Employee Engagement Part 2- Need for Engagement

Here is the link for part 1:
http://anvesh87.blogspot.in/2012/04/employee-engagement-part-1.html

so why had Employee Engagement became such a Buzz word with organizations, especially in the recent past . Infact the word "Employee Engagement" is formally coined only in 1990's ( now don't sue me if it is not accurate) .
So does it mean that employees are not Engaged towards their work before 1990's ?.
if they are , why can't the companies continue with they had been doing for ages instead of going for some thing fancy .
Is "Engagement" a new management fad which is gonna passover with time ?

Having put so many questions , lets see whether there are answers for these questions and also as one of my profs say "back every thing with numbers", will also see what is the research done with respect to Engagement (quite a few consulting companies had done research in the topic)

If we look at the careers of our parents , i mean those who are the Generation X (born in 60s) and baby boomers (those who were born after world war 2) , we can observe a trend that most people stick to the same organization for years . The mantra here is "Job security" . organizations offered job security , pension benefits , medical benefits etc which in other way of saying you work for us for long term and we will take care of u  and employees did reciprocated with sticking to the organization for a long time

The situation has changed now . With globalization and changed business scenario, no company can guarantee an employee of a life long employement but instead the focus shifted to offering careers . It is now accepted that there would be attrition , the challenge is to retain the top performers to work with the organization for a long term and to help them perform at their peak capabilities . This is where our "ENGAGEMENT" concept comes into picture .

Now lets look at some of the outcomes of research done on Engagement:

• Towersperrin research on 50 global companies over a one-year period, correlating employee engagement levels with financial results:
• Companies with high employee engagement had a 19% increase in operating income and almost a 28% growth in earnings per share
• Companies with low levels of engagement saw operating income drop more than 32% and earnings per share declining over 11%

• Hewitt's study on 1500 companies over 4 year period:
• Engagement Level                                              share holder return
• 60-100%                                                              20.2%
• 40-60%                                                                5.6%
• below 40%                                                           -9.6% 

so it can be clearly seen that when less than 40% employees are engaged , the share holders returns are negative

there are many other studies done correlating engagement with customer satisfaction, profitability etc. Even though there might be difference in the numbers , but all studies show Engaged employees are assets to the organization and a source of competitive advantage

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