Posted by  Lance Mercereau  Published on  9 Jan 2015
  • Workforce Management
  • People Analytics
  • HR Strategy

Talk to any HR professional and it’s not long before the ‘e’word – engagement – is mentioned. It’s an awful word for what can be a powerful business tool. There are few successful chief executives out there who don’t recognize the importance of cracking the code to individual employee engagement. 

It’s become accepted wisdom that a company with engaged employees will outperform companies with disengaged employees.  A Hay Group study found that organizations could cut staff attrition rates by 54% and boost revenue growth by 4.5 times through investing in engagement.

While most HR departments have some kind of engagement initiative, how many can directly correlate engagement with value? Particularly when many companies do not even have an agreed definition of engagement that all frontline managers understand and accept.

The likes of Starbucks, Limited Brands and Best Buy are able to make that explicit link between engagement and value using analytics. According to a Harvard Business Review article, these organizations can pinpoint the effect of a 0.1% increase in staff engagement at the store level. Best Buy, it says, puts that value at more than $100,000 onto a store’s annual operating income.

An engagement survey will give you a good idea of whether employee engagement levels are good or need work. But it takes more than the annual engagement survey to create an engagement strategy. While it has its place (and providing its insights are acted upon), the annual survey is a very broad brush. It does little to aid understanding about what engages employees at more of an individual level.

Analytics can help determine what is behind those results. Using analytics, companies can predict the effect of different engagement and retention strategies, assessing whether it training, a pay rise or benefits such as flexible working would be the best carrots to dangle in front of particular sets employees.

Another key ‘carrot’ is to reward performance. With data analytics, companies have an easier time recognising employees for their accomplishments. Through getting alerts when employees achieve a benchmark, employers can more readily praise workers for their work, increasing retention and employee engagement. 

Engagement and retention are wrapped tightly together. Engaged employees will stay with the company, while high turnover in certain departments may indicate an engagement problem.  Many firms use metrics to analyse who is leaving and why. But these are looking backwards at historical information.

What would be better is to know why they left to help you work out future attrition rates, and also the factors in existing employees that might make them more likely to jump ship. Armed with that knowledge, you have the power to put in place measures to entice them to stay (if you want them to). This type of analytics that analyse who is likely to leave are already beginning to hit the market.

To get the most out of engagement analytics, it’s essential that you measure the right things. Engagement is a fuzzy concept. You need to be specific about what aspect of engagement you are looking at – such as engagement with brand values. That in turn involves carefully thinking about what you are going to measure – is it employee ‘happiness’ or the things that will help drive performance or productivity?

Research backs the cliché that people join companies, but leave managers. So one of the keys to engagement is hiring the right management talent. Yet Gallup research finds that companies fail to put the right person in the job 82% of the time. Worse still, managers can cause engagement scores to shift 70% in either direction. Identifying the high-performing managers and using predictive analytics to identify future star managers can make a huge impact on engagement levels.

Google came to the same conclusions as Gallup. The search engine company decided that it didn’t need managers, but when it stripped out management in its engineering department it quickly found that they really were important and contributed to an employee’s happiness.

It used analytics to discover the eight traits that make a good manager at Google, including being a god coach, a good communicator and has a clear vision for the team. Employees are assessed against these traits and are then offered training in areas they need help with.

Ultimately, what will truly add value to the company is wider than simply the HR department.  Chief executives need data insight that is a combination of HR metrics, marketing information on customer satisfaction and finance metrics about corporate performance.

By removing the silos around this data, analytics can dig down to see which of the engagement initiatives most impact areas such as customer satisfaction and profitability.