Employee engagement the key HR metric in today's landscape
19 February 2009 8:27am
If there's one thing metrics-conscious HR managers should be measuring throughout the economic downturn it is employee engagement, according to Right Management's Rosemarie Dentesano.
"Psychological contracts from six months ago are broken", Dentesano told HR Daily, and the way employees perceive their jobs has changed.
Most workplace cultures have altered dramatically since late last year - with decreasing staff numbers, rising work demands and a shift in leadership styles and customer expectations - and many individuals are beginning to feel the economic pinch, Dentesano says.
"The way managers manage these changes," she says, "has a direct impact on employee engagement."
Referring to research, Dentesano says that if workplace change is managed efficiently, then employees are 10 times more likely to remain engaged at work. An engaged workforce has a positive impact on performance, productivity, customer loyalty and safety outcomes, she says, and can improve the company's bottom line by up to 30 per cent.
Employee-engagement metrics, therefore, are vital in determining the overall effectiveness of a leadership team and the capacity of a company to cope with the economic downturn.
Employers should measure engagement in terms of employee commitment, pride, advocacy and satisfaction, Dentesano says, using annual employee surveys, regular pulse checks and through the observations of leaders. What comes next hinges on the executive team.
"Leadership needs to own the results," she says.
HR personnel "are the custodians of the process and set up the mechanisms", but leaders must support and validate any necessary strategies aimed at giving employees "a sense of career" and allowing them to align their career paths with the values and goals of the company.
Throughout the economic downturn, Dentesano says, HR must also continue to measure:
safety outcomes, to ensure that corners aren't cut as staff numbers and resources are thinned;
customer satisfaction, to ensure that the company brand isn't sidelined by other priorities;
productivity, relative to labour output;
trust in leadership, to determine the extent of morale and company loyalty; and
profitability and revenue, to keep track of the company's expenses and viability.
Retention metrics, Dentesano notes, are not particularly informative in the current economic climate, as many workers are currently "prisoners" in their jobs due to financial constraints.
According to a recent survey conducted by US human resources consultancy Doublestar, "forward-thinking" HR professionals are now looking beyond basic HR metrics and using a range of programs that compare talent management outcomes with productivity metrics.
This allows organisations to see where the best return on investment in HR spend is coming from, says Doublestar's Joanne Bintliff-Ritchie. It also allows HR executives to gain greater support from company leaders.
Many employers, she says, are gathering data on:
total labour spend, on all employees, outsourcing costs, temps and contactors, and gauging this as a percentage of revenue;
attrition in target populations, by separating and analysing staff turnover among high and low performers, key successors, leaders and high-potential staff;
experience lost, by measuring the total amount, in years, of experience and knowledge lost due to turnover; and
average cost per vacancy, including recruitment, onboarding, training and overtime expenses and lost revenue.
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