Which Employee Engagement Indicators Must Companies Monitor?
Employee engagement is one of the most important ingredients of a successful organization. When employees are committed to their roles and to the company, they are more likely to go the extra mile, strive to improve their performance, and come up with innovative ideas. As a result, enhancing employee engagement is a top priority for most leaders. Yet, measuring the effectiveness of such initiatives can be challenging, as engagement is not as easily quantifiable as sales or production. This is where employee engagement Key Performance Indicators enter to provide measurable insights into this vital yet less visible aspect of your business. This article explores 15 employee engagement KPIs that organizations should include in their engagement strategies.
Why Is It Important To Measure Employee Engagement?
Engagement is essential for organizations that want to thrive and maintain a competitive advantage. Establishing metrics and a reliable measurement process, however, is the key to ensuring your workforce will continue to be engaged and contribute to organizational success. Data has shown that KPIs for employee engagement can reveal decreases in an employee’s commitment as early as nine months before they quit. This time frame allows you to identify their source of discontentment and implement engagement strategies to reignite their enthusiasm and interest in their role. Therefore, measuring engagement is essential because it empowers you to take proactive steps to enhance job satisfaction and reduce turnover rates.
15 Employee Engagement KPIs To Keep Track Of
1. Employee NPS
The employee Net Promoter Score was originally used to gauge customer loyalty and satisfaction but was later adopted to reveal the same information about employees. NPS asks employees a single question: “On a scale of 0–10, how likely are you to recommend this company as a great place to work?” The answers are divided into three categories, starting with the detractors, who have the lowest score (0–6), the passives (with scores of 7 and 8), and the promoters (with scores of 9 and 10). The final eNPS score is calculated with the following formula:
- (Promoters-Detractors) / Total respondents = Employee NPS
An employee Net Promoter Score can range from -100 to 100, but anything over 50 is a great score. This metric encapsulates how your employees view the organization, which is why you need to monitor it frequently to identify any changes in employee satisfaction.
2. Turnover Rate
Turnover is a particularly important employee engagement KPI, as it reveals how successful an organization is in retaining its employees. It is important to measure turnover separately for each department. This way, you can see which teams are facing more challenges and, as a result, require more support. This will allow you to channel your resources more effectively and achieve quicker results. Turnover is calculated with the following formula:
- (Total number of employees who have left the organization) / (Total number of employees at the beginning of the period) = Turnover rate
Turnover rates may vary from industry to industry, so it is essential to compare your organization’s rates with those of direct competitors. You should also analyze which employees are leaving. Is it low-performing employees or top performers? If it is the latter, you should definitely reevaluate your organization’s culture and practices.
3. Successful Hires
Another critical indicator of employee engagement is the percentage of employees staying with the company after their trial period. Calculating the number of successful versus unsuccessful hires heavily depends on the quality of your onboarding process. For example, if new hires often quit three to six months after their employment, it could mean that you failed to identify a suitable candidate for the position or that your onboarding process didn’t help them integrate into the team. Losing employees shortly after hiring them doesn’t only harm your business’s resources but also negatively impacts its productivity in the long run. Therefore, you should monitor the rate of successful hires and take appropriate action to improve it if you notice a decline.
4. Employee Satisfaction Rates
Employee satisfaction and engagement are often viewed as synonymous, but that’s not the case. Engagement refers to how employees feel about their work, while satisfaction targets what their job provides them, such as benefits, compensation, work-life balance, etc. For example, even though an employee might be interested in their job but feel dissatisfied with the level of flexibility it offers. Over time, this dissatisfaction can grow and negatively affect their engagement.
This employee engagement KPI can be measured through surveys that ask employees to rate their agreement with certain statements. These could be:
- “I am happy with my current salary.”
- “My work-life balance is healthy.”
- “I feel appreciated and valued by my coworkers and supervisors.”
Calculating the median score of these responses, along with others, can give you a better idea of how satisfied, apart from engaged, employees are.
5. Performance Evaluations
There is often a correlation between performance and employee engagement, and for good reason. Engaged employees are more invested in the success of their organization, which drives them to grow their skillsets to contribute as much value as possible. However, performance evaluations can be challenging for many businesses, especially when they can’t tie them to tangible metrics, such as sales growth associated with each employee.
If this is the case for your organization, consider employee surveys to gather valuable feedback from team members and supervisors. You can also develop a competency framework or, in other words, a structure that clarifies which skills each employee must possess depending on their role. By combining these measurement methods, you will gain access to a comprehensive image of each employee’s performance, which you can then link to their engagement levels.
6. Productivity Rate
We just discussed the quality of services engaged employees can offer, but what about the quantity? Employee productivity rate is a very important employee engagement KPI to keep in mind. Engaged employees are known to be willing to put in extra effort and perform to the best of their abilities to ensure that a project is carried out and the company remains successful. This willingness admittedly translates to great business outcomes, as research by Gallup has revealed that companies with an engaged workforce were almost 20% more productive than those with disengaged employees.
Employee productivity can be measured in various ways. One approach is to divide the total revenue generated within a business or department by the number of employees in that unit or the hours worked during a set period of time. Alternatively, you can calculate how long it takes for employees to complete a specific task. These measurements must be repeated regularly to monitor any changes and how those correlate with overall engagement levels.
7. Absenteeism
What can be more telling of problems with employee engagement than employees not showing up for work at all? Absenteeism has risen as a significant issue for many businesses, putting a significant strain on productivity, resources, and even morale. When employees skip work often, the rest of their team has to pick up the weight, which can negatively affect the overall work experience. To measure absenteeism rates, you can use the following formula:
- Total number of absent days per employee / Total number of working days = Absenteeism rate
Monitoring absenteeism rates is essential because this phenomenon is usually a symptom of other problems within the organization. Perhaps absence rates are too high because employees are feeling burnt out, lacking motivation, or having issues with their colleagues or supervisors. Therefore, after calculating absenteeism rates, make sure to identify the root causes of the problem and develop solutions to address them.
8. Customer Satisfaction Rates
It is common knowledge that customer satisfaction is essential for organizational success. But how does it connect with employee engagement? Actually, these two metrics have a lot to do with each other, as satisfied employees tend to offer customers better service and enhance the overall experience. Engaged employees are more attentive to customer concerns as well as genuinely interested in finding the best solutions to their problems. So, a decline in customer satisfaction rates often reflects a decrease in employee satisfaction and engagement. Make sure to stay on top of this metric by regularly asking customers for feedback regarding their experience with your company, the interactions they have had with employees, and the quality of service provided.
9. Salary Competitiveness
We live in a highly competitive world where constant technological and industry developments are forcing businesses to search for skilled candidates in a limited talent pool. At the same time, the rising cost of living has made salary a top priority for employees. As a result, the compensation packages that businesses offer play a critical role in their long-term ability to engage and retain employees. If you want to know whether your employees are receiving a competitive salary, you need to calculate your company’s Salary Competitiveness Ratio (SRC) using the following formula:
- (Your company’s average salary / The average salary offered by direct competitors) x 100 = Your company’s SRC percentage
This ratio usually ranges from 80% to 120%, with 100% considered the market value. While many factors can influence an employee’s salary, such as overall experience and specific skills, a ratio under 100% indicates that an employee is underpaid and can result in disengagement and increased turnover.
10. Diversity And Inclusion
The diversity, equity, and inclusion (DE&I) practices your organization implements are another great example of an employee engagement KPI you need to monitor. When a work environment is open to employees from diverse backgrounds and marginalized social groups, it fosters a culture of acceptance and respect. Apart from the fact that businesses with such forward-thinking cultures make for particularly desirable employers for new talent, they also exhibit high levels of employee engagement, satisfaction, and retention. To measure the effectiveness of DE&I initiatives within your organization, it is essential to monitor a separate set of metrics. These include demographic data within your organization, employee attrition analysis, compensation data, employee sentiment, and career development data, among others.
11. Employee Engagement Surveys
Many valuable insights about employee engagement can come from surveys completed by your workforce. First of all, even the level of participation in these surveys can reveal a lot. Specifically, if a significant percentage of employees don’t submit their surveys, that already means that engagement levels across your company are not what they should be. Additionally, you must pay extra attention to the statements or questions you will include in these surveys. Some examples include:
- “I feel motivated to come to work every day.”
- “I am satisfied with my relationship with my manager.”
- “I receive adequate development opportunities.”
You can calculate the results of these employee engagement surveys as explained in the employee satisfaction KPI section. This will paint a clearer picture of how employees feel about their roles and their work environment. Repeat these surveys annually so that you can compare results and identify trends and changes over time.
12. Active Users
It is likely that your organization uses an intranet to facilitate collaboration between departments, manage projects, and enhance communication. Measuring participation levels on this intranet is a great way to assess employee engagement. For example, you can monitor whether employees upload posts of their own, reply to questions or quizzes posed by colleagues and leadership, and react to announcements. Engaged employees are typically active on the intranet on a regular basis, exploring new posts and sharing their opinions and expertise whenever needed. Participation rates should be measured over time so that you can notice declines or increases and identify what motivates and hinders participation. You can use these insights to optimize your intranet and offer employees a more engaging experience.
13. Meeting Attendance Rates
Although meeting attendance rates are an important KPI for employee engagement, you need to approach them with an open mind. If employees often opt out of meetings without being out of the office, this could indicate declining rates of engagement. But in the era of remote work, it is also crucial to remember that a high rate of meeting rejections may point to an excessive number of meetings scheduled per day or week. It is not uncommon for employees to feel overwhelmed with their daily tasks because they spend a significant portion of their day in and out of meetings. Therefore, if attendance rates are dropping, consider discussing with your employees how to make meetings more efficient and meaningful rather than attributing it immediately to low engagement.
14. Employee Development
Employee development has become increasingly important for leaders as well as employees. On the one hand, leaders want to keep up with the rapid changes to ensure their businesses thrive. Meanwhile, employees are interested in upskilling and reskilling to maintain a competitive advantage and access career advancement opportunities. As a result, offering training courses, mentorship programs, and other development options plays a significant role in employee engagement.
Given that it is a multifaceted issue, measuring employee development requires attention to several factors:
- Internal promotion rates. This reveals an organization’s ability to not only retain but also develop internal talent. You can calculate this with this formula: Number of employees promoted / Total number of employees = Internal promotion rate.
- Goal accomplishment. It is important to keep track of the goals employees complete, especially when they are part of their personal development plan.
- Participation in training. Don’t forget to monitor various training metrics, such as participation, course completion, time to complete, etc. This way, you will be able to identify how engaged employees are with your organization’s learning strategy and the outcomes it produces.
15. Company Ratings And Reviews
Just as products and services receive customer reviews and ratings, there are websites where employees and clients can share their opinions on companies they have collaborated with. These reviews, whether they come from current or former employees and customers, are extremely important since they provide valuable insight into an organization’s real-life culture, practices, DE&I strategy, and overall work conditions. Positive reviews can prove very useful, as they help you build your brand’s reputation and attract new talent. This feedback can come from company review websites, social media platforms, as well as anonymous suggestion boxes. Make sure to take these comments seriously and make appropriate changes to improve your organization.
Conclusion
Establishing effective ways to measure employee engagement KPIs is crucial for transforming your organization and paving the way for success. Engaged employees will significantly boost your productivity, efficiency, and innovation rates while enhancing your reputation and attracting skilled candidates. The KPIs for employee engagement we explored in this article are a great starting point for you to gain a comprehensive understanding of engagement rates within your organization and the measures you need to take to optimize them.
