This paper highlights the growing recognition of the importance of employee engagement, and as that recognition increases, employee engagement needs to be recognized as a legitimate area of interest for boards of directors. After summarizing the increasingly understood connection between employee engagement and bottom line organizational performance, the authors contend that board members should— indeed must—make employee engagement a focus of their corporate governance duties. After showing evidence that the financial health and viability of firms are directly impacted by employee engagement, the study shows that boards have a duty to ensure that the top management makes such engagement a priority, just as they would require the management to protect the financial resources of the organization. The paper concludes that failing to do so is to ignore the demonstrated connections between employee engagement and the financial performance of the firm. The paper begins with the two accepted ideas of increased recognition of the importance of employee engagement and the long established fiduciary responsibility of boards of directors. It then blends these ideas in a fresh way and concludes with a brief anecdotal example from the healthcare industry.

The concept of employee engagement is well established in the management field. Engaged employees are not only happier, but are more productive, innovative and customer-oriented. Organizations with engaged employees are more profitable than those whose employees are disengaged. Not so well established is the role of board of directors with respect to the monitoring of employee engagement efforts within the organization. The present paper highlights that employee engagement is a shareholder value issue, and therefore, boards should take an active role in monitoring it.

The paper is structured as follows: it presents a brief discussion of the concept of employee engagement and its importance in the achievement of organizational goals and objectives. Then, it briefly summarizes the findings of the 2013 Gallup study of employee engagement in the American workplace, and subsequently, establishes the need for board oversight and outlines the role that the board should take in that oversight function. Finally, it concludes with the example of an organization in the healthcare industry whose board takes an active role in overseeing employee engagement.

Corporate Governance Journal, Corporate Boards, Competitive Advantage, ‘behavioral engagement’, ‘extra-role behavior’, “go beyond preserving, initiating, fostering, different, Employee Engagement.