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Build the Bottom Line by Measuring and Improving Employee Engagement

Monday, October 5, 2015   (0 Comments)
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Build the Bottom Line by Measuring and Improving Employee Engagement

Submitted by: Nancy Alhrichs

Employee engagement is the key to bottom-line performance. When employees are engaged, they’re willing to go the “extra mile” in their jobs. They learn continually, accept promotions, refer qualified job seekers to the organization, and commit to staying and growing with the organization, at least for a couple of years. Engaged employees have a significant impact on the company’s performance.

It’s not enough to accept this as truth, however - you also need to back it up with numbers. Metrics-driven executives become increasingly supportive of engagement efforts when they see results, so you have to show them the data. It’s fairly straightforward to figure out the organization’s financial performance, but how do you measure engagement and make the connection?

First, realize that it takes time - usually three to five years. You have to invest in establishing baseline engagement metrics showing where your organization is today and compare it to data you collect year after year going forward. With this in mind, here are some of the metrics you can look at to determine employee engagement.

  • Voluntary turnover: Analyze turnover and exit interview data by department and manager, race, gender, generation, length of tenure, and other demographics to be able to address specific issues with specific populations. Who is leaving and why? Share data with all levels in management. Departments and managers with high turnover need assistance in recruiting (how to hire the right people who will fit) and with their management skills.
  • Training participation: Track the number of training hours per year for the organization overall, as well as for different levels of employees. Analyze training participation by department and manager, race, gender, generation, length of tenure, and so on—and cross-reference it with turnover data. Low participation in any department or function often results in higher voluntary and involuntary turnover. Manager development is strongly correlated with higher staff and manager retention and higher employee performance.
  • Revenue per employee: As a baseline, determine today’s revenue per employee (total annual revenue divided by the number of employees at the end of the year). Calculate this for the past two years and then monitor it year to year after you implement engagement strategies.
    Number of internal applicants per job opening: If internal candidates are not applying, that’s a sign that engagement is low. You may need to offer internal courses in resume and interview preparation, internal networking, and other topics. Demonstrating care for your employees’ careers increases engagement.
  • Number of employee referrals for job openings: With or without a referral reward, engaged employees will refer qualified applicants. Track where and how all applicants learned of each opening.
  • Number of awards as a Great Place to Work, Top Employer, Great Place for Mothers, Best Places in IT, and so on: Many of these awards are based on employee surveys. If you apply for an award and don’t win, use the survey data/report you receive to analyze the situation and to refine engagement efforts in the future. When you do win, continue to use the data to improve strategies. Either way, thank your employees for taking the time give feedback.

Senior management may need education around the value of employee engagement to understand that lower engagement means higher turnover, a negative employment brand, more quality issues, a negative product or service brand, and a lower bottom line. Share articles featuring Gallup research. Start an executive book club with discussions of books such as First Break All the Rules or What Got You Here Won’t Get You There. Apply for an award as a Best Place to Work or Top Employer. And remember what the famous management consultant Peter Drucker once said: “What’s measured improves.” In the end, your bottom line will thank you.

Nancy S. Ahlrichs is a business development consultant at FlashPoint, where she interacts with human resource professionals, executives, and business owners in order to understand their organizational needs. She collaborates with our other team members to develop appropriate consulting solutions and supports prospects throughout the sales process.