How to Measure Employee Engagement KPIsOctober 07, 2022
Learn how to measure employee engagement to boost productivity and organizational success.
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. Deloitte’s Engaging the Workforce report found organizations with engaged workers have employees who are 57% more effective and 87% less likely to leave. It’s critical to ensure your workforce feels challenged, cared about, and invested in – this starts with examining your data and creating strategies to engage more employees more often.
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 measure employee engagement.
Why Is It Important to Measure Employee Engagement?
By measuring employee engagement, organizations can identify profiles of engaged employees and pinpoint opportunities to improve employee engagement.
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 $3,400 for every $10,000 they make, according to Forbes.
Understanding the extent of employee engagement throughout your organization is a critical first step towards remedying any potential issues.
How to Measure Employee Engagement
Measuring employee engagement all starts with knowing where to look. According to Deloitte’s Engaging the Workforce report, “Engagement typically refers to an employee’s job satisfaction, loyalty, and inclination to expend discretionary effort toward organizational goals.”
Historically, companies most often measured engagement through surveys asking workers to self-report their levels of engagement. While helpful, these types of employee engagement survey questions 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 improve 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. Ultimately, employers must make use of quantitative data from HR analytics platforms and qualitative data from employee surveys to fully understand the level of engagement within their workforce.
9 Key Employee Engagement Metrics
While every organization’s approach will look a little different, here are nine HR metrics that can be used to measure employee engagement and 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. 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 many ways your employees are going above and beyond the basic requirements of their jobs. Throughout the past year, schedules are just one aspects of work that are irregular, but it’s important to check in with your employees in this area.
Engagement is directly related to inclusiveness. Employees who do not feel included are more likely to be disengaged or not engaged at all, according to Harvard Business Review. Fair treatment, integrating differences, decision making, and diversity are all part of creating an environment where employees feel included. Direct employee feedback gathered from a quick survey is the most effective means of gauging how inclusive your organization is.
3. Stay Interviews
Initiate a conversation with high-performing employees to determine what they like about their role and what they would change. The stay interview can be used to reveal what keeps an employee engaged in their work.
4. Employee Net-Promoter Score (eNPS)
Employee net-promoter score is a commonly used employee engagement kpi that indicates how likely an employee is to recommend working at their organization to a family member or friend on a scale of 0-10. Employees who are engaged are more likely to recommend working for the organization, according to Fred Reichehld, who developed this method.
5. Turnover Rate
Turnover rate at your organization is another good factor to consider. Measuring who is staying and leaving, is the organization losing high performers or employees who have been with the organization for a long period of time?
You can quickly calculate turnover rate by dividing the number of separations by your organization’s average number of employees, then multiply by 100.
6. Successful Hires
Identifying who among your employees was a successful hire can reflect employee engagement. There are many ways to measure whether an employee was a successful hire, including the new hire 90-day failure rate, which is the percentage of employees who leave your organization in the first 90 days. You can also look at the average time to fill a job vacancy. This metric looks at how long it takes from job requisition to accepted offer. Not only does this number reflect how efficient your recruiting process is, but it also shows how engaged prospective employees are.
Though it’s a bit trickier to measure, identifying your quality of hire, or the value each hire provides your organization, can give you a good sense of employee engagement. Though there’s no gold standard for measuring quality of hire, job performance and time to productivity are a good place to start. Engaged employees are more likely to be productive and high performing.
7. Internal Promotion rate
Employees who are engaged may be inclined to continue growing their skill levels, which in return can lead to promotions. Your organization can find its internal promotion rate by taking the total number of internal promotions your organization has given out, dividing it by the total number of employees, and multiplying that number by 100.
8. Employee Satisfaction Index (ESI)
Employee satisfaction index is a survey that measures employee satisfaction at work. By conducting an ESI, your organization can get a better understanding of their everyday life and attitude to the job. ESI focuses on three questions: “How satisfied are you with your current workplace? How well does your current workplace meet your expectations? And, how close is your current workplace to the ideal one?”
Absenteeism could be a connection to how engaged an employee is with their job. High absenteeism rates could indicate a lack of motivation or low morale. It can be difficult to determine whether the employee is taking time off for a specific reason or if they are experiencing burnout, which could indicate that they are not engaged with their job. It’s good to schedule time to check in on your employees who may be showing signs of absenteeism to make sure everything is okay.
How to Evaluate Employee Engagement with Survey Software
Employee surveys are useful tools to measure employee engagement in conjunction with the above metrics. When your organization has employee engagement survey software on board, it’s easy to ask employees for feedback and glean insights from the results. Besides identifying your employee net promoter score, a quantitative metric, you can use surveys to gather qualitative data as well, ensuring you can understand employees’ perspectives in their own words.
What Is an Employee Engagement Survey?
An employee engagement survey asks workers to self-report their levels of engagement. Creating or using templates provided by your employee survey software can automate feedback at key milestones during the employee journey. Send out surveys at 30, 60, or 90-day reviews; one-year anniversaries; and during exit interviews. That way, you can gain a holistic view of employee engagement from hire onward.
High-quality employee survey software should enable you to measure both your employee satisfaction index and employee net promoter score. Your ESI gives insight into employees’ perspectives on your organization and how content they are in their roles. On the other hand, the employee net promoter score measures how likely employees are to recommend your organization to a family member or friend. Together, these two employee engagement KPIs can give you a baseline.
Should Employee Engagement Surveys Be Anonymous?
Employees may feel more comfortable submitting surveys anonymously, giving them the freedom to speak their minds and provide feedback without fear of reprisal. When they know their answers are attached to their names, they may consciously or subconsciously adjust their responses to what they think leaders want to hear. So you may receive more accurate feedback if you remove identifying information from employee engagement surveys.
On the other hand, knowing who said what can provide opportunities for leaders to follow up with employees to better understand their employee engagement survey answers. For example, if an employee’s satisfaction score has dropped over time, it may be worth scheduling a check-in or stay interview to find out what changed for them. Leaders can use survey information to start conversations, connect with employees on what matters to them, and define strategies for improving employee engagement.
Example Survey Questions to Evaluate Employee Engagement
One of the best ways to streamline your employee feedback process is to create an employee engagement survey template with pre-defined questions you can ask employees at different moments during their employment. Keeping the questions the same each time allows you to check for trends and compare one data set to another. For example, if an employee answers the same question at their 90-day review completely different from their one-year anniversary, you can analyze what changed for them, possibly identifying that employees need more support after their 90-day reviews to continue integrating into the team.
The types of questions you ask can yield different insights, but a general rule of thumb is to ask about various topics, including satisfaction, communication, learning and development, compensation, benefits, work environment, leadership, and work/life balance. For the most honest feedback, consider making your survey anonymous. The following employee engagement survey questions will help you create your template.
- How would you describe what you do every day?
- How would you describe your organization to friends and family?
- What types of projects/tasks/activities do you enjoy working on?
- Do you feel like your opinions are valued here?
- What do you understand about the strategic goals for the organization?
- Does the organization provide you with all the tools and resources you need to do your work?
- Does leadership recognize you for your contributions and accomplishments?
- Do your peers recognize you for your contributions and accomplishments?
- Are you satisfied with your current benefits offerings?
- Do you feel your professional development goals align with the organization?
- How has your supervisor helped you succeed in your role?
Though some 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.
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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