3 Easy Ways to Measure Employee Engagement

Why is employee engagement important?

It’s unrealistic for managers to expect people to be enthusiastic about their jobs all the time; even the most devoted worker can’t block out the occasional daydream while sitting at their desk. There isn’t anything wrong with this, so long as it doesn’t become standard behaviour.

We know that organisations lose millions of dollars a year when their workforce is disengaged. Research shows that this damage is  detrimental: low productivity, high absenteeism and disappointed stakeholders result in bleeding revenue.

High levels of employee engagement are more crucial now than ever before. The outbreak of the coronavirus has stalled the global economy, and businesses around the world felt the impact. To maintain business momentum, businesses must utilise their most valuable asset – their employees. To get the most out of their employees – and to retain top performers – employers must ensure that the workforce is engaged.

An engaged workforce is dedicated, loyal and committed to achieving positive outcomes, meaning that the business is in a good position to weather the storm. A business that has a disengaged workforce, on the other hand, will not be strong enough to emerge from the other side.

This article shows you how to measure staff engagement levels at your workplace, to see if there’s a problem. But first, what is employee engagement?

What is employee engagement?

Employee engagement represents the level of commitment that a worker puts into their job, and how much satisfaction they get from it. There are different interpretations of this subjective emotion, making it difficult to measure. However, the consensus of employee engagement can be based on the Gallup model below:

Engaged employees are enthusiastic about their role, honour workplace values and take initiative because they want to accomplish goals and help the organisation to succeed.

Disengaged employees do the bare minimum and take no pride in their work. In extreme cases, “actively disengaged” people show they’re unhappy and undermine the achievements of their colleagues.

How do you determine where your workforce sits on this scale of engagement?

How to measure employee engagement using metrics (quantitative and qualitative)

85% of respondents in ELMO’s HR Industry Benchmark Survey 2019 Report who have a formal process said that they run traditional engagement surveys to capture engagement data and metrics. Two-thirds (66%) said they run exit surveys and just 43% run short pulse surveys. 27% use onboarding surveys to measure the engagement of new starters and 16% use an employee Net Promoter Score (eNPS®^) survey.

There are three methods that managers can use:

  1. Calculate engagement based on Gallup’s averages
  2. Use the Employee Net Promoter Score
  3. Analyse findings from surveys and interviews

1. Use Gallup’s averages to calculate engagement (quantitative)

In Australia and New Zealand, 15% of employees are actively disengaged – according to Gallup’s State of the Global Workplace report.

You can estimate your number of disengaged employees based on this average figure.

To do this, follow the below:

  1. How many employees in your company? Multiply this number by 15%.

Example: 54 employees in the workplace

The Gallup average is 15% for active disengagement

54 workers multiply by 0.15 (54 x 15 / 100)   = 8.1

Estimate: eight “actively disengaged” employees

8 / 54 x 100 = 14%

You can do the same for the other categories that Gallup uses  (e.g. “engaged” and “not engaged”).

Note: If you prefer to base your calculations on worldwide averages, , please see this article for global engagement trends.

2. Use the Employee Net Promoter Score (quantitative)

“On a scale of zero to 10, how likely is it you would recommend this company as a place to work?”

You can use this one simple question to gauge how engaged your employees are. The Employee Net Promoter Score (eNPS) was devised by Bain & Company,  a management consulting firm.

This question is effective because it instantly captures every aspect of the workplace experience that shapes engagement levels, such as work culture, career opportunities and alignment to company values.

How it works:

  1. Put the question to employees in a confidential survey
  2. Ask them to rate their answer on a scale from zero to 10
  3. Refer to this rating system:

– 0 to 6: actively disengaged (“detractors” – unhappy employees)

– 7 to 9: neutral (“passives” – satisfied, but not enough to go above and beyond)

– 9 to 10: engaged (“promoters” – loyal, enthusiastic employees)

      4. Tally the results to see how many employees you have in each of the engagement categories.

3.  Refer to findings from employee surveys and interviews (qualitative)

Another way to see how engaged your employees are is to ask them to share their thoughts via an anonymous survey or one-on-one interview. This qualitative approach helps managers to understand what works or causes dissatisfaction.

Surveys cover a range of topics, including:

  • Induction survey – what do new hires think about the process?
  • Financial wellness survey – are there financial concerns?
  • Job satisfaction survey – do people feel happy and supported in their roles?
  • Exit interview survey – departing staff give feedback on their experiences
  • Reward and recognition survey – do staff feel like they’re being acknowledged?
  • Training survey – how useful are the training programs?

Online survey software, such as ELMO Survey, gives managers a quick, convenient and accurate way to collect and respond to confidential data.

Although interviews are anonymous, they give managers the opportunity to get to know their staff better. Exit interviews are particularly useful if individuals are honest – they provide a unique insight into what triggered their departure.

How to measure the financial cost of employee disengagement

Now that you’ve established the number of disengaged employees in your workplace, you can estimate how much this costs your business (based on the average salary at your workplace).

How to do this:

1. To find out how much a disengaged individual costs your business:

Take the median salary at your organisation and multiply it by 34%

Example: $65,000 x 0.34 = $22,100

Every disengaged employee costs your organisation $22,100

  • Why 34%? Actively disengaged employees cost businesses 34% of their salary, according to this LinkedIn resource.

2. To calculate how much all disengaged employees cost your business:

Individual cost of engagement X number of disengaged employees

Example: $22,100 x 8 = $176,800 a year

8 disengaged employees cost your company $176,800 a year

See how your results compare to other organisations

Different sectors have varying parameters around employee engagement – what may be considered “healthy” for one sector may be deemed “problematic” for another. Once you’ve calculated your percentage of engaged or disengaged employees, you can compare this to your sector’s global and national averages.

Is disengagement a problem for your business?

Managers can fix staff engagement problems by adopting strategies that improve job satisfaction. This could lead to 17% more productivity and 21% higher profits.

Find out how to engage your employees here.

ELMO Software (ASX:ELO) is a cloud-based solution that helps thousands of organisations across Australia, New Zealand and the United Kingdom to effectively manage their people, process and pay. ELMO solutions span the entire employee lifecycle from ‘hire to retire’. They can be used together or stand-alone, and are configurable according to an organisation’s unique processes and workflows. Automate and streamline your operations to reduce costs, increase efficiency and bolster productivity. For further information, contact us.

Learn more about how ELMO can help your organisation.
Learn more about how ELMO can help your organisation.