How do you know whether your employee engagement is helping or hindering your company? Setting and analyzing key performance indicators (KPIs), asking employees to fill out surveys, or implementing stack ranking may be among your solutions.

Key Performance Indicators

A KPI is a measure that reflects company success or progress in relation to a specific goal. For example, financial KPIs typically are based on elements of the income statement or balance sheet. They may report changes in sales growth by product groups, channel or customer segments or in expense categories. Revenue growth rate, net profit and return on investment are commonly used metrics for employee performance. A company needs to use non-financial KPIs as well. Non-financial KPIs are other measures used to assess activities that are important to achievement of strategic objectives. Examples include measures that relate to customer relationships, employees, operations, quality, cycle-time and the company’s supply chain. By aligning business activities and individual actions with strategic objectives, you can better determine whether employee engagement is benefitting or harming your company.

Employee-Centered Key Performance Indicators

Employee-centered KPIs, such as employee engagement, satisfaction and turnover are also important metrics. Higher employee engagement is linked to higher customer satisfaction. When employees are happy and believe in their company, it comes across in their work. For this reason, companies with high employee engagement levels outperform companies with lower engagement levels according to customer ratings. Plus, because engaged employees are motivated to achieve more, they produce more than disengaged ones. In addition, companies with employee-centered strategies are more likely to encourage innovation, autonomy and employee ownership than companies that do not implement such strategies.

Employee Surveys

To measure engagement, you may ask employees to fill out surveys. Questions may include, “How meaningful is your work?” “How much do your opinions about work matter to your manager?” Or, “Are you proud to be a member of your team?” Another approach may be analyzing engagement levels such as management quality and time investment, influence from colleagues, relationships and work schedule. The second approach is more comprehensive and likely to be answered honestly, rather than with answers employees think leaders want to hear.

Stack Ranking

Stack ranking is a system that ranks employees according to their performance. Top employees are put in line for promotions while the bottom 5-10 percent are let go. One objective is to encourage communication between managers and employees so employees know why they rank where they do and how they can improve. Employees may learn why they are not regularly being promoted or prepare to be laid off for continual poor performance.

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