Engagement in the workplace - How to measure your ROI

It seems that our joint efforts of promoting engagement in the workplace have not gone unnoticed. Along with HR professionals and industry influencers we’ve constantly underlined the importance and the necessity of having an employee engagement strategy.

The numbers prove we’re on the right track. With a percentage of 68% of engaged employees in 2013, according to Quantum Workplace’s 2014 Employee Engagement Trends Report, more and more companies are invested in valuing their employees.

However, when it comes to determining their ROI, they seem to realize that their brilliant strategy lacks one essential component: measurable KPIs.

How much do companies spend on engagement?

According to Bersin & Associates, $720 Million a year in the US. It’s estimated that the cost will grow to about $1.5 billion. (Source: TNLT)

Much of this cost is attributed to reward programs, benefits and incentives that, on their own, can’t deliver the results expected. The Incentive Marketing Association reports that $46 Billion is spent on recognition programs every year. (Source: Forbes)

It seems like a lot of money, especially if you haven’t figured out how to measure the ROI on employee engagement. The truth is an engagement strategy has to balance compensation and benefits with company culture and management practices. Rewards alone will most likely prove to be a waste of money.

In our latest article, we’ve talked about how you can create your own HRMS system to track and manage employee engagement. By following the right KPIs and linking your employee engagement efforts with your overall business strategy, the ROI will undoubtedly confirm that you’re on the right track.

Measuring the ROI of Employee Engagement

We’ll go through 3 key areas where employee engagement can be easily measured and correlated with your company’s objectives.

1. Retention

A common tendency for companies is to invest large amounts of money into their recruitment efforts and stop there. After the employee has found his/her desk it’s game over.

What they should be doing is tracking their investment further on, by correlating it with the employee’s performance, tenure, involvement and compensation.

To measure your engagement efforts against your retention rate, compare your tenure data with the evolution in your Happiness Index over time, to understand its effects in engaging employees.

It works both ways: engagement fosters retention and retention supports a higher engagement. In the last three years, companies with improved retention had significantly more engaged employees, 70.5% to be exact, compared to organizations where retention declined to 57.6%. (Source: Quantum Workplace)

2. Culture

The four main components of a company culture are individual behaviors, organizational behaviors, the business outcomes they produce and the drivers behind them.

Individual behaviors are the basis of engagement in the workplace. Get the pulse of your team by using a real-time data tracking system that provides a deep insight into how employees feel every day, based on their work performance, or on their interactions with management and colleagues.

Constantly ask for employee feedback and find out what defines your company culture is: is it a consensus-based one or, on the contrary, a control and command-based one?

Looking at both individual behaviors as well as organizational behaviors, you’ll be able to assess the outcomes that your culture breeds: growth, profitability, brand positioning, quality and competitiveness.

Alex Edmans, PhD (MIT) and Professor of Finance at the London Business School published a study that assessed stock performance for the Fortune “100 Best Companies to Work For in America”, over a period of 27 years. The results show a 3.8% increase in stock price for companies with happy, satisfied employees. Companies who registered profit growth had a 70.3% employee engagement score.

By linking these business outcomes back to your employee engagement strategy, you’ll be able to accurately measure your ROI.

3. Employee advocacy

If anyone is interested in your organization, their most reliable information source are your employees. They might not trust the newest ad you spent a lot of money on, your carefully crafted online presence or your recently published thought leadership piece.

They will go to the people who actually work there and who know the pulse of the company. The real company. This is another critical point where you can measure your employee engagement efforts: brand advocacy, recruitment performance and brand trust.

For us, employee advocacy is a key recruitment strategy. We can easily measure the direct impact that our Happiness Index has on our recruitment campaigns, through lead tracking and brand surveys.


Having an employee engagement strategy is not enough. Many companies are still aimlessly investing in unplanned employee engagement efforts that seem to provide zero ROI.

Create an employee engagement strategy that focuses on essential KPIs: retention rate, company culture and brand advocacy. Track and measure your activity and re-calibrate based on the ROI you get.

We’re always happy to talk more about this or get some fresh insights based on your personal experience so don’t hesitate to connect with us, here, on the website, or on our Social media channels!

Download the white paper and see how you can create an integrated, engaging employee experience using people analytics!

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