Doug Conant, former chief executive officer of Campbell Soup, once said, “To win in the marketplace you must first win in the workplace.” This statement speaks volumes to the importance of employee engagement, which organizations are increasingly holding managers responsible for improving. After all, Gallup reports that “managers account for 70% of the variance in employee engagement.”

Managers can make or break engagement with employees and the customer. What specific actions are your managers taking to increase employee and customer engagement ahead of your competition? Here are three things every manager must understand to improve employee and customer engagement.

1. A Disengaged Employee Drains Profits

Gallup’s “State of the Global Workplace,” a report on employee engagement in over 140 countries, divides employees into three categories: engaged, not engaged and actively disengaged. The hidden cost of the latter two categories of employees keeps many senior leaders awake at night after they understand the bottom-line havoc it can cause.

About 16% of the workforce is actively disengaged. These workers are unhappy and could care less about the company they work for. In 2013, Gallup estimated that these actively disengaged employees cost American businesses $450 billion to $550 billion in lost productivity each year. The logical conclusion to Gallup’s research is that when left unaddressed or misunderstood, disengagement can slowly erode an organization’s profitability.

2. Employee Engagement Drives Customer Engagement

Engaged employees create engaged and satisfied customers, because their high level of engagement naturally rubs off. Gallup defines customer engagement as “the emotional connection between your customer and your company.” Customers build strong emotions about a company because of their experience with its people. According to Gallup, “companies that successfully engage their B2B customers realize 63% lower customer attrition, 55% higher share of wallet, and 50% higher productivity.” In other words, an engaged employee is the customer gift that keeps on giving.

3. Managers Need Development to Impact Employee and Customer Engagement

Most managers are not prepared to increase engagement with employees and customers. In fact, without development, Gallup reports, only one in 10 people can manage effectively. Learning, growth and development are three critical components of the managerial engagement-boosting repertoire.

Despite the increased appetite of employees for learning and development opportunities, managers fail to fuel their team with proper development. In a 2015 Right Management survey, 68% of employees said their managers weren’t actively involved in their development. This lack of development leads employees to feel used, abused and disengaged. In order for senior leaders to engage their workforce, they need to provide more development for their managers — who will then trickle that development down to their team members.

The Center for Creative Leadership reports that investment in leadership development improves financials, attracts and retains top talent, drives strategic execution, and increases success in navigating change. If learning, growth and development are not an organizational focus, then engagement is destined to decline. In fact, the most expensive mistake a leader can make is failing to engage his or her people through development.

What’s Next?

Improving engagement sounds like a great idea, but due to widespread misunderstanding, it typically falls to the bottom of a leader’s priority list. This article highlights three facts to help leaders understand that employee and customer engagement starts with manager quality. This foundation will help your organization hit the ground running with an initiative that will create a culture of highly engaged employees.