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Measuring the ROI of Employee Benefits

Advanced data and analytics can be used to increase ROI of employee engagement programs.

Employee engagement has quickly become a primary focus for many businesses today. Most corporate executives recognize the need to reduce turnover rates and increase job satisfaction to improve their bottom line. By doing so, not only will organizations spend less money on recruiting, hiring and training replacement workers, but they will also benefit from improved levels of productivity and performance.

Managers have access to an abundance of advice on enhancing employee engagement, such as implementing health and wellness initiatives, providing ongoing communication and feedback and creating reward and recognition programs. But just as it is essential that companies have plans in place for engaging workers, it is also crucial that they have ways to measure the effectiveness of them.

Performance metrics of engaged workers

Mike McMinn, a Business 2 Community contributor, suggested that employee engagement levels should be just as high a priority as other aspects of business, including performance metrics and profitability. The source also added that, according to a Gartner survey report, “Organizations with high levels of employee engagement significantly outperform those without, and conversely, high levels of disengagement can adversely impact operating income, revenue, and shareholder value.”

McMinn also revealed that Gallup researchers estimate a profit increase of about 22 percent. Furthermore, businesses with engaged employees earned 147 percent more per share than other companies in their market.

Engagement is one of those overarching, general buzzwords that can be difficult to define. It can refer to everything from the health and happiness of workers to how often they collaborate and communicate with one another. And if it is difficult to define, how can it possibly be measured?

Employee engagement programs can lead to significant return on investment. The key is implementing the appropriate tools, systems and processes that make it possible to track and measure essential data and analytics.

An Oracle Simply Talent study found that 30 percent of employers feel that it is difficult to measure and quantify the benefits of employee engagement programs. And while the majority know it is important and 68 percent use employee surveys, only 37 percent leverage advanced analytics to assess engagement levels.

“Modern HR teams have access to data-based tools allowing them to effectively measure employee engagement, and just as crucially to quantify its impact on the business for the decision-makers in the boardroom,” Loic Le Guisquet, an Oracle executive, said in a statement. “In this way HR will find itself at the centre of the business, driving engagement strategies that best serve the organization’s growth ambitions.”

Identifying return on investment

Although it may not be possible to entirely quantify the engagement of team members, there are plenty of strategies employers can use to obtain the necessary insight and information needed. One way is through administering employee surveys. Regularly asking for feedback will help managers identify where workers are most unhappy. In addition, real-time engagement data can be used to determine what areas need the most improvement.

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A critical component of successfully measuring employee engagement rates, though, is to make sure they are being compared to the right data. Another Business 2 Community contributor, Aya Tsuruta, recently indicated that many executives compare worker engagement levels against customer satisfaction. Other company performance metrics that this data can be measured against, the source noted, include “revenue growth, churn, and percentage of new businesses from existing customer referrals.”

Custom reporting and advanced analytics can result in higher ROI. Click on the video to learn more.

If a business is limited in the expertise, time or resources needed to gain in-depth analysis of these programs, it is highly recommended it works with a third-party consulting firm that can provide the necessary custom reporting and analytics.

Corporate executives dedicate a considerable amount of time and resources to developing employee engagement programs. And by defining and tracking key metrics to measure the effectiveness of them, companies can increase retention rates, enhance business performance and, ultimately, improve return on investment.

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