What Is Employee Engagement?

October 15, 2019

Contributor: Jackie Wiles

Employee engagement is a hot topic, but how do you measure it? And what place does it occupy in broader voice-of-the-employee initiatives.

Did you arrive at this article through a Google internet search for the term “employee engagement?” That wouldn’t be surprising, as the number of such searches has increased by a factor of 1,000 in the past 15 years, indicating the growing popularity and acceptance of the term.

“ All survey-based models for measuring engagement try to measure five basic engagement categories”

By 2020, 20% of organizations will include employee engagement improvement as a shared performance objective for HR and IT groups. “But before you can incorporate employee engagement into performance management,” says Gartner Vice President Analyst Helen Poitevin, “you need to be clear what engagement is, how it is measured and what place it occupies in broader voice-of-the-employee initiatives.”

How engagement ties to performance

Repeated studies over the past 10 years have shown that the business performance of organizations in the highest quartile of employee engagement scores outpaces that of competitors. High employee engagement correlates with higher average revenue growth, net profit margin, customer satisfaction and earnings per share. 

Specific definitions of employee engagement may vary, but common to all are gauges of individuals' alignment with the organization and their willingness to invest discretionary effort (go above and beyond the call of duty) to achieve organizational objectives. As such, employee engagement is especially critical for digital business — an environment marked by complexity and frequent change

Globally, employee engagement is low, and has been for at least the past two decades, although the 2Q19 Gartner Global Talent Monitor found engagement edging up among U.S. employees, who were putting more time and effort into their current positions amid declining confidence in economic conditions. 

What to measure

The challenge in measuring employee engagement is the same as with any measurement related to complex human behaviors and perceptions. It must take into consideration a multitude of factors, all of which contribute to an overall understanding of individual engagement levels, which are then reflected in team and organizational views. 

Survey-based models for measuring engagement range in specificity from three to more than 15 factors, but they all try to measure five basic engagement categories:

  1. Current job understanding. The extent to which employees believe they know what is required to perform well in their current position; that they have received the right training, coaching, tools and resources to be successful; and that their work matters.
  2. Relationship with direct supervisor. The extent to which employees believe they have a good relationship with their manager; and that their manager understands their job and the issues they are facing, removes obstacles that may inhibit competent performance, and is looking out for their future growth and development.
  3. Perception of senior leadership. The extent to which employees believe that the senior leaders of the organization are capable and are moving the organization toward a better future (such as market dominance, achievement of financial targets or accomplishment of the organization's mission).
  4. Opportunities for career growth and development. The extent to which employees believe that their stay with the organization can be more than just a short-term "job," that they have the chance to develop their skills and have a longer-term career.
  5. Work conditions. The extent to which fundamental elements of the job or organization affect engagement, such as inadequate compensation or benefits, lack of enabling technologies, and workplace or organizational structural issues that inhibit efficient operations. Note that because these elements are not considered to be intrinsic motivational factors, they often don’t drive engagement positively when they are done well, but they can seriously detract from overall engagement when done poorly.

Measuring and analyzing engagement

Annual or biannual surveys continue to be the most common method of measuring employee engagement, but in a world of increasingly real-time analytics, many in HR now believe they need more frequent insights into engagement. 

Some leading organizations have taken a page from voice-of-the customer initiatives, applying these concepts and services (such as social network analysis, sentiment analysis, and social recognition and feedback channels) to gather additional insight around employee opinions, behaviors and attitudes — to create a “voice of the employee (VoE).”

Regardless of the method or technology through which data is collected, many organizations take the results and divide the employee population into different segments — such as “fully engaged,” “somewhat engaged,” “unengaged” and “actively disengaged.” Further segmentation of the results — by e.g., region, location, job level or supervisor — offers important insight on segments with particularly high or low engagement scores and helps to identify the underlying drivers of engagement (or disengagement) within those segments.

Many HR organizations also try to correlate engagement scores with other HR metrics such as attrition, performance ratings and internal mobility to better determine the business value of measuring engagement and to be more proactive in containing problems.

Leverage engagement measures in business decisions

As employee engagement measurement becomes part of a broader VoE initiative, it should also become a component of a broader strategy for measuring business performance. When this data is tracked regularly and made available to managers, business leaders can start to understand the correlations between employee engagement scores and other business metrics. 

For example, customer service organizations can examine over time how call volumes, customer satisfaction scores and employee engagement evolve separately and in tandem with each other. They can identify which factors of engagement, when increased, have the most significant impact on customer satisfaction. 

Similarly, in a retail environment, monitoring front-line sales employee engagement along with foot traffic, sales and in-store promotions can help organizations devise the right employee incentives to ensure high store profitability. The key is to examine the most critical drivers of employee engagement within a given business context and to link them to the specific operational results that a business unit is targeting.

Turn engagement measures into behaviors

To properly embed employee engagement measurement in regular business and HR practices, however, it will also be important to implement communications and support to ensure that managers and employees adopt the desired behaviors.

For example, the measurement and communication strategy should ensure that managers don't pressure employees into giving better ratings so that they themselves appear to be performing better than they actually are. Similarly, employees should be encouraged to give relevant feedback and not hide negative sentiment just because it isn’t welcomed.

Employees should understand which of their activities are being monitored and be made to feel safe in expressing their individual perspectives about how they feel within their work environment. They should feel that they will be rewarded for giving honest feedback. 

As organizations explore different data sources and further approaches to monitor employee engagement, they will also need to consider what ethical standards to put in place to support employee and manager adoption of desired behaviors.

This article has been updated from the original, published on November 28, 2018, to reflect new events, conditions or research.

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