Show me the money: Toward an economic model for a cost-benefit analysis of employee engagement interventions

Abstract

Purpose

The purpose of this paper is to reconcile various theoretical directions in employee engagement with self-determination theory (SDT) as a unifying framework and introduce an inter-disciplinary employee engagement economics model based on SDT.

Design/methodology/approach

Two studies were conducted applying a T1/T2 intervention study design. Study 1 examined the causal relationship between an organizational intervention and employee engagement with n=367 employees from a European pharmaceuticals company using both survey and actual performance data. Study 1 results were used as input data for study 2 which tested the employee engagement economics model by calculating the pre-/post-economic value added and return on investment (ROI) for the intervention.

Findings

Study 1 results showed a significant positive impact of the SDT-based intervention on both self-reported and actual employee engagement. Study 2 converted study findings into pre-/post-economic considerations putting an economic dollar value on achieved employee engagement gains and calculating an ROI in relation to the cost incurred.

Practical implications

The present results support SDT as a unifying theory for employee engagement and the proposed employee engagement economics model as strategic decision-making tool for planning and evaluating the economics of employee engagement interventions.

Social implications

This research supports a shift in corporate focus from “people as cost” to “people as values” proposing a systematic, value-based, strategic management approach to employee engagement based on cost-benefit analysis.

Originality/value

This is the first research to contribute an empirical economic model for employee engagement interventions to literature. It is based on the first reconciliation of engagement literature identifying SDT as a unifying framework. Finally, for the first time, this work identifies subjective vitality as a measure for engagement and contributes a definition for disengagement to literature.

Citation

Mueller, M. (2019), "Show me the money: Toward an economic model for a cost-benefit analysis of employee engagement interventions", International Journal of Organization Theory & Behavior, Vol. 22 No. 1, pp. 43-64. https://doi.org/10.1108/IJOTB-05-2018-0056