In our previous blogs, we have emphasized the importance of employee engagement, and its impact on employee wellness, workplace culture, employee productivity, and business growth. With so much evidence underlining its necessity, employers are putting in many efforts to craft the right employee engagement strategies in the workplace.
A Gallup poll reported that US companies lose $450 – $550 billion of annual productivity due to disengaged employees.
Another Gallup study showed that only 15% of employees were engaged at the workplace.
A Forbes study said that with the right employee engagement strategies, organizations with high-turnover rates reported 25% fewer turnover numbers.
According to a Harvard Business Review survey showed that engaged employees increased workplace productivity by 22%.
While there are so many more studies telling how to boost employee engagement, its impact on workplace wellness, and the losses caused by disengaged employees – there is one question that most employers face –
Are your employee engagement strategies bringing in the desired ROI?
How Much Do Employers Spend On Workplace Engagement?
Studies show that almost $720 Million is spent annually in the US alone towards workplace engagement, and the number is expected to soon reach $1.5 billion. Most of these amounts are spent on corporate wellness programs, rewards and incentives, employee benefits, and other employee engagement strategies. Although these are effective employee engagement strategies, they on their own might not deliver the expected results.
It may seem like a lot of wellness dollars are being spent on workplace engagement strategies, and employers may have second thoughts about it until they figure out the ROI it brings.
In short, an effective workplace engagement strategy should be a balance of the employee benefits and incentives with the workplace culture and management systems.
Measuring ROI of Employee Engagement
There are tools and resources to evaluate employee productivity, performance, and the impact of corporate wellness programs – mostly which are categorized broadly into leading and lagging indicators. However, measuring employee engagement could be more difficult as it is not input-based. This is why it is important to find and measure the right key performance indicators (KPIs) of the implemented employee engagement efforts, along with the overall business strategy.
Here are the 3 key fields to measure employee engagement, correlated with business objectives.
Workplace culture is influenced by 4 major elements –
- Employee Behaviors
- Company Practices
- Business Outcomes
- Drivers of the Business Outcomes
Employee behaviors and company practices help in understanding the quality of work, competitiveness, business growth, and brand positioning. More importantly, personal behaviors lay a strong foundation for employee engagement. Employers can conduct pulse surveys to seek employee feedback and use a real-time data tracking system to give insight into employee interests and needs. Employees whose requirements and opinions are valued tend to be happier at their workplace, thus, boosting productivity and business growth. These business outcomes when linked with the employee engagement strategies can help in measuring the ROI. No wonder, a healthy and positive workplace culture is the essence of a flourishing business.
It works both ways here – while good employee engagement fosters employee retention, higher employee retention also supports higher engagement. Many companies invest a lot in their recruitment programs, and once the employee is hired, it all stops there. Employers need to continue investing in tools and resources to track employee productivity, performance, health and wellbeing, tenure, incentives, and employee benefits. Understanding the trends in the ‘Happiness Index’ of employees, compared with the tenure data may also help in evaluating the company’s engagement efforts, reflecting higher retention and lower employee turnover rates.
Word-of-mouth is probably the best marketing strategy ever. Spending on ads may grab attention, but decisions are made only based on inputs from reliable sources. And if someone wants to know information about a company, their best resources are its employees. Happy employees talk positively about the company, whereas unhappy employees may advocate it negatively. And so, employee engagement strategies must be crafted well keeping in mind the long-term effects – company advocacy, branding, recruitment, retention, loyalty, trust, and growth. With employee advocacy being a powerful recruitment and retention tool, it becomes easier to measure the workplace engagement impact through surveys, lead tracking, and recruitment operations.
Just drafting an employee engagement strategy is never enough for a company to flourish. Despite investing a lot of wellness dollars in their engagement efforts, many companies do not achieve their desired ROI or VOI.
This is why, in addition to improving the employee value proposition (EVP) factor of the company, every employer must focus and analyze the vital KPIs – workplace culture, employee retention, and employee advocacy. Also, implementing the right employee engagement tools to seek feedback and boost communication is vital. Tracking these parameters and measuring their outcomes can help have a better understanding of the employee engagement ROI, and allows easy re-calibration, if needed, to achieve the set business goals.