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Monday, July 1, 2013

Why Engaged Companies Have a Competitive Advantage

While measuring employee engagement is increasingly common in the business world, it is more than just a popular human resources initiative. Gallup has found strong correlations between employee engagement, as measured by Gallup’s Q12 employee engagement metric, and organizational performance.

Gallup conducted its eighth meta-analysis last year on the Q12 using 263 research studies across 192 organizations in 49 industries and 34 countries. Within each study, our researchers statistically calculated the business/work unit level relationship between employee engagement and performance outcomes that the organization supplied.

There were large differences between top-quartile and bottom-quartile units on nine key business outcomes: customer ratings, profitability, productivity, turnover, safety incidents, shrinkage, absenteeism, patient safety incidents, and quality.

Gallup continues to find that the strong relationships between engagement and these key business outcomes hold true across various industries, economic climates, and regions of the world.

Furthermore, Gallup’s research also shows that companies with engaged workforces have higher earnings per share (EPS) and seem to have recovered from the recession at a faster rate. A separate study found that organizations with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher EPS compared with their competition in 2011-2012. In contrast, those with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period.

To learn more about how employee engagement drives growth and higher earnings per share for companies, read the State of the American Workplace report and the Gallup Business Journal.

Join the conversation on Twitter: #EmployeeEngagement.

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