From MBOs in Personal goals in the early 60s, HR processes have evolved their accountability to independently function as a profit center. Robust processes that allowed calcultaling the return on HR investment became crucial to this evolution. Employee engagement processes also need to fit the ROI feasibility and soundness to be able to measure its outcomes. In this article, we discuss how to ensure an engagement strategy can be built to be robust and measure the effectiveness of employee engagement strategy. Such a results- based approach for engagement program accountability helps HR align themselves to business needs, enhance program design effectiveness and increase support for strategies.
Google is a stark example of how a successful company has effective engagement in place. They use an employee engagement program to retain their top talents and according to PayScale, 86% of employees at Google are satisfied with their job. Google analyzes their engagement processes and ensures that they produce results that have helped Google to achieve its business goals so far.
Why is “enough” not enough? Organizations are making multiple attempts in updating their engagement program, but it is still not quite hitting the mark. A report by Aberdeen, found out the organizations with a high level of engaged employees outperform companies with poor engagement by 202%. A solid engagement program is an investment, if you play your cards right,yields great results fast. However, this road to returns is not the one without obstacles.
If you have been running an engagement program, the business owners would be interested to know the ROI on such programs. Putting it the other way round, business owners would like their HR’s to prove the effectiveness of the engagement program and the way it contributes to the bottom line.
Advancements in technology have helped us to gather data which can provide us return on investment metrics for engaging, rewarding, recognizing and incenting employees.
Today, organizations face a lot of challenges like shortage of best talents, changing workforce are a few to name. Hence it’s imperative for organizations to get on their toes and strategize a plan to immediately enhance their engagement program. Here are five best practices to follow that amplify the effectiveness of engagement programs.
Begin with tracking your engagement program metrics. Initially, you may face challenges such as which performance indicators should be considered and monitored.
Program metrics generally address basic information such as usage, adoption, frequency, reach of the engagement program which can help HR analyze what is happening with the engagement program across the firm.
These programmetrcis measure the satisfaction and engagement of the employees and Business metrics uncovers the program results on key business indicators as in profits and productivity.The data at program grade is genuine, simple and easy to understand. It also provides valuable information which is required to propel engagement program implementation and usage amongst the employees as well as their team leads.
Once the engagement program is implemented it is about to grow, hence HR professionals must start to integrate more data points that gauge a company’s culture as well as business performance into their analytics.
He further adds on that by using these metrics the organization can go way far they wish in order to prove the impact, worth, value and influence of the engagement program on their organization.
Once you have the program, culture and business performance data then HR professionals of the organization can ascertain the ways that individual behaviors affect business result by starting the task of running correlations. Such information helps organizations to leverage their engagement program as a tool to enhance the performance and meet the desired goals of the organization.
According to Costello, by aligning engagement program with the company’s goals one gets a better understanding of the behavior that should be rewarded and recognized.
Companies can utilize engagement strategies to shape their workforce culture and thereby fortify positive behavior.
In order to avail ample data that would let you know about the return on investment on engagement program companies need to make sure that the engagement program that they implement in their firm is easy to use and frequently used. The engagement program should be open to all the employees including managers across the firm.
Technological advancements have made engagement platforms easily accessible through actual time dashboards, on-demand reporting, contextual analytics etc.
Such tools have helped the managers a lot as they keep the managers aligned and in constant touch with the performance of their teams. An easy access to engagement platform enables managers to develop appropriate strategies that not only enhance the staff’s performance but also the business performance too. A right engagement program offers a platform that shares, celebrates and instills the intranet with amazing success stories. It displays a record of an employee’s greatest achievements till date
Even if cash bonuses are tied to results, according to Willis Towers Watson research, only 20% of employers in North America say merit pay is effective at driving higher levels of individual performance.
It’s time to break the habit! Instead, focus on smaller rewards and incentives throughout the year. By instituting a year-round rewards program, you can drive productivity and engagement.
Ask your team members — Do you understand our company’s vision? Do you know your specific objectives and goals?
Even if they have an idea, it’s always smart to brush up on goals before starting or revamping your rewards program.
Start from the top, delineate your corporate mission, move on to specific department’s objectives. Finish with the team and individual goals. By outlining the company’s mission and how that trickles down to each individual employee, your staff will understand the impact of their work.
If your team feels aligned with your corporate vision, you’ll be ahead of the game as recent reports show that only 40% of millennials feel strongly connected to their company's mission.
If you use an automated rewards program, such as Xoxoday empuls, not only will you avoid the manual headache of managing incentives, you’ll gain valuable data on the performance of your rewards program. Analytics and dashboards will give you real-time results on how employees are interacting with the program, and measure effectiveness.
According to the ROI institute, a engagement program or any HR initiative for that matter has 5 levels of evaluation, during implementation.:
Level 1 | Reaction & Planned Action
Measures employee’s reaction to the program and captures planned actions. The data for this level can be collected using program adoption rates which is the number employees who have engaged with the program. Sources for this data could be:
Level 2 | Learning
Measures changes in knowledge and attitudes. The data for this level can be collected using:
Level 3 | Application
Measures changes in on-the-job behavior or actions. This level data can be collected using:
Captures changes in business impact measures. This level data can be collected using Performance Monitoring.
Level 5 | ROI
Compares program benefits to the costs. ROI Calculation is done with the following formula.
ROI = ( Net Project Benefits Project Costs / Project Costs ) *100
The above discussed different levels of evaluation is done at the various points in the Engagement Program Value chain as given below:
Companies acquire talent in the company via various sources such as consultants, hiring portals, employee referrals and even social media. Employee referrals are considered to be the most efficient medium of hiring as employees understand the company culture and the referred people are likely to fit in better. Typically, an organization sees 35 new faces in the company out of 100 every year. The usual spend for every successful referral ranges from INR 5,000 to INR 50,000. This is calculated as 5000*0.3X = 1500X (where X is the number of employees).
Employees with a track record of good performance attract both rewards and engagement from their leaders. Good performers are recognized on a spot, weekly, monthly, quarterly or annual basis. If the organization has implemented a rewards point system, these winners are awarded points which can be redeemed against rewards such as experiences, activities and vouchers. Typical average spends are INR 300 per employee per month and are calculated as 300X*12 months = 3600X.
In addition to the manager-to-employee engagement, good organizations encourage employees to appreciate, reward or gift their peers who have helped them on multiple occasions or performed well on a consistent basis. Such organizations often own a culture of genuine appreciation. Such small but important gestures help organizations in building employee engagement and increasing productivity.
Every employee has personal milestones such as Birthday, Marriage, Anniversary and Parenthood. They feel special when their moments of happiness are complemented by congratulatory messages and personalized gifts at work. Such rewards often comprise experiences, activities and vouchers that not only engage employees, but also give their family members reasons to cheer about. These rewards are usually calculated as 100X*12 months = 1200X.
New and existing employees are often involved in ice-breaking experiences and activities along with their teammates and other employees. These activities are tailor-made for employees to connect with their colleagues and get in depth knowledge about the business and the people. They get acquainted with key people in the organization, and get better aligned with the structure and the culture of the company. Spends on overall team awards and bonding activities are typically calculated as 200X*12 months = 2400X.
Good organizations extend wellness programs to their employees in a planned manner. They let their employees know that their contribution means a lot and that their wellness is valued. These spends could include the setup of a health app for employees as a part of the existing HRMS, or giving the employees incentives to join wellness or a fitness program at a gym or a fitness center. Spends on overall employee wellness are calculated as 100X*12 months = 1200X.
It’s not a small achievement when an employee completes 5 or 10 years with an organization. These years of work reflect an employee’s loyalty and commitment towards the company, and implies that he/she understands the company culture well and is an asset for the organization. Organizations thus recognize long service by rewarding and recognizing their employees via cash rewards, vouchers and/or experiences and activities. In general, 10% of the employees complete 3+ years in a company and so, appreciating them and recognizing them becomes crucial. Typical spend on LSA is INR 10,000 and is calculated as 10,000X*0.1 = 1000X.
Summing up the reward spends across the stages of an employee lifecycle, the total reward spend comes out to be $ 10,900X per year. The nature of these spends varies according to the stage at which the employee is, however the intent remains the same – to appreciate and motivate. Well thought out rewards make for a perfect way to communicate this appreciation and engage employees better throughout the lifecycle.
In addition to a few benefits discussed in Level 5, following are a few of the critical benefits of an employee engagement program:
Engagement programs only work after a period and trial and error. They’re not just copy and paste efforts, each organization needs to develop and establish their own. Each business is different and attempting to shoehorn in a templated program is clumsy and most likely going to be ineffective. So schemes need to be tried and tested and amended where necessary. It’s a refinement process. You keep what works and you ditch what doesn’t. Simple.
The continual improvement of your rewards and engagement program comes by measurement, it’s the only way. You have to track the success of every scheme you run. Otherwise, it’s efficacy is basically unknown.
Somewhat incredibly, less than a third of employers worldwide actually bother to measure the effectiveness of their employee rewards and engagement programs in terms of their impact. So how can they tell they’re working? Or whether their staff is engaged or not? The simple answer is this - they can’t.