Weathering the COVID Storm: The Effect of Employee Engagement on Firm Performance During the COVID Pandemic

Abstract

The COVID-19 pandemic and associated need for remote work has required organizations to adapt and demonstrate resiliency in order to continue to deliver on their purpose. Since employee engagement is key to organizational effectiveness and adaptation, in this study, we examine whether there are differences in the financial performance during the pandemic across firms with different levels of pre-pandemic employee engagement. Using novel machine learning methods on Glassdoor.com reviews of leading software industry firms to create measures of employee engagement and their perception of their firm’s remote work practices, we show that firms with higher levels of pre-COVID employee engagement exhibited significantly higher financial performance during the critical months of the pandemic. Additional analysis of post-pandemic reviews revealed that employees of firms with higher levels of pre-pandemic engagement reported an alignment of their firms on strong leadership and customer focus, while employees of firms with lower levels of pre-pandemic engagement reported concerns regarding bureaucracy and lack of consistency in management and work practices.