How to properly measure employee engagement (and which metrics to measure)

Want to measure employee engagement? Here are the metrics you must track to you know where to devote your employee engagement efforts.

If you’re an HR leader, you’re constantly thinking about engagement. Your objective is to figure out how to get the best results out of your workforce, and studies show that highly engaged employees produce the best work.

But there’s no way you can speak to employees one by one. You’d never finish any other work and given the scale of such a project, the conversations wouldn’t be that rich.

Instead, there are several strategies and tools HR leaders can use to measure employee engagement.

Ways to measure employee engagement

  • Annual engagement surveys: A popular format for gauging employee engagement, these surveys are distributed once a year.

    They are a useful way to get a macro, data-driven understanding of how your employees are feeling.

    They also provide a benchmark that you can reference during your efforts to increase employee engagement. These are rather long and can take employees up to 20 minutes to complete.
  • Pulse surveys: These smaller surveys are distributed more frequently and used to get a real-time view of how employees are feeling. They can be distributed on a quarterly, monthly, or even weekly basis.

    HR leaders also use pulse surveys to compare them to the results of their annual surveys to gauge how much progress they’ve made since identifying goals for improvement.
  • Stay interviews: These are an alternative to exit interviews. Instead of waiting until after an employee resigns to ask why they’re unhappy, stay interviews try to get a conversation going before an employee even considers leaving.

    Managers or HR leaders schedule one-on-one meetings with highly valued employees. They find out what the employee enjoys about their work, what their larger career objectives are, and what they wish they could change about their current professional situation.
  • Turnover rate: Turnover rate measures how many employees are leaving your organization over a defined period of time.

    Turnover is expensive since the cost of hiring a new employee is often higher than the price of retaining one.

    Most of the time, turnover is a bad thing, and a high turnover rate equals low levels of engagement.

That said, the best approaches are proactive. Annual engagement surveys and pulse surveys identify problems before people want to leave. But what exactly should these surveys measure?

Which employee engagement metrics to measure?

To help you get started, we’ve listed twelve metrics your employee engagement surveys should track and why they’re important

Understanding of your organization’s strategy

Do your employees understand your company’s strategy?

Managing every single move of knowledge workers is impossible. So if they have a solid grasp on the organization’s strategic roadmap, they can make day-to-day decisions that are aligned.

Researchers refer to workers who understand and honor the company’s strategy as “embedded” employees.

A study of strategic alignment in organizations found that the most embedded employees are:

Surprisingly, the study found that tenure was not correlated to strategy alignment.

One possible reason? The longer a worker spends at an organization, the more pivots and high-level changes they experience, undermining their understanding of the company's priorities and values.

So how can organizations increase the number of embedded workers?

One strategy is to ditch the cascade method of communication.

Traditionally, senior management communicates important information to their direct reports with the understanding that they’ll pass the details on to their team. This study suggests that this may not be the most effective way to communicate company values.

Instead, senior business leaders should communicate directly to the workforce through emails and townhall-style conversations where employees have an opportunity to engage and ask questions.

How recognized employees feel for a job well done

Humans seek appreciation in their personal lives from friends and family. It’s only natural that this need extends to their professional lives, too.

Appreciation is an important part of any company’s culture.

When an employee goes beyond the black and white requirements of their contract, appreciation from managers reinforces that behavior and makes it worthwhile.

Otherwise, an employee will question why they’re putting in so much effort, particularly if they don’t own any equity in the company.

To ensure workers stay star workers — and that they remain with the company — business leaders have formalized workplace appreciation into employee recognition programs.

Employee recognition programs have a demonstrably positive impact.

Productivity, engagement, and performance levels in companies with recognition programs trump companies without recognition programs by 14%.

In turn, a 15% increase in engagement levels can cause a 2% increase in profit margins.

What’s more, Deloitte’s Talent 2020 Survey found that recognition is among the top three most effective non-financial methods of retention.

Employee recognition is also important due to the changing work landscape.

Previously, companies had more money to throw around. Today, they’re trying to get by with fewer workers, slimmer salaries, and small or non-existent bonuses.

In addition, companies are shifting from hierarchical structures to flat organizational structures that prioritize collaboration and teamwork.

As a result, there are fewer promotion opportunities. Traditionally, the prospect of a promotion was a strong motivating factor to increase individual contributions. All of these changes make employee recognition programs more and more important for engaging and retaining employees.

Opportunities for personal and professional growth

Technology is evolving at a rapid pace. This is disrupting standard procedures in organizations.

Companies no longer have a firm understanding of future needs, so it’s harder to design linear career paths.

Instead, they need to quickly pivot every few years to hire employees who possess a set of skills that weren’t even on the radar a couple years back.

Ambitious, proactive employees are not content to rest on their laurels.

They want to “future proof” their careers by equipping themselves with skills in the latest technologies.

When companies don’t provide these opportunities, these individuals pursue them on their own through courses outside the workplace.

On the face of it, this may sound like a win-win for employers. They get the benefits of a diversified workforce without paying for it.

On the contrary, there’s no guarantee that those employees will stay once they’ve upgraded for a few key reasons.

For one thing, a lack of internal development opportunities suggests that their company doesn’t have a long-term vision.

For another thing, their new skills will leave them eager to find a new, higher-paying job outside of their current company. Switching jobs is one of the fastest ways to bump up your salary.

On the other hand, a company that provides internal development opportunities demonstrates to its employees that they’re thinking about their long-term career progression and job security.

Plus, they can show how these learning opportunities tie into career opportunities. For instance, a specific management program may be one way individual contributors can move into team lead roles.

Positive and supportive manager-employee relationships

Did you know that your company’s growth is tied to the quality of your managers?

This is according to a decade’s worth of research at Gallup. In fact, the study showed that it accounted for up to 70% of the variance in productivity levels.

If you’re trying to build a winning organization, hiring great managers means most of your work is done.

And when they’re talking about managers, they’re not talking about executives. They’re talking about team leads and middle management.

There are many qualities that great managers share.

They eliminate obstacles, but they don’t micromanage.

They provide professional development opportunities while being honest about promotion timelines.

They communicate goals clearly and give employees opportunities to prove themselves.

But there’s another big thing that great managers do. They inspire their team.

Today’s workers have higher expectations about their jobs. They want fulfillment, and they’re just not getting it, leading to a problem some have called the “inspiration gap”.

Great managers also get to know their direct reports on a personal level.

They learn about their goals and ambitions and what’s important to them outside of work. In fact, research shows that managers who get to know their team members on a personal level help prevent toxic work environments.

They do this by practicing what researchers at San Diego State University call “ethical leadership”. This is a form of management that prioritizes two-way communication, providing positive reinforcement, and serving as a source of emotional support.

The presence of supportive managers affects your culture and your bottom line, so it’s worth checking in to see how supported your employees feel.

Strength of the relationship to colleagues

When an employee has a positive relationship with colleagues, they’re seven times more likely to feel engaged at work.

Any job has its ups and downs, but having a supportive group of colleagues to turn to helps employees stick it through.

They are also a trusted sounding board for employees embarking on an exciting project, preparing for a challenging conversation with their manager, or navigating a challenging assignment.

In addition, the line between work and home is blurrier than ever. In the past, there was a clear division between your professional life and your personal life. You arrived at 9 and left at 5 and if you needed to stay late, you did so physically by remaining at the office.

In the modern workplace, employees are always “on”. They leave the office only to log back on after putting their kids to bed. Work takes up an ever-growing share of an employee’s day.

Meaningful relationships are a critical component of a person’s happiness, but they take time to cultivate. With most of an employee’s time spent on work, it’s only natural that their level of engagement will correlate to the quality of the relationships they have at work.

Positive relationships between colleagues increase engagement, build morale, and contribute to a strong company culture. But that’s not all they do. They also have an effect on a company’s creativity and competitiveness by increasing instances of cross-functional collaboration.

Cross-functional collaboration is important for companies that wish to compete in a market defined by rapid technological change. A global survey conducted by MIT Sloan Management Review and Deloitte found that the most digitally advanced organizations engaged in higher levels of cross-functional collaboration.

Personal health and wellbeing

Engagement and well-being are the two major factors that impact employee performance. That said, engagement usually gets most of the attention.

So it’s important to clearly define wellbeing, which Gallup and Sharecare did while creating the Well-Being Index.

They have a holistic understanding of well-being which consists of five elements:

  1. Purpose: Enjoying your job and being motivated to achieve your goals
  2. Social: Having loving and supportive relationships in your life
  3. Financial: Possessing the means to reduce stress and increase security
  4. Community: Feeling safe, happy, and prideful of your community
  5. Physical: Having good health and the energy to complete daily tasks and responsibilities

An employee’s well-being relies on the combination of several factors, so it’s a good idea for organizations to measure it through surveys and then drill down to learn specifics if well-being is low.

For example, if a company knows that employee well-being is low and that the main reason is a low sense of purpose, they can create their solutions accordingly.

Lack of purpose may be a sign that your company needs to be more clear about why the work matters, especially if it’s in an industry where “presenteeism” is a surefire way to kill competitiveness

Lack of social well-being may be a sign that your company should create more opportunities for employees to build their network at work.

It could also be a sign that your company needs to introduce flexible hours or remote working opportunities, so employees can do their work while also being present for their loved ones.

Lack of financial well-being may be a sign that your company needs to offer more competitive compensation in line with the local cost of living so that employees are not plagued with anxiety about their financial security.

For employees with specific areas of financial concern, like lack of retirement savings, this could be an opportunity to offer workshops on different retirement plans or introduce a company-wide matching program for retirement accounts.

Lack of community is an opportunity for your organization to introduce ways for employees to give back to their community. For example, some companies encourage employees to volunteer on company time and continue to pay their salary.

Finally, lack of physical well-being, including mental health, may be a sign that employees need more comprehensive health packages or access to preventative health activities such as yoga, exercise, or meditation.

Level of autonomy

Did you know leaving your employees alone may actually be a good idea?

It goes against all the traditional notions of workplace dynamics. It’s expected that a supervisor or manager keeps a close eye on workers to ensure they complete a certain amount of work in a specific amount of time.

Today’s workplaces are much different. Two people in the same role, particularly knowledge workers, may not get things done in the same way.

One may prefer to work with headphones in, with limited interference from their manager, and preferably from home if possible.

Another may enjoy the social aspect of the workplace and seek frequent touchpoints with their team lead.

Generally speaking, employees should be able to have control over their day-to-day work so long as it’s aligned with the larger strategy and key information is communicated. When employees have this freedom to use their judgement and expertise, they have what’s known as worker autonomy.

Workers with sufficient autonomy are more engaged, committed, and productive in their roles. They appreciate the fact that they’re trusted to complete deliverables on their terms.

On the flip side, leaders who are overly critical, untrusting, and commanding undermine a worker’s sense of autonomy. Employees feel less ownership over their work and undervalued as a contributor. As a result, their engagement levels and sense of loyalty decrease.

With the right hires, micromanagement shouldn’t be necessary. This means that if you’re happy with your workforce, it’s worth keeping tabs on the levels of micromanagement.

Level of motivation

Believe it or not, only 69% of workers say they put in a strong effort on a consistent basis.

For most companies, worker salaries are one of the biggest - if not the biggest - business expense, so it’s only natural that they’d expect that number to be closer to 100.

Motivation is the amount of commitment, energy, and creativity that employees bring to work every day.

And since your employees are your greatest asset - particularly if you’re working in the professional services or technology industry - it’s important that you get the most out of your workforce on a consistent basis.

Motivated workers are committed to solving problems, collaborating with people from other teams to find solutions, and developing creative new products and services.

Unfortunately, creating and maintaining a motivated workforce is difficult. And when employees don’t feel motivated, there’s an increase in presenteeism.

What is presenteeism? The term was originally coined to refer to workers who showed up to work when sick even though they were not as productive.

Today, it’s also used to refer to disengaged employees who show up and perform the bare minimum work required. They’re physically present and they’re honouring their contractual commitment, but they aren’t invested in the long-term success of the company. They arrive on time, leave on time, and they don’t volunteer for new projects.

Suffice to say, this is not the ideal scenario for any company. What’s more, presenteeism in high performers is often a sign that they’re planning to leave for a new opportunity.

Level of commitment to an organization

Job hopping - switching jobs every two years or so - is the new normal. In fact, 64% of workers say they favor this approach. Meanwhile, three-quarters of professionals under 34 believe that job hopping can benefit their careers.

The old contract between employers and employees - job security in exchange for loyalty - is no more. Workers don’t take it as given that they’ll have a job long term or that their company has an established career progression plan.

To compensate, workers keep their eyes peeled for external opportunities. They’re engaging with recruiters or with people in their network in search of opportunities that offer more challenging projects, higher pay, fancier titles, and a better company culture.

This means that if employers want their employees to stick around for the long term, they need employees who feel a commitment to the organization. That sentiment is hard to manufacture overnight.

That doesn’t mean it’s impossible. Take the case of DTE Energy. The company president viewed statements about purpose or mission as “simplistic rhetoric” that didn’t make a meaningful impact on management.

But when the recession hit, and he needed to get more out of his existing workforce, he explored the concept further.

He visited companies where the idea of purpose created engaged employees in roles that traditionally had low levels of engagement.

Intrigued, he created a video that tied the company’s work to its larger societal impact such as powering the work environments of factory workers, doctors, and teachers.

Not only was the video well-received by the company, it gave the work employees were doing a sense of purpose and importance.

The company solidified the project with a clear statement: “We serve with our energy, the lifeblood of communities and the engine of progress.” As a result of this shift towards building a purpose-driven organization:

Bottom line: The company articulated a mission worth committing to, and employees committed to it. As a result, DTE prospered even after the financial crisis.

Sense of accomplishment

Do your employees feel a sense of accomplishment at work? According to Robert Half, it’s the most important factor that drives happiness in employees under 35.

From where do employees derive a sense of accomplishment?

Usually by accomplishing goals that have been clearly articulated by their manager and that are aligned with larger company goals.

Of course, it’s not enough to simply assign tasks. These tasks must have specific incentives assigned to them or play a meaningful role in an employee’s overall career progression.

Projects and big assignments are not the only way to instill a sense of accomplishment. Offering training opportunities can also help by giving employees a chance to level up and develop their skills.

At the end of the day, you want that professional stimulation and validation to come from your organization, so people don’t look for it elsewhere.

Compensation

Calculating compensation is a tricky activity. One the one hand, you have to take the market and your projected growth into consideration.

On the other hand, your employees’ salaries dictate a big part of their lives. If they don’t earn enough money to feel stable and secure, this impacts their productivity.

Plus, it determines how committed they are to the organization.

If their salary is too low, your company may just be something to hold them over until they find something better.

Use your annual engagement survey to directly ask employees whether they’re happy with their salary. People are more honest than you’d think.

When one company simply asked employees how long they planned to stay, the survey responses were more accurate than other indirect methods like analysis of email response rates.

A low salary and infrequent raises signals to employees that their job is undervalued. The most proactive employees - the ones you want to keep - will find a way to raise their salary. And as we discussed earlier, the fastest way to get a raise is to find a new job.

In some cases, keeping salaries low is an example of being a penny wise and a pound foolish. You save money in the short term, but you may wind up spending more to recruit new workers if turnover becomes too high.

Pride in the organization

Pride is one of the key indicators of employee engagement. When people respect their employers and believe the work they do is meaningful, they contribute more of their energy and ideas to their job rather than simply showing up.

KPMG, one of the Big 4 firms, wanted to engage its already highly motivated workforce even further.

So it launched a campaign designed to bring new meaning to the work its employees did.

After conducting countless interviews, the company settled on a clear purpose statement: Inspire Confidence. Empower Change.

To make that purpose statement relevant to individual employees, they created a video that asked the question, “What do you do at KPMG?” and answered it with, “We shape history”. The video detailed the firm’s role in important historical events.

They also allowed employees to share what their contributions were and created a campaign with these responses which included statements like:

The results of this initiative were:

Track the right metrics, so you know where to devote your employee engagement efforts

Asking the right questions ensures your work as an HR leader is as impactful as possible. Instead of starting “one-size-fits-all” employee engagement projects, you can launch focused, data-driven initiatives that focus on the most urgent areas for improvement within your company.

Interested in learning how technology can help you improve employee morale and job satisfaction? Learn more about our people analytics and employee engagement software.

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