How to Measure Employee Engagement

Do you know how engaged your employees are in the workplace? It’s important to measure employee engagement, as this directly affects the success of your business. The difficulty is that engagement is an intangible metric.

This means you have to come up with tangible data that can give you a picture of your workforce engagement. You need to understand how engagement affects your company, determine Key Performance Indictors (KPIs) that drive engagement, and determine how and when to evaluate these KPIs.

Why Should You Measure Engagement?

According to a Gallup poll, only 1/3 of employees are actively engaged at work. This disengagement can lead to:

Decreased productivity
Reduced employee morale across your company
Failure to complete important tasks
Reduced customer experience

Lack of employee engagement also brings increased costs for your company. Turnover increases when engagement is low, leading to increased hiring costs. You can lose customers, requiring increased advertising costs.

You also have the cost of paying employees who are not actively completing their work. Disengagement can cost your company 18% of the employee’s annual salary. For instance, if you pay an employee $50,000 annually, disengagement could cost you $9,000 or more.

Managing employee engagement can save you money and increase revenues, driving better company growth.

Employee Engagement KPIs

While you can’t directly measure employee engagement, you can look at KPIs that correlate with engagement. Essentially, these KPIs show the results of engagement or disengagement in your company.

Turnover Rates

There are two areas where you can measure your turnover rate. Look at the overall turnover for your company and look at turnover for each department. This will help you determine potential problem areas to address.

To measure employee turnover, divide the number of employees who have left by the average number of employees for the period, then multiply this number by 100. Measure this rate at different intervals to look for patterns that could be driving disengagement.

Retention Rates

Retention rates also give you a snapshot of employee satisfaction. To determine the retention rate, divide the total number of employees still with your company for the period being measured by the total number of employees during that period, then multiply by 100.

Say you currently have 20 employees and during the period in question you had 25 employees. 20/25 is 0.8. Multiply this by 100 to get a retention rate of 80%.

As with turnover rates, measure retention rates at different intervals.

Exit and Stay Interviews

Exit interviews are a good way to find out more about what is causing disengagement in your company. Compare these interviews with the turnover intervals you measured to look for recurring issues.

Stay interviews on the other hand give you a look at what factors make employees stay. Start with high-performing employees, ask them to be honest about how they feel about their current work environment, and ask them to share what factors might lead to them leaving.

Note: make sure you highlight the good aspects of your company during the interview, so you are not running the risk of them dwelling on concerns only.

Calculate Net Promoter Score

A good way to determine if employees are engaged is to find out how likely they are to recommend you to friends looking for a job. One way to determine this is to calculate a Net Promoter Score (NPS).

This is completed by asking employees if they would recommend your company. Subtract those who would not recommend from those who would, then divide this by the total number of employees.

Example: Say you have 20 employees, and 12 would recommend your company. This leaves 8 who would not recommend it. 12-8=4. Divide this by 20 for an NPS of 20%.

You can also have employees rate their willingness to recommend your company. Using a scale from least likely (1) to most likely (10) will give you an idea of employee satisfaction.

Online Employee Ratings

Most online job boards allow past and current employees to review their workplace. If you have an account set up on any of these job boards, you will likely have some reviews.

While it may be uncomfortable to look at what a disgruntled employee has to say, these ratings and comments can be helpful to measure employee engagement. Periodically check your company ratings and compare these ratings over time. You will also want to look for common themes in the comments to find potential problem areas.

Calculate Absenteeism

Absenteeism can be a big indicator of disengagement. Keep in mind, absenteeism includes unscheduled absences, not prescheduled days off. If you have employees regularly calling in, this can create a domino effect as coworkers become frustrated with increased workloads to cover.

Calculate absenteeism by dividing the number of absences by the number of workdays for that period, then multiply by 100. You will want to look for patterns to determine what is leading to increased absences.

Review Internal Promotions

Your internal promotion rate gives a good indicator of how many high performers your company retains. High performers are your most engaged employees, so your internal promotion rate is a good way to measure employee engagement.

Recognition Rates

40% of employees report receiving little recognition at work throughout the year. These employees say they only receive recognition a few times a year, some less than that. Employees who do not feel appreciated are more likely to become disengaged.

Measuring recognition rates is about determining what percentage of your employees receive recognition for their work. How you measure this will depend on how you set up your recognition program. You can also survey employees and managers to get an idea of your recognition rate.

Diversity Rates

Diversity in the workplace helps all employees feel more involved, as your company has a built-in support system. With increased feelings of inclusion comes increased employee engagement.

This means your diversity rate is a helpful tool to measure employee engagement. Look at your company’s demographics to determine the level of diversity you have.

Measure Productivity

Productivity is directly connected with employee engagement. The more engaged employees are, the more productive they will be.

Productivity measurements will look different for each department, so it’s important to put measurement tools in place that make sense for the individual departments. This can be a measurement of output, revenue, project completion rates, or any other relevant metrics.

Measure Effort Required

To better measure employee engagement, you need an understanding of the processes, resources, and effort involved in completing tasks. Employees who do not have the right resources in place to complete their tasks are more likely to become disengaged.

Survey employees to get an idea of the level of effort and the resources available and required for their jobs. This will help you review processes to make sure employees have what they need to succeed.

Best Practices to Measure Employee Engagement

Before you can measure employee engagement, you need to determine what constitutes engagement for your company. You then need to determine what metrics you will use to determine engagement. Whichever metrics you decide on, you will also want to incorporate employee feedback.

Once you have gathered all the data, you need to determine how to organize it so you can best determine engagement in your company.

Create Models of Engagement

What do engaged and disengaged employees look like for your company? It is important to create models to distinguish between the two groups. You will want to create personas for engaged and disengaged employees by answering questions like the following:

What initiative does the employee show?
How much career growth have they seen in this organization?
How aligned are they with our company goals and values?
How much communication do they have with managers and coworkers?
How often are they absent from work?

Create models as specific as possible to help you better classify employees. While engagement is not usually so black and white, this does give you a good starting point to help determine the metrics needed to measure employee engagement.

Determine Your Metrics

When determining metrics, consider tools that will help you measure work meaningfulness, employee participation, workload, resources available, development opportunities, goals, management relationships, coworker interactions, etc. Also, determine what role you want employee feedback to play in measuring engagement.

Employee Feedback: Questions to Ask

Whether you decide to do monthly, quarterly, or annual employee surveys, you should include some important questions to help you gain employee feedback about their engagement levels. These questions include:

How do the company goals align with the work you are doing?
What part of your job do you look forward to?
How does your manager participate in your career development?
What motivates you at work?
How would you rate the recognition you receive for your work?
What would you change about your current workflow?
How would you describe your work environment?

To get a good view of employee feedback, consider evaluating surveys based on departments. Look for recurring keywords or messages, sort based on favorability factors, and compare based on the different departments to help you identify patterns.

Evaluating Engagement

Once you have gathered all your data to measure employee engagement, you need to determine how to evaluate these results. You will want to use your models of engagement to organize your data. To get a good assessment, where possible, you will also want to break these results down based on departments.

From here, you can compare your models to get a good view of how many employees are engaged and disengaged. You want your engagement rate to be at least 50%, but higher is best.

Using the metrics and employee feedback, you can also start to make connections to determine what might cause disengagement.

Determine Measures to Increase Engagement

Even if your evaluation shows a high engagement level for your company, you always want to remain conscious of measures to help you maintain or increase engagement. Use your results to determine what measures can be put into place to drive better engagement.

Look for what motivates your employees and what leadership can do to keep employees involved. Look for what resources are missing that could help keep employees engaged. Use these results to help improve processes and communication within departments and across your company.

Areas to focus on include management communication, growth opportunities, trust, work environments, work relevance, and recognition.

Management Communication

While most employees work best when they have some level of autonomy, managers still need to keep open communication with their teams. 39% of employees surveyed said they would feel more involved if they had regular check-ins with their managers.

Encourage managers to conduct regular one-on-one meetings with their employees. This is a chance to check in on work progress and determine what resources employees need. This is also a chance to make sure employees are not feeling overwhelmed or underappreciated.

It is also a good idea to conduct one-ones with new hires at dedicated intervals. This gives you a chance to determine their engagement and work through any challenges they are facing as they transition into their new role.

Growth Opportunities

Employees feel more involved when they feel they have opportunities to grow within your company. Have managers take time to understand the growth goals of their employees and work together to determine how to help them meet these goals.

You will also want to evaluate the needs of your company to make sure you are hiring employees who can grow with you. Look for employees who want options to move up and set out goals to meet your needs both at the time of hire and as they grow within your company.

Creating Trust

Trust is an important aspect when you measure employee engagement. You want to make sure employees have trust in their leadership and in the path your company takes.

Maintain open communication about any changes that occur and allow employees to be involved in major decisions. Listen to employee feedback during transitions so you can make sure you put processes in place that will help them feel secure.

Creating a Positive Work Environment

Employees need to feel heard, and they need to feel represented in your company. Look at the diversity in your workplace to make sure you have a good representation. Make sure employees at all levels have a chance to be included in decisions that will affect them.

It’s also a good idea to find ways to create camaraderie between coworkers. Encourage communication between employees and create opportunities to better know and understand each other.

Providing Meaningful Work

Every job role has some type of drudge work. Every person has an aspect of their job they find dull. You want to make sure that each person in your company has an aspect of their job they look forward to.

Give opportunities to participate in projects and tasks the employee finds meaningful to help them maintain engagement. This requires listening to feedback from the employees so you can find ways to include them in these meaningful tasks.

Employee Recognition

The fastest way to lose engagement is to let employees feel unappreciated for the work they provide. In the daily hustle, it can be easy to forget to say thank you for work well done.

It’s a good idea to have an employee recognition program in place so you can make sure everyone has an opportunity for recognition in the workplace.

Continue to Monitor Engagement

As you work to improve engagement in the workplace, you will want to continue to monitor engagement regularly. Measure employee engagement at determined intervals so you can look at the progress made and adjust as needed.

Measuring employee engagement is an involved but important aspect of growing your business and attracting and retaining top talent. If you are unsure where to start, or need help managing the process, check out how HR Service, Inc. can provide HR support.

Written by: Penny Clark