Employee Engagement and Organizational Performance: A Literature Review

This literature review explores the relationship between employee engagement and organizational performance. It discusses the definitions of employee engagement and organizational performance, the importance of employee engagement, and the impact of workforce diversity on the relationship between employee engagement and organizational performance.

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Literature Review
7HURM012W.2 HUMAN RESOUCE MANAGEMENT
LITERATURE REVIEW ASSIGNMENT

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Literature Review
Employee Engagement and Organizational
Performance

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Literature Review
Introduction
Employee engagement has been a hot topic of research among industrial
and management practitioners, human resource researchers, and positive
psychologists. No matter what is the type of business, employees are the
most crucial assets for any organization. By creating a development-
enabling and friendly working environment that leads to employees'
commitment, employers can also enhance their chances of retaining and
hiring worthy employees. Employee engagement is a buzzword that most
employers and managers think they completely understand, but they face
entirely different circumstances when it comes to practicing. They face
challenges while implementing strategies to help employees engage in
competitive activities. Regardless of their nature, the progress and
survival of any industry undoubtedly depend on their human capital and
the contributions of their workers. The challenges of a committed and
engaged workforce have been reported by almost every kind of
organization. Every organization considers its employees as the most
crucial assets (Motyka, 2018). Over the last few decades, concepts of
organizational commitments and job engagement as methods to enhance
an organization's productivity and performance have been discussed
extensively in the literature. Furthermore, organizations are consistently
looking for several strategies to improve their financial arrangements
while emphasizing various ways of enhancing employees' quality of care.
To achieve positive business outcomes and competitive advantages,
organizations must know the organizational commitment and job
engagement of their personnel. It is why human resource managers

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ranking the establishment of job engaged workforce as a priority for their
companies does not seem surprising. It has also been suggested that job
engagement is crucial for fruitful business outcomes. Because of the
increasing competition of business sectors, committed employees have
become a matter of survival for every firm.
The article's significant objective is to sum up the previous research
based on the categorization and ordering, identifying the gaps between
the recent up to date information, and proposing future research agendas.
The paper presents the findings and outcomes in an orderly and synthetic
manner providing theoretical and practical implications. The study's
consequences indicate a statistically prominent relationship between the
employee engagement and several categories and subcategories of
organizational performance.
From the viewpoint of Satornino, Doreian and Allen, (2017), it is analysed
that employee engagement is very crucial to understand the meaning and
importance of employee engagements and the impact they could have on
the overall performance of the organizations. The purpose of this article is
to provide an assessment that aims to introduce the results regarding the
research of an organizational performance based on the employee efforts
and engagement. Employee engagement and satisfaction is related to the
indication of how happy an employee is within workplace. It includes
addressing of motivation, involvement and commitment for a company’s
work. There is need for focusing upon improving the satisfaction level of
employees. This can be concluded that employee satisfaction has to be
controlled in particular manner so that motivation can be increased. There

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is need for managing different conditions involved within the
accountability of employee satisfaction and increased performance. There
is need for improving the standards of employees and making them
effective so that they can work within company for long period. The
expectation of employees from a company are higher and it is ensured
that they must be having effective employee engagement strategy so that
highly engaged workforce can be implemented.
It is evaluated from the views of Roumpi, Magrizos and Nicolopoulou, (2020),
employee engagement surveys are important for development of
measuring performance of the people working in the company.
Engagement is a term which focuses upon the providing of useful
resources that will help a company to work in efficient manner.
Definitions
Employee Engagement
There are different definitions of employee engagement by various
scholars and organizations. It must be noticed that in 1990, Kahn was the
first scholar to propose the concept of employee engagement. He defined
employee engagement as harnessing of members of organizations
according to their work responsibilities that mainly include self-expression
and self-employment of people cognitively, physically, and emotionally in
their work lives. Various research has proposed multiple perspectives of
employee engagement since Kahn proposed this concept. These
definitions reflect different understandings of employee commitment and
engagement, but each of them defines employee engagement as crucial

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for businesses' success (Kocherlakota, 2015). . Human resource
management is the biggest problem on which every organization should
put effort consistently. It seemed that employees are committed to their
jobs and are dedicated enough to perform well but are not engaged
enough by the management team. It is all up to the management team
and the employer to get the employees' physical, mental, and emotional
efforts out of them all at the same time (Heritier, and et.al., 2017). It is crucial
to get the best out of the employees by properly managing their time,
work, and efforts.
Employee engagement is related to workforce feeling passionate about
their working, occupation and are committed for the company so to put
discretionary efforts into jobs. An engaged employee is fully observed and
enthusiastic about jobs and takes positive actions towards reputation and
interest of entity. Similarly, organisational performance is actual results of
a business concern that is measured against its defined outputs.
Employee engagement is beyond games, events and practices in the
company and contributes widely in driving business performances as
engaged employee puts emphasis on entire organisation and properly
carry out operations by understanding their purpose, where as well as
how they fit in attaining great performances. It is analysed that there is
positive relationship among employee engagement and organisational
performance as engagement of employee helps the entity to outperform
in competition and have high recovery factor after any kind of setbacks.
Employee engagement excel in performance of company in dynamic
industry as engaged person attain excel in satisfying consumer and

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attaining high results on productivity with operational efficiency.
Moreover, employee engagement lowers absenteeism as well as reduces
turnover at workplace. For instance, within a construction organisation,
engaged employee is important to reach or attain project delivery metrics
including production quality together with safety. In various companies,
employee engagement is viewed as emotional, behavioural together with
cognitive perspective. Behavioural aspect of employee engagement
fosters willingness of a person to apply towards discretionary practices of
occupation that results in high performances of company in form of value
added advantages to the premise.
Engaged employee prefers to doing what they like to do as well as
find their practices more meaningful that motivates them for harder,
faster and enthusiastic efforts to deliver great results. In an organisation,
engaged employee are seen as 40% more productive for great
performances and more effective in delivering end results within dynamic
business environment. Employees join the business with desire and
expectation to improve their and organisational performances. At the time
when they fail in their personal objectives, they takes initiation in looking
towards better options that makes them more engaged to deliver high
organisational performances. Professionals of an entity believes that
engaging employees in decision making will lead to brainstorming of ideas
and effectual solutions to problems. Highly engaged employee contribute
best in complex situation so that it organisation is able to make revenues
and other business goals leading to great performances in uncertain
situations. Furthermore. Making personnel feeling engaged naturally

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foster or motivate them for going towards extra mile to attain resulting in
great performances by finishing working quicker and increasing capacity
of workplace to finish tasks by improvising on customer services. So, it is
said that there is positive relationship among employee engagement and
that of organisational performance as engaged employees tends to takes
leaves less and makes huge efforts in delivering great performances in all
types of circumstances.
Employee engagement as a positive state of mind
Employee engagement can be defined as the involvement and
satisfaction of individuals along with enthusiasm for work. It can also be
referred to as having a positive emotional, long-lasting, and motivational
state of work awakening of employees who are always ready to devote
themselves to any work at any time but are partnered by proud, pleasant,
and encouraging experiences during the job (Zeng and Han, 2005).
Employee Engagement as a multi-faceted contract
In addition to cognition, employee engagement also included flexible
applications of behaviors and emotions. Employee engagement is
considered a mixture of loyalty, commitment, productivity, and ownership.
In another definition by Saks, employee engagement is referred to as a
'unique and different concept' that is composed of emotion, knowledge,
and behavior (Wellins and Concelman, 2005).
Employee Engagement as a dedicated willingness
In 2001, Hewitt Organization defined employee engagement as the
number of workers willing to stay in the firm and keep working hard for

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the company according to three crucial aspects of Say, Stay, and Strive.
'Say' suggests that workers use suitable language to describe their work,
colleagues, and company. 'Stay' indicates that workers are willing to stay
at the company for a long time and do not consider it a temporary
position. 'Strive' suggests that workers are eager to put extra work and
effort into making the company's success possible.
Organizational Performance
It includes examining the performance of companies against their goals
and objectives. Organizational performance consists of actual results and
outputs of the company measured against the organization's intended
outcomes (Ronan and Prien, 1973). It encompasses three particular firm
results: product market performance, financial performance, and
shareholder return.
Relation Between Employee Engagement and Organizational
Performance
There is a strongly supported link between the engagement of employees
and organizations' performances. There is a robust yet straightforward
logic behind it; an engaging workforce leads to enhanced operations
efficiency, thus producing higher profits and achieving customer
satisfaction. Moreover, employee engagement helps drive effectiveness in
a business through customer loyalty, improving retention, higher levels of
productivity, profitability, and safety.

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Figure 1Employee engagement, 2020
From the above statistics, it is concluded that employee engagement is
known as key for developing a successful business. There are only 15% of
employees who are involved within the driving of employee engagement.
There is fast changing environment of business nowadays and that is why
retaining of top talented employees is necessary. As per the researchers
conducted within few years, it is concluded that there are more than 600
business which are having more than 50 employees and companies are
hiring and retaining employees. As per this graph, it is concluded that war
of talent concept is basically needed for managing skills for business and
achieving expectations of employees.
Statement of the Problem

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The employee engagement of already existing employees often has more
impact on enhancing the organizational performance. The relation
between the concentration of employees and organizations' performance
is overlooked, and studies over the last few decades along with abating
effect of workforce diversity. Such kind of research certainly has gaps,
thus lead to my statement of the problem: How does employee
engagement affect organizational performances?
Conceptual Framework
This paper is based on explanatory variables of employee engagement
and their impacts on organizational performance. The relation of these
variables can change by the organization's workforce diversity.
Objectives of the Study
The study conceptualizes the organizational performance enhanced by
employee engagement positively based on several workforce diversity.
This paper is generally concerned with the following significant purposes:
Employee
Engagement
Workforce
Diversity
Age
Gender
Age of Employee
Education
Job Tenure
Organizational
Performance

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 Examining to what extent the workforce diversity elements change
the relationship between organizational performance and employee
engagement
 Determine how employee engagement impacts the organizational
performance
Research Hypothesis
Based on the statement of the research problem and literature review, the
following hypothesis is generated, which may aid in finding out whether
employee engagement affects organizational performance chiefly or only
partially. Following are the hypothesis based on the conceptual
framework:
 WFD Workforce Diversity will have a slight but significant effect on
the relationship between employee engagement and organizational
performance
 EE Employee Engagement will influence organizational
performance.
Review of Literature
Commitment and engagement are workplaces approach precisely
planned to ensure that employees are dedicated to their organizations'
goals, values, and objectives. Employee engagement helps in motivating
the workers to contribute to the success of the company. In addition to it,
it also enables employees to improve their sense of well-being. Employee
engagement is related entirely to commitment and passion. Engagement
is defined as a positive approach and attitude towards the employees' job
by distinguishing it from both job commitment and job satisfaction

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(Rothwell, 2010). Engagement is more volatile and temporary than
commitment. As discussed earlier, engagement is all about passion and
commitment. It is one's will to expand the discretionary efforts and invest
enough that help the employer succeed by achieving the organization's
goals and values. It is considered to be beyond the usual job satisfaction
or general loyalty of an employee to the employer and organization.
Therefore, it must be kept in mind that the complete equation of
engagement is achieved by keeping maximum job contribution in line with
complete job satisfaction (Krishnan and Sharma, 2012). Disengagement of
employees gets them misaligned from their responsibilities and roles. It
suppresses the emotional, personal, and cognitive aspects of work
(Shantz, Truss, Soane, Delbridge, and Alfes, 2013). They have their point
of view regarding the organization as well as personal success. They are
not proud or passionate at all. They are not enthused and do not make
use of their efforts to make a difference in the search by an employer for
the sustainable success of the organization.
According to the views of Waheed and et.al., (2017), it is analysed that
quantum workplace is defined as employee engagement as the strength
for emotional and mental connection that employees feel for places of
work. It is given by Gallup that engaged employees are the ones which
are involved, enthusiastic and committed for working at the company. As
per the views given by Willis Towers Watson, it is evaluated that
employee engagement includes the willingness of employees and the
ability that contributes for success of company. According to the views of

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Literature Review
Aon Hewitt, it is concluded that employee engagement is defined as the
level of the psychological investment within companies.
Dedicated employees perform better in their jobs, have better
health, and are more active in work. They get more satisfaction from their
jobs along with enough appraisal. It leads to less willingness to leave the
organization and more organizational commitment. They have more
positive behavior towards themselves, their colleagues, their families,
their friends, and their jobs. A survey (of 342 employees in more than 100
hotels) suggests that organizational resources have a positive influence
on employee engagement and employee performance. The employee
engagement index tells us that only 34% of workers are efficiently
committed to their current jobs. Over the last three decades, it has been
reported that only 18% of the employees are engaged with their jobs
(Gallup Management Journal, 20). So, what do we expect from employees'
job engagement? When employees do not perform well or are not
performing their work efficiently, even the most minor tasks would take so
long. Hence, there would be a significant decrease in productivity. When
efficient working methods and practical techniques are not practiced
inside the organizations, performance will never be enhanced or
maintained. It is indispensable for each employee to perform their duties
well on time and according to the employer and the organization (Mathur,
2020).
According to the views of (Dibben and et.al., 2020),it is analysed that
employee engagement is the emotional commitment for employees
working in the company. When there are employees who feel engaged,

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they are caring more about the organisation and doing the best work for
attaining objectives of the organisation. Employee engagement has
become one of the most essential priority of companies and the reasons
are mentioned below –
 It enhances the productivity at workplace and engaged employees
outperform the peers who are not engaged.
 It enhances the morale of workforce and managed the work
efficiently.
 It helps to increase the employee performance and provide a better
customer service.
 Low employee engagement is a more costly problem and it is not
easy to manage the employees working in the company.
Employees' engagement helps perform several challenging
activities, such as innovating, solving complex problems, attracting and
creating new consumers, and maintaining organizational working
performance (Mukhalipi, 2018). Disengaged employees do not actively try
to damage the organization or their selves. Still, they get to know it very
late that their carelessness and unfaithfulness are risking the future of the
organizations they are working in and the end of themselves (Yadav,
2020). The reputation of an organization is dependent on its employees.
When the organizational reputation is affected, so does the importance of
each employee. They might not be able to get a better opportunity
(Yuzarni, 2019). Disengaged employees seem to be affecting their
resumes. One of the critical contrasts between the presentation of a drew
in and a separated worker is "optional exertion," or "the degree of

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exertion individuals could give on the off chance that they needed to, yet
far in excess of the base required." Simply put, if representatives are
associated with and excited about their work and working environment,
they are probably going to surpass the assumptions and prerequisites of
their position. Connected with representatives are energetic about their
work. They feel propelled by their chiefs and are sure they can make
progress in their jobs. Connected with workers see the reason in what
they do each day and assume a critical part in business victories.
Notwithstanding, numerous laborers don't encounter this degree of
commitment. As indicated by research led by Gallup, around half of the
US labour force is withdrawn, and 15% to 20% is effectively disengaged.
Disengagement might be brought about by a helpless relationship with an
immediate chief or by an absence of significant criticism or
acknowledgment. It might even be an essential misalignment between the
organization and workers' qualities. Without an approach to gauge
representative commitment, business pioneers are left to speculate what
activities will improve the worker experience.
Today the general public and the business are seeing a phenomenal
change in the worldwide commercial centre. Numerous organizations are
going after ability work power. In the serious world, the capacity of
associations to pull in, connect with, create and hold an ability turning into
a high undertaking action. There is an expanded interest for equilibrium
between fun and serious stuff of representatives and positive connection
among boss and worker. This required associations to comprehend the
necessities of representatives and to discover the available resources to

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address those issues. Simultaneously the associations need to create
abilities at all degrees of association. Thus, the labour force should
comprehend the significance of the authoritative achievement.
The primary factor that impacts representative responsibility is the
director worker relationship. The supervisor makes the association among
representative and association. This relationship is frequently the major
issue corresponding to representative maintenance. A new report shows
that representative who trust their supervisors seem to have more pride
in the association. They are bound to feel, they are applying their
individual ability for the viability of the association notwithstanding their
own headway. Advancing representative commitment, administrators
ought to – have obligation of accomplishment and disappointments, show
obligation to variety, help to discover arrangement, exhibit
trustworthiness and honesty and regard and care for workers. Human
asset rehearses in an association have the effect between compelling
commitment and important human resources joining the opposition.
Workers are discovered to be more dedicated to the association when
they are dealt with reformist human asset rehearses. Advancing worker
responsibility, including instructing the supervisors to be viable individuals
chiefs, is a critical factor in representative commitment in an association.
Representative accomplishment is prime factor in any organization, so
when the workers of an organization are not satisfied with the work, they
are in dire need of motivation and to do the job so they ultimately help in
the organizational development. When the representatives are busy in
their working routine but are satisfied and contended with their position in

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the company, they sense the leading association with the organization
and they produce the quality work that in the end is beneficial for the
organization (Bose and Gupta, 2017). More work is done by the
representatives when they connect with other representative in a positive
way. Exceptionally the USA organization accepts the non-attendance of
about 41 %. The main problem of having the separate representative in
the organization is that they don’t feel connected and they are unaware of
the expectations the organization is expecting from them. When the
representatives are fully satisfied and happy from their current position
they are working for, they work more passionately for the organization
Conclusion
This research has been undertaken to determine the impacts of employee
engagement on organizational performance. The observations also
include the relationship between workforce diversities acting directly upon
the organization's performance and success. It is concluded that
organizational performance depends mainly on employee commitment,
dedication, and engagement. Any organization's success is never possible
without its employees being faithful to their jobs and the organizations'
values. It must also be noticed that human resource management plays a
significant role in maintaining a positive relationship between employee
engagement and organizational performance. Due to the immense
potential impact on several organizations' outcomes, job engagement has
received much focusing on both practice and research. This study focuses
on the influence of job commitment and efforts put by the employee on
organizational achievements in various industries. Practitioners and

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scholars consider the low levels of employee engagement and dedication
at work as the most alarming economic challenges worldwide.

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