How to Measure the ROI of Your Employee Engagement Software

Learn how using an employee engagement software can create measurable business impact as well as how to calculate the ROI of your employee engagement solution

7

min read

How can employee engagement impact business results?

This has been one of the most pressing questions for people managers in the last two decades, leading organizations to experiment with new employee engagement initiatives.

As a result, the use of an employee engagement software has also seen an upward trend, considering the many advantages it brings along. 

However, many organizations struggle to navigate the best way to calculate and illustrate the return on investment or ROI of using an employee engagement software

Through the course of this article, we seek to establish a case for employee engagement and the relevance of an employee engagement software to streamline all efforts. We will also share the best practices to gauge and measure the ROI of an employee engagement software to create a sustained business case. 

Why should you focus on employee engagement?

Before moving on to discussing the impact and ROI of an employee engagement software, let’s first take a quick look on why employee engagement matters

Despite several benefits and advantages of employee engagement, research shows that only 36% of employees are engaged in the workplace. There are many reasons why it is so. For instance,

  • A lack of concentrated efforts towards augmenting engagement levels
  • Most of the initiatives are ad-hoc and don’t have a long term focus to change the engagement score. 
  • Most organizations adopt a conventional approach to engagement which relies only on manual interventions and efforts, making engagement efforts ineffective or inefficient at times.

For a long time, the usage of employee engagement software has been limited. Fortunately, as more and more people managers understand the effectiveness of such a specific software, the adoption rate is increasing. 

It is quite evident that unless employees feel engaged, motivated and driven at work, encouraging them to give their 100% becomes extremely difficult. Focusing on employee engagement not only leads to a pleasant employee experience, but also results in business impact across a variety of factors.

employee engagement ROI

In the following section, we will discuss how an employee engagement software can help organizations create an impact and augment its ROI.

How does an employee engagement software create impact?

The right employee engagement platform can help organizations concentrate all their engagement efforts in one direction and focus on driving results. It aims to enable organizations to get a hold of employee sentiments, benefit from actionable insights, provide templates for meaningful interactions and much more to move the engagement needle.

Here are a few ways in which an employee engagement tool can facilitate high levels of engagement —

1. Gauge employee pulse to align purpose for employees

Employees who find a passion and purpose at work are more than 3 times as likely to stay with their organizations than those who don't.  

An employee engagement software can enable organizations measure employee pulse on a regular basis. Gauging employee sentiment annually or bi-anuallly seldom gives a complete picture. 

This results in a disconnect between employees and the organization, where employees find it difficult to find a purpose at work. 

A constant interaction powered by the right engagement software can help address this challenge to enable greater levels of engagement and subsequently retention. Furthermore, it helps managers know each team member on an individual level and facilitate personalized growth and development, conversations and much more. 

2. Clarity of expectations

65% of employees with clearly defined responsibilities are more engaged.

Second, the tool can help gauge whether or not employees have a clarity on what is expected out of them. When there is a clarity of expectations on the tasks and delegation of responsibilities, employees have a fair idea of what they have to do and are able to work in a structured and meaningful manner. This clarity has a direct impact on engagement.

3. Better recognition

71% of highly engaged organizations recognize their employees for jobs well done.

Third, an effective employee engagement software can enable organizations to recognize employee efforts in real time. Often, what is out of sight is out of mind and most employees, especially, among the millennials and Gen Z prefer on the spot recognition and appreciation. 

Using an employee engagement software is an easy and quick way to gauge daily employee pulse and reflect on the performance to celebrate efforts and results in real time, which leads to greater sense of belongingness and motivation.

SUPER TIP — Here’s everything you need to know to build a culture of recognition

4. Improved 1:1 conversations

43% of highly engaged employees receive feedback at least once a week.

Fourth, high levels of engagement are not only founded on better recognition but also on 1:1 conversations between managers and their team members. 

However, following a manual approach, feedback is often sporadic and managers seldom have insights and guidance on conducting meaningful 1:1 conversations. Moreover, with manual approach often there is no history of 1:1 conversations for retrospective trend analysis.

An employee engagement software can take care of all these factors to facilitate engagement. By gauging pulse on a regular basis, it can provide managers with the right insights to offer continuous feedback

Employee engagement software also helps managers with AI recommended guided 1:1 conversation templates to navigate conversations in a way that can inspire confidence, augment engagement and preempt risks of attrition. 

Check out how SuperBeings can take your 1:1 conversations to the next level. Get a 21 day free trial today!

What is the ROI of using an employee engagement tool?

Based on the ways mentioned above, an employee engagement tool can create measurable impact across different business impact areas. 

1. Improves quality of work

Chances of errors by disengaged workers increase by 60%. 

An employee engagement software which helps organizations motivate their employees and recognize them on a regular basis has a direct impact on the quality of work.  When employees have a poor sense of motivation or are disengaged, they are less likely to give in their 100% and their work is vulnerable to error or poor quality. 

A tool that facilitates real time appreciation and feedback can mitigate this disengagement challenge and improve the quality of work and output.  

SUPER TIP — Not sure how to select an employee engagement tool? Use this 12 point checklist to find the best solution for you

2. Facilitates a strong company culture

77% of employees say that a strongly engaged culture makes them do their best work.

If you look closely, employee engagement has a direct impact on organizational culture. When employees are highly engaged they foster a positive work culture that facilitates high levels of performance and motivation. 

On the flip side, the culture of an organization has a direct impact on engagement levels as well.

Either way, an employee engagement software can help you create an ecosystem of open communication, recognition, real time feedback which leads to an empowering culture and high level of engagement which are interlinked and interdependent.

High levels of engagement fueling a high performance culture also has an impact on the organization’s bottom line. 

Companies with a thriving corporate culture achieve over 4x higher revenue growth.

SUPER TIP — Download our free PDF guide on building a high performing work culture and get all your culture questions answered

3. Creates a strong employer brand

Employee referrals are 4x more likely to be hired and referral employees are more profitable for their employers by 25%.

An employee engagement software can help organizations gauge how likely their employees are to recommend their place of work to their peers and those in their network. 

Keeping employees engaged enabled organizations to have a high eNPS which increases the referrals for any organization. Invariably, this leads to better quality and number of referrals which often results in greater impact on the bottom line. 

4. Leads to customer satisfaction

Companies with high employee engagement had 89% greater customer satisfaction and 50% higher customer loyalty.

Finally, an employee engagement software can help managers know about their team members in real time and preempt any risks which might have an impact on customer experience and satisfaction. Be it low levels of motivation or the risk of sudden turnover, an employee engagement tool can enable the organization to gauge all such challenges before they surface to ensure they are addressed proactively with the right conversations. 

Preemptive risk management and AI driven guided conversations can facilitate engagement led customer satisfaction. 

Which parameters can help measure the ROI of an employee engagement software?

While we have comprehensively discussed the impact that an employee engagement tool can entail for an organization, it is important to look at the metrics which can help organizations calculate the ROI of using the tool as well.

As any important business decision, investment in an employee engagement software must be backed with data driven returns to facilitate long term commitment. 

Here are a few ways you can calculate the ROI of their employee engagement tool to create a business case:

1. Attrition

Only 37% of engaged employees are looking for new job opportunities, while 73% of disengaged employees and 56% of unengaged employees are seeking new jobs. 

One of the key benefits of using an employee engagement software is to create a feeling of belongingness for employees towards their workplace. This eventually leads to greater retention and reduced voluntary turnover. 

To calculate the ROI of an employee engagement software, you can start by measuring the decrease in attrition after the adoption of the tool. It is also worthwhile to calculate the total cost of hiring and onboarding new employees to replace the old ones. 

You can translate this in monetary terms too. Research shows that the average cost of attrition for each employee can range from 50%-250% of his/her annual salary.  The cost of attrition depends on the leadership position, experience and institutional knowledge.

Roi of employee engagement attrition cost

2. Productivity

Highly engaged workforce have 21% higher profitability. They also have 17% higher productivity than companies with a disengaged workforce.

There is enough evidence to support that when employees are highly engaged, they are more productive, leading to greater profitability and outcomes. Therefore, the next parameter to measure the ROI of an employee engagement software would be to gauge levels of productivity. 

Depending on the business vertical, measuring productivity can have different metrics. For instance, marketing can be measured on the basis of leads generated or traffic attracted, while sales can be measured based on leads converted. To get an accurate sense of the ROI of an employee engagement tool, it is important to ensure that organizations choose the right productivity metrics. 

3. eNPS

One of the final metrics that deserves recognition for calculating the ROI of an employee engagement tool is the eNPS or the employee net promoter score. eNPS refers to the likelihood of an employee referral to those in their network to work for their organization.

It goes without saying that only when employees feel engaged, happy and satisfied at work will they refer the place to others. 

Therefore, conducting an employee pulse survey to gauge the eNPS can be a great ROI indicator. An upward trend in the same illustrates the positive ROI of the employee engagement software.

4. Absenteeism

Businesses with engaged employees experience 41% less absenteeism. Thriving employees have 53% fewer missed days due to health issues.

The next metric to calculate the ROI of an engagement software should focus on absenteeism or missed days. There are several reasons why employees take time off, while some of them are legitimate, others may signal disengagement at different levels. 

roi of employee engagement tool absenteeism

Disengagement can also lead to employee burnout which adds to time off due to health issues. However, the right employee engagement tool can help organizations preempt indicators of absenteeism in advance and address them proactively. Thus, ROI can be calculated on the basis of a decrease in absenteeism and greater active participation at work. 

Conclusion

As we come to an end of this discussion, it is evident that organizations can leverage employee engagement software not only to attract and retain the top talent in their industry, but to also directly impact their bottom line in a positive manner. 

An effective and comprehensive employee engagement tool can help organizations know their team strengths, gain actionable insights on employee engagement drivers, and guide managers through meaningful 1:1 conversations

To correctly measure different aspects of employee engagement, enable managers to grow and augment participation across the engagement lifecycle — book a free demo with SuperBeings today.

Suggested Reading

How to choose the right employee engagement tool

Complete guide to employee engagement

Employee recognition 101

How to use employee pulse survey results

Continuous feedback 101

Beginner’s guide to effective 1:1 meetings

References

https://www.gallup.com/workplace/236927/employee-engagement-drives-growth.aspx

https://www.nytimes.com/2014/06/01/opinion/sunday/why-you-hate-work.html

https://www.mercer.us/our-thinking/career/global-talent-hr-trends.html

https://www.benefitnews.com/

https://www.insidermedia.com/blogs/north-west/business-matters-disengaged-employees-60-more-likely-to-make-mistakes-compared-with-their-engaged-colleagues

https://cultureiq.com/blog/company-culture-employee-engagement-statistics/

https://www.kornferry.com/insights/this-week-in-leadership/measures-for-success

https://learning.linkedin.com/content/dam/me/learning/en-us/pdfs/lil-workbook-calculating-cost-of-employee-attrition-and-disengagement.pdf 

https://www.gallup.com/workplace/236351/star-employees-slipping-away.aspx#:~:text=While%2037%25%20of%20engaged%20employees,their%20jobs%2C%20managers%20and%20companies.

https://www.gallup.com/workplace/236366/right-culture-not-employee-satisfaction.aspx

https://www.gallup.com/workplace/313067/employees-aren-thriving-business-struggling.aspx

Sudeshna Roy

Marketing, SuperBeings

Hi There! I am Sudeshna. At SuperBeings, I lead our content strategy to bring you the best and latest on everything related to people management

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Performance
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x
min read

How to strategically align compensation and performance management?

The right compensation management practices and policies can make or break your employee experience. Of course, there is merit in linking compensation and performance to drive organizational success, it can lead to several questions and implementation problems as well. 

Read on to get all your compensation management related questions answered.

Why is fair compensation important?

Let’s start with the very basic question of why fair compensation is important and the merits it brings along. It is no surprise that if you are paid more and are compensated according to your efforts, you are likely to give in your 100% and stay with an organization longer. However, there are other factors that support fair compensation:

  • Reduce the risk of turnover: 50% employees are more likely to leave if they believe they are paid below market
  • Retain high-potential performers: High-potential talent brings 91% more value to an organization
  • Increase job satisfaction: Compensation/pay and benefits are 2 of the top 3 drivers of job satisfaction 

Thus, fair compensation as a part of compensation linked performance management has the potential to facilitate better employee outcomes such as engagement, experience and performance. 

Should compensation be tied to performance reviews?

To make compensation fair and inclusive in all aspects, it needs to have a clear foundation. Most organizations have relied on performance reviews as a way of reflecting on performance as a means of compensation decisions. However, there are several competing views both for and against tying compensation to performance reviews. 

Benefits of tying compensation and performance reviews

  • Compensation can act as a great motivator for employees to perform well, which can be reflected in their performance reviews
  • Enable employees to get a clear understanding of what rewards or recognition they get with an increasing level of performance
  • Give employees the opportunity to see the direct value of their performance in tangible ways
  • At an organizational level, it helps to align inputs (compensation) with outputs (performance), enabling efficient resource allocation
  • Ensure that compensation hikes and appraisals are seen as transparent and not arbitrary

Pitfalls of tying compensation and performance reviews

  • It focuses on only those aspects of performance which are under review and not the overall and subtler forms of organizational contribution for employees
  • Performance linked compensation system leads to employees giving themselves  more lenient ratings during self reflection during 360 performance review. Thus, driving the focus away from self reflection as a development practice
  • Biased peer review can also prevent fair compensation, especially when the departmental budgets are limited
  • Sometimes, it creates a blame oriented workplace culture and discourages collaborative problem resolution

Clearly, there are both sides to the story.

The most favorable outcome will be to keep performance as one of the parameters for compensation, but not the sole foundation.

Additionally, as one of the best practices, performance reviews can be conducted on a regular basis, where some are only developmental in nature and others can be tied to compensation management. 

5 compensation best practices today

As discussed, focusing only on performance reviews for compensation management needs a relook. Working with growing organizations, we have curated a list of the top five performance and compensation management practices you can leverage:

1. Keep up with market trends

Ensure that your compensation structure aligns with the market trends so your employees don’t feel underpaid and leave.

  • Conduct a dipstick survey to understand appropriate pay scales
  • Keep your pay structures updated based on market corrections
  • Leverage custom employee pulse surveys to regularly to check their perception on compensation according to market trends

2. Be clear about relationship between performance and compensation

Provide complete transparency and clarity to your employees on what constitutes high levels of performance and what it will take to earn a raise or appraisal.

  • Highlight specific job competencies that link compensation and performance management
  • Don’t rely completely on performance reviews as a means to determine compensation, let them be developmental in nature
  • Gauge performance against pre defined competencies over time

3. Have well defined criteria

Have specific, well defined and measurable criteria for the compensation strategy to ensure that there is complete transparency. 

  • Develop or choose metrics which are easy to comprehend
  • Try to quantify the value for each criteria, including years of experience, education, etc.
  • Account for difference in compensation based on skills, performance levels, among others

4. Communicate benefits effectively

Salary in hand or the pay check your employees receive is accompanied by a range of benefits that are a part of the compensation structure and cost to the company, but are often overlooked by employees. Make sure they are widely communicated.

  • Create a list of all benefits offered to employees and communicate to them via different ways, email, discussion sessions, etc.
  • Be vocal about the value these benefits are able to add over and above their monetary value
  • Illustrate how these benefits also act as tax saving options at times, leading to a more efficient compensation structure

5. Have a standard pay range

Ensure that there is a base pay range for every role and profile with variable additions based on candidate competencies.

  • Have clear guidelines and pay range for each position to set the right expectations
  • Illustrate the competencies/parameters based on which deviation from standard pay range will be acceptable
  • Have a well defined strategy to evolve the pay range and support employee transition from one range to another

How to ensure distributive justice?

The idea of fair compensation and linking compensation and performance management, leads to a very interesting concept of distributive justice. On a broad level, distributive justice essentially focuses on ensuring that the compensation received by employees is fair and equitable and is based on objective and rational grounds which are uniform for all. Here are a few ways to ensure distributive justice:

  • Be transparent about the criteria for compensation and what constitutes as parameters for raise
  • Ensure that measuring of performance/ other criteria for performance is bias free and doesn’t fall prey to halo, horns or recency effect
Measure potential and market value of the employee in addition to experience and expertise to ensure distributive justice for high potential employees 
  • Be fair in your compensation and appraisal assessment

Pay transparency: Merits and demerits

Another interesting component of compensation and performance management that you must acquaint yourself with is pay transparency. Essentially pay transparency refers to how openly or freely employees within an organization can discuss their compensation with others. 

This is not only limited to the check they take home but other perks and benefits they are entitled to. Invariably, many platforms today also enable individuals to anonymously share their salaries online and get insights from others doing the same. However, there are diverse views on when it comes to pay transparency for an organization. 

Merits of pay transparency

Those who advocate for pay transparency believe that it can enable large scale impact for the organization across performance management.

  • Meet employee expectations, build greater trust and augment engagement and overall experience
  • Attract the best talent by showcasing competitive compensation at market standards
  • Reduce chances of biases in salary negotiations and increments
  • Ensure fair compensation and distributive justice among employees
  • Greater employee motivation leading to better organizational outcomes
  • Fewer negotiations allowing employees to focus on adding value to their work

Demerits of pay transparency

However, there is a flip side to pay transparency too with some common pitfalls that need to be addressed proactively.

  • Risk of resentment and conflict if pay scale is not uniform and balanced
  • May lead to comparison of pay scales among peers in the organization with possible backfire
  • Requires strategic planning and meticulous implementation
  • May lead to high levels of turnover in case employees feel they are paid less than what they deserve, in comparison to others
  • Employees might have privacy concerns about their salary being shared with others

How to guide managers to have better compensation conversations?

In the last section of this article, we will focus on how managers play an integral role in compensation and performance management and the best practices to guide managers to have effective compensation conversations with their team members.

Almost 58% organizations do not train managers on pay communications 

This startling statistic clearly highlights how despite the apparent importance of compensation management, the focus on ensuring a seamless process is rather limited. However, organizations today can play a leading role in enabling their managers to have better pay communication and conversations by following these tips:

  • Create a communication toolkit with all the resources including compensation structure, criteria, performance linkage, etc. and share it with all the managers 
  • Conduct regular surveys to gauge employee pulse and data from employees on their compensation and share insights with managers to help create a conversation flow
  • Leverage tools for NLP led sentiment analysis of open ended responses and share guided 1:1 conversation templates for effective compensation conversations
  • Encourage managers to keep compensation conversations and performance reviews as separate
  • Give proper context, especially during an appraisal or raise, with both internal and external factors that led to the compensation decision
  • Communicate the value and importance of the employee to the organization, don’t rely on numbers and monetary increase do all the talking
  • Prepare for the conversation and be prepared for response, be an active listener and patiently address grievances, if any

Final Thoughts

It is quite evident that compensation and performance management are intrinsically interlinked and if leveraged well, compensation has great potential to not only drive performance, but also facilitate engagement, retention and much more.

However, to ensure the same, you need to have a very structured, transparent and fair compensation strategy and policy. Furthermore, you must, don’t forget to invest in training your managers to bridge any gaps and constantly gauge and address employee pulse — to ensure fair compensation for all.

Suggested Reading

10 tips for managers to effectively conduct performance reviews

How often should you conduct performance reviews?

How to use competency framework as a talent management strategy

Performance
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x
min read

How to Use Competency Framework for Talent Development

Talent development is critical for growing organizations which see the workforce as their biggest asset. Focus on developing their talent stack not only leads to a pleasant employee experience, it also augments the overall performance and productivity for an organization. 

While you may come across many ways to facilitate talent development, leveraging the competency framework can help you move the needle very quickly. 

Let's see how.

5 Stages in talent development

Before moving directly to how you can implement the competency framework, let’s quickly understand the 5 stages of talent development.

1. Planning

The first stage involves planning for your talent needs based on your organizational priorities and creating the position profile based on the skills, attitudes and other competencies. 

2. Identifying

Based on the position profile, you need to start attracting talent for the position. You can do so by spreading the word in the right networks, through job portal platforms, etc. The objective is to ensure that you are reaching out to the right network. You can also explore the right candidate for the position internally to considerably save hiring and training costs. 

3. Onboarding

Once you have identified the right person, the next stage of talent development is extending the offer to the person after a thorough background check as well as a competency and expectation match. It also requires creating personalized onboarding plans for the first 30-60-90 days of the candidate’s journey within the organization. Read our guide to employee onboarding to learn more about onboarding do’s and don’ts.

4. Developing

The main focus of talent development starts with providing the right development and learning opportunities to your workforce. This can involve upskilling for both technical and soft skills, leadership building or any development intervention based on the need of the role and position. 

Read: How to create employee development plan based on performance history

5. Retaining

Finally, talent development involves undertaking initiatives to retain your talent. While learning opportunities are important, facilitating engagement, wellness, motivation, etc. all contribute to employee retention. 

What is the competency framework?

If you are wondering how the competency framework aligns with talent development, you need to start by decoding what the framework actually stands for. 

Put simply, a competency framework is a set of behaviors, skills, abilities and attributes that an organization considers imperative for creating a high performance culture. 

The competency framework can be implemented at all stages of the talent development or the employee lifecycle within an organization. The idea is to ensure that certain core competencies are kept at the heart of the decision making that in any way impact the workforce. 

Importance of talent development for employee retention

Competency framework based talent development is very important for employee retention. Talent development practices when undertaken effectively have the potential to encourage team members to stay with the organization for long and at the same time become ambassadors to help attract high quality peers. 

Here are the top reasons why competency framework based talent development matters:

  • Recruit the right person for the right job
  • Provide the right learning and development opportunities
  • Be an active participant in professional growth for employees
  • Train and develop employees for professional obstacles
  • Enable employees to navigate through challenges with mentoring support
  • Enable employees to see a clear career growth path within the organization

Implementing the competency framework: Process, steps and ownership

Now that we have covered the basics of talent development and competency framework, let’s understand how leveraging the latter to advance the former can create a far reaching impact for organizations. 

Step I: Create a competency framework

The first step is to create a competency framework which involves identifying the key competencies which will be instrumental in guiding all decisions around talent development. Depending on the nature of your organization, there can be categories within the competency framework that you seek to focus on. Your competency framework should focus on behaviors, skills and attributes which are critical for performance and overall success. The following steps can help you create a competency framework for talent development:

1. Identify key competencies

  • Establish core competencies that are required to be possessed by everyone in the organization, for instance, teamwork or collaboration
  • Highlight the functional competencies that are required for specific roles and positions, for instance, situational awareness and the ability to think on one’s feet for those in business development roles
  • Identify competencies that align with your core values and are non negotiable, for instance, if your core value revolves around innovation and experimentation, a key competency will be a risk taking attitude

2. Determine behaviors and attributes

  • Define the key parameters for each identified competency i.e. what are the factors that collectively contribute to presence or absence of that competency
  • Establish metrics to judge the level of competency alignment across the workforce and identify the gaps

3. Link to organizational goals

  • Create a business statement of how the competencies can advance overarching organizational goals
  • Focus on the value add they bring along for organizational success
The responsibility of creating the competency framework is collective. It starts with involving the executive leadership to ensure alignment with the vision, people managers to ensure they are ideal for the culture you are trying to build and functional managers to ensure inclusion of right competencies for each role and position. Furthermore, involving those on the ground can be fruitful as they have the best idea of what competencies are critical and others which are good to have. 

Step II: Align the competency framework with recruitment

Once the competency framework for talent development is ready, the next step is to align it with your recruitment process to ensure precise and effective hiring. There are a few steps along the way:

  • Mention the keywords from the competency framework in your position profile or job description
  • Specifically identify 5-7 key competencies for each role important for high level of performance
  • Identify behaviors for each competency to look out for during the selection process
  • Leverage psychometric assessments customized with your competency framework to test your candidates
  • Conduct competency based interviews and assignments for a comprehensive view
  • If there is a significant competency match, identify gaps if any for competency based development later
  • Document results to align performance management for selected candidates
The onus of implementing the competency framework during selection lies primarily with the HR team and recruiters who assess the candidates with different tests and assessments. Team managers and leaders also play a role in assessing functional competencies and fit. 

Step III: Facilitate competency based performance management and development opportunities

Irrespective of whether an employee is onboarded before or after you have implemented the competency framework for recruitment, you need to ensure competency based performance management and development opportunities. 

Performance management

  • Align OKRs and goals with competencies; focus on behaviors that can help drive the key results. For instance if a key result is expand to 5 new markets, a key competency can be adaptability
  • Conduct competency based 360 feedback review; encourage your managers to review performance not just on outcomes but presence or absence of competencies that made the outcomes possible
  • Encourage competency based self reflection for employees to assess their performance based on the competency framework
  • Identify development areas based on competency needs for particular roles as well as the next career path in the trajectory
  • Reward competency based performance and outcomes
  • Measure competencies on an ongoing basis and compare results with recruitment analysis

Talent development interventions

  • Define competency gaps for each position and identify talent development interventions to bridge the same. For instance, if communication is a key competency for a sales role, learning can be oriented towards better communication skills
  • Align developmental interventions with competency based OKRs
  • Identify learning objectives for each role and position and determine how they connect with the competency framework

From a talent development perspective, the focus of the competency framework should equally be on developing employees for their next or subsequent role based on the specific competencies for the same. 

The onus of aligning performance and development with the competency framework lies with team managers as they are best able to determine the performance gaps. Furthermore, employees with their managers can identify competency gaps for better performance and focus on the right learning and development interventions to bridge the same. 

Step IV: Leverage competency framework for succession planning

Finally, the competency framework must also impact the subsequent rungs of talent development where an employee moves up the ladder from one position to the next. Based on the organizational matrix and competencies for each level, you need to identify key attributes that differentiate one level from another and ensure the same is communicated to your employees. 

You should:

  • Help you employees create a career development plan based on your competency framework to help them understand which competencies will enable them to grow
  • Make succession planning a key organizational priority and focus on talent development from that lens

Final Thoughts

In a nutshell, it is quite evident that the competency framework can inform and advance every stage of talent development for fast growing organizations. If you implement such a framework across the employee lifecycle, you will significantly reduce your chances of a wrong hire and will be able to nurture a workforce that aligns on the vision, goals and overall organizational culture. 

A clear competency based talent development approach can help you achieve high levels of performance which is observable and measurable.

OKRs
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x
min read

Should Your Business Invest in OKR Software? See the ROI

While most people managers are able to create a business case for setting OKRs as well as for the adoption of an OKR software by leveraging industry benchmarks and best practices, there is a need to explicitly decode the return on investment of using an OKR tool as well.

Unless they are able to clearly illustrate how the return achieved using a goal management software is greater than the investment, it becomes difficult to sustain the adoption and get long-term leadership buy-in. 

Continue reading to strengthen your business case on the same.

What’s the ROI of Goal Management using OKRs?

Let’s quickly understand how the OKR framework is integral for an organization, especially high growth companies. Most fast growing organizations have competing priorities they need to focus on with limited resources at hand. 

Therefore, simply setting goals by adopting a top-down approach without supporting parameters can lead to confusion and incompetence. OKRs help drive away this ambiguity by linking measurable key results for each objective and facilitating a collaborative approach to achieving goals.  

Here are the top three benefits of implementing OKRs in an effective manner:

1. Better focus and more clarity

OKRs enable employees and leadership to have a very clear focus on what needs to be accomplished and what work is out of scope. The idea is to have complete clarity on — 

  • what each goal or objective means, 
  • its purpose for the overall success of the organization, and
  • what achieving it will look like. 

The last part is extremely important as it helps create a sharp focus and set priorities straight. 

93% of employees don’t really understand what their organization is trying to accomplish in order to align with their own work.

This illustrates that there is a big absence of clarity and focus amongst employees when it comes to what needs to be accomplished, which stands in the way of creating a high performance culture. Therefore, OKRs can help reduce such uncertainty and ambiguity, making it easy for the workforce to concentrate on what matters. 

2. Strategic alignment

Taking cue from the first point, the second benefit or purpose of implementing OKRs foris a need for clarity of expectations and overall team and organizational alignment. In case of fast growing organizations, there is an overlapping of roles and responsibilities and a lack of clarity on expectations from each employee. This leads to lower than average outcomes, productivity and revenue growth and data backs the same. 

97% of employees and executives believe lack of alignment within a team impacts the outcome of a task or project. Whereas, companies that regularly exceeded revenue goals were 2.3X more likely to report high levels of alignment.

By ensuring organization-wide goal visibility, OKRs help teams to decode what is expected out of each team member and their respective contribution towards achievement of the shared goals. Thus, increasing alignment and collaboration. 

3. Greater engagement

Finally, setting and implementing OKRs is often a collaborative process. Employees get involved in and participate during the entire OKR process and feel engaged in the same. This greater involvement and participation leads to deeper levels of engagement and ownership of key results which drive impact. 

OKRs also enable employees to also gauge their performance and measure their progress in an effective manner. This motivates them to get more involved in achieving the common weekly, quarterly and annual goals. This higher level of engagement directly impacts key organizational parameters such as retention, productivity, profitability, etc. 

How does an OKR software make a difference? 

The business case for OKRs is very clear. However, for companies that are scaling up, with limited bandwidth and competing priorities, often setting OKRs itself gets left behind due to other business priorities.

If an organization focuses on a manual approach to the OKR system, there are several steps which require a lot of time and effort including setting and writing, implementing, tracking, grading, evaluating and modifying OKRs.

Fortunately, today there are OKR tools in the market, which can help automate all of these aspects to help simplify the OKR journey. The right goal management software can help you maximize the realization of the return on investment for your OKRs. Following are the top five ways in which an OKR software makes a measurable difference on the bottomline — 

1. It allows you to document goals

First, an OKR tool can help organizations document or record the OKRs in a way that is visible and accessible to all. There is supporting evidence to show that what gets documented has a higher chance of being achieved, as what is out of sight is often out of mind. 

Individuals are 42% more likely to achieve goals when they are physically recorded.

Therefore, the OKR tool can enable organizations to clearly define the business and team OKRs in a written manner which can be reflected on, seen again and again to create instant recall for employees. 

2. It drives accountability and alignment

OKR tools are great for creating alignment and accountability. On the alignment front, the OKR software can help achieve high levels of strategic alignment on what is the responsibility of each team member across organizations towards the key business goal achievement. 

Highly aligned companies grow revenue 58% faster and are 72% more profitable than their misaligned counterparts.

The dashboard of a good OKR software can help you constantly gauge the level of goal achievement, ensure that team members are aligned on different phases as well as keep a track of when their responsibility is due. It creates high levels of transparency. 

Moreover, greater alignment leads to high levels of accountability. Generally, since there is a lack of alignment on responsibilities, there is an accompanying lack of ownership and accountability, and most employees shirk away from taking accountability. 

84% of the workforce describes itself as “trying but failing” or “avoiding” accountability, even when employees know what to fix.

A goal management software like SuperBeings allows you to integrate OKRs with regular meetings and check-ins to keep track of progress. Thus, driving a culture of accountability.

3. It enables real-time OKR progress and goal tracking

It is very common for companies to set OKRs and then evaluate them only at the end of the quarter/year. There is a lack of mid-term tracking which makes it difficult to gauge whether the progress is aligned with the key results or not. 

40% of people that write down goals don’t check whether they’ve achieved them. Moreover, only 5.9% of companies communicate goals daily. 

An OKR software can help you address this concern by facilitating day-to-day OKR progress tracking. A daily dashboard and history of 1:1 and team check-ins on OKRs, can help organizations track developments over time. 

ROI of OKR software
SuperBeings OKR dashboard helps you get a quick overview on all primary goals

It can also help identify and resolve any performance issues that stand in the way of goal achievement preemptively. At the same time, even if organizations are tracking and monitoring OKR progress, doing so with a manual process is inefficient. An OKR tool can automate most of these processes to enable HR and people managers to spend more time on driving results. 

4. An effective software offers OKR training for success

Another major concern that organizations face when it comes to OKRs is being prepared and ready for the same. Many line managers and others struggle with writing effective OKRs. Many organizations believe setting OKRs once is enough. However, that is far from the truth. 

Research says, companies that set performance goals quarterly can generate 31% more returns than those reassessing annually.

Using an OKR software can help eliminate all these challenges. 

  • First, the right tool will offer OKR coaching and onboarding support to train managers to write OKRs which are effective and result oriented.
  • Second, it can help reflect on OKRs at regular intervals to realign on them and adjust according to changing market conditions. 
  • Third, the OKR tool can help managers have meaningful 1:1 conversations with team members to link OKR with performance and facilitate high levels of goal achievement. This is a direct return on investment which can create value across the organizational verticals.  

5. It facilitates greater collaboration

Finally, an OKR software can promote high levels of collaboration for goal achievement. For many organizations, the inability to collaborate leads to low levels of results, diminishing the ROI for OKRs.

86% of employees and executives cite lack of collaboration or ineffective communication for workplace failures.

Using a good OKR software makes collaboration seamless by aligning cross-functional projects and tracking cumulative progress. Invariably, an increase in degree of collaboration is a direct ROI of an OKR tool which can create far reaching impact.

How to calculate the ROI of an OKR software?

In this final section of the article, we will talk about the key parameters that can help you gauge the ROI of an OKR software. While the above mentioned are primary impact areas, most of them have a qualitative aspect to them. 

Gauging the ROI requires backing of data points from employee experience and business results, which the following parameters can help explain.

1. Level of transparency

Organizations should start by gauging whether or not transparency and alignment on goals has increased. This can be measured using employee pulse surveys to understand their opinion on how well they have visibility of goals and clarity on what they need to work towards. Therefore, the first ROI parameter for an OKR software is to identify the increase in level of transparency to ensure everyone is working in the same direction and there are no gaps or overlap in efforts. 

2. Degree and time period of goal achievement

The main purpose of an OKR tool is to facilitate the effective and efficient achievement of the goals set by an organization. Thus, the next parameter to measure ROI should revolve around the degree and time period of goal achievement. 

You can start by comparing the degree of goal achievement by leveraging OKR grading to see if there is a significant improvement in percentage terms as compared to pre-OKR tool period. Second, it is important to gauge whether or not the goals/key results have been achieved in a shorter period of time or not. Since the OKR platform facilitates better alignment, collaboration, tracking, etc., it can help organizations achieve or realize the goals faster. 

3. Reduced administrative overheads

Third, there are several administrative overheads that accompany the setting and implementation of goals/OKRs. These include tracking, grading, etc. for managers and providing inputs on the part of employees. The ROI of an OKR software can be gauged by mapping whether or not these overheads come down. 

  • For the managers, ROI can be calculated in terms of time saved which can be invested in other value add tasks. 
  • For employees, the ROI comes in the form of reduced time and effort spent in juggling between platforms to work on goals and projects. The right tool will provide organizations with integrations across top productivity tools like Slack, Jira, etc. which reduce administrative overheads for all organizational stakeholders. 

4. Increased revenue

The next parameter for ROI calculation is to measure the change or increase in revenue after the adoption of an OKR software. Since an OKR tool seeks to enable organizations to achieve their goals faster, cost effectively and to a greater extent, there should be an increase in the revenue realized. 

According to Larry Page, co-founder, Google claims that “OKRs have helped lead us to 10X growth, many times over.” 

5. Better employee experience

Finally, gauging the value of employee parameters like retention/turnover, productivity, engagement, etc, can cumulatively be leveraged to capture the ROI of an OKR tool. There are several ways to gauge these workforce parameters, along with factors like eNPS, etc. which have a direct business impact. Calculating them can help measure the ROI of the OKR tool for an organization. 

Final Thoughts

It is evident that adoption of an intelligent OKR software is not only good to have, but integral for organizational success. Using the right tool has a direct business impact which can be measured in numbers using the ROI parameters mentioned in this article. 

There are both qualitative and quantitative aspects to measuring the ROI and a balanced approach to both can empower organizations to align individual performance with business goals.

If you are considering implementing the right OKR software in your business, try out SuperBeings free 21 day trial. Book today. (No credit card or commitment required)

Suggested Reading

How to find the best OKR tool

Master OKRs in 10 days: Free OKR email course

References

https://www.forbes.com/sites/johnhall/2019/10/06/why-accountability-is-vital-to-your-company/?sh=4297f3cb6580

https://www.salesforce.com/in/work/?sfdc-redirect=219

https://www.minsilo.com/resources/strategic-alignment/why-is-alignment-important

https://www.cnbc.com/2019/09/13/self-made-millionaire-how-to-increase-your-odds-of-success-by-42-percent-marie-forleo.html#:~:text=The%20results%20were%20clear%3A%20Participants,down%20on%20a%20daily%20basis

https://lsaglobal.com/insights/proprietary-methodology/lsa-3x-organizational-alignment-model/#:~:text=Based%20upon%20research%20of%20410,Effectively%20leading%208.71%2Dto%2D1

http://www.cedma-europe.org/newsletter%20articles/Clomedia/Want%20Results%20-%20Fix%20Accountability%20(Feb%2015).pdf

https://www.asuresoftware.com/

https://fierceinc.com/employees-cite-lack-of-collaboration-for-workplace-failures/#:~:text=Key%20survey%20finds%20include%3A,will%20impact%20bottom%20line%20results.

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