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Culture

Measuring employee engagement: 11 best employee engagement metrics and KPIs you must know

Employee engagement is increasingly becoming one of the top ways for organizations to attract, retain, and develop top industry talent. Yet, despite significant investment and effort, many organizations are unable to gauge whether or not the employee engagement initiatives are impactful or not. This is because most organizations don’t have a system to measure employee engagement. 

While asking employees whether or not the engagement initiatives are working is one way of measuring employee engagement, there are a few employee engagement metrics and KPIs that can tell the tale. The objective is to ensure that the practices being adopted are able to move the needle as they intend to and identify the gaps to implement corrective measures. 

Let us dive deep into that. 

employee engagement metrics

11 employee engagement metrics that organizations must focus on:

1. Employee NPS

Employee NPS or Employee Net Promoter Score, is an effective and efficient way of measuring employee engagement. It involves encouraging employees to answer a simple question on how likely they are to recommend their organization to their peers and their network. The scoring is generally from 0-10. 

NPS rating can help organizations categorize their employees in three parts based on their levels of engagement:

  • 0-6: Detractors, who are unsatisfied and disengaged 
  • 7-8: Passives, who are neither engaged or disengaged 
  • 9-10: Promoters, who are actively engaged and act as ambassadors of the organization

e-NPS= {(No. of Promoters – No. of Detractors)/Total No. of Respondents} x 100

Hence, e-NPS is a straightforward employee engagement metric that enables organizations to gauge the loyalty, satisfaction, and commitment of their employees, which is a direct reflection of their experiences. 

2. Voluntary attrition

Organizations that have higher levels of engagement are seamlessly able to retain their top talent and offer opportunities for them to grow and vice versa. As one of the key employee engagement KPIs, voluntary attrition seeks to capture the percentage of employees who leave an organization relative to those who were there at the beginning of the year. 

Voluntary attrition rate= {No. of employees who quit/Total no. of employees at the beginning of the year} x 100

A high voluntary attrition rate indicates an organizational disconnect and lower levels of engagement. However, this rate must be evaluated in a contextual setting taking into account the reasons for attrition. For instance, if an employee quits because he/she is moving to a different city, it may not indicate poor engagement experience. 

3. Absenteeism

Engaged employees seldom take unplanned leaves of absence. When engaged, employees are motivated to come to work as they feel valued and believe their contribution will make a difference to organizational success. Therefore, absenteeism rate serves as an effective employee engagement metric. 

Absenteeism can most simply be defined as the number of unplanned leaves that employees take due to illness or otherwise. 

Absenteeism rate: {No. of unplanned absences/Total no. of days in the period} x 100

Greater absenteeism rate is often a reflection of poor levels of employee engagement. 

4. Productivity

The relationship between engagement and productivity has been quoted very often to create a case for investment in employee engagement activities. According to a Gallup survey, companies with highly engaged workforce also scored 17% higher on productivity. 

Productivity as an employee engagement KPI focuses on the output that employees are able to deliver, relative to the input. Invariably, more engaged employees have higher levels of productivity and go the extra mile, while those who are disengaged, perform only what is expected. 

The levels of productivity for different functional areas need to be measured with different parameters. For instance, in the sales team, productivity can be measured with the number of conversions or sales closed. Whereas, for marketing, it could be the number of leads generated with a campaign or the increase in website traffic. 

5. Vacation days used

Studies show there is a direct correlation between engagement levels and work-life balance. Work-life balance manifests itself in the vacation days used. If employees take a decent number of vacation days or paid time off, it indicates that they have a good work-life balance and are not overworked. 

This further reflects higher levels of engagement. Lack of vacation days used might point towards being overworked to the capacity of not being able to take time off, or a lack of confidence or comfort in asking for time off. Whatever may be the case, lower number of used vacation days indicates lower levels of engagement. 

6. Employee health and wellness

Many organizations believe that health and wellness is a driver of employee engagement. When employees are engaged at work, stress levels are regulated and do not impact health and wellbeing. A key trait of disengagement is anxiety, stress, and regular episodes of burnout. This generally leads to an increased number of sick days and lower productivity over time — making employee health and wellness an important employee engagement metric that organizations must keep a track of. 

Greater levels of engagement facilitates motivation and an excitement to work, ultimately leading to a healthier and happier workforce. 

7. Employee ratings and review

This is an easy one to gauge and understand for measuring employee engagement. Engaged employees are often highly satisfied and motivated in their professional life. Thus, they speak highly of the organization. On the flip side, those who are disengaged may not have something good to say, but do have many cons to share. 

Regularly checking employee ratings and reviews on sites such as LinkedIn or Glassdoor is one of the top employee engagement metrics. Greater number of positive reviews, combined with a higher rating directly indicates higher levels of engagement. However, it is equally important to be mindful of the components which are contributing to a pleasant experience and areas that still deserve work, based on the reviews.

5 key metrics to measure employee engagement

8. New hire-failure rate

Employee engagement kicks in from the very beginning. An employee starts feeling engaged or disengaged even before his/her formal onboarding takes place. Thus, an important way for measuring employee engagement is to track the new hire-failure rate throughout the employee lifecycle, but especially in the first three months. 

If multiple new hires leave the organization within 90 days of joining, it indicates that the organization was unable to engage them and their aspirations, reflecting a poor hiring and onboarding experience. 

New hire-failure rate: {No. of new hires who quit in the first 90 days/ Total no. of new hires} x 100

The lower the new hire-failure rate, the higher is the engagement quotient for organizations. This is simply because, when employees stay back after 3 months, it indicates that they feel some level of connection and interest that can be nurtured further. 

9. Customer experience

Engaged employees create an unparalleled experience for the customers. They go beyond simple customer service to focus on customer success and ensure that every concern of their customers is taken care of, with utmost priority. However, those who are disengaged will do only what is needed and for them, customers will not be on the top priority. Here customer NPS, like employee NPS can play a major role.

While customer NPS will be a cumulative measure of the product/ service, employee interaction, brand promise, etc. but it gives a fair picture of employee engagement as well. Since humans connect with humans, customer experience is mostly impacted by employee interaction, which is a factor of employee engagement. 

10. Internal promotion rate

The right learning and development opportunities lead to career growth and promotions. Therefore, greater levels of engagement result in better promotions within the organization, rather than scouting for leadership positions outside. Here, the internal promotion rate is integral for measuring employee engagement:

Internal promotion rate: {No. of internal promotions/ Total no. of employees} x 100

A higher internal promotion rate indicates that employees are leveraging and benefiting from the work exposure as well as from the learning and development opportunities presented to them, leading them to promotions and appraisals. Thus, making it a crucial employee engagement KPI.

11. Employee ambassadors

Finally, measuring employee engagement requires identifying the number of employee ambassadors in the organization. When employees are engaged, they participate more openly, spread good word about the organization, and much more. 

Identifying employee ambassadors is relatively simple.

  • They bring in the best referrals for open positions. 
  • They are most active in team building and other activities in the organization as well as on the intranet. 
  • They post empowering stories about their workplace on the social handles. 

In short, they are walking and talking brand ambassadors and that’s one of the top employee engagement metrics that organizations can capture. 

Final Thoughts 

It is important to not only make an investment in employee engagement, but also ensure these investments are strategic and judicious. Having a strategic approach includes critical employee engagement metrics and KPIs in place. 

These metrics need authentic and genuine responses from employees as well as an analytical study of the workplace data to create insights which make sense. Pulse surveys, 1:1 meetings are great tools to gather continuous feedback from employees and create an action plan accordingly. 

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