Employee engagement level

Employee engagement level indicates how strongly people invest their attention, effort and commitment in their work and in the organisation’s purpose. It can help anticipate performance and retention, but it should be interpreted alongside working conditions and outcomes rather than as a stand-alone score.

When to use it

• Answer the key performance question: “To what extent are our employees committed to delivering to the vision and mission of the organisation?”
• Assess this KPI within the Employee perspective.
• Plan data collection, formula use, reporting frequency, and data-source requirements for this KPI.
• Compare results against the targets, benchmarks, examples, or trend guidance available for this KPI.

Origins

William Kahn established an influential academic foundation for employee engagement in his landmark study of personal engagement and disengagement at work. He described people as bringing more or less of their physical, cognitive and emotional selves into role performance according to the meaningfulness, safety and availability they experienced. Consulting firms later translated the construct into survey indices. Those instruments do not all define engagement in the same way, so results are comparable only when the questions, scoring method and population remain consistent.

What it is

Perspective: Employee perspective.

Key performance question: To what extent are our employees committed to delivering to the vision and mission of the organisation?

Engagement is related to, but distinct from, satisfaction. An employee may be satisfied with pay, benefits or a comfortable workload without being deeply committed to the organisation’s purpose. Conversely, a performance-oriented employee may be dissatisfied precisely because obstacles prevent good work. A useful survey therefore examines energy, commitment, advocacy and the conditions that enable contribution, while treating satisfaction as one part of the broader experience.

Survey scores should not be interpreted as a direct measure of an individual’s value. Engagement emerges from an interaction between the person, the role, leadership and the work environment. Its practical value lies in revealing where people can contribute fully and where systems or behaviour get in the way.

Historical provider studies illustrate why organisations monitor the construct. Gallup reported that 73% of North American employees were disengaged in its 2007 results and estimated an associated productivity cost of up to $350 billion per year. These estimates depend on the provider’s definitions and methods and should be read as contextual research, not as universal constants.

Towers Watson also analysed three years of employee data across 40 global companies. Its reported comparison over 36 months associated higher engagement with a 5.75% difference in operating margins and a 3.44% difference in net profit. A separate analysis associated above-average engagement with shareholder returns 9.3% higher than the S&P 500 Index from 2002 through 2006. Such results demonstrate association; they do not, by themselves, establish that engagement caused the financial difference.

How to use it