How to Calculate Employee Engagement

Adjoa Kittoe
Marketing Manager
May 30, 2022

Employee engagement is correlated with better business results. Several studies show that there is a direct impact of employee engagement on the company’s performance. Gallup suggests that there is a 20% boost in profitability and productivity for companies with high engagement [1]. So, what exactly is employee engagement and how do you measure it?

Why is employee engagement important?

Harvard Business Report states that only 30% of American workers [2], and 13% of global workers [3], are engaged in their jobs. Organizations with highly engaged employees have a 17% higher productivity and 21% profitability rates. Having engaged employees equates to having employees that work harder, stay longer, and are happier.

In short, engaged employees work harder and stay longer [4]. To engage your frontline workers, you need to understand what is engaging them. Measuring employee engagement can help provide some insight. As operators, you can learn what your company does well and what areas you can improve on.

Here are the key benefits of measuring employee engagement:

Identify strengths and problem areas

As you continue to measure engagement, you become at better tackling obstacles before they become issues. Engagement data shows what is going well and helps you identify employees that need help.

Align company goals and work culture

Data should not only be for managers. After collecting data, share it with the managers, frontline employees, and leaders. This will provide people the opportunity to contribute to better work culture.

Build trust and get feedback

When you leave room for feedback, your employees will know that you value their opinions. Receiving feedback shows that you are dedicated to providing the best experience.

See frontline business trends

The data will give you an overview of what's going on in your organization. You can also get more insight to see what's happening over time and compare it to industry benchmarks. See how and where your organization is or is not progressing.

How to measure employee engagement

Three important components to calculating employee engagement:

  • Attendance
  • Retention
  • Productivity

Calculating Employee Attendance

Attendance rates can be tracked through payroll or workforce management systems. Brad Cleveland’s work, Leading the Customer Experience, presents how to calculate attendance rates. Divide the number of hours worked by the number of hours scheduled [5].

For example, if a restaurant operator schedules an employee for 1,000 hours and the employee worked 900 hours, their attendance rate will be 90% (900/1,000). To calculate the value of increased attendance, multiply the difference in attendance rates by the scheduled hours and by the average pay rate. An example of this is as follows:

An employee has 10,000 scheduled hours, at an hourly rate of $25. The annual attendance rate increased from 90% to 95% (a five-point increase). This five-point increase has a value of $12,500 (5% x 10,000 x $25).

Calculating employee retention

Let's say you have 10 employees leave the company. To calculate employee retention, multiply the number of more positions retained by the staff replacement costs. If it cost $30,000 to replace an employee, the value of increased engagement is $300,000 (10 x $30,000).

Calculating employee productivity

It’s important to measure productivity to improve the customer experience. An engaged employee can lead to better customer engagement. If employees are spending 40 more hours each year with customers, multiply these more hours by the number of employees and their hourly rate. 40 hours x 100 employees at $25 measures out to $100,000 (40 x 100 x 25).

Brad Cleveland found that dissatisfied employees generally run into issues of:

  • Policies
  • Lack of authority to complete job
  • Conflicting goals
  • Technology that doesn’t work well
  • Process of communication barriers
  • Constant unanticipated change

Employees that run into many of these issues are more likely to have difficulty with increasing customer experiences. The more dissatisfied your employees are, the more likely good employees will leave your organization. Brad’s studies have shown that apathetic employees tend to stay, but do not provide great results.

Other ways to measure employee engagement

Annual engagement surveys

Distributed once a year, engagement surveys are a popular format for gauging employee engagement. These useful surveys provide a macro-data-driven understanding of your employee engagement. Annual engagement surveys can be used as a touchstone to be referenced to increase employee engagement.  Annual engagement surveys can take 20-30 minutes to complete [6].

Studies show that the annual employee engagement surveys are better than less frequent measuring [7]. Once conducting engagement surveys, operators should be ready to act on feedback. Make sure that managers have a plan in place and are prepared to act before beginning the survey process.

Before administering employee surveys, managers and operators should look at any previous results and determine why they are administrating the survey. SHRM suggests looking at the following questions when designing a survey:

  • Why are we conducting a survey?
  • What are we measuring, and why?
  • Who will create the questions?
  • Who will be asked to participate in the survey?
  • When will we conduct the survey?
  • Will all results be communicated, and how?
  • Who will be held accountable for implementing changes driven by survey results?
  • Are there questions from previous surveys that should not be included again?
  • Are there questions from previous surveys that need to be rewritten because they were vague or confusing?

It is recommended to design surveys based on a Likert scale, from 1-5. 1 meaning strongly disagree and 5 meaning strongly agree. These questions are closed questions with little room for confusion.  It is also advised to make demographic questions voluntary, to avoid revealing identity. Demographic questions are a great way to get insight into trends amongst groups.

Pulse surveys

Pulse surveys are smaller surveys that are distributed more frequently. They are used to get a real-time view of how employees are feeling. They tend to be distributed on a quarterly, monthly, and sometimes weekly basis. You can get a holistic view of your employee engagement, by regularly asking questions aimed at measuring engagement drivers.

Pulse surveys help you narrow down where to focus your efforts to have huge impacts on your frontline workforce engagement. Pulse surveys can track the engagement process through time. To gauge the progress your company has made, compare pulse survey results to annual employee survey results.

Employee Net Promoter Score (eNPS)

Employee Net Promoter Score (eNPS) is based on the Net Promoter Score (NPS).  eNPS assessments are completed through annual engagement surveys or pulse surveys. These scores assess employee loyalty by asking: ”How likely are you to recommend this company as a great place to work?” eNPS doesn’t explain why employees do or do not recommend your company, but it can provide an overview of how loyal your employees are.