Return on Engagement (RoE): viewpoint

January 8th, 2010

Measuring engagement is no longer enough. Internal communications and HR professionals need to be proving the value of their activities by measuring RoE: return on engagement.

Many companies have engagement measures. They assess how effective their communications are. Or they measure levels of employee engagement and what drives it. However, relatively few (we estimate only around 15%) are linking levels of engagement to harder business outcomes such as:

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Talent retention
Customer satisfaction
Profitability

IC and HR need to stop measuring employee engagement in a vacuum. Measuring and managing engagement is not an end in itself.

Discovering how to raise engagement needs to be attached to a purpose such as:

Improving brand promise delivery
Enhancing the customer experience
Delivering on a growth strategy

So how can RoE be proven? Engage Group believes there are a few simple steps:

1. Measure the right things:

Many organisations are not measuring the engagement factors which will drive the hard organisational outcomes that matter
For example, the factors which drive engagement with you as an employer (line management, reward etc.) are often not the same factors that drive harder outcomes such as retention of your best people, heightened customer loyalty or unit-level profitability: the drivers here often issues such as leadership, communications and recognition.
Equally, organisations need to stop trying to “boil the ocean” when they measure engagement. They need to ask “engagement with what?” Smarter companies are now measuring more specific issues such as: engagement with customer service delivery; engagement with our brand values, engagement with our strive for growth.
To achieve this, organisations need to focus more strategically on what they are trying to measure: are you measuring what makes employees “happy” or “satisfied”? OR are you trying t measure what will drive their productivity, delivery and performance.

2. Conduct smart analytics:

We believe there are too many bar-charts in the world. Too much employee engagement research is fed back using endless reams of descriptive data. While these “scores on the doors” are helpful in telling you where you are now (“how engaged are our people”?), they do not tell you how to improve engagement levels for the future (“what drives engagement here”?)
Organisations need to use smarter analytical techniques to get a more strategic view from their engagement research. Examples include:

a. Strategic priority analysis: what are the big areas of engagement we need to focus on to improve talent retention, customer satisfaction or profitability?

b. Key driver analysis: at a more tactical level, what behaviours do we need to get line managers focused on to optimise engagement levels?

c. Segmentation analysis: do different segments of our workforce require different engagement stimuli to optimise their performance? (For example, call centre worker productivity and the retention of high potential graduate trainees are likely to be driven by a different set of engagement factors)

However, many IC and HR functions do not have the internal capabilities around numeracy, statistical modelling and analytics to be able to deliver such insights: this is where external expertise can be of help.

3. Link your data:

Finally, you need to start linking your engagement survey data to harder business metrics
At present, IC often own the engagement survey data; HR own the metrics around labour churn, sickness and absence and productivity; Marketing own the data around customer satisfaction; and the Finance function hold the data around corporate performance. However, what frustrates CEOs is that they can rarely get all of this data knitted together.
Organisations need to go through three basic steps to help the CEO get a “helicopter” view of which people drivers are driving performance and profitability:

a. Build an integrated dataset: tefuse the engagement, HR, Marketing and Finance metrics into one, single place for analysis (the units of analysis will be stores, branches, geographies, business areas, divisions etc.)

b. Conduct integrated analysis of the data: use smart analytics to assess which engagement drivers most impact on the key outcomes (talent retention, customer satisfaction, profitability)

c. Share the results and learn from them: use the analytics to help senior leaders and managers within the business learn about which “people levers” to pull to optimise performance within the organisation

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