Why do we care about employee engagement?

How do measure it?

What can we do about it?

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Well, low engagement leads to decreased productivity and increased turnover (people leaving a company), which impacts a business's bottom line.

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Turnover costs are linearly related to turnover rate. So, if your turnover rate is double this, you can roughly estimate your turnover cost is double this.

Turnover costs are small in comparison to productivity costs.

The explicit turnover costs aren’t the biggest people cost to optimise though, productivity is. Poor producivity could be costing your company $4m a year. The challenge with this is it’s intangible, unlike the turnover cost. Studies show that:

What is employee engagement?

We define employee engagement as the art and science of how connected, excited and positive team members feel within their role.

Engagement is a spectrum and not binary.

It is an outcome of connection driven across three levels:

• Individual (personal connection to one’s work)
• Role (connection to your team and leader(s)/manager(s))
• Organisation (connection through alignment to values, mission and culture).

What do engaged employees look like?

• They are excited by what they do.
• They are energised to tackle problems and achieve goals.
• They feel both challenged by their work and safe to make mistakes.

How do we measure engagement?

There are several ways to measure employee engagement. As we define above, it is not binary.

Surveys

You can collect data on how your employees are feeling. This can give valuable insights into measuring and benchmarking engagement.

There are a range of approaches available each with pros and cons.

Semi-annual or annual surveys

• Pros: they provide a holistic snapshot of the state of your organisation and expose themes across teams and departments.
• Cons: They’re not very frequent, they’re a snapshot at a point in time. It is difficult to take targeted action.

Quarterly or monthly pulse checks

• Pros: they provide a more frequent and updated view of your organisation and how it’s changing through time.
• Cons: Survey fatigue, which leads to low adoption and low-quality or inconsistent data

Daily collection (Ploomo)

• Pros: small (single question) collection that allows more total data points and consistent view through time of how your organisation is changing. Low survey fatigue due to the psychology of small habit stacking.
• Cons: A complex approach to implement given the system and technological requirements to facilitate the data collection and analysis.

What are the key retention metrics

Turnover rate: The % of turnover annually of your organisation.

• The total turnover number doesn’t paint the whole picture but provides some guidance.
• Lower turnover indicates better engagement, however, it doesn’t tell the whole story.
• Some classifications that help understand turnover caused by low/high engagement;
• % that is expected leavers vs unexpected leavers. An expected leaver can be either via a termination or resignation but it is not surprising and understood by leadership. An unexpected leaver comes out of the blue and puts you on a back foot.
• tenure categories of turnover (<6 months, 6 months to 1 year, etc.). Where is the turnover taking place? Is it with new joiners or spread evenly amongst your organisation?

Tenure: The average tenure of employees.

• The Australian national average tenure for employees is 3.3 years.
• Overall tenure gives some guidance relating to engagement. Longer tenure indicates better engagement, however, it doesn’t tell the whole story.
• A dichotomy in tenure within the organisation can indicate higher engagement. This means a higher percentage of employees with tenure of less than a year, and then a higher percentage at the back end (depending on the age of the organisation). This indicates that when people connect with the organisation they stay.
• This should be combined with engagement survey data. The flip side is you could have low engagement and the reason people leave early is because they want more.

What can we do about it?

When it comes to building great companies and engaged teams, researchers consistently agree that three psychological needs are essential: \

1. Connectedness

2. Autonomy

3. Competence

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“While working from home has been a boon for autonomy, empowering many to decide when and where they work, a lack of physical proximity to colleagues has made it exponentially more challenging to create close personal bonds.” - Harvard Business Review

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The number 1 behaviour high-performing teams did in comparison to everyone else from a study of 1000+ based office workers was:

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“They tend to communicate more frequently in general, and are significantly more likely to communicate with colleagues.” - Harvard Business Review

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It is not initiatives like free lunches, casual clothes days, a fridge stocked with beer, or agreeing to employee demands that increase engagement.

Be connected with your team and communicate openly and frequently.

Have the difficult conversation. Don’t let little things fester.

Understand different communication and thinking styles so you can relate to each other.

Practical steps to increase engagement.

1. Be connected with your team and communicate openly and frequently.

2. Have the difficult conversation. Don’t let little things fester.

3. Understand different communication and thinking styles so you can relate to each other.

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References

• https://www.ahri.com.au/wp-content/uploads/turnover-and-retention-report_final.pdf
• https://www.aib.edu.au/blog/career-development/changing-jobs-how-often-is-too-often/
• https://www.abs.gov.au/statistics/labour/jobs/job-mobility/latest-release
• https://hbr.org/2021/10/5-things-high-performing-teams-do-differently
• https://hbr.org/2017/08/high-performing-teams-need-psychological-safety-heres-how-to-create-it

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