Measuring employee engagement is one of the most impactful things you can do for your business - companies with highly-engaged teams are 23% more profitable (1), after all! - and it starts with familiarising yourself with the essential employee engagement metrics.
From eNPS to turnover rates to employee satisfaction surveys, we're sharing 7 essential methods for measuring employee engagement, plus 2 problematic metrics to avoid.
Employee engagement metrics are a set of measurements used to assess the level of employee engagement within an organisation. These metrics can help leaders identify strengths and weaknesses in their employee engagement strategy, and develop effective programs to improve employee engagement.
Measuring employee engagement is important for one key reason: What gets measured gets improved. By regularly and consistently measuring employee engagement across your organisation, you can identify root causes of disengagement quickly, before the impact is widely felt.
We’ve written a full blog post about this, linking to key pieces of employee research.
Here’s the short version;
1. Highly engaged teams generate 18% more sales.
2. Highly engaged teams show 23% greater profitability.
3. Highly engaged teams show 43% lower turnover.
4. Highly engaged teams are 14% more productive.
5. Employees who feel their voice is heard are 4.6 times more likely to feel empowered to perform their best work.
6. Disengaged employees cost U.S. companies up to $550 billion a year.
7. Disengaged employees are costing their companies 34% of their annual salary.
8. A thriving company culture increases revenue by over 400%.
9. Companies with high employee engagement have a clear competitive advantage.
Measuring employee engagement is a little more complicated than calculating metrics like Customer Acquisition Cost or Monthly Recurring Revenue. We are, after all, measuring people’s connection to their work, which can’t easily be indicated by a number on a screen. That’s why it’s important to use a wide range of metrics to create a full picture of your employee engagement rates and employee experience at your company.
Our list below includes some essential tips on how to measure engagement but here’s the key piece of advice: for a comprehensive view of employee engagement, you need to track several metrics. eNPS alone is not enough.
We recently created a full list of Employee Engagement Benchmarks for 2023 by industry, role, tenure and more, designed to be used with an employee engagement survey. But do remember that there are many ways to measure engagement, and each method will have its own benchmarks. We talk more about these in our list below.
1. Employee Net Promoter Score (eNPS)
Based on a single question, employee net promotor score or eNPS is a metric used to demonstrate how people feel about working at your company.
Respondents are asked, “On a scale of 1-10, how likely are you to recommend (company name) as a good place to work?” but some companies add additional questions to help them understand the responses in greater detail.
eNPS is calculated by subtracting the percentage of detractors (employees who score between 0-6) from the percentage of promoters (employees who score between 9-10). An eNPS tool like Frankli helps you set up a recurring eNPS survey cycle in less than 60 seconds and automatically generate a report on the responses.
Benchmark: A good eNPS score is between +10 and +30. Above +50 is excellent and above +80 is exemplary.
Further Reading: Frankli’s Quick Guide to eNPS
2. Employee Turnover and Retention Rates
High turnover rates are usually a sign of low employee engagement and an indicator that leaders need to take measures to improve employee experience.
According to a study by Quantum Workplace, disengaged employees are 3.3 times more likely to leave the organisation within 90 days of completing an associated employee survey (2).
Employee turnover is calculated by finding the percentage of employees who left during a specific time period, while retention is calculated by finding the percentage of employees who stayed during a specific time period.
Benchmark: Benchmarks vary according to industry and location but a turnover rate of 10% or less is considered good, while a retention rate of 90% or more is considered good. It’s worth noting that a turnover rate of 0% isn’t necessarily ideal, as this can indicate that the company’s growth has stalled.
Further Reading: Frankli's Employee Turnover Cost Calculator
3. Employee Goal Performance
When we think about engagement and performance, we might be tempted to ask, “Does high engagement lead to high performance, or is it the other way around?” Actually, it’s more helpful to think of engagement and performance as two points on a continuous loop.
Highly engaged people tend to perform better, which makes them more willing to take part in performance management rituals that lead to higher engagement, like regular one-to-one meetings and feedback.
This tells us that we need to look at employee performance alongside more obvious employee engagement metrics like eNPS and retention rates. Every company will have their own methods for measuring performance - we love OKR goal-setting and continuous feedback.
Benchmark: With goal-setting, 100% completion rates are never the goal - they only indicate that our employee's goals weren't ambitious enough to begin with. For most teams, completion rates of over 70% are considered good.
Further Reading: Frankli's Guide to More Effective Goal Setting
4. Employee Satisfaction Rates
Multiple studies show that high employee satisfaction is a strong predictor of high engagement (3, 4), so it’s unlikely that one will exist without the other.
Two of the best ways to measure employee satisfaction are through a series of one-to-one meetings between employees and managers, and by running an employee survey. A survey tool like Frankli with built-in templates allows you to create an employee satisfaction survey in less than 60 seconds.
Benchmark: Employee satisfaction benchmarks vary by industry, location and more, but a good average score for a Likert Scale survey (including questions like “My job performance is evaluated fairly”) is 8 or higher.
Further Reading: Frankli's List of Employee Satisfaction Survey Questions
5. Employee Wellbeing Rates
It should come as no surprise that employees who report higher levels of wellbeing are more likely to be engaged (6), so this is an important metric to track for signs that your people might be experiencing stress or burnout.
As with employee satisfaction rates, employee wellbeing can be measured through one-to-one meetings, focus groups and/or employee surveys.
Benchmark: Employee wellbeing benchmarks vary by industry, location and more, but a good average score for a Likert Scale survey (including questions like “I believe my health and wellbeing is a priority for my manager”) is 8 or higher.
Further Reading: Frankli's Guide to Preventing Employee Burnout
6. Employee Development Program Adoption Rates
Research shows that employees with access to professional development opportunities are 15% more engaged (5), so how leaders approach development can usually tell you a lot about employee connection to the organisation.
There’s not an obvious employee engagement KPI that links to development, but high adoption rates for employee development initiatives like training, career pathways, or internal coaching and mentoring programs are a great indicator that your people are engaged with the company, and their work.
Benchmark: Adoption rates will vary according to the specific initiative but 50% - 70% of eligible employees is usually considered a good result.
Further Reading: Frankli's Guide to Creating an Employee Development Program
7. One-on-One Meeting Participation Rates
Research by Gallup tells us that one-on-one meetings between employees and managers can improve engagement by 270% (7), so not only is it worth investing in regular one-to-ones, but it’s worth tracking participation too.
Meeting participation can be difficult to measure - looking at meeting attendance alone won’t give us the full picture. Tools like Frankli deliver meaningful insights on employee one-to-ones, including enrolment rates, number of talking points created and number of action points actioned, as well as number of meetings completed.
Benchmark: Participation rates will vary depending on roles and relationships, but a good rate to aim for is 80% or higher. A really important metric to track is enrolment rate - 100% of your people should be participating in regular one-on-one meetings with their manager.
Further Reading: Frankli's One-on-One Meeting Agenda Templates
While it’s true that being away from work can be a sign of disengagement, absenteeism is rarely a good indicator of performance, productivity or employee satisfaction.
Focusing on hours logged at a desk distracts us from what’s really important - outcomes. In other words, if an employee is consistently performing well and reaching their objectives, does it really matter that they’re not spending a lot of time in the office or online?
Tracking absenteeism can be useful - for example, a sudden increase in days off might indicate that an employee is facing a new challenge in their personal life - but when it comes to engagement, it adds very little to the conversation.
2. Quantitative Output Metrics
While highly engaged teams are undoubtably more productive, quantitive output like number of products shipped or number of sales made tell us very little about the engagement levels of a team or individual employee.
To draw a connection between the two, we need to look instead at qualitative performance metrics like goal progress. Outcomes typically tell us more about our people’s engagement levels than inputs.
Read more about the benefits of measuring outcomes, not inputs.
1. Gallup, Employee Engagement vs. Employee Satisfaction and Organizational Culture. 2. Quantum Workplace, 2020 Employee Engagement Trends Report. 3. SHRM, Influencing Workplace Culture Through Employee Recognition and Other Efforts. 4. Journal of Applied Psychology, Psychological conditions of personal engagement and disengagement at work. 5. Better Buys, The Impact of Employee Development. 6. Journal of Leadership and Organizational Studies, Employee Engagement and Wellbeing. 7. Gallup, How Fast Feedback Fuels Performance.