Creating KPIs for Employee Engagement to Demonstrate ROI

Unlike sales, advertisement or production, employee engagement cannot be measured easily with quantifiable data to demonstrate a return on investment. And this muddies the process of estimation and analysis to work out the engagement levels of staff, and what impact is had when engagement levels are poor vs. when engagement levels are high. This is where the introduction of KPIs is particularly valuable.

Our 2022 WorkBuzz survey shows that 60% of organisations have engagement KPIs (Key Performance Indicators) already in place. These are a blend of HR only measures (14%), business measures (20%), and those that measure success both in HR and the wider business (26%). Putting KPIs in place is critical to measuring the pulse of organisational sentiment. And it provides a reliable barometer for elements of culture.

What should my KPIs measure?

In terms of the metrics companies are using, they cover both overall levels of engagement and specific areas of the employee experience. Our 2022 survey shows that the most prevalent measures include overall engagement (74%), sickness and absence (50%), voluntary turnover (41%), and external customer satisfaction (41%).

Viewing engagement through an employee experience lens and measuring this through KPI’s, ensures that nothing is missed; that you are evaluating the core experiences that employees have day-to-day. The individual experiences of employees add up to how they feel about the organisation. This affects an employee’s performance, development, and likelihood of retention.

Plan your KPIs around the employee experience

Employees will encounter many events, emotions, and experiences across the entire time they work with you. The employee experience is the sum of all the interactions an employee has with the organisation from the processes leading up to recruitment, major milestones and personal events, the technology, communications, and work environment to final exit from the company – the employee lifecycle.

Planning engagement KPIs around the employee experience creates a robust framework to ensure that you have a comprehensive picture of engagement and culture across all stages of the employee lifecycle.

Our top tips on setting engagement KPIs

1. Ensure that you set up some KPIs to measure employee experience. Particularly if you are looking to justify your investment in this area over others.
2. No one KPI measurement will provide you with a complete picture of the employee experience. So instead, assemble a list of indicators and mesh them together.
3. Once you have your dashboard of KPIs for your employee experience, start tracking how well your employees are doing in real time and watch how trend lines move into the future. Then, look to improve these over time. This is where you’ll see if your interventions on culture, wellbeing, employee listening, hybrid working, and flexibility are working or not.
4. Measure how well you are doing regarding creating moments that matter for employees. This will make sure that fewer people decide to leave your organisation. And it will help persuade others to join you because you’re different.

This article contains a snippet from our 2022 report on The State of Employee Engagement. This report draws on insights from our 400+ clients at WorkBuzz and research conducted with 300+ people and business leaders. It outlines their top priorities, best practices, and different perspectives to help you navigate an ever-changing world of work. Download the full version of the report here. You can also view all our other eBooks available to download here.