New research from Microsoft shows definitively what many leaders know intuitively: a workforce that is energised and empowered is more likely to be productive and high performing. Employee engagement now matters more than ever to bottom line performance.

Key takeaways from the report include:

• Leaders need to treat employee engagement with the same strategic importance as business and financial outcomes.
• Leaders need modern communication tools that meet employees where they are in the flow of work.
• Organisations should look to implement digital employee experiences that leverages next-generation AI and data-driven insights.
• Utilise next-generation AI and data-driven analytics to increase the effectiveness of communications.
• Empower managers to create their own feedback flywheels to drive meaningful change within their teams, and ensure key metrics are in place to measure impact.

With leaders under pressure to increase productivity during challenging economic headwinds, Microsoft’s Work Trend Index Special Report (April 2023) has shed new insight on the critical importance of employee engagement within the workplace and the role it plays within organisations in gaining – and maintaining – competitive advantage.[1]

The comprehensive survey program – which analysed feedback from more then three million employees across over 200 companies – assessed the key drivers of employee engagement and correlated the findings with the combined S&P 500 stock price movement of these companies throughout 2022.

Here’s what they found:

“The findings are clear. High employee engagement correlates with stronger financial performance. And companies with highly engaged employees focus on two things: they create clarity via intentional employee communications and goal setting, and they use data to build a powerful “feedback flywheel” to continuously improve over time.”

Microsoft: Work Trend Index Special Report, ‘The New Performance Equation in the Age of AI’

Doubling down on engagement

In fact, organisations that doubled down on employee engagement performed twice as well financially as organisations that deprioritised it – with the most engaged outperforming the S&P 500 at the end of the year. On average, each additional point of engagement reported by employees correlated with a +$46,511 (+£36,542) difference in market cap per employee.

Put simply, companies with highly engaged workforces had better financial outcomes.

In contrast, within the least engaged organisations, the report found that employees were twice as likely to leave an organisation when communication is poor, with one in four employees stating that poor communication results in them not knowing what they should focus on to improve business performance.

The report found that the key to building and sustaining employee engagement requires leaders to adopt agile and ongoing systems for gathering and responding to employee feedback and driving change, specifically through the use of artificial intelligence applications.

In conclusion, as AI begins to change the talent landscape and re-engineer skilling for the workforce, the winners in both the financial and labour markets will be the organisations that take critical action now.

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Sources:

[1] https://www.microsoft.com/en-us/worklab/work-trend-index/the-new-performance-equation-in-the-age-of-ai