ROI Of Employee Engagement: A Guide

Employee engagement is a crucial factor in achieving business success. However, you need to track the ROI of employee engagement.

When the level of engagement in your company is high, your organization will likely achieve more success. Your efforts in improving engagement in your organization may be futile if you are not focusing on measuring the return on investment in employee engagement.

Otherwise, it will be difficult for you to get a justification for the investment and concentrate your energy on the correct initiatives. When employee engagement increases, there is an increase in productivity, and drastically, the absenteeism of employees reduces.

Also, when productivity increases, there is an increase in profit, and the wastage of resources becomes minimal due to a decrease in absenteeism. So, Let’s find out how you can measure the ROI of employee engagement

Importance Of Employee Engagement

Human beings consist of inherent longing for relationships that are usually mutually beneficial and emotionally valuable. In workplaces where people find this type of interconnection, they get highly inspired, devote themselves, and contribute to the company’s well-being.

From the bottom of their heart, they also want to respond in kind by giving their utmost instead of just taking what they can achieve from the employer.

Organizations accumulate the benefits which have engaged with the employees are:

  • Decreased absenteeism
  • Boosted productivity
  • More customer satisfaction
  • Improved retention

Due to the reasons mentioned above, without any doubt, it is worth investing in an “employee engagement plan.” Your senior manager or leader of the organization may understand this in theory, but actually, they are data-focused and might ask for the ROI that their investment brings.

To quantify their value, you need to see beyond the employee engagement efforts in sentimental and emotional aspects. It is essential to communicate and measure the ROI of employee engagement.

Ways To Measure ROI Of Employee Engagement

Colleagues and managers working closely alongside individuals realize employee disengagement on a gut level. The absolute detachment and distance become apparent quickly. They are blatant on all levels of life at work: emotional, mental, and behavioral.

Personnel instinct is a precious global alert system that tells us that something is amiss in our environment, in the case of an employee. The managers or leaders of the organizations can’t truly rely on their guts as a pressure gauge for engagement, even though they can sense something is “wrong.”

Usually, in the end, despite our instincts eventually being correct, they don’t help us that much to go to a deeper understanding of the source of the problem or quantify its seriousness.

Employee Disengagement, early signs

Again and again, the executives pay attention to the employee once their absenteeism has become high and top talent turnover among their workforce. In short, when employee disengagement is signaling.

Then in the current situation, the disengagement has spread to all complex issues; it will need several resources and a tremendous amount of time to make everything acceptable.

To prevent this, it is the responsibility of the managers and the executives to have their support on the pulse of workforce satisfaction – so that the levels of engagement can be monitored systematically.

The main priority should be to recognize the subtle signs of disengagement and dissatisfaction before the situation becomes complete absenteeism or, worse, turnover.

Organizations can achieve their goal by measuring engagement regularly or conducting regular engagement audits across their organization.

Conducting an Employee Engagement audit

Suppose you are feeling ill, and go to the doctor for a checkup; you might not expect the doctor to treat you with medication from the beginning without any checkup. In most cases (hopefully), firstly, the doctor will perform a routine examination.

Before assigning or making any diagnosing treatment plan, they might ask questions and run tests to judge the current state of your health.

Uniformly, the procedures for distinguishing the following causes of low engagement must proceed in the same way; first of all, identifying most of your prominent symptoms and their seriousness, and last but not least, evaluating the current health of your organization.

Usually, companies or organizations reach an engagement audit by deploying the tasks to third-party organizations that pursue this type of organizational audit or by organizing such audits in-house.

But in reality, by keeping an on some main figures, you can quickly judge the engagement and health of your organization. The advantage of this is that bringing up these too many figures can only be done by observing your employees (organizational members).

Employee Engagement Metrics

Not engaging with your employees makes it feel emotional and intuitive; when an employee’s work ethic shifts, it is easy to recognize that.

But it’s hard to criticize the degree to which the disengagement harms your business before spending money and implementing an engagement plan. In such situations, you can use the following quantifiable metrics.

You can track these key metrics every month, allowing you to look into the pulse of engagement in your organization.

Metrics, such as “employee net promoter score” and “employee satisfaction score,” which are the first and last, need a poll or survey to be managed to employees.

The other remaining metrics do not require formal surveying or your employees’ time, so, in an organization, this is the most time and cost-effective way to scale the engagement rates.

  • Employee Net Promoter Score (ENPS)
  • Employee Productivity
  • Employee Absenteeism
  • Employee Turnover Rate
  • Customer Satisfaction Rate
  • Employee Satisfaction Score

Employee Net Promoter Score

As the name suggests, this metric depends upon the “Net Promoter Score,” you will measure your employees’ engagement and commitment instead of measuring customer loyalty, which is the only difference.

Likely, It’s a measure of how often your customers suggest your company to others. Due to this, this metric is considered a precise predictor and measure of loyalty of the employees.

Asking questions like “How often would you like to refer your colleague or a friend to work at our company?” employees will be asked to respond on a sliding scale of 1-10. Then, the employees can be classified into three categories: passives, promoters, and detractors.

You will get to know individuals or detractors who don’t refer to working for your organization. While this metric will not tell you why they feel so, it does an excellent job of estimating your employees’ thoughts about working for your organization.

Employee Productivity

In the conventional sense, productivity means accomplishing a particular goal in time, mainly meeting a quota. In certain lines of work, this thing is still the case.

However, as per the current productivity description, we should also appraise the value and amount of production in our modern work environment. The quality and quantity of the employee’s work must be considered.

Having said that, when both the quantity and quality of work start suffering, the main reason can be employee disengagement. For instance, if an employee fails to meet their daily or monthly quotas consistently, or they begin submitting work of poor quality with slight errors and no attention to detail.

However, if you have evaluated the allocations clearly and made sure that they are attainable, but you see the productivity is still suffering, likely the main culprit is likely disengagement.

As a relevant instance, Gallup conducted an extensive meta-analysis, which displayed the scores of businesses with the highest employee engagement scores, that shows it is 22% profitable and increases productivity by 21%.

So, it states that an employee’s engagement and productivity are closely linked. So, to keep your finger on the attention pulse, you must monitor productivity and goals continuously, as it is crucial.

Employee Absenteeism

When the employees don’t come to work, absenteeism occurs. This impacts the organization’s productivity negatively, and it’s a red flag in case of employee disengagement.

The company’s bottom line is strongly affected by the absenteeism of the employees. This metric is used to measure the employee’s percentage who were absent for a while. High levels of employee disengagement are indicated by higher percentages.

You need the below-given values to measure employee disengagement:

  • Number of employees (E)
  • Number of absences (A)
  • Total number of working hours (H)

(E x A / E x H) x 100 = % Absenteeism Rate

If you desire to lower employee absenteeism enduringly, more than band-aid solutions are likely enough.

To truly resolve the root cause of employee disengagement, you must address it with a deliberately implemented “Employee Engagement Programme” for absenteeism issues.

Employee Turnover Rate

Voluntary turnover occurs when employees resign from a company on their responsibility. You can know the general health of your company by measuring the turnover rates, which will give you an idea of it.

Researches show that organizations that have 59% fewer employee turnover rates those companies have scored in the top 20% in engagement. Engaged employees show up daily with presence, passion, energy, and purpose.

The three points that you need to calculate the monthly employee turnover rate:

  • Number of active employees at the start of a month (B)
  • Number of active employees at the end of a month (E)
  • Number of employees who left (resigned) in that month (L)

[L / (B + E / 2)] x 100 = % Retention Rate

Then by adding your beginning & ending workforce by two, you can calculate the average number of employees.

Finally, to get the final turnover percentage, you must divide the number of employees who resigned (L) by your average number of employees and then multiply it by 100.

In addition, when employees are not satisfied or impressed by the company’s offerings, usually the first symptom is high voluntary turnover. Or there are possibilities that they might be challenged or compensated unfairly, so they wish that the organization offers them a more challenging position and high salary.

Customer Satisfaction Rate

The foundation of customer satisfaction is happy employees. So, in a business, if you manage customer-facing employees, one admirable measure of employee engagement is that your customers are satisfied with their service.

Employees by whom the top customer service is delivered go beyond the minimum of what is expected intentionally. Their work is underpinned by ownership and passion. To deliver excellence, there is intrinsic and personal motivation.

You can measure customer satisfaction possibly in different ways. You can do it either quantitatively with casual customer satisfaction surveys or thorough feedback or conversation with the customer. Mainly, you will notice trends and patterns when you will try to gather perceptions from customers.

As an example, when the same employee gets complaints, negative feedback, or a poor CSAT score, at that time, you get to know who is the familiar denominator. And to correct the issues, energy and time should be spent.

Employee Satisfaction Score

To measure employee satisfaction, you should administer a survey containing questions about employee satisfaction. You may have heard of and might also be taken a survey of this kind in the past. The questions in the survey may ask, “on a rating of 1 to 10 that how much happy are you at working?”

Generally, the satisfaction surveys of employees are conducted in a “pulse” form, with only one question that is asked daily. So, monthly, at least, you will get an idea that on what position the workforce of your organization stands in according to their working terms.

Investing in Employee Engagement

Organizations and companies know about the importance of employee engagement. But according to the nature of the concept, in most organizations, improving the conditions of employee engagement sometimes takes a backseat.

Moreover, the executives focused on data may find it challenging to understand the importance of this subject, which is kind of “touchy-feely”.

Ultimately, a question comes out, “What could I get in return for my investment,” it may become difficult to answer it with precision. The executives may least prioritize the engagement initiatives.

It might not happen, as data and industry benchmarks have made it easier to measure the estimated ROI of the investment on employee engagement.

ROI Calculator Employee Engagement

It may sound intimidating the thought of calculating the engagement manually. A calculator is created to easily calculate the ROI of engagement that will do all the heavy tasks for you.

You have to plug in three figures: the average salary, the number of employees working in your company (organization), and the turnover rate of the employees, and the rest of the work will be done by the ROI calculator.

The calculator will give you the expected stats based on an increase in productivity and a reduction in turnover and absenteeism.


Like your personal relationships, creating a good and healthy connection between your employees will help build the organization and both parties. Undoubtedly the best approach you can take is to foster a culture of engagement.

Still, in some conditions, it will pay off when employees start to believe that they contribute to the company’s future and success.

HR should be able to accumulate the win-win of employee engagement. You can prove leadership with the help of measuring ROI on employee engagement which shows that employee engagement truly impacts the business with positivity.

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