How to Make a Business Case for Investing in Employee Engagement

By Krishna Rajagopal of Narish International

It’s one thing to say employee engagement is beneficial, but it’s another thing to make a business case that companies should invest in it. As an abstract idea, you’d be hard-pressed to find any company executive who says employee engagement isn’t a positive thing. But the number of execs who think it’s worth spending money on is much lower.

Looking at the numbers can help senior leadership understand the importance of employee engagement strategies to the company’s bottom line. It can also illustrate the various costs of neglecting this crucial aspect of the employee experience.

Engagement brings financial gains.

A multi-study analysis from Gallup showed that highly engaged employees were 22 percent more productive and generated 21 percent more profits for their organization than those who were not actively engaged. Engaged employees also had 37 percent less absenteeism, which is huge since absenteeism costs companies 15 to 20 percent of total payroll costs.

Employee disengagement also results in lost productivity. Disengaged employees are often considered “toxic.” These workers cost companies an average of almost $13,000 each per year because of the negative impact on the workers around them.

Then there’s the replacement cost that comes from having to hire someone new when an employee leaves—the ultimate result of disengagement. Starting at 20 percent of one’s yearly salary, replacement costs for upper-tier employees can be as much as 200 percent or more of their salary. Neglecting employee engagement is costly for companies, and the costs can stack up quickly to become a major drain on the business.

When these costs are considered, it makes perfect business sense to invest in increasing employee engagement. The time it takes to listen to employees, be authentic, and recognize their achievements may have an opportunity cost, but greater engagement will flood companies with bottom-line improvements in the long term.

Behavioral assessments boost engagement.

One proven way to boost engagement is by using behavioral assessments during the hiring process and with existing employees. Behavioral assessments provide both managers and their direct reports with a greater understanding of their strengths in the workplace. That way, they can then leverage these strengths for the company’s benefit.

The added awareness that behavioral assessments bring can help recruiters place the right people in the right positions. In doing so, you improve the odds those employees will be engaged in their roles—and passionate about their work.

New hires that have taken a behavioral assessment reported 22 percent higher engagement than those who hadn’t. And if the company went over the assessment results with the new hire, engagement was 30 percent higher.


About the Author:

Krishna Rajagopal is the Chief Facilitator of Great Outcomes at Narish International. He has a bachelor’s degree in economics, an MBA, and a master’s in information systems management. Krishna’s mission is to help organizations leverage their potential. He can be reached at