Some of the biggest challenges for businesses, such as retaining people, improving productivity, reducing absence, and finding better ways to do things, can be more easily achieved when people are actively engaged.

I believe that, engaging your staff in your business has the ability to become your biggest competitive differentiator. Organisations with high employee engagementunderstand that their employees are the very essence of their products and services. It’s employees who develop it, deliver it and support it. They are the ones that deliver the best customer experience.

Employee engagement is a big topic. Every month there are numerous articles and studies telling us how to improve it; how to give our employees a psychological reason to go the extra mile. So why does employee engagement still remain a critical business challenge?

Is the problem that, as markets have become more competitive in the credit crunch, our leaders and managers have less time to engage in the human side of the business? Do we need more leaders who can inspire their staff first, and think about the bottom line second? If inspiration was the first priority of our business leaders, then surely engagement levels would rise, and improved bottom line results would follow.

Good leadership is vital to employee engagement

Employee engagement can only be fostered within a business if the senior managers and leaders ‘live it’. They need to ‘walk the walk’ as well as ‘talk the talk’.

Take the news that Lord Wolfson, the chief executive of Next, is to share his £4m bonus among the retailer’s staff – the equivalent of a 1.5% pay rise for employees.

He wrote to employees telling them that the trebling of the company’s share price, and the 65% rise in earnings per share over the past three years, meant his bonus “has become more valuable than I could possibly have hoped.”

“In these circumstances, instead of accepting the award, I have asked the board if they will share it amongst all those who have worked for the company during the three year…period 28 April 2011 to 28 April 2014.”

“I hope you will accept this bonus as a personal gesture of thanks and appreciation for all your hard work and dedication to Next through testing economic times.”

“Together, you have helped ensure that Next emerges from the credit crunch in better shape than it went in.”

How can we become better leaders and have a more engaged workforce?

Employee engagement has to put the employee at its centre. That means getting to understand your staff and their individual motivations. But true engagement starts with the CEO and good leadership. This means looking at the culture, the identity and the mission of the business. All of which are driven by senior leaders.

Leaders who understand engagement are constantly striving to develop their employees, they improve their training and development programmes, and invest in the employee.

Organisations with high levels of employee engagementcommunicate with their employees regularly, openly and honestly. There is also a culture of recognition in these business,both managers and co-workers regularly recognise employee efforts, and their contribution to the business. In some businesses the concept of employee engagement is such a part of their culture, that they will re-design the working environment, change job descriptions and offer surprise bonuses, just as Lord Wolfson did.

If you want to engage your employees you need to move beyond annual employee engagement surveys. You need to put your employee at the centre of your strategy, and your leaders need to create a workplace that lets its employees thrive.

John Sylvester

John is responsible for the motivation division of p&mm ltd and a Director on the board of the IPM. Specialising in developing, implementing and directing many large scale staff motivation, recognition and employee communications programmes.