Employee Engagement and Organizational Performance — Evidence from Indian Manufacturing Firms
Author(s): Priya Nair, Suresh Babu Krishnamurthy, Meenakshi Rajan
Affiliation: School of Management, Bennett University, Greater Noida, Uttar Pradesh, India , Department of OB & HRM, XLRI Xavier School of Management, Jamshedpur, Jharkhand, India
Page No: 48-52-
Volume issue & Publishing Year: Volume 3, Issue 3, 2026/03/12
Journal: International Journal of Modern Engineering and Management | IJMEM
ISSN NO: 3048-8230
DOI:
Abstract:
Employee engagement has emerged as a foremost determinant of organisational performance in the post-pandemic landscape, yet its measurement, antecedents, and productivity consequences remain underexplored in India's large-scale manufacturing sector. This study investigates the relationship between employee engagement levels and multidimensional organisational performance outcomes across 218 manufacturing firms listed on the BSE 500 index, using a mixed-methods research design combining structured survey data from 4,106 employees with firm-level financial performance metrics — Return on Assets, EBITDA margin, and revenue per employee — sourced from CMIE Prowess database for the period 2020–2025. Structural Equation Modelling (SEM) reveals that employee engagement — operationalised across cognitive, emotional, and behavioural dimensions using an adapted Utrecht Work Engagement Scale (UWES-17) — explains 36.2% of variance in operational performance and 24.1% of variance in financial performance. The study identifies supervisor support (β=0.43), perceived organisational justice (β=0.39), and job autonomy (β=0.31) as the strongest antecedents of engagement. Frontline workers show significantly lower engagement scores (mean=3.31/7) compared to managerial staff (mean=4.94/7), a gap widened by hybrid and contract-labour restructuring post-2022. Automotive component manufacturers exhibit the highest engagement-performance correlation (r=0.69, p<0.001), while textile manufacturers show the weakest coupling (r=0.29, p<0.05). The Four Labour Codes implementation and e-Shram registration data provide updated institutional context shaping engagement dynamics as of 2025. Findings carry implications for HRM policy design in Indian manufacturing: mandatory supervisor competency certification under the National Occupational Standards framework, AI-assisted feedback systems, and participative goal-setting each significantly amplify the engagement-performance link. The study updates prior SEM-based engagement-performance analyses with 2024-25 data incorporating gig-worker formalization under the Social Security Code 2020.
Keywords:
employee engagement, organisational performance, SEM, UWES-17, Indian manufacturing, supervisor support, Four Labour Codes, BSE 500, CMIE Prowess, gig economy
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