4 KPIs to Measure Employee Engagement

How has your employee engagement been impacted by the recent changes in the marketing department in the last 90 days?

The answer to a simple question like this should be a quick, off-the-shelf data point that is tracked and measured, as influences and trends in employee experience and retention can have big impacts on the success of your organization.

Engaged employees invest themselves in the broader success of the company, rather than only being present for the paycheck and benefits. They are also more likely to see their role as an important part of the company’s mission, and will often support the company in a manner of different ways outside of their everyday responsibilities.

Unfortunately, research shows that only 32% of U.S. employees are engaged at work. This would suggest that we are missing out on 68% of the potential output of our people. This is supported by the research in finding strong correlation between actively engaged teams, and increases in customer ratings, profitability, and productivity.

This is an important factor that Human Resources leaders should focus on constantly improving. Measuring employee engagement and the employee experience involves emotions and feelings, which are difficult to measure objectively. You need data to accurately measure and improve engagement levels.

Here are four key performance indicators (“KPIs”) that Human Resources teams can use to get the right feedback on employee engagement.

Diversity & Inclusion

Measuring diversity and inclusion within your organization is a key KPI that can help create a welcoming company culture that retains your employees and attracts top talent. Higher rates of diversity and inclusion have also been found to correlate with more successful companies that are able to weather difficult circumstances, even financial recessions. For example, a recent study found that, “During, and after the Great Recession, and gained a 4x larger stock return than the S&P 500.”

So the case for investing in strong D&I initiatives is also a strategic and smart business decision. To start a successful D&I initiative, it’s important to review your people data and find out where your company has any gaps. See if you can spot imbalances before they lead to turnover. Include the number of employees that identify as each gender and ethnicity at the company level, as well as by seniority and department. It’s also a good idea to include compensation data by demographic to keep an eye on pay equity at your organization.

Get ahead of inclusion issues by adding some related questions to your employee surveys—or even creating a dedicated diversity and inclusion survey. Then, track your progress over time and take necessary steps to build and retain a more diverse organization.

Employee Engagement Surveys

Another way of collecting opinions to gain insight into levels of employee engagement is by using employee engagement surveys.

These surveys can vary in cadence, but the general rule is: the more frequent, the better. Today’s workforce is comprised of Millennials who naturally resonate with continuous feedback and information loops. For companies scaling quickly, after the employee onboarding process is a great time time to check-in on new hire engagement and ensure expectations have been met.

Using employee engagement surveys enables Human Resources teams to ask real questions related to the employee experience:

 How valued they feel as an employee?
 How satisfied they are with their work/ life balance?
 How they feel about their career prospects?

Using a combination of open and closed questions in order to get both quantitative and qualitative feedback from your team will give you valuable insight on what your organization could be doing to make people feel more engaged.

A positive score coming out of the survey is great, but if it is achieved dishonestly, then it won’t provide you with the knowledge you need to actually improve your company's employee experience. Nor will it help the success of your company.

Similarly to employee suggestion box programs, it is vital that something is actually done with the results you collect in order to improve employee engagement.

Sweeping problems underneath the rug is a slippery slope which can lead to bad outcomes in the long run.

Employee Net Provider Score (eNPS)

Net Promoter Scores were originally introduced to measure the levels of satisfaction and loyalty of customers.

They have since been adopted internally by progressive employers to ascertain the same information from their employees. This is done by asking the simple question, “How likely is it that you would recommend working at our company to a friend or colleague?”

‍Generally, the question is answered on a scale from 0 to 10, where anyone answering 0 to 6 considered a detractor, 7 and 8 considered passive, and 9 and 10 respondents are considered promoters.

To calculate your employee NPS, you simply subtract your detractors from your promoters (and ignore the passives) and divide by the total number of respondents:

‍Employee NPS = (promoters - detractors)/ total respondents

‍A negative score indicates that more employees said they would not recommend someone to work at your company, whereas a positive score indicates that more people would recommend your company as an employer of choice.

Evidently, the more positive the score, the better. Employees that are engaged will be more likely to recommend a position to a friend or colleague.

If this is not the case, you need to determine how to improve your employee NPS, which starts with putting yourself in your employees’ shoes.

‍Having a clear understanding on what your employees are looking for from their role can go a long way in evaluating the reasons behind a low employee NPS.

‍Including an additional question (either optional or required) that asks employees how your company could increase this score should also give you some insights on how to improve employee engagement levels.

Employee Absenteeism and Turnover Rate

It's no secret that engaged employees show up and put in the effort.

Examining trends in absence rates and turnover rates of your employees can be a good indication of employee engagement, but unfortunately it’s a lag indicator.

According to market research, you should aim for an annual employee turnover rate of 10% or less. Of course, a certain amount of employee turnover can be beneficial in terms of moving the company forward and sparking change, but unnaturally high employee turnover can be a massive ROI killer for your organization.

From a ground-up approach, absenteeism and turnover rates within teams will also show you whether there are certain managers or departments that need attention to improve employee experience. Also, if certain employees are often away without valid reasons, this can affect the rest of the team.

A proactive way of improving both employee absenteeism and turnover rates is by understanding what motivates your employees when they are hired, and ensuring that these motivations are continually met and exceeded during their tenure with the company.

Presenteeism can also be an issue. This is where employees arrive to work, but they aren’t actively engaged in the activities they are performing. They might be distracted, put less effort, or not be doing what they should be.

This can be a strong indicator of declining employee engagement, and if it’s a team-wide issue - it signals a need to realign your company's success with that of your employees.

Focus on the people

All companies should strive to strengthen and grow employee experience, so it is mission critical for companies to understand how engaged their employees are with quantitative and qualitative data points. Without objective measures and feedback , there is no way of knowing if your efforts are working.

Providing a great employee onboarding experience can go a long way towards improving employee engagement.

4 KPIs to Measure Employee Engagement

Diversity & Inclusion

Employee Engagement Surveys

Employee Net Provider Score (eNPS)

Employee Absenteeism and Turnover Rate

Focus on the people

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