Survey after survey indicates that only around one third of UK workers say they are engaged – a figure which leaves the UK ranked ninth for engagement levels amongst the world’s twelfth largest economies as ranked by GDP (Kenexa 2009).

The UK also has a productivity deficit. The most recent ONS survey found that output per hour in the UK was 15 percentage points below the average for the rest of the G7 industrialised nations in 2011; on an output per worker basis, UK productivity was 20 percentage points lower than the rest of the G7 in 2011. This represents the widest productivity gap since 1995.

We believe these two factors are related. As this paper demonstrates, there is a firm correlation between employee engagement and high organisational productivity and performance, across all sectors of the economy.

Employee disengagement is therefore clearly contributing to our disappointing productivity figures. Analysis indicates that were the UK to move its engagement levels to the middle of the top quartile such as that for the Netherlands this would be associated with a £25.8bn increase in GDP. (Kenexa).

No wonder then that increasing employee engagement is seen as a major priority by UK leaders. In the latest CBI Harvey Nash employment trends survey (July 2012) securing high levels of employee engagement was the top workforce priority for UK businesses, ahead even of containing labour costs. This year the Head of the Civil Service identified increasing engagement among public sector employees as a priority.

This paper highlights the evidence for the effectiveness of employee engagement strategies in improving performance, productivity and, in the private sector profitability. This evidence comes from academic research, and from research using data compiled by research houses such as Towers Watson, Kenexa, Hay, Aon Hewitt and Gallup. It comes from case studies compiled by many leading companies and organisations. The cumulative effect of these different studies leaves little room for doubt about the statistical importance of engaging employees. But the evidence also comes from our own experiences of working in organisations which care about engaging and inspiring their employees – and the effect that has on performance.

As well as performance and productivity, employee engagement impacts positively on levels of absenteeism, on retention, on levels of innovation, on customer service, on positive outcomes in public services and on staff advocacy of their organisations.

It is also clear that engagement impacts more on performance than the other way around. A study in a leading retail bank found that employee engagement levels predicted subsequent business level performance over a three year horizon while business unit performance predicted engagement only over a single year.

No wonder that 94% of the world’s most admired companies believe that their efforts to engage their employees have created a competitive advantage (Hay).