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How to Measure Employee Engagement

published: January 9, 2020

Engaging employees is key to keeping employees loyal, happy, and productive on a long-term basis. However, Similar to other fundamental human emotions like happiness and sadness, employee engagement is an ephemeral and fleeting state.

In short, employees will experience different degrees of engagement throughout their tenure in an organization. As a result, employee engagement is something that should be measured consistently. But this still begs the question: Can something as intangible and feeling as engagement be quantified?

In short, yes!

bigstock-happy-sadTraditional Measures of Employee Engagement

That said, employee disengagement is often first felt on a gut level. The unmistakable distance and detachment quickly become apparent to managers and colleagues working closely with an individual.

Gut instinct is a valuable global alert system—telling us something is amiss in our environment, in this case—with an employee. Despite our instincts usually being correct, our instinct is not great at reaching a deeper understanding of the source of the issue, nor quantifying its severity.

That said, if you are looking into investing in an Employee Engagement Program, you will need to understand which metrics to look into—ensuring progress in results in an optimal Employee Engagement ROI.

To do this, we will outline the six most important metrics to quantify disengagement in your organization.

bigstock-Customer-Service-Experience-An-282212215The 6 Critical Employee Engagement Metrics You Should Be Measuring

1. Employee net promoter score (ENPS)

This metric is based on the "Net Promoter Score," the only difference is, instead of measuring customer loyalty, you measure your employees' commitment and engagement. It's a measure of how likely your customers are to recommend your company to others. As a result, this metric is found to be an accurate measure and predictor of employee loyalty.

Asset 11Using questions like "How likely is it that you would recommend working at our company to a friend or colleague?" employees respond on a Likert Scale of 1-10. Then, based on their answers, employees get classified into three categories: detractors, passives and promoters.

As you can imagine, detractors are individuals who do not recommend working for your organization. While this metric doesn't tell you why  these employees wouldn't recommend working for your organization, it does a good job at collectively assessing a global picture of how proud and dedicated your workers feel overall.

2. Voluntary Employee Turnover Rate

Voluntary turnover occurs when an employee leaves a company on their own volition. Measuring your turnover rates will give you an idea of the general health of your company.

Asset 25-1When employees don't feel fulfilled or impressed by a company's offerings, high voluntary turnover is usually the first symptom. Or they might be unfairly compensated or challenge, and as a result, have eyes for organizations offering a higher salary and more challenging position.

To calculate the monthly employee turnover rate, all you need is three numbers:

  • The number of active employees at the beginning of the month (B)
  • The number of active employees at the end of the month (E)
  • The number of employees who left during that month (L)

Then, calculate the average (average) number of employees by adding your beginning and ending workforce and dividing by two.

Finally, you should divide the number of employees who left (L) by your average number (average) of employees and multiply by 100 to get your final turnover percentage.

Pro tip: It's important to note that turnover rates vary significantly from industry to industry. However, turnover rates should (ideally) be lower than 10%, which is a very healthy turnover rate across the board.

3- Customer Satisfaction Rate (CSAT)

Asset 66Happy employees are the foundation of customer satisfaction. So, if you're managing customer-facing employees, one of the best measures of employee engagement is how satisfied your customers are with their service.

Employees that deliver top customer service intentionally go beyond the minimum of what is expected. Passion and ownership underpin their work. There is a personal and intrinsic motivation to provide excellence.

Measuring customer satisfaction is possible in several different ways. It can be done quantitatively with formal customer satisfaction surveys, or more casually through conversation or feedback. Either way, when you make an effort to gather insights from customers, you'll quickly notice patterns and trends. For example, when the same associate receives negative feedback, complaints, or a poor CSAT score, you know who the likely common denominator is. As a result, time and energy should be invested in addressing and correcting the issue.

4- Employee Productivity

In the traditional sense, productivity is about meeting a certain output within a given time period. In short, meeting a quota. This is still the case for certain lines of work. However, In our modern work environment, the definition of productivity should take into consideration the value and quality of the work produced.

Asset 69i

That said, when quality or quantity of work  begins to suffer, this can be symptomatic of employee disengagement. For example, an employee consistently misses their daily or monthly quotas, or they begin delivery work of poor quality—with apparent errors and lack of attention to detail. You can keep track of your employee's productivity and goal attainment with the help of an employee engagement software that incorporates productivity tracking features, like Applauz Recognition.

As a case in point, an extensive meta-analysis conducted by Gallup, which showed businesses that scored highest in employee engagement, are shown to be 22% in profitability and show a 21% increase in productivity."

5- Employee Absenteeism Rate

Absenteeism occurs when employees regularly fail to show up for work. It can negatively impact productivity, and it's a red flag for employee disengagement. Not to mention, absenteeism strongly affects the company's bottom line. This metric measures the percentage of employees who were absent over a given time. Higher percentages can indicate high levels of employee disengagement.

Asset 75iTo measure employee absenteeism you all you need is the following values:

  • Number of employees
  • Number of absences
  • Total number of work hours

Temporary band-aid solutions will not suffice if you wish to lower employee absenteeism in an enduring way. The root cause of employee disengagement must be addressed with a strategically implemented Employee Engagement Program for absenteeism issues to be truly resolved.

In fact, according to a Gallup Workplace report, businesses boasting a highly engaged workforce are showing to have a powerful impact on lowering employee absenteeism by up to 41%.

6 - Employee Satisfaction Score

Asset 68iThis metric can only be obtained by administering "Pulse" surveys that contain questions conceived to measure employee satisfaction.

You’ve likely heard of (and probably taken) a work survey of this nature in the past. Survey questions often asked are “on a scale of 1 to 10 how happy are you at work?” and “do you feel valued at work?”

With the help of an employee engagement software like Applauz, you can administer Pulse surveys and keep your finger on the pulse of how your employees are really feeling. As a result, on a monthly basis, you should have a global idea of where you’re workforce stands in terms of their satisfaction at work.


Final Thoughts

Often, executives only pay attention to employee engagement once there are perceptibly high rates of absenteeism and turnover among their top talent in their workforce. In short, when employee disengagement is clearly symptomatic.

At this point, disengagement has likely spread to all levels and evolved into a complex issue that will require a great deal of time and resources to fix.

To nip disengagement in the bud, it's incumbent on executives and managers to keep their finger on the pulse of the workforce satisfaction—to systematically monitor levels of engagement with these important metrics. The goal is to catch the early (and often subtle) signs of dissatisfaction and disengagement before they manifest as full-blown absenteeism or, worse, voluntary turnover.