause. While employee engagement has an important role to play, it cannot be allowed to be what defines the operation.

So how do business leaders find and maintain the right balance? In many cases, leaders need to start by recognizing that the health of the business should be at the top of their agenda.

There is a common misconception that organizational health does not deliver value and is not worth investing in as it brings little return. Often, it suffers when a company is in financial difficulty and the initial reaction is to improve performance at all cost, especially if shareholders need reassurance.

The problem is that such obsessive focus on immediate results is like embarking on a starvation diet to control your weight: it simply cannot be maintained without disastrous consequences.

Leaders need to focus on a corporate change in lifestyle to bring long-term benefits for their stakeholders, both external and internal. Not doing so will sacrifice the organization’s viability in the long run.

SETTING GOALS

To get started, the senior team needs to measure the state of the company’s health and set clear, precise, and aspirational targets to where the company should be over a realistic period of time.

Having a medium-term goal, set for two to three years, can give a company a sense of immediacy and tangibility needed to inspire the workforce and other stakeholders.

From there, they can identify what the company needs to do to achieve those aspirations since they will be in a better position to assess which areas need strengthening.

When executing, a portfolio approach of setting clear targets, milestones, resources and leadership for each initiative should be strictly followed. Organizations that do this are three and a half times more likely to succeed in achieving their goals, according to a McKinsey Quarterly survey.

Getting the workforce and external stakeholders to buy into these aspirations can be a challenge, but ensuring that the company is healthy is crucial.

Clear and regular communication will go a long way towards getting everyone on board: if you think you are over-communicating, do it some more.

Leaders that are diligent about the health of their organizations can be confident of both performance and engagement in the years to come.

This article was originally published in Personnel Today, July 10, 2015.

References

¹ Deloitte Global Human Capital Trends 2015.