Employee engagement is a property of the relationship between an organization and its employees. An "engaged employee" is one who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests.
An organization with 'high' employee engagement might therefore be expected to outperform those with 'low' employee engagement, all else being equal.
William Kahn provided the first formal definition of employee engagement as "the harnessing of organisation members' selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performances." Kahn (1990).
In 1993, Schmidt et al. proposed a bridge between the pre-existing concept of 'job satisfaction' and employee engagement with the definition: "an employee's involvement with, commitment to, and satisfaction with work. Employee engagement is a part of employee retention." This definition integrates the classic constructs of job satisfaction (Smith et al., 1969), and organizational commitment (Meyer & Allen, 1991).
Defining employee engagement remains problematic. In their review of the literature in 2011, Shuck and Wollard  identify four main sub-concepts within the term:
- "Needs satisfying" approach, in which engagement is the expression of one's preferred self in task behaviours.
- "Burnout antithesis" approach, in which energy, involvement, efficacy are presented as the opposites of established "burnout" constructs: exhaustion, cynicism and lack of accomplishment.
- Satisfaction-engagement approach, in which engagement is a more technical version of job satisfaction, evidenced by Gallup's own Q12 engagement survey which gives an r=.91 correlation with one (job satisfaction) measure.
- The multidimensional approach, in which a clear distinction is maintained between job and organisational engagement, usually with the primary focus on antecedents and consequents to role performance rather than organisational identification.
Definitions of engagement vary in the weight they give to the individual vs the organisation in creating engagement. Recent practice has situated the drivers of engagement across this spectrum, from within the psyche of the individual employee (for example, promising recruitment services that will filter out 'disengaged' job applicants ) to focusing mainly on the actions and investments the organisation makes to support engagement.
These definitional issues are potentially severe for practitioners. With different (and often proprietary) definitions of the object being measured, statistics from different sources are not readily comparable. Engagement work remains open to the challenge that its basic assumptions are, as Tom Keenoy describes them, 'normative' and 'aspirational', rather than analytic or operational - and so risk being seen by other organizational participants as "motherhood and apple pie" rhetoric.
Prior to the mid-1990s, a series of concepts relating to employee morale, work ethic, productivity and motivation had been investigated in management theory, in a line dating back to the work of Mary Parker Follett in the early 1920s. See for example the work of Frederick Herzberg, who concluded  that positive motivation is driven by managers giving their employees developmental opportunities, activity he termed 'vertical enrichment'.
With the wide range of definitions of employee engagement come a wide range of identified causes and effects. For some examples:
Eileen Appelbaum and her colleagues (2000) studied 15 steel mills, 17 apparel manufacturers, and 10 electronic instrument and imaging equipment producers. Their purpose was to compare traditional production systems with flexible high-performance production systems involving teams, training, and incentive pay systems. In all three industries, the plants utilizing high-involvement practices showed superior performance. In addition, workers in the high-involvement plants showed more positive attitudes, including trust, organizational commitment and intrinsic enjoyment of the work. The concept has gained popularity as various studies have demonstrated links with productivity. It is often linked to the notion of employee voice and empowerment.
Two studies of employees in the life insurance industry examined the impact of employee perceptions that they had the power to make decisions, sufficient knowledge and information to do the job effectively, and rewards for high performance. Both studies included large samples of employees (3,570 employees in 49 organizations and 4,828 employees in 92 organizations). In both studies, high-involvement management practices were positively associated with employee morale, employee retention, and firm financial performance. Watson Wyatt found that high-commitment organizations (one with loyal and dedicated employees) out-performed those with low commitment by 47% in the 2000 study and by 200% in the 2002 study.
While it is possible to measure engagement itself through employee surveys, this does not assist in identifying areas for improvement within organisations. To manage employee engagement upwards, it is necessary to identify what drives engagement. Some points from research into drivers of engagement are presented below:
- Employee perceptions of job importance - "...an employee's attitude toward the job's importance and the company had the greatest impact on loyalty and customer service than all other employee factors combined."
- Employee clarity of job expectations - "If expectations are not clear and basic materials and equipment are not provided, negative emotions such as boredom or resentment may result, and the employee may then become focused on surviving more than thinking about how he can help the organization succeed."
- Career advancement / improvement opportunities - "Plant supervisors and managers indicated that many plant improvements were being made outside the suggestion system, where employees initiated changes in order to reap the bonuses generated by the subsequent cost savings."
- Regular feedback and dialogue with superiors - "Feedback is the key to giving employees a sense of where they’re going, but many organizations are remarkably bad at giving it." "'What I really wanted to hear was 'Thanks. You did a good job.' But all my boss did was hand me a check.'"
- Quality of working relationships with peers, superiors, and subordinates - "...if employees' relationship with their managers is fractured, then no amount of perks will persuade the employees to perform at top levels. Employee engagement is a direct reflection of how employees feel about their relationship with the boss."
- Perceptions of the ethos and values of the organization - "'Inspiration and values' is the most important of the six drivers in our Engaged Performance model. Inspirational leadership is the ultimate perk. In its absence, [it] is unlikely to engage employees."
- Effective internal employee communications - which convey a clear description of "what's going on". "'
Commitment theories are rather based on creating conditions, under which the employee will feel compelled to work for an organization, whereas engagement theories aim to bring about a situation in which the employee by free choice has an intrinsic desire to work in the best interests of the organization.
Recent research has focused on developing a better understanding of how variables such as quality of work relationships and values of the organization interact, and their link to important work outcomes. From the perspective of the employee, "outcomes" range from strong commitment to the isolation of oneself from the organization.
- Methodological: Bad use of statistics: practitioners face a number of risks in working with engagement data, which are typically drawn from survey evidence. These include the risk of mistaking correlations for causation, making invalid comparisons between similar-sounding data drawn from diverging methodologies and/or incomparable populations, misunderstanding or misrepresented basic concepts and assumptions, and accurately establishing margins of error in data (ensuring signal and noise are kept distinct).
- Administrative: A focus on survey administration, data gathering and analysis of results (rather than taking action) may also damage engagement efforts. Organizations that survey their workforce without acting on the feedback appear to negatively impact engagement scores. The reporting and oversight requirements of engagement initiatives represent a claim on the scarcest resources (time and money) of the organisation, and therefore requires management time to demonstrate value added. At the same time, actions on the basis of engagement surveys are usually devolved to local management, where any 'value add' is counted in local performance. Central administration of 'employee engagement' is therefore challenging to maintain over time.
- Ethical: Were it proven possible to alter employees' attitudes and behaviours in the manner intended, and with the expected value-adding results for the organisation, a question remains  whether it would be ethical to do so. Practitioners generally acknowledge that the old model of the psychological contract is gone, but attempting to programme a one-way identification in its place, from employee to organization, may be seen as morally and perhaps politically loaded.
- Externalities: According to the Conference Board and other recent studies, employee engagement has deteriorated significantly in the US and the UK over the last five years.
References in popular culture
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