How Highly Engaged Employees Improve Business Performance

According to research from Gallup, high rates of employee engagement are a direct indicator of improved business performance. 

The report, which measured eleven key business outcomes across 276 organisations, found that organisations with more engaged employees correlated with higher levels of profitability, product quality and customer loyalty. 

To improve employee engagement, Gallup says that businesses must ensure they are measuring engagement rates within the business – but leaders must make sure these measurements are looking at the workforce as a whole rather than specific areas. 

Jim Harter, Chief Scientist of Workplace Management and Wellbeing at Gallup, says of the research: “Measurement is one thing, what you measure is another. "You can measure a lot of things that have nothing to do with performance and that don't help a company implement a system that allows managers to create change.”

The importance of leadership in driving employee engagement 

Managers account for 70% of the variance in team-level engagement, according to Gallup research – meaning that they play a significant role in determining whether employees are engaged.

When building a strategy to improve employee engagement, it needs to take a top-down approach in order to be effective. 

At many leading companies CEOs themselves are directly involved in driving initiatives to improve employee engagement – such as Accenture, which was rated one of the World’s Best Workplaces by Fortune in 2025. 

The company has shifted its leadership approach within the AI era to a culture of ‘reinvention’. Through significant shifts, Accenture has prioritised employee engagement by ensuring leaders give their employees permission to fail. 

Julie Sweet, CEO of Accenture, says of this approach in an interview with Great Place to Work: “We have a culture of progress over perfection. When you have that culture, you provide the safety to move quickly, to be able to make mistakes, and that is a deep part of our DNA.”

Giving employees space to grow in this way can make a significant difference to their engagement levels, with a study of 50,000 employees by Inpulse finding that 81% of employees who felt trusted by their line managers were engaged, compared to 28% of employees who didn’t.

This higher engagement has translated into higher employee trust in the company, with 84% of employees telling the World’s Best Workplace survey that management is honest and ethical in its business practices and that facilities contribute to a good working environment.

Improving employee retention 

Gallup’s research also finds that companies with more engaged employees are likely to see employee turnover rates that are 18-43% lower than less engaged teams. 

This can be seen at Patagonia, where average employee turnover is just 4% – compared to an average of 57% in the US. 

To hire and retain highly engaged employees, the company has taken what it refers to as a “purpose-first” approach to talent acquisition. 

This means seeking out candidates who are passionate about environmentalism and the outdoors over those with experience, as these employees are likely to be more connected to Patagonia’s core mission. 

By doing this, the company believes it is not only increasing employee engagement but also making better products, with founder Yvon Chouinard saying in his book ‘Let my People go Surfing’: “We can hardly continue to make the best outdoor clothing if we become primarily an “indoor” culture.”