You Don’t Need To Measure Employee Engagement

I know.  Antithetical in today’s employee-centric world.  I’m not saying you shouldn’t HAVE employee engagement.  I’m suggesting you may not need to measure it.  I’m struggling with the whole idea of a separate measurement for engagement.  I’m thinking it’s kind of like checking your tire pressure to find out if your car is going forward.  

What Matters Get’s Measured

Measurements are funny things.  The minute we begin to measure something we want to start influencing it.  Measure customer satisfaction and you now need to make sure you do things that increase that number.  Measure employee satisfaction and engagement?  Better start adding things to the employee want list so we can show mahogany row that we've increased employee satisfaction. 

Once you begin to measure these things, you now are required to impact them.  

Engagement Drives Business Performance

We’ve seen the studies and read the research.  Employee engagement is the new black for business performance.  If you want to be a leader in your marketplace, you had better have employee engagement.  If you want employee engagement, you had better measure it.

Results like this are all over the web...

• Companies with highly engaged employees have lower staff turnover rates, lower absenteeism, higher customer satisfaction and loyalty
• Companies with high levels of employee engagement, operating income improved by 19.2 percent in the 12 months
• Companies with low levels of engagement saw their operating income decline by 32.7 percent.Highly engaged group of companies saw its net income rise by 13.7 percent, versus a 3.8 percent decline for peer companies
• Earnings-per-share (EPS) rose by 27.8 percent among the companies with highly engaged employees; this compares to an EPS decline of 11.2 percent for the other analyzed companies.

Nice – it seems that engagement equals performance.

Or does it...

Causality/Correlation

I know you’re tired of hearing it but the fact is we don’t know if this is causal or correlated.  So the measure is pretty much a “nice to know” but not a measure you can really do anything with.  And I think having the measure diverts us from the things that we already measure and use to manage our business.  I’m just curious if the fact that we’re measuring engagement is really keeping us from doing the work that actually drives business performance – and ultimately – engagement?  (I know –chicken and egg – but that’s why I’m asking the question.)

We Already Have Measures of Engagement

In my small brain I think we’ve already got the measures we need to suss out whether you’ve got engaged employees or not.  Want to hear the simple and already measured and reported truth?  Sure you do...

• Employee retention – yup – that one is a no-brainer.  If people want to stay at your company you’re doing something right.  Now go ask them what it is.  It might be that they feel engaged at work. 
• Successful new products/services offerings – got any?  Do you have a good innovation pipeline going?  Why?  Probably because your employees are engaged and thinking about how they can help customer sue the core business offering in their business/personal lives.  
• Profits/Sales/EPS – measuring all those right now – if they’re all good then your employees are working at their potential, not wasting time nor money and adding value.  Which in turn means you can offer better benefits, higher pay, better incentives, etc., etc., etc.  More money, more stuff, more stuff, more engagement?
• Number of new hires from recommendations versus recruiters – if you’re out scouring the world for top talent my guess is you’re not doing anything worth their time and attention.  Apple has a waiting list I’m sure... so does zappos (drink my #hrhappyhour friends.)

Engagement Is A Philosophy – Not a Measure

I believe engagement is key to business success.  I also believe managers have the biggest impact on whether employees are engaged (and I group Exec. Mgmnt in the category of managers.)  I believe that the number of companies we highlight as successful because of employee engagement is a small fraction of the total number of businesses using the other measures I outlined.  

In other words - we love outliers.  We love platitudes and stuff that makes us feel warm and fuzzy.  I know it makes for great copy when Tony Hsieh gets up and talks about the culture at zappos (drink!) and I know he believes it and runs his company that way.  I also know that investors in zappos (drink!) still look at revenue, profits, retention, innovation, etc., when deciding whether to invest.  

Tony believes in engagement and his business philosophy is all about it.  But he still wants profits, customers, etc.

If you’re getting bad results on the traditional measures you need to get with your managers – I’m betting you have an engagement problem.

The bottom line on this is that engagement is a WAY of doing business that impacts other measures of success.  It is not an end.  

If you have a philosophy of wanting to engage your employees as human adults in the work environment – you don’t need to measure engagement – you can measure success the old-fashioned way.  

So... do we really need to measure engagement?  Or is engagement like tire pressure.  Something you check when you find out you have other problems?

 

Related articles

• IT Employees are the Least Engaged...Again (prweb.com)
• The Strongest Link (iowabiz.com)
• What It Takes to Be a Great Employer (blogs.hbr.org)

Comments

[Kurt Nelson]

Paul,

You and I must have some weird psychic link going on lately where we want to write about the very same things...I have a draft of a blog that is very, very similar in nature to this one. Particularly, how do we really measure this when almost all measures of employee engagement are correlational and not necessarily causal (However, I do really like your "Number of new hires from recommendations versus recruiters" which is definitely not).

Well done!

Kurt

[Drew K.]

Paul - I think I agree with you in questioning the 100% accuracy of the metric, however the fact of the matter is, C-level decision makers love metrics. That is how decisions are made in larger organizations. Think about it - if you need to cost justify massage therapists every Friday, your best bet is to show that employee engagement numbers are down. This also touches on the point that maybe it is challenging to compare metrics between different organizations, but to compare the same metric YOY and analyze why there is a change is always useful as far as I am concerned. It may not say exactly how engaged employees are, but it will tell you if they are getting more engaged or less engaged.

I love this dialog though because feel like HR these days is starting to talk about intangible assets but I feel like certain leaders either can or cannot grasp an "intangiably" wonderfully fun and productive corporate culture - Mr. Hsieh being one of them. Do you agree?

Cheers,

Drew K.
http://hirecalling.wordpress.com

[Paul Hebert]

Thanks for engaging here Drew. I agree - C-level (any level) manager likes/needs metrics. Metrics are like taking the temperature of a patient. My only point was that having ANOTHER metric called "engagement" isn't any more helpful than say - "height." As a manager I have a bucketful of metrics that tell me the health of the organization. If engagement "causes" as they want us to believe, better business performance - why do I need the that metric? Wouldn't increase (or changes) tell me about my level of engagement?

Is engagement simply the sum total or some index of all the other metrics?

Do I need to invest in an employee engagement survey to tell me folks are engaged/disengaged when I have a retention report, sales report and a new product pipeline report?

I don't thing people are "intangible" assets either. They are the most tangible of all assets. You can start a business tomorrow with people and no machines - but try to start a business with machines and no people.

[ken@kenmilloy.com]

I think this is a very interesting conversation. I look at the whole measurement piece as I do a round of golf...we keep score on each hole and each round we play as a means of tracking how well we are doing in an overall sense and in comparison to some expected norm (aka 'par'). Yet, the more important measures with respect to performance relate to improving in a number of differing metrics: the number of fairways and greens hit, putts taken on each green, the number of times we save par having missed the green and so forth....each of these measures contributes to the level of success or failure in achieving par or better. Especially when we add in some subjective measures associated with our mind-set and physical state on any given day, the course itself and the weather...

By tracking the overall score provides us with an improvement over time score and hence has significant value. Likewise our overall engagement score provides a sense of improvement or slippage. the issue with measurement as it is done by so many is that it becomes the driver and focus of engagement programs (aaargh I hate that term) for those at the executive table - and this is problematic. Paul, I'm liking the notion of not measuring to some degree...maybe every 2 to 3 years instead of every quarter would help focus afforts where they would have the best possible impact and contribute to longterm and sustainable engagement levels....

I'm of to the range!

Ken Milloy
www.kenmilloy.com

[Paul Hebert]

Thanks Ken for taking the time to engage here.

I like your analysis - and think there may (may) be a place for an engagement score - even if we call it something else - maybe and "index" that is some function of the other stuff.

Knowing your net score is nice - but to make any improvement you need to know what part of your game is causing problems (in my case - all of the above.) The engagement score to me is like saying "I'm 5 over par, I need to golf better to get to 4 under." Now what? The other measures tell you were to focus.

I'm liking the golf analogy a lot here...

[Claudio]

I may be a bit biased since measuring is at the core of our consultancy. And yes, we do measure employee engagement. However, we also measure quality of leadership, presence of teamwork, and effectiveness of communication. Individually these measures do not provide a clear picture of the enterprise. However, taken as a whole they tell a different story and a more complete one. In addition, it is not the measure per se that is important; but rather the variance of these measurements over time that indicate whether the initiatives implemented to fix a problem area are working. I have a big stomach, so I go and see a trainer and the trainer puts me on a regimented exercise routine. After 1 month, I can see that my stomach has gone down; don't know how much though. Trainer 1 leaves and now I am working with a different trainer; I look at my stomach and I 'feel' that my stomach has not gone down as much with Trainer 1. So does that mean that Trainer 2 was less effective than Trainer 1? Not necessarily. I should have measured not only my weight, but also my stomach circumference, my muscles, as well as calories intake. That way I can truly compare the two trainers and if Trainer 1 was more effective, I would leave the gym and follow Trainer 1 to wherever she has gone. Long metaphor to indicate

1. measurement taken by itself means absolutely nothing (I have a big stomach)
2. always measure all the relevant variables surrounding an issue (don't just measure your stomach include stomach, muscle mass, calories intake)
3. take actions (gym)
4. re-measure each action to discover which one is the most effective (re-masure stomach, muscle mass, calories intake)
5. compare and decide (Trainer 1 > leave the gym - Trainer 2 > stay at the current gym)

One last note, I wholeheartedly agree that engagement cannot be directly tide to and be a predictor of profits and revenue. Gallup Q12, for example, measures correlation not causality. It is my opinion that too many variables play into a company stock price or revenue stream to be successfully and statically measured. Having said that, it is implied that if an organization's employees are more engaged, of course they will be more productive which, everything else being equal, translates to more dollars.

Claudio Fiorani
Partner
http://www.nplusoneconsulting.com