Employee engagement explained

Engagement, motivation and the employer ecosystem

Employee engagement unites employee motivation and the employer ecosystem in mutual benefit. When the ecosystem is positive and operating to satisfy employee needs, employees will direct their motivation and efforts towards achieving the organisational goals.  The dynamic is one of mutual benefit.  You meet my needs and I'll help achieve your success.

Are you engaged? 

This is not a question about marital status.  It is one about performance, specifically employee performance.

Wikipedia defines the engaged employee as, one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organisation's reputation and interests. Gallup says, engaged employees work with passion and feel a profound connection to their company. They drive innovation and move the organisation forward. Whilst the Kenexa Research Institute defines engagement as, the extent to which individuals are motivated to contribute to organisational success, and are willing to apply discretionary effort to accomplishing tasks important to the achievement of organisational goals.


At the core of employee engagement are three things:

  1. Employee motivation,
  2. Constructive work effort, and
  3. Pursuit of organisational success.

Managing engagement

Organisations invest heavily in managing employee engagement to reap the promised rewards of improved performance, productivity, innovation and collaboration. 

Adopting an engagement management approach dramatically influences how an organisation operates and usually involves regular surveying of employees to evaluate and monitor engagement.

Definitions of employee engagement are many and varied.  Researchers, consultants, academics and organisational psychologists offer subtly different ways to understand and measure engagement. The confusion appears to stem from whether engagement is viewed as attitude, behaviour or outcome.  It is indeed, all three.

An engaged employee may feel pride and love their work (attitude), perform tasks accurately and collaborate well with their team (behaviour), and take fewer sick days, work longer hours and achieve performance targets (outcome).
Wherever you look, at the core of the engagement approach is a need to understand and measure employee motivation.

Employee motivation

Most definitions of employee engagement refer to employees’ discretionary effort, drives, energy or passion.  This is motivation. 

When we apply motivation at work to benefit our employer, we are an engaged employee.

Studies of motivational dynamics tell us that intrinsic motivation is more lasting and powerful than extrinsic motivation generated by reward or punishment. And that intrinsic motivation occurs when our personal needs for affiliation (feeling connected), achievement (exercising competence) and actualisation (meaning) are satisfied. 

So motivation combines emotion (passion, enthusiasm, happiness) with action (skills, tasks, goal attainment) and operates differently from one person to the next.  What motivates me, may not motivate you.  What satisfies my need for connection, competence and meaning may not satisfy yours.

This is what makes it so difficult for organisations to know exactly what to do to motivate their entire workforce. And so they try different things within their employer ecosystem to become a motivating organisation.

The employer ecosystem

The phrase ‘employer ecosystem’ refers to everything about the employer organisation, both tangible and symbolic.  It includes the organisation’s purpose, its functions, leadership, systems, structures, rewards, communication patterns, culture, conditions, job design, reputation and more. 

It is within the employer ecosystem that action is taken to motivate, or engage employees. 

There are many differing opinions as to which specific features in the employer ecosystem, have the strongest impact on motivation. Is it how leaders behave and communicate? Or is it how we promote, remunerate and reward?  
Every employee research firm has its own list of engagement drivers with matching surveys questions.  What they all share is an attempt to measure the complexity of an employer ecosystem and the features within that system that operate as motivation catalysts.

A UK government report that looked at multiple engagement studies concluded there are four broad catalysts: leadership, management style, listening and responding to employees, and internal behaviours.

Catalysts are the characteristics of an employer ecosystem that suppress or motivate employees; the things that ‘drive’ employee engagement. Researchers use surveys and sophisticated data analysis techniques to find employee engagement drivers.

Our own research with more than 227,000 employees over 15 years has identified and organised motivation catalysts into seven drivers that we have labelled; job, employer, influence, development, alignment, leadership and manager. To make the cut for inclusion in our set of motivation drivers, each ecosystem characteristic had to stand the test of time over multiple studies, demonstrate a powerful impact on motivation and resonate across different employee populations.

Mutual Benefit

The ultimate goal of an engagement management approach is to create a mutually beneficial relationship between an employee and the employer ecosystem. 

This means the ecosystem operates in a way that satisfies employees’ needs for meaning, competence and connection, thus motivating employees to apply their time, skill and energy in useful pursuit of the organisation’s goals.  

When operating well, the employer ecosystem benefits from the output of productive employees, and employees benefit from the enjoyment of motivation.

So my need for connection (affiliation), competence (achievement) and meaning (actualisation) are satisfied and I feel good, and at the same time my employer benefits from my full participation and efforts to help it succeed. This is a mutually beneficial, ‘engaged’ relationship.  


Engagement and the bottom line

Regardless of the strength or weakness of individual studies there is a large volume of evidence pointing to the same conclusion - that employee engagement is a powerful determinant of business success.
— Macleod Report

The goal of an engagement approach is to create engaging employer ecosystems and reap the benefit from motivated employees.

There is a growing body of evidence to support that this approach is more than just a worthy idea, but one that has positive impact on financial performance, innovation, customer service satisfaction as well as employee health and well-being.

According to Gallup, businesses with top quartile engagement achieve
•    12% higher customer advocacy
•    18% higher productivity
•    12% higher profitability

Another global research consultancy Towers-Perrin ISR reported in 2006 that higher financial performance occurred in companies with higher engagement levels and that there was a 52% gap in income improvement between companies with high engagement versus low.

The UK government reports that engaged employees take fewer sick days and are far less likely to leave their current employer.

The Corporate Leadership Council in the US reported that engaged organisations grew profits as much as three times faster than their competitors. 

Our own research has tracked engagement metrics and found irrefutable evidence that engagement improves productivity, sales revenues and customer service and reduces turnover, absent days and complaints.
 “…the correlation between engagement, well-being and performance is repeated too often for it to be a coincidence.” (McLeod Report)

For small business too

There is unsurprisingly, less emphasis on employee engagement in small business and there is a tendency for owners and managers to assume employees of smaller organisations are automatically more engaged. 

I know my people, and they’re all motivated!

There is some evidence to support this assumption from a study of engagement by organisation size.
•    Size < 100 employees:  engagement level 45% or nearly 1 in 2 employees
•    Size > 100 employees:  engagement level 24% or nearly 1 in 4 employees

The engagement level for smaller business is certainly higher than for large business, but it is still less than half of the employees. This is well below what small business can afford.

The SME sector in Australia employs more than half our working population and for these businesses to prosper in the current economic climate they will need employee motivation working in their favour.

In summary

Employee engagement is motivation directed in service of an employer triggered by the employer ecosystem.
— Peoplepie

Motivation is energy derived intrinsically from the satisfaction of our needs for affiliation, achievement and meaning, and extrinsically from reward and punishment.

Intrinsic motivation is the most lasting and powerful.

The employer ecosystem is everything about the organisation: its culture, leadership, management practices, systems, policies, customer and supplier relationships, communication styles, job design, everything and more.

Focusing on engagement is a management approach designed to create and foster a mutually rewarding dynamic operating between employee and the employer ecosystem. A dynamic whereby the employer ecosystem triggers and supports motivation and in which employees apply their energies and skills in service of the organisation’s goals.

Engagement is not a given.

  • Only one in four employees in big business are engaged.
  • Only one in two employees in small business are engaged.

An ever growing body of evidence confirms that where a positive engagement dynamic is operating it makes a significant contribution to increased profits, service, collaboration, innovation and employee well-being.

Employee engagement delivers financial and business benefits plus wider social and community benefits. The best engagement survey tools measure both sides of the equation: the employer ecosystem and employee motivation.

The most effective way to implement an engagement approach within any organisation is to:

  1. Measure both sides of the engagement dynamic; employee motivation and the employer ecosystem;
  2. Take action in the employer ecosystem to make it more motivating; then
  3. Remeasure and track engagement levels whilst tracking your business KPIs.

Author: © 2016 Louisa Vanderkruk, CEO and Founder of Peoplepie


‘What Executives Really Need to Know about Employee Engagement’ by Elizabeth Craig and Lauren DeSimone, (Accenture) (2011) 

Corporate Leadership Council /Corporate Executive Board (2008). ‘Improving Employee Performance in the Economic Downturn’

Chapter: ‘Employee boredom in the workplace: a contribution to motivational theory and organisational productivity’ by Hinds, J-M in the book Kouzmin,A. & Still, L.V (eds) New Directions in Management, McGraw-Hill, Australia (1994)

‘Engaging for Success: enhancing performance through employee engagement’ (aka The Macleod Report) a report to Government by David MacLeod and Nita Clarke for the UK Department for Business, Innovation and Skills (2009).

Intrinsic and Extrinsic Motivations: Classic Definitions and New Directions by Richard M. Ryan and Edward L. Deci in the journal Contemporary Educational Psychology 25, 54–67 (2000)