BUSINESS 2000:WHEN ALARM CLOCKS went off in households around the State this morning, some people will have bounded out of bed and dashed into work early to begin another productive, satisfying day at the office.

Others will have hit "snooze" five times and seriously contemplated calling in sick just to avoid their patronising David Brent-style boss or because they've simply lost all interest in their job.

The difference between these two types of employees is called, in human resources (HR) parlance, "engagement".

This buzzword is defined as "a heightened emotional and intellectual connection with a job, organisation, manager or co-workers".

Put simply, a highly-engaged employee is more likely to be productive, flexible, innovative and willing to go that extra mile.

At the other end of the scale is the disgruntled employee who, for whatever reason - perhaps their manager constantly undermines them or they are getting paid nowhere near the market rate for their position - is not "engaged" and feels no loyalty to the company. Poor morale of this kind can lead to deliberate time-wasting, high absence rates, resignations, petty pilfering and even sabotage.

It's not surprising, then, that a new report published by PricewaterhouseCoopers (PwC) entitled Managing People in a Changing World found a strong link between the level of employee engagement in a company and its profitability. According to PwC, workforce engagement levels are beginning to be perceived by some investors as an important indicator of a company's financial health and future viability.

"Our experience in Ireland shows that both employees and employers want higher levels of engagement," said Ellen Roche, a director with PwC HR Services.

"Employees want their employers to show they care and employers want the same thing in return. When both parties are doing this the result is well-motivated individuals in high-performing teams who develop good customer relationships. All of this impacts the bottom line positively."

Higher levels of employee engagement can enhance the image of an organisation as a responsible employer, and improve employee retention where staff turnover is high.

So what can employers do to ensure that they have a motivated, committed, engaged workforce?

Gaining and maintaining employee engagement is a long-term investment, according to the report, requiring sensitive leadership and a high degree of respect for individual motivation.

One very tangible and powerful way of motivating employees and letting them know they are valued is, of course, money.

"Part of upping the ante on engagement levels includes communicating the value of the reward package to employees," says Siobhan O'Brien, a manager in PwC HR Services.

For example, employers often fail to adequately communicate the value of the pension benefits given to their employees. So, although pension contributions may be one of the most expensive benefits provided, they are often the least appreciated.

"If employees understand the value of their pension arrangements they are twice as likely to significantly appreciate the company's contribution," says O'Brien.

"Through increasing the levels of awareness around the total reward package amongst employees, our experience indicates this will have direct positive implications for motivation and retention of employees."

The report examines the link between employee remuneration and an organisation's profitability.

Interestingly, the return on employee investment is significantly higher in the US than in western Europe. This is attributed to stronger levels of revenue generation combined with stringent control of employee costs and numbers. The US also has a more competitive, performance-related culture, whereas the European culture leans towards a greater emphasis on work-life balance.

Another trend picked up by the report is the emergence of "wellness programmes" across organisations. The aim of these programmes is to reduce employee absence rates by promoting health and safety, managing ill health and so on.

With employee costs accounting for as much as 50 to 80 per cent of an organisation's total expenditure, even average absence levels can represent a serious expense in terms of reduced productivity and even reduced employee retention because of over-stretched staff. Any initiative that lowers absenteeism makes financial sense.

Overall, the message coming through loud and clear from PwC's research is that creating a happy workforce can give employers an edge over their competitors, which is, as they say in HR, a win-win situation.

The Irish Times Business 200: 11th Edition

The Business 2000 column provides information for business studies teachers and students on the current business climate.

It is intended to complement The Irish Times Business 2000 multimedia resource package, developed by Woodgrange Technologies, which is sent to all second-level schools and selected third-level institutions.

Business 2000 is published every Friday in the Business This Week supplement. The teacher support desk at Woodgrange Technologies can be reached at (01)435 2514 or by e-mail at: business2000@woodgrange.com

The companies which are participating in Business 2000 are: AIB, Bus Éireann; CRH Group; the Department of Education and Science; the Department of Finance; the Department of Transport/ Transport 21; Diageo Ireland; the EU Commission; EU Structural Funds; the Financial Regulator; the Labour Relations Commission; the Local Government Management Services Board; the Musgrave Group; the National Consumer Agency; the National Development Plan; the National Treasury Management Agency; the Pensions Board and Pragma Management.