SME's - Improve your Profitability through Employee Engagement

Research has consistently shown the link between engaged staff and increased profitability. However the facts tell another story. A recent UK a survey reported that only one third of British staff felt they were highly engaged at work with only 48% saying they were only moderately engaged.

In Australia nearly half the workforce is likely to be looking for a new job in the next 12 months according to "a Snapshot of Australian workplaces" a national survey of 1000 Australians including full and part time workers and the self employed (1).

In New Zealand, hundreds of thousands of new jobs will open up over the next four years as baby boomers retire and the economy expands. This will create more opportunities than ever for the existing workforce. 

It is often tough for SME's (small and medium sized businesses) to invest and nurture staff due to their size. In fact, the whole discipline of staff satisfaction is often sited as one of SME's weakest practices. Business owners tend to focus more on running the business, driving sales and paring costs. However the costs of replacing, attracting and training new staff is often greater than retaining existing staff. 

For small businesses, whatever the industry, who want to improve productivity, reduce employee turnover and improve customer service there is no better way than to create a great workplace.

According to research carried out by Dr Anthony Brien who leads Lincoln University Service Productivity Research Programme "increasing organisational social capital (OSC) - how employees interact with each other and their organisation-can be a big contributor to increased productivity and hence greater profit". (2)

OSC focuses on and measures five elements;

  1. Employee commitment,

  2. Communication,

  3. Trust,

  4. Influence, and

  5. Social relations.

So how can you improve your employee engagement?

Here are a few tips on increasing OSC and creating a great workplace. 

  1. Commitment. Build positive rapport with staff by involving them in the direction of the company. Encourage their development through training programmes and mapping career paths. Provide opportunities to learn and grow. Show a personal interest in all staff, treat them with respect, project confidence and lead by example.

  2. Communication. Encourage employee feedback and input. Have an open door policy. Provide regular and timely feedback both positive and constructive on the employees performance, letting your employees know how they are doing.

  3. Trust. Encourage delegation and give employees latitude to do their job (don't micro manage). Ensure you have policies in place around bullying, sexual harassment and discrimination and enforce them where necessary. Be specific about acceptable work behaviours. Keep the promises you make. Have company values that are well communicated and understood by all. Reinforce them at meetings and performance reviews.

  4. Influence. Celebrate success, recognise and reward milestones, promotions or even staff birthdays. Praise appropriately and recognise good performance. Ensure the staff feel valued, supported and encouraged. This can be as simple as a verbal thank you and certificate to say well done.

  5. Social relation. Ensure managers and supervisors foster collaboration and trust throughout the company. Have team or group goals and celebrate as teams. Have systems and standards in place so that each employee fully understands their role and how it supports the team overall. Ensure in the recruitment process candidates understand the importance of team culture, integrity and thoughtfulness.

Additional factors for creating a great workplace.

  • Collaborate. Employees need to understand the goals of the company to be able to contribute to the success of the business so share results,the business vision and goals. Ensure employees feel included by keeping them informed. Send weekly company updates by email. Listen to opinions.

  • Access. Provide open access channels for employees to express their ideas, opinions and concerns. Encourage employees to ask questions and provide suggestions to improve the way things are done.


The research is clear; the higher the levels of OSC and employee engagement the higher the levels of productivity, profitability and retention. Understandably, this takes time and commitment from the business owner.

However with the increasing demand for good employees and looming staff shortages, the need to build a great place to work is even more important than ever. The good news is that any small change in staff engagement can have a significant impact on productivity and profitability. 



(2) Dr Anthony Brien: Increasing organisational productivity, Inside Tourism

Dr Anthony Brien, Clive Smallmanhe: Respected Manager, the organisational social capital developer

Dr Anthony Brien, Nicholas Thomas, Ananda Hussien: Turnover, Intention and Commitment

Dr Anthony Brien, Nicholas Thomas, Ananda Hussien: The Low Level of Hotel Organisational Social Capital, a New Zealand Case Study


Author, David Shackleton, Partner of nem Austrlasia.

This article is based on research and opinion available in the public domain.