Employee Engagement vs. Employee Satisfaction: What You Need to Know

In 2023, only 33% of employees were actively engaged at work, according to Gallup estimates. Low engagement or disengagement can lead to problems like absenteeism, higher turnover, reduced productivity, and more.

Employee satisfaction is a key performance indicator to measure, so higher satisfaction is a good thing. But morale isn’t the only driver of business outcomes, and believing that happy employees are automatically productive and engaged is a mistake.

So, what’s the relationship between employee engagement and employee satisfaction? While the concepts are closely related, there are a few key differences you need to know.

In this article, we’ll help you understand how to leverage satisfaction to drive engagement and keep your organization thriving.

What Is Employee Engagement?

Employee engagement is a measure of how enthusiastically and effectively employees are involved in their roles and in the workplace.

Employee Engagement Factors

Because what motivates an employee to be engaged can vary based on the individual, all of the following elements can have a significant impact on an employee’s level of engagement:

• Expectations: How clearly the employee understands what’s required of them
• Resources: Whether what’s provided is sufficient to get the job done
• Recognition: How the organization recognizes and rewards success
• Wellbeing: How the employee feels their manager and the organization care about them as a person
• Development: Whether the workplace provides opportunities for an employee to enhance their skills and advance their career
• Importance: How valuable the employee feels their contribution is to the organization
• Purpose: How the employee feels they are contributing to the company mission and the greater society
• Camaraderie: How connected an employee feels to their coworkers
• Feedback: How clearly and consistently the employee’s work is evaluated
• Autonomy: Whether and how well employees are empowered to make their own decisions

While other things may contribute to how plugged-in an employee is at work, these factors are the ones that many experts believe move the needle on employee engagement.

But does that mean organizations shouldn’t care about employee satisfaction? Absolutely not. Satisfied employees are more likely to be engaged and productive.

What Is Employee Satisfaction?

Employee satisfaction is the feeling of contentment employees get from the fulfillment of employment-related expectations. It’s also determined by an employee’s emotional and analytical assessment of their entire situation. But employee satisfaction is about more than just what the company can do to meet an employee’s needs.

At the heart of it, employee satisfaction depends on how an employee’s expectations align with their experience. For example, if an employee believes they need to make $50,000 a year to be happy and their market analysis leads them to believe that’s a fair salary, anything less may be unsatisfactory.

Employee Satisfaction Factors

Employee satisfaction and employee engagement have some of the same influencing factors. Much like employee engagement, what any individual needs to feel satisfied will vary according to their personal expectations and experiences.

• Role suitability: Whether the employee’s skill set and internal motivators match the job they’ve been hired for, and whether the employee feels the role is the right fit for them
• Role importance and recognition: How the employee’s role contributes to the overall mission and how often they receive authentic recognition for that contribution
• Interpersonal relationships: Whether the employee has work friends and positive relationships with managers
• Professional growth: Whether the employee receives frequent quality feedback and has opportunities to develop new skills and experience career mobility
• Compensation: How well the employee’s salary and benefits match up with their personal needs and expectations of fairness
• Work hours: Whether the employee can work a schedule that allows them to maintain work-life balance
• Work environment: Whether the environment is inclusive and supports the employee’s physical and psychological needs
• Job security: Whether the employee feels their employment is stable and unlikely to end suddenly

While there are a number of similarities between employee engagement and employee satisfaction, ultimately, the difference between them is action. However satisfied an employee may be, satisfaction is a feeling the employee experiences internally. Engagement is how they interact with the workplace.

Why Employee Engagement and Employee Satisfaction Matter

Employee engagement and satisfaction matter to businesses because they influence company culture and drive outcomes, and they generally work in tandem. Low job satisfaction and low employee engagement can lead to huge losses in productivity, but satisfied and engaged employees can improve outcomes.

Benefits of Employee Engagement and Satisfaction

Employee satisfaction and engagement have many proven business benefits and advantages:

• Reduced absenteeism
• Reduced safety incidents for all stakeholders
• Reduced turnover
• Reduced theft
• Increased product quality
• Increased innovation and creativity
• Increased customer satisfaction
• Increased employee productivity and performance
• Increased business profitability

When prioritized properly, employee engagement and job satisfaction have the power to impact key metrics and improve organizational performance.

How to Improve Employee Engagement and Employee Satisfaction

It’s clear that working to improve satisfaction and engagement is worth the effort. You can work to improve engagement and satisfaction separately, or implement changes to improve both, such as modeling high engagement from the top, fostering a culture of open communication, ensuring managers are well-trained, and ensuring employees’ job expectations are clear.

How to Improve Employee Engagement

If you’re looking to increase engagement in your workforce, ensure the following are part of your plan:

• Goal alignment: Employees know exactly how their roles affect and align with the overall mission and purpose of the organization
• Better management: Managers are trained to coach employees with frequent feedback and goal-setting conversations to keep fueling the fire
• Rewards and recognition: Employees receive frequent and authentic recognition for their achievements, so they know their role is important
• Development opportunities: Employees have the opportunity to develop new skills, which 87% of Gen Z employees say is important to them

These actions will require leadership buy-in and a concerted effort from the HR team, but remember: this extra work is an investment in the future of your business.

How to Improve Employee Satisfaction

Though what satisfies employees can vary, there are some similarities in what employees value across the board:

• Skills assessments: Align employees’ skill sets with their job expectations. Are they in a position to do what they’re good at?
• Culture fit: Help your people build positive relationships. Are employees the right fit for the team you’ve placed them on?
• Fair compensation: Does the company pay employees fairly for the work they do?
• Internal mobility: Do you provide opportunities for upskilling and a clear path to promotion?
• Work flexibility: Consider employee work-life balance needs. Can you offer more flexible schedules and remote or hybrid work opportunities?
• Perks and benefits: Consider adding benefits like paid family leave, gym memberships, or meditation rooms to show employees how much you care about their wellbeing.

Focusing on these elements can help you build a highly satisfied, highly engaged, and high-performing workforce that drives your business toward success.

How to Measure Employee Engagement and Employee Satisfaction

As you begin working toward improving employee engagement and employee satisfaction, it’s important that you analyze and measure your results so you know where you’re knocking it out of the park and what still needs work. Having the right measurement tools can help.

eNPS Surveys

eNPS, or Employee Net Promoter Score, is an employee engagement and satisfaction survey that answers one question: how likely is the employee to recommend your company to others as a great place to work?

High scores indicate that you have loyal and satisfied employees. When eNPS scores are low, it can be an indication of widespread dissatisfaction.

Engagement Surveys

Engagement surveys can be a great way to gauge how employees feel by asking open-ended qualitative questions focused on employee sentiment. These surveys can also provide you with a way to gather and track metrics — they ask quantitative questions that allow employees to rank their experiences on different engagement metrics.

You can then compare these metrics to broader HR statistics to get a sense of how your company is doing and where you can make changes that result in more satisfied and engaged employees.