How to Measure Employee Engagement in Four Easy Steps

Employee engagement is a reflection of employee sentiment towards their work, their coworkers, their company, and you, their employer..

Highly engaged employees believe in the organization’s mission, vision, and values. They share that commitment with their teams, customers, friends, and family. Their engagement leads to more productivity, better attitudes, and stronger, more cohesive work teams.

Conversely, a high level of disengagement among your employees means more detractors disrupting work and lowering morale.

It’s an important concept and one that organizations of all sizes in all industries are focusing on more. Increasing employee engagement leads to better results on all levels.

The challenge for many organizations is how to measure and track employee engagement.

To do so effectively, organizations often take a multifaceted approach. Surveys that measure quantitative and qualitative data can help establish an engagement benchmark. The information in interviews and long-form survey responses can help formulate an action plan and initiatives to improve engagement.

A commitment to employee engagement shows employees you care about their well-being and that their opinions matter. Simply stating your intention to examine and improve employee engagement and why can lead to improvement.

In this blog you’ll learn: 

• Why measuring employee engagement is important 
• What the most important metrics are to consider
• Four steps you can take to measure, analyze, and improve employee engagement

Why is measuring employee engagement important? 

Employee engagement is an important consideration for any organization. Employees who feel more engaged and committed to the organization are going to work better and more effectively.

Among the considerable benefits of good employee engagement rates are:

• Lower employee turnover rates and higher employee retention
• Better customer relationships
• More efficient workflows and processes
• More experienced and cohesive work teams
• Less employee stress and burnout
• Improved collaboration and teamwork
• Higher employee commitment
• Lower absenteeism
• Fewer mistakes
• Increased revenue and profitability

The benefits are significant. That’s why knowing what to measure and how is so essential.

What are the most important employee engagement metrics to consider?

Employee engagement metrics are measures that indicate how engaged your employees are. There are many employee engagement metrics that can be calculated from general HR data, such as retention rate. Others benefit from asking employees directly about their work and their sentiment towards the organization.

While the metrics used in your organization may vary, here are 7 employee engagement metrics to consider.

1. Voluntary employee turnover rate

Your voluntary employee turnover rate is the number of employees who choose to leave during a time period. The rate does not include those who leave due to dismissal, layoff, or furlough.

Employees who feel valued, financially and emotionally, are far less likely to leave. They are likely to have longer tenures and be more satisfied and engaged with their work.

Valued employees are more productive, contribute to stronger teams, and speak well of their employers.

Calculate the voluntary employee turnover rate as follows:

The number of employees who left voluntarily during a given timeframe is divided by the number of total employees during the same timeframe. Take that answer and multiply by 100.

2. Employee retention rate

The employee retention rate is similar to the turnover rate. Employee retention and turnover are crucial metrics. They speak to how apt employees are to stay with the organization, which is often a reflection of employee engagement.

Given the considerable costs of hiring a new employee, a high employee retention rate is good not only for morale and overall employee engagement. It also leads to more profitability and fewer hiring costs. Industry standards recommend having an employee retention rate of at least 90 percent.

High employee retention rates mean more employees who are connected, know processes and procedures and are more productive.

To calculate the employee retention rate for a given time period:

Subtract the total number of employees who left from the total employees employed at the beginning of the timeframe. Divide that result by the total number of employees at the beginning. Multiply that result by 100.

For more details on how to calculate employee retention see this post. 

3. Employee performance

Employee performance metrics are a relevant indicator of how well jobs are being done. They can act as a proxy for how engaged your employees are.

Typically, there are four types of employee performance metrics:

• Work quality, such as the number of errors or 360-degree feedback scores
• Work quantity, which includes sales numbers, units produced, and other performance metrics for each employee based on their job role
• Work efficiency, such as how quickly they respond to requests and how much time it takes to complete tasks
• Organizational performance, including revenue per employee and the return on investment for human capital

When work performance is measured against employee engagement, you can see how highly correlated they are. An increase in employee engagement will mean a boost in performance and vice versa.

4. Employee satisfaction

There is a clear connection between employee engagement and satisfaction. Each should be measured and compared to the other.

Employee satisfaction goes beyond the work they are doing and the people they work with. It also involves factors outside of the day-to-day, such as salary, benefits, and working conditions.

Employee engagement looks more at motivation and how much they believe in organizational mission, vision, and values.

Surveys that measure employee satisfaction can be sent out separately or combined with broader engagement surveys. However, the measures should be separated. Effective employee satisfaction surveys ask questions like:

• Do you feel valued in your work?
• Is your job making good use of your skills?
• Is your relationship good with your manager?
• Do you see a path for advancement and growth in the organization?
• Do you have the tools for successful work?
• Do you consider the workplace to be safe?

Other questions about total compensation, well-being, and leadership can be interspersed or asked separately as a specific survey focus.

5. Absenteeism

High levels of employee absenteeism could be an indication of a problem with employee engagement. A high absenteeism rate may be a sign of workplace safety issues, workplace stress, or poor leadership. They may be a sign of dysfunctional teams or a lack of work-life balance.

High absenteeism may also correlate with low employee satisfaction. No matter what the cause, it’s important to determine what might be causing high absentee rates.

High rates of absenteeism have a trickle-down effect. They often cause more work for other employees, missed deadlines, and delays in completing projects. These issues can cause employee engagement rates to fall among other employees, not just those out of work frequently.

To measure the absenteeism rate:

Divide the total days absent (either for employees or an employee) by the total available work days in a given timeframe.

6. Customer satisfaction

The levels to which employees are engaged inevitably have an impact on customer satisfaction. Low employee engagement rates often lead to low customer satisfaction rates.

Consider you are a customer working with an employee who is positive, puts in the extra initiative, and makes you feel valued. You are far more likely to feel fond of the organization or brand and return as a repeat customer.

However, if you experience disinterest, lack of motivation, and poor attitudes in the employees you engage, the opposite is likely. Customer satisfaction relates in large part to the use and results of products and services purchased. But it also has to do with the people they engage with in sales, customer service, and throughout the organization.

A word of caution: Not all customer satisfaction is directly tied to employee engagement. While it is a metric to consider, a look at the underlying factors of customer satisfaction is also important. There may be other issues shaping customer satisfaction that have little or nothing to do with your employees.

7. External ratings

Today, it’s very easy to rate businesses and products online. Increasingly, employers and ex-employers are also taking to online portals to rate their employers, too.

Applicants are going to look at these employer rating sites like Glassdoor, Indeed, and Vault to gain information. Given the high demand for talented employees in many job markets, employers need to consider these sites. Employer branding means positioning your organization in the best possible light.

Employee engagement and satisfaction go beyond internal measures and indications. Highly engaged employees are far more likely to leave positive reviews, while the reverse is also true.

How to measure employee engagement within your organization

With so many critical metrics to consider, how can your organization effectively measure employee engagement? Here are some of the measurement approaches that are best practices to ensure you have accurate, ongoing insights.

1. Surveys

Most organizations incorporate surveys into their employee engagement strategy. Often, there are multiple types of surveys used to gather the needed information.

Organizations may begin by conducting initial, longer employee engagement surveys. These tools can give you a comprehensive baseline of the employee experience. Questions in the survey can include asking about any of the following:

• Connectedness to the organization and the work
• Working environment
• Work relationships
• Coworkers
• Team and company culture, learning, and strengths
• Supervisors and management
• Values alignment of the individual and the organization

These surveys, conducted through an employee engagement software tool, can provide you with detailed, anonymous insights. These quantifiable measures of the employee experience can help guide you in the development of a strategy.

Employee feedback needs to be carefully cultivated and protected. Employees need to know that they will not be identified in making their feelings known. They also need to know their information will not be shared except as part of the collective results.

Surveys should have quantitative questions primarily. These allow for measurable and dissectible insights.

However, open-ended questions can also be incorporated. A small number of these questions can provide a richer context in employees’ own words.

Surveying on a large scale should be done regularly, such as every year or two. In the interim, there are other tools that can be used.

Pulse surveys and polls are designed to address a single topic or issue. These brief instruments usually only include a few questions and can provide organizations with rapid insights into a particular issue.

Many organizations opt to include employee net promoter score (eNPS) questions in your survey. eNPS measures how likely employees are to recommend their employer to others. Much like NPS consumer questions, an eNPS survey measures employee loyalty and satisfaction over time.

eNPS is a good indicator of how positively employees speak about their employer outside of work. That sentiment often is an indicator of how engaged employees are within their workplace.

Be careful not to bombard your employees with too many surveys. Too many queries can add to survey fatigue and lower response rates. Tell your employees your survey strategy and use infrequent long surveys and intermittent flash surveys to gain information.

2. Journey-based employee interviews

Typically, most organizations only interview employees at the beginning and end of the employee lifecycle. There are interviews done before they are hired, and exit interviews are done when they leave the organization.

However, by limiting interviews to just these two occasions, employees miss an extraordinary opportunity. By engaging employees at different stages of the employee lifecycle, they can gain more insights. They can also gauge whether employee engagement is different for those at different stages.

Employee engagement may change between the start of their employment, the middle, and at the end. These changes may indicate systemic needs for better employee engagement strategies. They can also identify patterns regarding employee retention, employee satisfaction, and employee turnover rates.

Exit interviews can be valuable as one part of journey-based interviews. When an employee is leaving, they may be more candid, providing honest feedback about the experience without fear of retribution.

However, they will not tell you a complete picture.

Consider, for example, adding interviews at the conclusion of the onboarding process. How do employees feel about their start with the organization and the information provided? Ensuring the onboarding process not only brings employees up to speed but connects them to teams and employers, is important.

The information gained from post-onboarding interviews can help improve the employee launch cycle to improve how employees first experience the organization.

A relatively new concept in interviews is the “stay interview.” These interviews are usually conducted in the middle stages of an employee’s tenure. They can help understand what keeps people employed, how they feel about their work, and their long-term plans.

Stay interviews are a good way to understand whether employees are feeling satisfied with their work and their employer. They can also create first alerts about warning signs that may cause employees to look to leave.

Stay interviews may be done electronically or in one-on-one sessions to facilitate more intimate and compelling conversations. Follow-up questions can provide more details and insights than possible with an electronic survey.

3. Small groups or focus groups

Discussions or focus groups with small numbers of employees is one way to gather information. They must be managed carefully, as employees may not be as candid in group settings.

They are generally focused on a small number of topics. The purpose of the group discussions may stem from the results of earlier, broader attitudinal studies. The smaller groups allow managers or facilitators to hone in on particular issues or concerns to gather more information and clarity.

By using guided questions, the facilitator can drill down more deeply into an issue. There are also software solutions to help manage these small discussions to measure sentiment and quantify the information shared.

4. One-on-ones

Regular one-on-one meetings with supervisors are an effective way to gain information. They offer employees a consistent venue in which to voice concerns, offer feedback and connect on key company issues.

From a managerial standpoint, one-on-one meetings have the benefit of checking in with employees and getting a sense of their engagement levels.

As part of a continuous feedback strategy, these meetings provide an opportunity to build relationships and trust. They provide employees with a private outlet to express what’s on their minds. Managers can get a sense of productivity, job satisfaction, team performance, and stressors.

However, these indicators are often based on a manager’s interpretation of what is said. There is no substitution for anonymous measures of employee engagement. They can, however, do wonders to improve employee engagement when there are healthy, productive relationships between managers and workers.

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Employee engagement has a profound impact on your organization. Getting a handle on it requires a strategic approach with a combination of vehicles to gather pertinent information. Surveys, groups, and one-on-one conversations are effective ways to measure your employee engagement.

Combined with other metrics on retention, absenteeism, eNPS, and customer satisfaction, you’ll gain a fuller picture of the collective employee sentiment. Once the information is collected, your organization can begin to identify areas of opportunity to improve the employee experience.

At Gusto, we help organizations connect with their employees, from onboarding to employee benefits to talent management.