Employee Engagement Metrics Guide to KPIs & How to Track Them
The Great Resignation. Quiet quitting. Quiet hiring. Employee retention. Labor shortages. These are just some of the topics that have been top-of-mind for many employers, HR, and People Ops teams since the pandemic completely rewired workplaces.
As in-office workers went fully remote, new remote workers found themselves struggling with productivity, distractions, work/life balance, and collaboration and communication despite the increase in screen time. As a result, employee engagement took a hit and burnout began to impact employee wellbeing and engagement.
After trending up for many years, a Gallup survey found that employee engagement dropped for the first time in a decade between 2020 (36%) and 2021 (34%). Engagement continued downward in 2022 with only 32% of full- or part-time employees identified as engaged at work. For women in the workplace, the decline was even more significant than that of male workers.
To combat this slump and get back to pre-pandemic engagement levels, an investment in measuring and improving employee engagement is a must.
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What does measuring employee engagement mean?
Employee evaluations help employers understand an employee’s individual abilities and limitations, which helps determine compensation, training, and suitability for advancement. In this case, the focus is on skills, which is important, but does paint a full picture of employee performance.
Employee engagement calculates how strongly employees feel connected to their work both mentally and emotionally. It also informs how well employees perform their roles, which is why it’s necessary to keep track of them. Measuring employee engagement improves morale, builds trust between teams, and brings attention to necessary improvements before they snowball into larger issues like turnover.
What are employee engagement metrics and KPIs?
Employee engagement metrics measure how involved, connected, or enthusiastic employees are with their work and at their workplace. Employee engagement KPIs help measure the performance of certain employee-related goals, objectives, or business activities.
Before jumping into why this data is important, let’s first define the difference between engagement and enablement — two terms that may be used interchangeably.
Employee engagement vs. employee enablement
Employee engagement covers whether an employee wants to work, whereas employee enablement covers whether employees can do the work. In other words, how well employees feel motivated at work and how well employees are equipped with the resources or tools they need to complete their work.
Typically, poor levels of employee enablement can lead to low levels of employee engagement. And if employee engagement is low, then employee enablement can suffer due to low workplace morale. In other words, if employees aren’t motivated or fulfilled by what they do, the work and workplace ultimately suffer.
Why are employee engagement metrics important?
Employees are a valuable resource, and they make decisions every day that affect their coworkers, their workplace, and their results. Countless studies have found that engaged employees not only produce more positive business outcomes across industries or company sizes, they do so in both good and bad economic times.
Understanding how employees feel or treat one another reveals how well companies can and perform, as well as what risks they’re currently facing or are susceptible to.
Employee engagement metrics are a great way to:
- Clarify expectations
- Connect employees to the company mission, purpose, or goal
- Identify opportunities to develop employees or match them to internal opportunities
- Identify improvements to business policies or practices
- Create a more inclusive workplace
- Support employees at a personal and professional level
- Increase morale and motivate employees
How to track and collect employee engagement metrics and KPIs
There are many ways to track and collect metrics and KPIs, but the most popular techniques and tools include surveys, emails, or interviews.
Surveys are a fast, concise, and convenient way to collect employee feedback. This pulse check is a chance to learn how employees are feeling (personally as individuals, as members of a team, and as employees), whether they’re interested in additional career opportunities, or whether they understand and are aligned with current business goals.
The key here is to phrase questions in a way that is clear, easy to understand, and quick to answer. To ensure that information is collected in a structured and standardized way, some companies may opt for survey software or business process management software to build customizable survey forms.
Emails are a great way to share company information with employees, whether it’s a newsletter or just a brief update on company changes or job opportunities. It’s also a great way to measure whether it’s an effective way to communicate with them by measuring click-through and open rates.
1:1 employee meetings
A 1:1 meeting is a great way to get to know employees personally. While it offers a chance for employees to speak candidly about their experiences, it can also feel intimidating — especially if the topic of conversation requires employees to be candid about their experiences with a leader or upper management.
Ease employee worries by letting them know up-front what the discussion points are and why they’ve been selected for a 1:1. This not only breaks the ice, it also gives employees the time to think through their responses and come to the meeting with thoughtful, informative, and helpful answers.
Exit and “stay” interviews
Just because an employee decides to leave the company doesn’t mean it’s the end of their employee engagement metrics. Scheduling an exit interview before their last day is a chance to collect information related to their leaving that can be used to better the workplace, policies, or business practices. For example, if an employee says they left because there aren’t any opportunities to grow within the company, then the solution would be to invest in employee development and mapping possible growth trajectories so that remaining employees don’t feel “stuck” or leave.
In addition to understanding why employees leave, it’s just as important to understand why they decide to stay. For example, an employee shares that they really appreciate how flexible and supportive the company is for parents. In today’s remote-first environment, this is a big selling point that can be promoted and used to stand out.
Identifying the positives and negatives and course-correcting employee journeys ultimately leads to higher employee satisfaction, engagement, and morale.
The most effective employee engagement metrics and KPIs to measure
Employee engagement is a measure of how enthusiastic and dedicated employees feel at work and toward their job. Engagement is typically linked to job satisfaction, workplace morale, and high performance, so this metric is one that should be watched and tracked.
There are three principles that inform employee engagement: physical, cognitive, and emotional. In other words: Does the employee feel safe at work, or properly equipped to successfully perform their role? Is their role contributing to their professional development? Is there work-life balance? Do they feel connected to the company’s mission, values, and goals?
To determine a company’s level of employee engagement, below are some key metrics and KPIs to keep in mind to build an employee engagement strategy that prioritizes well-being, company culture, training and development, and recognition.
Employee net promoter score (eNPS)
An employee net promoter score measures employee satisfaction and helps gauge employee loyalty. The eNPS system is modeled after the Net Promoter Score system which is designed to gauge customer loyalty, or the likelihood of customers being company “promoters.”
When applied to employees, this score can determine how likely employees are to promote or recommend the workplace to friends or colleagues. If the answer is highly likely, then this indicates that employees are happy or very happy with the company culture and their job.
How to measure eNPS
To measure employee satisfaction and loyalty, employers may ask employees how likely they would recommend this company as a place to work. The scoring system will typically follow a rating scale. For example, on a scale of 1 (being least likely) to 5 (being most likely). After rating their experience, employees may be offered the chance to elaborate on their rating with an open-ended response. This response can be leveraged and workplace improvements can be made to improve eNPS scores.
Exit interviews and feedback
Whether an employee is transitioning from one role or department to another or leaving the company, scheduling an exit interview during the employee offboarding process is an essential practice that should occur every time an employee decides to leave the company.
Exit interviews are a dedicated time for employees to share about their experiences during their time at the company. Due to the candid nature of this interview, employees may share positives as well as negatives. No matter the feedback, it’s important to listen and take what they say seriously. While this isn’t necessarily a metric, this valuable information can be transformed into applicable improvements that can benefit the entire business.
How to track exit interview feedback
These meetings will usually occur face-to-face, or screen-to-screen if employees are remote. Due to this nature, creating a survey to track and collect feedback is necessary so that there’s something to refer back to and pull insights from.
Ahead of the exit interview, consider building and sharing an exit questionnaire or survey with departing employees ahead of the official interview. Depending on how they answer, use the interview as a time to follow up, ask for clarification, or elaborate on the answers they shared.
This metric is a sensitive one. If managed inappropriately, employees may feel like their every move or day off is being tracked, which can be counterproductive to improving engagement.
Instead, use this metric as a way to support employees and prevent burnout. For example, if a high-performer is suddenly missing meetings, running late, or taking more time off than normal, this may be a sign to check in with them and ensure that they’re doing OK.
Employee engagement may also be affected by personal matters, so avoid using this metric as a chance to micromanage. However, that isn’t to say that employees with chronic absenteeism should be left unbothered.
How to measure attendance rate
The best way to measure and track attendance rate is with software that does it for you. Whether it’s a time-tracking software like Clockify, scheduling software like Connecteam, or an HR software suite like Bamboo, these solutions make it easier for employees to track their time and for managers to spot any disruptions or attendance issues.
Employee happiness index
The employee happiness index is a way to measure job satisfaction. If employees are happy, job satisfaction is high. If employees are not happy, then job satisfaction will usually be low. Measuring job satisfaction is important because it affects employee engagement and satisfaction. For example, when employees aren’t happy or satisfied with their work, then it’s likely their engagement (as well as productivity or performance) is unsatisfactory as well.
This metric is important because measuring employee happiness is necessary for combating employee turnover and also the latest workplace trend that’s leading to workplace disengagement: quiet quitting.
It’s also a leading indicator of business productivity and profitability.
How to measure employee happiness index
The most streamlined way to measure employee happiness is by creating a survey that employees can answer. Typically, a series of questions related to motivation, team happiness, business goals, fulfillment, and career growth, and employees will respond by ranking their satisfaction on a scale (1 to 3, 1 to 5, or 1 to 10).
For example, if you were to ask to rank from 1 to 5, that ranking system may mean:
- 1 = extremely unhappy
- 2 = unhappy
- 3 = neutral
- 4 = happy
- 5 = extremely happy
There are tools available today that can help calculate the employee happiness index, but there’s also a pen-and-paper formula that can be used:
The maximum possible score is calculated using the following formula:
For a company with 300 employees deploying a survey with five questions that are ranked on a scale of 1 to 5, the maximum possible score is 7,500. Assuming that the sum of employee scores is 6,000, the final happiness score is 80, which indicates a high level of employee happiness.
For reference, below are the score ranges that companies use to determine employee happiness:
- Very high (80-100)
- High (70-79)
- Acceptable (60-69)
- Low (50-59)
- Very low (0-49)
Employee turnover rate
Employee turnover is a metric that employers keep a close eye on. It represents the total number of employees that decide to leave the company over a period of time. There are various types of turnover, including:
- Voluntary, or employees that chose to leave the company. This can also include employees that are retiring. While the former is undesirable, the latter is a type of desirable turnover.
- Involuntary, such as employees that are laid off or terminated. This type is considered desirable primarily because companies can hire new employees to fill job openings or provide skills that former employees couldn’t.
The reason why this metric is important is because turnover costs companies time and money to hire employees — and even more to replace them. According to one estimate, replacing a single employee can cost up to two times an employee’s annual salary.
How to measure employee turnover rate
Turnover rate can be measured using the following formula:
Therefore, a company with an average of 150 employees lookingto determine annual turnover (let’s assume 15 employees left), YoY turnover rate would be 10%. For a more detailed explanation, SHRM explains how to measure turnover rate in six steps.
For an easier and more automated solution, an HR platform with built-in process reporting or dashboards is another option, especially for companies with a much larger workforce.
Best practices for collecting employee engagement metrics
When metrics and KPIs are tracked and measured effectively, companies are able to mine their employee data and draw key insights that can be applied to improve employee engagement. This includes creating or sponsoring company activities that better the workplace and, in turn, lead to positive business results. Here’s how to get started.
A benchmark is the standard point of reference for something being measured. For example, in the case of employee turnover, a good benchmark is 10% since 10% is an example of a healthy turnover rate. However, benchmarks vary based on industry averages so look at industry averages for a more accurate measure.
With benchmarks established, keeping track of metrics and determining whether they’re “good” or bad” or “on track” is made easier. The closer they are to the benchmark, the better.
Find out what works for employees
In order to measure employee engagement, employees need to provide their insights. But if employers request this in a manner that’s inefficient, confusing, or time-consuming, participation may suffer and so may the data being collected.
Start by engaging with managers to see what works for their teams and then connect with employees to see what areas of focus they’re interested in and what methods work best.
Whether it’s polling, anonymous collection boxes, or surveys, or a community whiteboard, tracking employee engagement begins by discovering what engages and inspires employees to participate.
Be precise with your area of focus and questions
Information overload can impact how employees respond. If you’re seeking to learn more about employees, then it’s important to be specific about what you’re asking and why you’re asking. Keep questions clear and focused on a single topic.
This also applies to the questions you ask. Avoid lengthy, confusing, or too many questions. Simplicity and precision render more accurate responses.
Stick to a single or cohesive grading scale
You can’t compare apples to oranges, and the same applies to collecting and measuring employee engagement metrics. By sticking to a cohesive grading scale, collecting, organizing, and analyzing the data is easier. It also makes it easier for employees to answer questions.
Track and centralize employee data with an HR platform
Keeping track of employee data and engagement metrics is necessary for measuring engagement. An HR platform that centralizes employee data and consolidates employee responses can help make this step possible.
Cultivate a culture of praise and gratitude
When employees feel recognized, they perform better. That’s because employee recognition inspires trust and improves productivity, which in turn drives engagement because they feel that their work is valuable and useful.
Thank them for taking the time to participate in surveys and let them know about the positive benefit their feedback has on the company.
How to implement employee engagement improvements
This glance into how employees are feeling helps improve employee recognition, increase employee retention, decrease turnover, and improve HR practices. Once metrics have been measured and reported, follow the steps below to improve employee engagement.
Step 1: Review employee feedback
Once you’ve collected responses, it’s time to review employee feedback. Depending on the topic, method, or number of questions asked, organizing responses may be a time-consuming and sensitive process.
It’s important to not take certain responses personally and review the feedback or responses with an open-minded and professional attitude. This ultimately fosters a feedback-positive workplace where employees feel like their opinions matter.
Step 2: Compare results to benchmarks
A best practice for measuring employee engagement is establishing and referring back to benchmarks. Benchmarks serve as a sort of compass that can help leaders determine whether they’re going in the right direction. The closer to the bench mark, the more effective their employee engagement strategy is.
However, if the results are much higher or lower, it’s worth investigating what the cause is. For example, if the turnover rate is higher, then companies should find out why employees are leaving and course-correct. But if it’s lower than anticipated, then it’s worth discovering why employees stay and how this can be leveraged as a company selling point.
Step 3: Identify trends and patterns
If there is something that is seen or mentioned repeatedly, then it’s a clear pattern of an improvement employees want or need.
For example, if you notice that higher pay or a more robust benefits package are the singular reasons employees give for leaving during their exit interviews, then expanding employee benefits or reassessing pay may be required to retain employees.
Step 4: Determine what needs to be changed or improved and how
After trends and patterns have been identified, define the scope of improvements. Perhaps a process isn’t working and it’s impacting job satisfaction or employees have expressed interest in a hybrid work model or employee development is an area that needs attention. Whatever the improvement may be, it needs to be clearly defined.
Step 5: Connect employee engagement improvements to business outcomes
Lead with the data to make the business (and human) case for the improvements.
It’s no secret that high levels of employee engagement is proven to have a real and positive impact on businesses. When employees feel like they have a personal stake in business goals and like their work has a direct impact on business outcomes, they feel more engaged, are more motivated, and more productive. All of these features combined make for higher profits, happier employees, and a successful and competitive workplace that attracts the attention of top talent.
As you decide which improvements you’ll make, make sure that they always tie back to the larger business outcome, mission, and values.
Step 6: Develop an action plan
Once the data has been collected and reviewed, it’s time to decide what to do with the insights you’ve gathered. You may find that no action is needed or that a total revamp of a policy is required. Either way, developing an action plan for the insights is necessary.
Below are key steps that should be completed as you develop yours:
- Establish the goal(s) of implementing improvements
- Define the scope of improvements
- Define improvement KPIs
- Identify the processes and workflows that will be impacted
- Set a timeline, deadlines, and milestones
- Allocate resources (people, tools, technology)
- Engage with stakeholders or participants
- Communicate plan and expectations with the company
- Implement improvements
Step 7: Communicate results and improvement plan to employees
It’s common for employees to want to know what the outcomes or findings were of the surveys they answered. After developing an action plan for improvements, it’s important to provide employees with the details of key findings, why improvements are being made, what the plans for improvement are, how this will be executed, and by when.
This transparency is key to making employees feel involved in the company’s decision-making, and like their opinions are valued and are significant to helping shape the workplace. This transparency leads to more engaged employees and higher job satisfaction.
In addition to looping employees in, it’s just as important to recognize their efforts so be sure to do that as you present results and communicate improvements.
Step 8: Implement feedback and improvements
Once the action plan has been communicated with employees so they understand why improvements are being made and how, it’s time to get to work. Whatever the improvement may be — whether it’s updating processes, deploying a new HR platform, or revising company policies or benefits — stick to the plan, meet deadlines, and celebrate every small win and contributor.
Step 9: Measure improvements and follow up with employees
Employee engagement is a continuous process that requires continuous follow-ups and attention. After improvements have been made, check in with employees and conduct a pulse survey to gauge the impact and whether it’s improved employee engagement. Consider checking in at the three-month mark and again at the six-month mark to adjust and update as needed.
Fuel employee engagement by building better employee experiences
Employee engagement levels are never guaranteed to remain the same. It can go up or down, and it requires attention and continuous support. Whether companies want to learn how what’s working or are interested in identifying improvements, HR and People Ops teams should avoid implementing any changes (or solutions) that may negatively impact employee engagement.
Pipefy improves employee experiences and, in turn, employee engagement. The low-code platform’s visual user interface makes it easy for non-technical teams to centralize and organize and connect business processes, communication, and employee information within a single platform. Customizable forms make it easy to survey employees and manage their responses, and real-time dashboards and reporting features turn data points into compelling employee stories.
But Pipefy isn’t just for the back office. Because job satisfaction plays such a large role in employee engagement, Pipefy’s automation capabilities free employees from the repetitive, time-consuming, and error-prone manual work that can torpedo employee engagement and job satisfaction.
Streamline employee requests, gain visibility into key engagement insights, and eliminate all the time-consuming and bureaucratic work. With Pipefy’s low-code process automation and management solution, streamline and automate processes for maximum engagement, productivity, efficiency, and loyalty across the entire business.