The CFO's Guide to Culture ROI: How Workforce Engagement Drives Commercial Performance
‘Oh yeah, we've got a great culture. We do loads of social events and we get free fruit.’
This is often the response I get, or something like it, when I ask about workplace culture and engagement. Events, the Christmas party, a new coffee machine (!), team days. It’s not that these aren’t good things, and healthy parts of a culture, but it’s all a bit…fluffy, just ‘nice to have’. This is fine when the going’s good, but when things are tight? They’re the first to go. A healthy culture and a highly engaged workforce is so much more than this. In fact, we’d argue that it’s the difference between being ‘okay’ and excelling, and is the foundation and context that is vital for high performance that drives the commercials.
Executive Summary
The flaw: Treating culture as a ‘nice to have’ and engagement as an input (surveys, events, perks) fails because engagement is a snapshot outcome.
The financial proof: Companies in the top quartile of engagement realize 2 net profit, 2.5 revenue growth, and up to 40% lower turnover versus lower quartile.
The SaltX systemic solution: To drive commercial performance, organisations must optimise the underlying employee experience — removing operational friction across leadership, culture, and transformation.
In this post, we outline that the business case for a strong and healthy culture is that it leads to high levels of employee engagement. Businesses with a highly engaged workforce perform way better than their competitors in all commercial metrics. More on that in a moment.
What is the relationship between culture, employee experience, and engagement?
Organisational culture describes the workplace conditions in which we ask our people to work. It’s the pattern of shared assumptions, expectations and everyday practices that shapes how people work together. It influences what feels normal, what earns approval and what happens when competing priorities collide. We like to think of it as the organisation’s human operating system, how the work gets done.
The employee experience (the EX) is how your people experience the culture and their work. Culture helps shape the experience, and the experience gives us signals as to what the culture is like.
Culture and experience are inputs that result in employee engagement. Employee engagement, which we like to define as people who are ‘switched on’ to their role and organisation, is the outcome.
So, if you want a highly engaged workforce for an outperforming business, you need a strong and healthy culture. And to understand the business case for a strong culture, we need to be crystal clear on the link between workforce engagement and commercial performance.
The financial data: Connecting engagement to EBITDA and revenue
Right from the beginning, its proponents have made some considerable claims linking high levels of engagement with better business outcomes. In the seminal work by Macload and Clarke, commissioned by the UK Government in 2009, extensive research backed these claims. In fact, wide-ranging research before and since has shown that companies that have high levels of engagement significantly outperform their competitors. To summarise:
Commercial metric | Top-quartile impact | Primary research citation |
Net profitability | 2 x net profit | Towers Watson Global Workforce Study |
Revenue growth | 2.5 x revenue growth | Hay Group / Aon Hewitt meta-analysis |
Voluntary attrition | 24% – 40% lower turnover | Gallup Q12 Global Meta-Analysis |
Sickness & absenteeism | 56% fewer sick days | Engage for Success / CBI Evidence Report |
Productivity output | 17% higher productivity | Gallup Q12 meta-analysis |
Customer satisfaction | 12% increase in CSAT | Harvard Business Review / Gallup |
Because workplace culture directly reduces operational friction and voluntary turnover, the financial return shows up immediately in operating margins (EBITDA) and double the net profit.
These numbers are eye-catching. The case is made even stronger in that studies across industries, geographies and cultures corroborate this position, showing something universal about this focus on people and good business performance.
Another study showed that even an incremental 5% increase in engagement levels results in 3% revenue increase (Aon Hewitt 2013).
And another study shows that just one disengaged person earning £42,000 per year costs an extra £14,280 per year on average, in lost time, productivity, sales, and turnover costs (McLean & Company, 2017).
Just think about the business you’re in. What would an extra 3% or 6% on annual revenue be like for you? All it would need is a 5% or 10% increase in workforce engagement. What would be the impact on profit if your attrition was 40% lower? This is not ‘nibbling around the edges’, it’s hard commercials. Big numbers.
The diagnostic paradox: Why engagement remains stubbornly low
And yet, engagement levels are generally low across the board. The Gallup State of the Global Workplace says that global levels of engagement have fallen to 20%. Europe is their lowest area at 12% and from a rank of 38 countries, the UK comes in at number 30 with only 10% engaged. These engagement scores are very low and, while Gallup’s methodology means that the numbers come in with very low scores, other studies have the same general themes. Engage for Success say that the UK is at 62% and it’s been sitting around this level since the global pandemic, while Peakon say 27% of workers are at risk of burnout. All this research shows us that high levels of engagement has a strong correlation with high performing businesses, yet the commonly stated methods and levers for driving engagement have largely failed to make the impact expected. High engagement equals better business performance. Yet engagement remains stubbornly low. Why is this? And what is the answer?
Why engagement is an outcome, not an input
The key to unlocking the potential of a highly engaged workforce is to embrace a fundamental shift in thinking about engagement. That shift is to consider engagement as an outcome, rather than an input. When considering the theory of engagement, and how we measure it, this was always the intent. But largely due to a language problem (the word ‘engagement’ has many different meanings and means different things to different people in different contexts), engagement has often been seen as something to ‘do’. ‘How should we ‘engage our people?’ ‘Everyone was really ‘engaged’ at that event’. In contrast, engagement should be seen as a measure, an outcome, or a snapshot state.
This leads naturally to a question. If engagement is an outcome, what are the inputs that impact engagement? You already know the answer. It’s the culture and the employee experience: the many factors and conditions that make up the organisational culture and people’s experience of it at work.
System design: Cultivating culture as an operating system
An engaged workforce is like a beautiful garden (the outcome), the culture and employee experience are all the different plants, borders and features that you have to cultivate to create the garden. We see culture as a whole system. Systemic inputs aren't perks or coffee machines—they are your organisational design, learning culture, shared assumptions, strategic clarity, manager capability and so on. When you remove daily operational friction from the system, high engagement is the natural outcome.
Our proprietary Tube system map is a visual representation of the 20 factors that impact engagement the most. Each factor influences others so a holistic view is essential to make sure you’re pulling the lever that will make the most difference.
We believe that this approach is supported by all the research into engagement, but simplifies the sometimes opaque discussions about the topic, and demystifies people data, turning it into actionable insights.
From ‘nice to have’ to ‘must have’
Far from the annual all-together meeting, the latest D&I lunch & learn, or discounts at the local DIY store, a strong and healthy culture is essential for outperforming your competitors. The evidence is in, the business case is strong. Pull the cultural and employee experience levers to have the greatest impact on engagement. The commercials follow.
Get in touch if you need support in pulling those levers, or even in identifying the levers that will have the most impact on engagement. Our discovery stage includes a diagnostic that gets under the skin of your organisation for this very purpose. To identify the precise levers across your culture that will ultimately make the biggest difference to your performance.
