What is the Difference Between Employee Engagement and Job Satisfaction?

There is a direct correlation between employee engagement and job satisfaction, however, they are not synonymous with each other.

Employee engagement and job satisfaction both deserve equal attention if you are to maximize your workforce’s potential and enable the growth of your organization.

A historically high 4.3 million workers quit their jobs in December, according to the Labor Department’s latest Job Openings and Labor Turnover report, closing out a record-shattering year when roughly 47.4 million people voluntarily left their jobs for better work during the pandemic and Great Resignation.

For comparison, 42.1 million people quit in 2019, at the time considered the tightest labor market on record.

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“All of this is uncharted territory,” says Rucha Vankudre, a senior economist at Emsi Burning Glass, a labor market analytics firm.

The U.S. saw record-breaking months of turnover throughout 2021, with early signs of trouble kicking off in April as vaccination efforts improved, consumer activity rebounded and businesses scrambled to re-staff to meet demand. Workers, especially in low-wage service roles, quit their jobs for higher pay and better work conditions.

This rate of voluntary turnover costs companies billions in lost productivity, rehiring, retraining, and retention expenses every year.

One way to retain at least some number of employees is by addressing the issues of employee engagement and job satisfaction. The two are different, and learning how they differ can help you keep your employees happy, motivated, and less likely to quit.

And this has a massive impact: even a 10% reduction in voluntary turnover can save U.S. companies $475 billion, according to the Work Institute, directly impacting profitability.

Engaged Employees vs.  Job Satisfaction

Many organization leaders think employee engagement means perks like free beer, ping-pong tables, and Instagrammable office spaces.

Those are the things that make employees engaged and experience job satisfaction... right?

Wrong. Those who are satisfied with their jobs are not necessarily fully engaged employees.

Truly engaged employees don't care about perks and free stuff. Instead, they're looking for things like shared values, a purpose-driven mission, opportunities for growth, and supportive managers.

So, what’s the difference?

The Comparison: Jim (satisfied employee) versus Sarah (engaged employee)

To identify the difference between these two areas, let’s consider two types of employees.

Imagine a manufacturing employee, Jim, who starts his shift at 9 AM every day and works until 5 PM with a one-hour lunch break in-between. He receives a competitive pay package, better than other manufacturing plants located in his county. It takes Jim only 20 minutes to reach the plant, and he has been working there for the last seven years. In this period, he has been promoted twice. He also receives full medical coverage for himself and his family, which makes him worry less about the future.

These indicators suggest that Jim is satisfied with his job. The job provides everything he needs, and he has no complaints from it.

Now consider Sarah, a software developer at a startup. The company is in the early stages of growth, and Sarah has been offered equity benefits instead of standard compensation elements until the first round of funding arrives. Sarah often spends over 10 hours in the office, trying to meet deadlines and getting the product off the ground. She is passionate about her work and is continually learning new things in her domain, which makes her a highly skilled professional.

Sarah’s passion for her job and her desire to learn more about her work are indicators that she is highly engaged in her job, even though some of the traditional satisfaction components are missing.

What is important to note here, however, is that job satisfaction and employee engagement are both equally important. While satisfaction may be enough to sustain an employee in a job for seven years, it is engagement in the job that will help employees reach their full potential and subsequently enable the growth of the organization. Only when your workforce is satisfied and engaged, you can sustain productivity levels in the long run.

Job Satisfaction

Job satisfaction can be defined as the sense of contentment one feels as a direct result of being employed in a particular role. It isn’t only when the employee is content while in the office/workplace — their job makes them feel content in life, impacting areas such as security and confidence. Job satisfaction is a must-have if you want your employees to have a long tenure with your company.

Considering Sarah’s example above, she may be engaged. Still, unless the company receives funding and starts providing her with the pay commensurate with her efforts, she is likely to start looking for a new job because the satisfaction element may be missing.

Employee Engagement

Employee engagement can be defined as the level of involvement and connection one feels in their job. Various forces shape engagement, including the nature of leadership and the sense of community in the workplace. There’s also an individual factor in employee engagement – if you placed Jim in Sarah’s role, he might not have experienced the same level of engagement. Motivation, interest, passion, purpose, and personal investment all make up how engaged an employee is.

Engagement is what ensures that employees are part of a company’s growth curve. For example, if Jim isn’t engaged in his role at the manufacturing plant, he will feel there is no direct link between his job and the company’s success. Over time, this feeling could intensify, causing him to look for a more meaningful employment option.

This is where you should note that engagement is also associated with employees’ personality type. Jim’s seven years at the job can be an indicator that for him, the security that comes with a job and the ensuing satisfaction is a higher priority than being engaged on the job at the cost of weaker job security.

So, there’s a subtle but definite difference between employee engagement and job satisfaction. Let’s look at the top factors influencing these parameters.

Factors Affecting Job Satisfaction

Typically, it is the monetary and associated factors that determine how satisfied employees are with their job. The top four elements include:

1. Compensation

The first (and probably the biggest) driver of job satisfaction is compensation. Remember two things here. One, the pay scale must be positioned competitively against similar companies in your region. Two, employees should be able to maintain an above-average quality of life with the compensation provided.

2. Benefits

Supporting the advantages of good pay, you can offer a comprehensive benefits package that takes care of physical and mental well-being, financial wellness, childcare, and family coverage. You may not need innovative perks like unlimited paid time off or an in-house gym. And this is a key difference between employee engagement and job satisfaction. People want stronger basics than perks they can do without.

3. Work-life balance

Many workers feel the work-life balance is most important for a company culture that fosters success.

Shorter commutes, the freedom to work from home, paid leaves, and mandatory vacation days, among other things, can ensure a positive work-life balance for your workforce. They will have more time to spend with family or in personal pursuits, thereby improving the quality of life. This is one of those factors that not only ensures satisfaction but can also contribute to a certain level of employee engagement.

4. Recognition

Every employee, no matter their personality, professional goals, or level of engagement/satisfaction, wants to be appreciated for their contribution. You can adopt a formal structure of recognition, with annual reviews and appraisals, or an informal one, where achievements are acknowledged in the moment. We recommend both. Note, again, that this is a factor that can enable both satisfaction and engagement at work.

Factors Affecting Employee Engagement

The drivers of employee engagement are slightly different. You’ll notice that they are focused more on employee development and future needs. Here are the top four factors for this parameter.:

1. Inspiring leadership

Employee engagement starts at the top. Company leaders must be collaborative, regularly interacting with their workforce, sharing ideas with them, and soliciting their contributions before making a significant decision. This makes employees feel like they are involved in the company’s growth and keeps them engaged.

2. Career development

In many ways, career development can be better than employee benefits, and this applies particularly to millennials/Gen Zers. LinkedIn’s 2019 Workforce Learning Report found that the No. 1 reason this segment quits is the lack of learning and career development opportunities.

3. Internal communication

Communication plays a significant role in how engaged your employees are, especially if you have a large distributed workforce. The ability to connect in real-time, receive regular updates from the company, and quickly resolve issues (no matter how trivial) is critical to enabling an engagement-friendly workplace.

4. A culture of diversity

To ensure maximum engagement for all individuals, diverse work culture is essential. This means that the company is open to new ideas from every employee, proactively prevents bias, and ensures equal opportunity for all. Diversity must be embedded within the company values, covering every minority group as well as the generational divide.

Employee Engagement and Job Satisfaction on Maslow’s Pyramid

One way to understand the difference between employee engagement and job satisfaction – as well as how the two are related – is by placing them on Maslow’s hierarchy of needs pyramid.

Maslow’s pyramid is widely applied to study the different factors influencing workplace engagement. Interestingly, if you look at the bottom three layers, they deal primarily with job satisfaction drivers. As you progress up the pyramid, factors contributing to employee engagement come into play. The pyramid also suggests that job satisfaction and employee engagement belong on the same spectrum, and you cannot have one without the other.

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Job satisfaction is the foundation without which employee engagement cannot be sustained. And employee engagement differentiates the job role from the many others available to the professional. It gives the work meaning and a sense of purpose, enabling pride and self-development – factors necessary to achieve one’s full potential.

So, the progress would look like this: companies begin by regularly measuring job satisfaction among employees. They implement the necessary measures to improve satisfaction. They then follow them up with employee satisfaction surveys, understanding the areas where the company isn’t performing so well. Accordingly, engagement initiatives measuring employee experience can be deployed – this could include career pathing programs, out-of-the-box perks, personalized learning, customized rewards, and so on.

Going back to our original example, imagine if Sarah’s company had to wait for over two years before launching their product. On the surface, it may seem that Amanda is extraordinarily engaged and invested in the company’s future. But biannual surveys could reveal that she is not experiencing any satisfaction in her job, making her a prime candidate for voluntary attrition.

For outcome-focused companies, there’s always a risk of prioritizing engagement over satisfaction. And the reverse might be true in process-based verticals. That’s why it is so important to use a framework like Maslow’s hierarchy of needs to understand precisely where you are on the spectrum. To become an employer of choice, start at the bottom and offer support to your employees as they make their way to the top of the pyramid.