How Do You Measure Employee Engagement?

January 12, 2021

Attract and retain top performers by demystifying employee engagement, and learn how your organization is doing and where to focus your efforts.

Blog Post

Massive technological advancements, global business shifts, and a workforce that’s more diverse than ever before have turned today’s landscape into one that’s almost unrecognizable compared to that of just a few decades ago. Employees who used to spend their entire careers with a single employer are now seeking greener pastures and development opportunities as they come with multiple shifts in employment.

Businesses have also been facing the challenge of a major shift from the traditional, inward focus on operations and profit to a more outward focus in becoming the social enterprise:

“A social enterprise is an organization whose mission combines revenue growth and profit-making with the need to respect and support its environment and stakeholder network. This includes listening to, investing in, and actively managing the trends that are shaping today’s world. It is an organization that shoulders its responsibility to be a good citizen (both inside and outside the organization), serving as a role model for its peers and promoting a high degree of collaboration at every level of the organization,” according to the 2019 Deloitte Global Human Capital Trends report.

All of these changes have had a major impact on the competition to attract top talent, especially from the Millennial and Gen Z camps, who demand fulfilling work experiences, empowering and inclusive environments, and the opportunity to learn and grow at every stage of their work experience.

With the connection between engagement and performance outcomes well established, organizations have dedicated time and resources over the past decade attempting to demystify employee engagement and how exactly to quantify it. With big data and data analytics entering the scene alongside a huge shift to digital-centric interactions in the workplace, organizations have a clearer picture than ever before of how to accurately measure key indicators of employee engagement.

Prior to the COVID-19 pandemic, employee engagement was slowly creeping up in the U.S., according to Gallup, which finds that engagement is returning to pre-COVID levels. So how can organizations ensure those numbers continue to rise, despite major disruptions or crises like a global pandemic?

It all starts with knowing where to look. According to Deloitte’s Engaging the Workforce, “Engagement typically refers to an employee’s job satisfaction, loyalty, and inclination to expend discretionary effort toward organizational goals.”

In its 2021 Human Capital Trends report, Deloitte includes employee well-being as critical to their engagement and performance. To bring out the best in employees and make organizations thrive, it recommends, “Integrating workers’ physical, mental, financial, and social health into the design of work itself rather than addressing wellbeing with adjacent programs."

In its State of the American Workplace report, Gallup highlights five critical areas of wellbeing that impact employee engagement, including:

  • The ability for employees to do what they do best
  • Work-life balance and personal health and wellbeing
  • Job security and stability
  • The opportunity to work for a company with a good reputation or well-regarded brand
  • A competitive income compared to peers and previous jobs

7 Ways to Monitor, Measure, and Improve Employee Engagement

Historically, companies most often measured engagement through surveys asking workers to self-report their levels of engagement. While helpful, these types of surveys are vulnerable to “gaming” (employees telling leaders what they think leaders want to hear),  get dated quickly, and fail to provide the objective, critical data regarding the above areas for organizations who want to take a successful, multi-pronged approach to improving employee engagement, points out Ryan Fuller of the Harvard Business Review.

However, Fuller also writes that organizations now have access to a wider, deeper range of data that will enable them to put the pieces of the engagement puzzle together more quickly and efficiently than ever before.

While every organization’s approach will look a little different, here are a few places where mining data can yield rich and game-changing insights.

1. Discretionary effort

Keep an eye on what’s referred to as “discretionary effort,” an employee’s willingness to “exceed duty’s call,” according to the Harvard Business Review, and that willingness is a strong indicator of engagement but must be balanced with the risk of burnout. Though hours worked might be one sign, there are a lot of ways your employees are going above and beyond the basic requirements of their jobs. Throughout the past year, schedules are just one among many aspects of work that are irregular, but it’s important to check in with your employees in this area.

2. Network-building and communication within the company

They say it takes a village, and the same is true for professional life as it is in your personal life. Employees that go outside the “team bubble” to build a broader network of connections tend to be more engaged. Take a look at the amount of time employees spend with people outside their team and region, and how many network connections they’re building as an indicator of their engagement. Connections, both internal and external, personal and professional, are what help build the sense of belonging your employees crave.

3. Participation in meetings

The transition of the workforce to remote working in 2020 gave rise to more video conferencing than ever before. Daily downloads of the free Zoom app increased 30x year-over-year, and Zoom’s daily meeting participants grew from 10 million in December 2019 to 300 million in April 2020. In whatever format your employees’ meetings are, in particular, how many ad-hoc meetings are they attending and how are they participating? High participation in unplanned meetings and social meetings is a good sign, but participation only in highly structured events could be a sign of lower engagement.

4. How often employees use self-service options

If you’ve implemented a human capital management (HCM) solution with employee self-service functionality, looking at how often employees turn to your HR team for information versus finding it on their own. Evaluating the adoption and utilization of your HCM solution lets you know whether the solution is working or where you may need to better communicate the self-service options available. Actively seeking out information, the amount of information they seek, and the type of information employees look for are useful clues.

5. How employees talk about the organization

Talk is anything but cheap, and in fact it’s incredibly valuable in telling you how your employees feel about the company and their role there. If your company has a centralized chat room or communications hub, investigate which employees are posting the most, the least, and what kind of conversations they’re having. It’s certainly important to navigate these waters carefully so you avoid stepping into Big Brother territory, but trending phrases and other indicators of employee sentiment in your communication platforms, pulse survey results, and even performance notes will offer insights that numbers often can’t.

6. Manager interaction with employees

Especially now when so many employees are working remotely, your managers are hopefully taking extra steps to stay connected with their teams. In times of disruption and change, leaders play a key role in carrying or rebuilding company culture as well as a sense of shared purpose. By creating more frequent opportunities for connection with direct reports, following suit with the new model of ongoing performance management, managers can foster a closer connection between employees and the organization. “Engagement typically increases as an individual gets more time with his or her boss,” points out Ryan Fuller of Harvard Business Review. Look into how many and how frequently these conversations are happening, maybe even encourage tracking notes using tools like Journals.

7. Organizational health metrics

In addition to the more subtle nuances of employee engagement, especially those metrics associated with individual employees, basic organizational metrics can help you understand how engaged your workforce is, including:

  • Headcount
  • Growth rate
  • Turnover/attrition rate

On their own, these numbers can be misleading or misunderstood, but within the context of other engagement indicators, understanding if and how fast your company is growing (or shrinking), as well as average employee tenure (by level, department, and role) can help you measure actual employee engagement versus self-reported levels of engagement.

Why Employee Engagement Matters

It’s no secret that high performers lead your company forward, and today’s high performers have an evolving set of wants, needs, and demands of the companies they work for. Taking steps to ensure they feel challenged, cared about, and invested starts with examining your data and creating strategies to engage more employees more often.

Deloitte’s Engaging the Workforce found organizations with engaged workers have employees who are:

  • 57% more effective
  • 87% less likely to leave
  • 3-year revenue growth rate 2.3 times greater than average.

Disengaged employees, on the other hand, pose a threat to your organization by increasing turnover or worse, sticking around and destabilizing the business. Disengaged employees cost the U.S. between $450 billion and $550 billion each year in lost productivity. What’s more, employee disengagement costs businesses a jaw-dropping $3,400 for every $10,000 they make, according to Forbes.

Technology: Paving the Road to a More Engaged Workforce

Though some of indicators of employee engagement are still hard to quantify and automate, today’s HR technology and people analytics solutions have empowered businesses of all sizes to zero in on critical organizational information to measure, analyze, and increase employee engagement.

“While still in its infancy, people analytics is beginning to give organizations the data and tools to understand what drives engagement, perhaps even better than employees understand themselves,” writes Ryan Fuller of the Harvard Business Review.

In addition to analytics, HR technology is fundamental to an organization’s ability to curate and deliver the kind of employee experience today’s modern workforce demands. With the tools to create a streamlined, frictionless, always-on experience throughout the employee life cycle and then measure and iterate that experience continuously, your business is empowered to evolve and innovate despite disruptions and challenges that come your way.

Learn more about the benefits of an HCM solution, calculated as potential time and cost savings in ten core human resource responsibility areas, in your free copy of Deloitte’s Estimating the Return on Investment of a Human-Capital Management Solution for Various Human Resources Tasks.

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