Case study: Harvard Business Review: The Impact of Employee Engagement on Performance 

While most executives see a clear need to improve employee engagement, many have yet to develop tangible ways to measure and tackle this goal.

However, a growing group of best-in-class companies says they are gaining competitive advantage through establishing metrics and practices to effectively quantify and improve the impact of their engagement initiatives on overall business performance.
These are among the findings of a new Harvard Business Review Analytic Services report of more than 550 executives around employee engagement research that features in-depth interviews with 12 best-practice company leaders.

The report survey found that many companies find it challenging to measure engagement and tie its impact to financial results: fewer than 50 percent of companies said that they are effectively measuring employee engagement against business performance metrics such as customer satisfaction or increased market share. But one group of companies—called “high prioritizers” in the study because they saw engagement as an extremely important priority—are effectively using metrics and shared some best practices for tying engagement to business performance.

These include:

  • Avoiding rote surveys. Leading companies devote significant resources to carefully crafting employee engagement surveys so they ask pointed, clear questions that go beyond measuring “satisfaction.”
    They then pore through the data to find the hidden stories of what’s working and where there are
    pockets of dissatisfaction. Finally, senior management uses this information to inform strategy and
    policies going forward.
  • Ensuring that goal alignment is occurring at every level of the organization and is well-communicated. Top managers set and communicate business objectives; middle managers are responsible for creating specific objectives for employees that support broader business goals; and employees are given the tools to succeed, some autonomy, and accountability to meet tangible goals aligned with corporate goals.
  • Using data to leverage engagement initiatives to improve performance, typically customer satisfaction/net promoter score (NPS)surveys and feedback, and then tying winning results to recognition programs to reinforce alignment and the activities linked to performance.

In most companies, today’s leaders are acutely aware that there is much to be done to ensure that they have a focused and highly engaged workforce. Connecting engagement to business performance requires considerable effort and top management focus—and, to a large degree, it is about how you do it. But there is enormous opportunity for companies that get it right.

The most common measurements best-practice companies are using to connect engagement to business performance were those that tied customer metrics with engagement metrics. Specifically, a number of best-practice companies interviewed found NPS and the service-profit chain to be powerful tools to link engagement initiatives with business goals.

Read the full report by downloading it here.

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