Mastering what you measure: a new approach to Employee Engagement KPIs

As a relatively new corporate discipline, Employee Engagement is still finding its feet alongside such established disciplines as safety, productivity, sales, etc. — all of which can be measured by easily verifiable data.

A CEO of a regional utility I once worked for was known for his maxim, “You can’t master what you can’t measure.” His organization was deeply driven by Key Performance Indicators (KPIs) such as the number of outages, time per outage event, grid load, etc. Company values were even used as KPIs on performance evaluations. The company’s operations and employee engagement both reflected this adherence to KPIs.

Because Employee Engagement happens in the hearts and minds of employees, it may occur as difficult to assign KPIs to track it. However, a deeper look reveals some useful KPIs, and they come in two varieties — lagging and leading KPIs.

Lagging KPIs are commonly used to identify trends that need to be reversed. Safety professionals might look at OSHA recordable rates or break down the frequency of injuries to find out what people are doing wrong. Service providers might use surveys to see if they’ve been satisfying their customers.

For measuring employee engagement, lagging KPIs show data indicating whether employees are engaged or disengaged. Here are some lagging KPIs that are becoming widely adopted for measuring Employee Engagement:

• Results from Employee Engagement Survey
• Absenteeism
• Turnover
• Customer product or service complaints
• Net promoter score (employee detractors/employee promoters measured quarterly per survey mechanism)

Unless the numbers look really good, these KPIs show where a company might be coming up short. They’re good for identifying trends that need to be reversed. They tend to measure failure against success. But as anyone who has ever dreaded a traditional performance evaluation will tell you, no one really likes to be measured in a way that emphasizes failings over successes. Fortunately, there is a better way.

That’s where leading indicators come in. Leading indicators reflect a proactive (rather than reactive) mindset. Safety professionals, for example, might measure leading indicators like how many employees take safety classes, submit safety suggestions, or report near misses. These are KPIs that reflect how employees are creating safety, rather than causing hazards.

Here are some leading indicators that could likewise measure Employee Engagement:

• Process improvement suggestions
• Innovation/new products
• Productivity
• Employee participation in wellness programs, company website or engagement app, diversity resource groups, company training programs, etc.

No doubt a Gallup Q12-type engagement survey provides critical data that shows what life is like for your employees, and it's a very worthwhile set of KPIs to follow. But these KPIs don't tell the whole story. A company that wants to lead the way in Employee Engagement would do well to focus on the ways employees express their engagement, rather than their disengagement, with their work. Of course, the company’s operations and programs need to afford employees the opportunities they find useful for them to participate.

Engaged employees:

• Want to innovate (so make it easy for employees at all levels of the company to submit ideas, and provide accountability for screening and crediting the ideas, and measure the results)
• Want to make money for the company (so give them what they need to be productive, and measure productivity)
• Want to satisfy their customers (so make it easy for customers to call out star performers, and measure the things they do to go above and beyond)
• Want to better themselves (provide useful, relevant ways for employees to improve skills, career, and physical/emotional/spiritual health, and measure their participation)

“Employees are our greatest asset,” said every single company in the history of capitalism. The companies that rise above their competition are those who INVEST effectively in their assets. This means effective employee development programs, clearly defined job responsibilities, a modern internal communication infrastructure, competitive compensation, and above all, a deeply engaged servant leadership corps whose purpose is to create more leaders. (Can you find a way to measure what employees are doing to prepare themselves for leadership roles in the company?)

What evidence is there that measuring leading KPIs will work for employee engagement?

I’ll return to safety as an example.

At a large industrial company I worked at, safety professionals were struggling with the best way to run a safety performance recognition program and were deciding between lagging and leading indicators.

In the end, the whole discussion about how to recognize and reward safety was tabled, because, as it turned out, the general manager whose facility was the safest by a large margin was not interested in tying recognition to lagging indicators, and even questioned the wisdom of any safety recognition program. If we are living our company values, he reasoned, we will have better safety, better engagement, and better profits.

His facility, by far the most engaged in the company, had pioneered the use of a smartphone app to record near misses. The data had two purposes: 1) follow up and take action on every single reported safety issue, and 2) measure the way employees were participating in their own safety. Every unsecured load, incorrectly stored ladder or sloppy work area was logged and addressed ASAP.

Attending to the KPI of injuries that aren’t happening (because they’re prevented) rather than injuries that have happened not only made his facility and employees the safest in the company but also led the company to adopt the phone app across all nine sites where the company operated. And as of this writing, the entire company’s safety rating is trending better.

So imagine measuring the things employees are doing to develop themselves as leaders, to satisfy customers, to recruit their friends, to streamline processes, to innovate. Imagine how your company would do if your operational plan, capital expenditures, and policies were laser-focused on freeing your employees to innovate, network, and bring their “A-game” to work every day, rather than merely fixating on what your problems are.

Perhaps, like the utility CEO I mentioned, you will find that you master that which you measure.