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So many North West SMEs take the time to acknowledge their customers’ needs, but fail to consider what’s important to their employees. A loaf without yeast is flat and uninteresting - exactly how your business could end up if you don’t focus on motivating and engaging your team.
Your people are your greatest asset
It’s a mystery why so few Manchester, Altrincham and Cheshire based businesses truly invest time and effort in engaging their workforce. Improving employee engagement can bring oodles of benefits, like boosting profits, performance, customer service and retention. Attending to the needs and expectations of your workforce helps build a strong, stable, happy and committed team. Where engagement is high, businesses experience 78% less absence, 18% higher productivity and are 23% more profitable compared to companies with low employee engagement. Source
In this guide we will cover:
What employee engagement is and why it matters to business performance
The business benefits of an engaged workforce
How to measure and monitor engagement
A leader’s role in building engagement and retention
Areas to focus to build an engaged workforce
The role of recognition, collaboration and career development
Wellbeing and flexibility at work
Employee Ownership Trusts
What is employee engagement?
Gallup defines employee engagement as “the involvement and enthusiasm of employees in their work and workplace”.
When employees feel disengaged, they tend to go through the motions and have little motivation, sense of purpose or enthusiasm to contribute and make a difference to the future success of the organisation. Engagement is the difference between surviving and thriving at work.
The common features of an engaged workplace include:
Giving employees opportunities to voice their concerns
Managers who listen and act on the needs of their team
Commitment to company values and living them every day
Visionary leaders who value the contribution of their workforce
Management who empower not control.
What impact does engagement have on retention?
In Gallup’s State of the Global Workforce Report 2025, Europe emerged with the lowest regional percentage of engaged employees (13%). When you drill down into the results at UK level, engagement drops to 10%, while 30% of employees said they were actively looking for a new job - equalling the result across Europe.
Low engagement is not just a European issue. Across the globe engagement is falling and 79% of employees are disengaged to some extent. Declining engagement costs a business in terms of productivity, quality of product/service, absence, loyalty, workplace dynamics, profits, and talented people actively choosing to leave.
On the flip side, high engagement is linked to having a sense of purpose and happiness at work. It is also strongly linked with positive mental health.
Lord Mark Price said it best in the Work L Global Workplace report 2024:
“Workplace happiness is essential for economic success and productivity. Companies that prioritise employee wellbeing and engagement not only see a stronger bottom line but also build a workforce that’s motivated, loyal, and better equipped to face future challenges.”
- Lord Mark Price, Founder of WorkL and WorkL for Business
The benefits of building an engaged team
Companies that invest in employee engagement enjoy lower absenteeism, increased staff retention, better sales, greater productivity and profitability.
Employee retention: Maintaining high staff retention rates in any industry is a challenge, more so today given increasing employee mobility and expectations. Replacing members of your team can be a costly and time-consuming process. Improving employee engagement helps through increasing employee satisfaction and retention.
Absenteeism: All the positive impacts of building an engaged team combine to lower rates of absence. It makes sense that a happy, healthy and energised workforce results in fewer days lost to illness-related absence.
Productivity: Employee engagement and productivity go hand in hand. Employees who feel valued and rewarded for their hard work are more likely to go the extra mile and become more active participants at work.
Performance: People who are invested in the future of the business are more motivated to produce high-quality work. When employees can see how their role contributes to business success, and the rewards they can gain from this, performance will improve.
Communication: Engaged employees are more likely to communicate openly with their employers. When this happens, employees feel valued and involved, which invites more honest feedback and communication - invaluable in delivering strategy.
Culture: A motivating, engaging business culture not only attracts new employees, but clients too. In today’s media savvy world, customers are looking for strong employer brands, and fully engaged employees are the best way to showcase what you offer.
Health and Wellbeing: There is a strong connection between health and wellbeing initiatives and employee engagement. Businesses that care about their employees’ health and invest in their wellbeing see a boost to their bottom line.
Understanding and measuring engagement
Employee engagement is generally measured through an engagement survey and tracked throughout the year using shorter pulse surveys to take temperature checks at various points in time. These can provide a useful monitor when a business is going through change.
Commonly, engagement surveys track an employee’s feelings of happiness and satisfaction at work, sense of role and purpose, and recommendation levels (i.e. would employees recommend the business as a great place to work). When combined, these answers give a total engagement score. The higher the score, the more engaged the workforce.
You have to ask your employees questions to find out whether they are engaged. While a survey provides valuable statistical data, in-person conversations can also reveal a lot about a person’s satisfaction at work. One-to-one coaching conversations with managers, stay interviews (see below), roundtable discussions and focus groups are all helpful verbal feedback channels.
Other metrics most businesses monitor that may indicate low or declining engagement are:
Increasing rates of employee absence
Declining productivity and quality of output, perhaps coupled with an increase in errors
Poor customer satisfaction levels
An increase in employees leaving the business (high turnover or low retention).
We’ll discuss measuring engagement more later on.
The role of leadership in building engagement and retention
“People leave bad managers, not bad companies”
Good line management is so often the difference between an employee deciding to stay or leave their employer. People leave weak managers and poor leaders who do not listen to, or seek to understand, others. People leave leaders who fail to develop themselves or their team, and who never recognise or reward strong performance.
Managers have a huge role to play in leading the behaviours that drive engagement and building a culture where it can thrive. From top down, leaders have a responsibility to communicate the ‘why of work’ - that is the business strategy and an employee’s role in it. With this understanding, people are more likely to feel the sense of purpose linked to strong engagement and retention. Without it, employees will become emotionally disconnected and confused about the purpose of their role.
Managers must first understand their own important role in creating a business culture that embeds and champions employee engagement. One aspect of this is building strong relationships through continuous team dialogue.
Managers should be using their regular one-to-one conversations to ask:
How supported do you feel by me and the wider leadership team?
Where and how could we improve the support you receive?
What’s one small change we could make that would improve your overall wellbeing?
Which tasks drain your energy the most, and how often do they crop up?
A flexible manager mindset
There’s also a growing need for managers to demonstrate flexibility in the way they lead by recognising and adapting to each individual’s needs. For some leaders this requires a simple shift in mindset, others may need to be supported with skills development. Read on for more about flexibility in the workplace.
Where to focus your efforts to build a motivated and engaged workforce
Whether you’re an SME owner-manager or belong to an HR function, the areas to focus on to boost engagement are the same.
Collaboration
Collaboration is about focusing on the ‘feeling involved’ part of engagement. Opportunities for collaborative working include project work, team building and corporate social responsibility activities such as volunteering and fundraising.
Collaboration offers employees the possibility to connect with other teams and departments, to expand their network and build new relationships - inside and outside the workplace. It is a chance to contribute to organisational growth and success through ideas sharing, teamwork, and shared goals. Collaboration builds trust and helps employees to feel valued, heard and understood, promoting a sense of belonging and involvement that strengthens engagement.
Career development
Access to learning and development is critical to growing engagement and retaining talent within the organisation. Employees want to see a clear path for personal and professional growth, but this won’t look the same for everyone.
That’s why regular, meaningful career conversations are integral to building engagement. When managers listen to and understand the development needs of their team members, employees feel heard. As development opportunities arise and are taken up, employees feel wanted and motivated to contribute to their team and organisation’s success.
PDPs with a difference
A popular trend right now is the personalised development plan. Forget the lengthy, complex 3-year career development plan. We’re talking short, simple, action-oriented career development plans with clear links to company values and goals. Setting short-term or mini goals is often more motivating than having annual targets.
Recognition
While salary is an important part of employee reward, it’s also a basic human need. When it comes to recognition, employees expect more than financial rewards. Recognising employee contributions and achievements beyond this broadens the potential to strengthen engagement and retain employees within the business.
What recognition best practice looks like
Sharing positive feedback in manager one-to-ones
Sending a thank you card or e-card
Open praise in team meetings
Peer-to-peer thanks and recognition
Monthly recognition programmes, e.g. employee of the month
Annual employee awards programmes
Celebration events
Flexibility
In the 2024 Global Workplace report, over 4,000 of the 400,000 respondents identified flexibility as an area for improvement in their workplace. There continues to be great debate around flexible working, with brands such as Amazon mandating a return to full-time office based working. This kind of employer ruling is a huge turn-off for many, particularly amongst working parents, carers, people with disabilities, and those who most value flexible and hybrid working. Researchers at King's College London found that 10% of UK office workers would quit straight away if a five-day return-to-office was mandated by their employer.
When it comes to demonstrating flexibility, it’s better to trial an initiative to test how it works for everyone, rather than dismissing it completely. This approach demonstrates fairness and an open mind, even if it doesn’t work out for your organisation in the long term.
Flexibility in the workplace also means responding to diversity, equity and inclusion needs. Managers need to see employees as people with feelings, fears and families, not as robots who think only of work. People should not have to leave part of themselves at home to come to work. When employees feel safe and valued as an individual, they are more likely to feel engaged and remain in the business.
Wellbeing
Employee wellbeing involves more than designating a wellbeing room or providing fruit and healthy snacks. Wellbeing has to be embedded in the culture of the business as a way of working and understanding others, encompassing physical, mental and financial health.
In a Bupa survey of employees in tech and digital companies, those at non-executive level revealed that health and wellbeing support is a key consideration when choosing who to work for. This makes it a key factor in employee retention. Every employee has the right to lead a healthy, productive working life. If they don’t feel satisfied, they will choose another employer that can provide what they need.
Embedding wellbeing into company culture can be particularly powerful within SMEs, where personalised employee experiences are easier to manage and deliver. It’s not just about the manager-employee relationship either, wellbeing is about how employees treat one another as much as removing barriers to work.
The quality of workspaces is closely linked to wellbeing. While flexible and hybrid working has changed working arrangements forever, employees still require pleasant, comfortable work environments to be productive. Think about designing areas suited to focused activity as much as creativity and collaboration - and make sure remote workers have the tools and equipment they need to be at their best.
Employee Wellbeing case study - Propellernet, Brighton
In a fiercely competitive digital industry known for burnout and high turnover, Propellernet differentiated itself by prioritising wellbeing and personal growth as core to their business, proving that flexibility and a commitment to personal development are achievable and effective retention strategies.
Initiatives introduced included:
Each time a business goal was met, a ‘dream ball’ containing a staff member’s personal dream was drawn, funded, and actively encouraged.
Comprehensive flexible working options, tailored to the individual.
Extensive investment in mental wellbeing, including training for managers.
Continuous career conversations focused on personal aspirations and growth.
The results
Consistently high staff retention above industry norms (over 90% year-on-year).
Exceptionally high employee satisfaction and engagement, particularly around wellbeing support and personal development opportunities.
Recognition and multiple awards for Best Places to Work in the UK, enhancing talent attraction.
Employee Ownership Trusts (EOTs)
Employee ownership is not just for large organisations. SMEs can benefit from the model too, ensuring long-term stability, creating loyalty, building employee engagement and retention.
An EOT allows a company to become employee-owned by setting up a trust that holds a controlling interest in the company on behalf of its employees. Moving to an EOT structure is a significant show of trust and respect and a commitment to fostering employee engagement.
When coupled with other measures, such as establishing an employee forum, appointing employee representatives, and fully transparent communication, EOTs can significantly increase engagement.
Interested to learn more about how Employee Ownership Trusts work? We work alongside trusted partners to set up and manage EOTs. Talk to us to discover what’s involved.
Employee Ownership Trust case study - Riverford Organic, Devon
In 2018, when the founder of Riverford Organic Farmers expanded operations, they decided to transition to an Employee Ownership Trust structure. In an industry prone to high staff turnover, the aim was to foster genuine ownership and engagement among employees by directly involving them in strategic decisions, reinforcing transparency and trust.
The results
Staff retention improved significantly, particularly among operational roles where turnover was historically high.
Employee engagement scores increased, consistently above sector averages.
Profitability and productivity metrics improved, driven by the increased sense of ownership and collective responsibility.
Measuring engagement
The only way to establish how best to enhance employee engagement and retention is to ask your people what’s important to them.
Surveys allow you to:
Sense check what really matters to your people
Understand individual passions, motivations, and expectations
Identify the areas you need to prioritise to improve the workplace experience.
Pulse surveys can help SMEs tune in to how people are feeling. The simple act of asking one question a month is manageable and the results can be truly revealing. For example, rather than mandating a return to the office five days a week, why not ask:
Would you prefer to return full-time office working or continue with a hybrid/flexible working model?
Surveys should be used alongside a variety of other feedback mechanisms, such as focus groups, social media, team and one-to-one meetings. Allow your employees to choose their preferred way to share their views.
A word about surveys
Be wary of asking too many or the same questions every time. Pulse surveys can be revealing in their results, but people can grow tired of responding to them, making the results less reliable.
Keep the questions short and to the point: complexity will put people off.
Choose your words carefully: for two reasons a) to measure the correct data, and b) so that people understand what you are asking them.
Re-order the questions each time: to keep people on their toes and avoid survey lethargy.
Pulse surveys should be shorter: ask between one and three questions.
What is a stay interview?
We’ve all heard of onboarding and exit interviews, but have you come across a stay interview? Asking key questions during regular 121 conversations can motivate and boost retention, e.g. Which of your strengths do you feel are underused? How do you think these could be better-used in your role?
Acting on feedback
Asking employees for feedback is a positive step towards improving engagement and retention rates, while acting on that feedback is how to show genuine care for your employees and actively shift both measures. This promotes a listening culture where employees feel heard and valued, building a more engaged, loyal, and productive workforce, with lower absence and higher retention rates.
Listen to your workforce to drive business growth
Listening to your workforce is a sound investment that pays dividends in motivation and engagement, and a fundamental tool for driving business success. Motivating and engaging your team begins at the top. Business leaders must set the standard because building a reputation as a thoughtful and considerate employer continues to be one of the biggest factors in recruiting and retaining a talented team.
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