What comes first, employee engagement or company performance?

Does employee engagement really equal company performance? Let’s take a look.

Gallup is considered the leading authority in business analytics so when they say employee engagement boosts profitability by 21%, it is worth taking note. However, despite the swell of attention and research contributing to the broad stroke statement, unmanaged and unanimous engagement do not automatically result in improved individual and company performance. There are even cases where investing in engagement may lead to adverse performance results.

True employee engagement refers to the connection between an employee role and the individual’s motivators which typically include autonomy, mastery and purpose. If a team member can see a route to achieving personal development goals through their current role, they are more likely to contribute the benefits of a fully engaged employee. By valuing employees’ futures and aspirations as part of the greater business purpose, a culture of engagement is fostered. 

Whilst engaging cultures are championed by most for employee welfare, there is a sophistication required to harness its power for business performance and even then, the results are not consistent for all businesses or all roles. 

Employee Performance is not automatically boosted by Engagement

Health, wellness and personal development have permeated workforce cultures on a far greater scale in the past decade as research has shown the business benefits. However, while they regularly improve satisfaction levels, they do not always align with business performance.

Engagement Importance Largely Depends on the Role

Alex Levenson, author of Employee Surveys that Work, has studied engagement for quite some time and explains there is a need for pause before pursuing high engagement scores. It is not out of spite for employee happiness or with indifference to professional development but because it isn’t a case of “what’s good for the goose is good for the gander”, i.e. the output of every role is not necessarily enhanced by feeling engaged.

There needs to be a deeper level of thought and intention to using engagement as a tool especially in certain roles. Engagement yields different results for customer facing and non-customer facing, highly skilled and unskilled and various levels of trade work. 

Take the example of a cashier at a busy drive-thru. Of course you need employees showing up with a good attitude as that is an emblem of good customer service. However, it becomes counterproductive when it leads to employees spending too much time with customers or colleagues while others wait. Similarly with landscaping or construction, industries typically paid on hourly rates, excess time on positive interactions with colleagues reduces overall productivity. 

On the other hand, when it comes to teachers, care-giving and collaborative roles, engagement vastly improves performance. In fact, for nurses it is essential as engagement was found to be the number 1 predictor of patient mortality rates according to Gallup. Engaged nurses made less errors and encountered less complications. Engagement was more responsible for successful performance than lower patient:nurse ratios and the level of overtime hours.

Whilst the regard for personal efficacy and agency of employees has gained attention in the past 10 years, employers should take it into consideration which roles are enhanced by engagement and which are not. Where the role is dependent on repetitive tasks, efficiency and quantity output, interpersonal engagement is often secondary in the pursuit of overall performance. 

Engagement for the Sake of Engagement Can be Destructive

Companies who opt to seek high engagement scores should always be guided by their business aims and alert to potential side effects. Creating the conditions for high engagement typically requires you to bestow enhanced levels of trust and responsibility in your team members. This allows them to take ownership, personally attach themselves to outcomes and go the extra mile to resolve problems. 

Territorial Job Ownership

The unfortunate consequence of this willingness is the territorial nature of the responsibility. Being able to play nice with others is vital for most roles but where someone considers themselves the sole custodian of project success, protective instincts kick in. It is not quite a mother bear protecting the cubs situation but as the arbiter of the project, a lot depends on that employee. Willingness to listen to alternative opinions or tolerance of low productivity can take a back seat as the engaged employee feels they will be judged on their results.

Unethical Behavior

Even more interestingly, where performance is heavily rewarded regularly, negative employee competition can ensue. Team members, driven by the possibility of achievement can be less likely to share tips for success and possibly exhibit unethical behaviors toward colleagues.

As a facet of the growth mindset, employees in a role where aggressive competition with peers matters, pro-job unethical behavior can fester. This means that the employee puts their goals ahead of the overall business success even going so far as to exclude team members or discredit the contributions of others.

Commission based sales roles, intellectual property R&D teams, firms with regular performance based promotions and roles with unmanaged engagement reward schemes often fall victim to this toxic culture trait.


Business performance and engagement are vaunted as mutually beneficial in the majority of research. However, where there are few dissenting voices, one must question the unanimity of the opinion and in the case of employee engagement, there is more to the story. 

Engagement, on the face of it, is a positively influencing factor on company success but context and pursuit are worthy of consideration. Without placing business aims at the forefront of your reasoning, adverse effects may result. Employees may become too familiar or ‘chatty’ with each other and customers causing a deterioration of services. When employees are encouraged to see the role as their extended-selves aggravated territorialism can materialize.

Employee engagement ought to be treated as a business tool and managed carefully. Just like other employee management strategies, there is a time and a place for it’s most effective use. In an environment where an engaged company culture shows marked productivity benefits, it is directly contributory to company success. However, where underlying internal competition exists or the nature of work is dependent on efficient, continuous output, engagement should be intentionally managed and guided.

Leave a Comment

Your email address will not be published. Required fields are marked *