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Democratizing Employee Engagement: Why it’s Essential for Businesses of All Sizes

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Employee engagement is a critical factor for any business, regardless of its size. SME businesses often overlook the importance of employee engagement due to their limited resources and a smaller workforce. However, employee engagement is equally important for SMEs as it is for larger organizations. This whitepaper will explain the reasons why employee engagement is important to SMEs, provide statistics and examples of how employee engagement can positively impact SMEs, and discuss the return on investment (ROI) on employee engagement strategies, including performance management.

Why Employee Engagement is Important to SMEs:

Employee retention: Higher Employee engagement will increase employee retention, which is a significant concern for SMEs. High employee turnover can be costly for SMEs as it can result in loss of productivity, decreased morale, lost knowledge, and increased recruitment and training costs. According to research, disengaged employees are 87% more likely to leave their current employer than engaged employees.

Improved productivity: Employee engagement has been linked to improved productivity levels. When employees are engaged, they are more likely to be motivated and committed to their work, resulting in increased productivity levels. According to research, companies with engaged employees outperform those without by 202% deliver better business outcomes and higher profitability.

Increased customer satisfaction: Engaged employees are more likely to provide excellent customer service, resulting in increased customer satisfaction levels. According to research, companies with highly engaged employees have a 10% higher customer satisfaction rate. This leads to higher average customer spend and more repeat business.

Better business outcomes: Engaged employees are more likely to go above and beyond their job responsibilities, resulting in better business outcomes. According to research, companies with highly engaged employees have a 21% higher profitability rate.

Examples of Successful Employee Engagement Strategies:

Providing employee development opportunities: SMEs can provide employees with training and development opportunities to help them grow professionally and personally. This can include on-the-job training, mentoring programs, and attending conferences and seminars. Online learning platforms are a low cost an efficient way to upskill your workforce and drive better employee engagement.

Implementing employee recognition programs: SMEs can implement employee recognition programs to acknowledge and reward employees for their hard work and dedication. This can include bonuses, promotions, and other incentives. It can however, be more simple, use technology to enable peer to peer and top down recognition. This drives motivation of your people and makes them feel a valued part of the team.

Offering flexible work arrangements: Often challenging depending on the industry but SMEs can offer flexible work arrangements, such as telecommuting and flexible hours, to accommodate employees’ personal needs and promote work-life balance.

Return on Investment (ROI) on Implementing Employee Engagement Strategies within your business:

Implementing employee engagement strategies can result in a significant ROI for SMEs. Here are some examples:

Increased productivity: A study by Gallup found that engaged employees are 21% more productive than disengaged employees. This can result in increased revenue for SMEs. An increased productivity of 21% can have significant impact on the performance of your business.

Decreased turnover costs: According to research, the cost of replacing an employee can range from 16% to 213% of the employee’s salary. Implementing employee engagement strategies can reduce turnover rates, resulting in cost savings for SMEs.

Increased customer satisfaction: According to research, a 5% increase in customer retention can result in a 25% to 95% increase in profits. Engaged employees are more likely to provide excellent customer service, resulting in increased customer retention rates and profits for SMEs.

Performance Management: Performance management is a critical component of employee engagement. It involves setting goals, providing feedback, and coaching employees to help them reach their full potential. SMEs can implement performance management strategies to help employees improve their skills and achieve their goals. This can include regular performance reviews, goal-setting sessions, and performance improvement plans.


Employee engagement is critical for the success of SMEs. Engaged employees are more likely to stay with their current employer, be more productive, provide better customer service, and achieve better business outcomes. Implementing employee engagement strategies can result in a significant ROI for SMEs, including increased productivity, decreased turnover costs, and increased customer satisfaction.

Prosper EX is an Australian Employee Engagement Platform that helps better drive business performance through Employee Engagement, Performance Management, Development and Recognition in one, easy to use platform.

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