After recently reviewing thousand of Annual Plans and Quarterly Plans, I can say without a doubt that improving employee engagement seems to be top of mind for everyone this year. How on earth do you keep today's dynamic and diverse employees happy, engaged and productive? It's the million dollar question that we ask ourselves year after year.
According to Gallup, companies with highly engaged workforces outperform their peers by 147%. Gallup also concluded that 87% of employees worldwide are not engaged. So, how do you know if your company is on the right side of those statistics? You need to start measuring employee engagement KPIs this quarter so that you can keep your A Players and reduce employee turnover. This is not just a function for the human resources department, the best team managers measure employee satisfaction KPIs on their teams.
As with most things, the first step is to start measuring so that you can determine the baseline of your employee engagement and work on the biggest areas for improvement first. This isn't about just creating and sending out employee engagement surveys, but that certainly may be part of your overall employee engagement project. Effective employee engagement metrics are best derived by starting where you are at and the best way is to determine a baseline for business leaders. Every company is different and each company can vary from year to year - as an example your team might get burned out during the holidays if that is the peak season for your merchandise. Make sure that you measure your baseline employee engagement metrics with any seasonal adjustments in mind.
Here are the Top 10 Employee Engagement Metrics and KPIs I've seen from Rhythm clients:
1. Employee NPS - Determine your Employee Net Promoter Score (NPS). The Net Promoter Score is a method developed by Fred Reichheld and explained in his book, The Ultimate Question. In a nutshell, it’s based on a direct question and the scoring is on a 0-10 scale. Ask your team if they would recommend a job at your company to a friend or family member. Improve employee NPS and you'll reduce your employee turnover rates and keep your labor costs down.
2. Absenteeism - If not showing up is an issue at your company, engagement is suffering for sure! And not just for the person that called out sick, it also affects other team members that need to cover for their work. This leads to a bad employee experience all the way around and often becomes a self fulfilling cycle.
3. Turnover/Retention - Employees who are not happy will simply leave to find a place where they can be happy. Pay close attention to the tenure of employees who quit. Are you losing A players who have been there a long time?
4. Production/Profitability - Quite simply, if employees aren't engaged, the proof will be in the pudding. If sales are slow or production is down, consider low engagement as a possible cause. Research shows that an engaged workforce is a productive workforce.
5. Employee Health Index - This one is interesting. It's simply a "gut-check" KPI that each employee statuses each week. As an example, I'll share our Red-Yellow-Green success criteria for the Rhythm Consulting team. SuperGreen means "Bring It On" or I have the bandwidth to take more clients or help another consultant. Green is "Balanced" or I feel full but it's just the right amount of work. Red means "I need help" or I don't have the bandwidth to take on additional clients or projects right now. As a team, we discuss our Employee Health Index in our weekly meeting to make sure everyone gets the support they need to remain engaged at work.
6. Glassdoor.com Rating - GlassDoor is a website that allows employees to write reviews of their employers. Reviews are evaluated and companies are rated 1-5 stars. For larger organizations, watching this rating can provide insight not only to how current employees feel, but how those who have left feel. Also, it's great to know what is being said about your organization in the marketplace from a recruiting standpoint.
7. Vacation Days Used - On the surface, the value of this measurement may not seem very insightful; however, a healthy work-life balance promotes employee engagement. Vacation Days Used can also be an indicator of your culture. For example, do people not feel comfortable taking time off? Are they so overloaded a vacation just isn't possible? Do they feel no one has their back if they were to take a few days off? If people aren't using them, there's usually a reason.
8. New Hire 90-Day Failure Rate - Engagement is a mindset. However, employees can become engaged if given the proper tools and training. If new hires are leaving in the first 90 days, they either weren't the right hire from the beginning, or the onboarding process didn't set them up to be engaged. High levels of failure should have you invest more time in the hiring process to make sure that you are getting A-Players.
9. Customer Happiness - This one follows the logic that happy employees equal happy customers. Measure Customer Net Promoter Score. If it's low, consider the possible impact of low employee engagement is having on customer happiness. Low customer engagement is often a sign of low employee engagement. This is a data point that seems to cut both ways.
10. Rhythm KPI and OKR Software Usage - For those of you using Rhythm software, measure employee engagement with the tool. Are they statusing and commenting on their priorities? Are they collaborating with the team and problem-solving in week meetings? If they aren't excited about the strategy and supportive of the execution of the strategy, they aren't an engaged employee.
I know that many of you are also using OKRs, which are similar to KPIs. To learn more about the difference you might be interested in reading OKRs vs KPIs to make sure that you have the right metrics that to help you improve your productivity.
Looking for some Employee KPI Examples or HR KPI Examples to help get you started? Check out our additional resources:
The Power of Systems and People: Accountable Leaders and Teams
Rhythm Systems KPI Resource Center
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