Employee engagement leads to higher turnover

Companies which make employee engagement a strategic priority may be more likely to perform better financially, according to research from Sideways 6.

An analysis of the annual reports of companies in the FTSE100 Index found that those which frequently reference “employee engagement” in their annual reports also perform better financially.

The analysis looked for the frequency with which certain key terms such as ‘employee engagement’ and ‘innovation’ appeared in the reports and combined this with data on annual turnover, industry sector, number of employees and ratings on review site, Glassdoor.

Their research found that the 53 companies with five or more mentions of “employee engagement” had average profits 27 per cent higher than the 47 companies who mentioned it less frequently – a difference which on average equates to over £4.3bn in monetary terms.

Of course the research falls short of scientific, with the possibility that certain companies and sectors in higher margin areas tend to emphasise such issues. For example the industry with the highest scores was pharmaceuticals and biotechnology, with GlaxoSmithKline and AstraZeneca ranking among the top examples.

However, as a rough indicator it might be a good basis for more detailed research.

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