If you’ve ever received above-and-beyond service that made you a loyal customer, you’ve experienced the buyer-side benefit of an engaged employee. But how did the consulting service, store or B2B business motivate that worker, and their supporting team, to deliver a superior customer experience?
The answer is the hottest new human resources KPI: employee experience.
It’s intuitively clear that when your workforce is energized, engaged and happy when on the clock, that will translate into higher customer satisfaction, a positive culture and ultimately business success. Problem is, as a company grows, it becomes more difficult to quantitatively measure employee experience metrics.
Fortunately, there are ways to understand and encourage employee engagement.
What Does Employee Experience Mean?
Before digging into formulas, it’s important to understand what “employee experience” means for your company. Depending on business type and typical work environment, your KPIs could look very different from those of the firm down the street.
For example, a warehouse or manufacturing work experience will differ from that of a retail or office employee. For hourly workers in a factory, the entire experience likely happens during regular business hours and entails considerable interaction with peers and managers. For a finance or marketing professional working remotely, employee experience could extend to after-hours communications and involve little face-to-face interaction, unless you count video calls.
No matter the model, though, without KPIs to track progress over time, understanding how well you’re doing will be a matter of guesswork.
Why Is Measuring Employee Experience KPIs Important?
Unless you have specific, measurable goals, you don’t know if you’re moving in the right direction or how your team is performing. Collecting the metrics we discuss below provides an early warning that employees are struggling so you can address problems before they affect the culture or customers.
If your people run into roadblocks during a typical workday or dread driving into the parking lot, there’s a good chance you’ll experience high turnover and poor performance. If you can keep employees excited about your mission, connected to their teammates and empowered to do their jobs, however, you’re providing an excellent employee experience and by extension setting the business up for success.
As to frequency, virtually every business should measure employee experience KPIs on a regular schedule, whether weekly, monthly or quarterly.
How to Measure Employee Experience
A pilot who needs data on heading, altitude, speed or fuel level has access to a dashboard that includes every key detail. While you may not be operating a plane thousands of feet in the air, your business should also have a dashboard that collects your KPIs in one place.
When it comes to employee experience KPIs, no single measurement will provide a complete picture. Instead, assemble a list of indicators that mesh together.
Some key performance indicators are easy to measure using readily available data from a payroll or enterprise resource planning (ERP) system. Others are better tracked through surveys, HR systems, manager feedback or company performance metrics.
Let’s look at some of the most popular and useful KPIs that work across industries.
12 Top KPIs to Measure
While you may want additional KPIs specific to your own business, these 12 top employee experience indicators can help your management team measure progress and build the best possible employee experience.
Employee satisfaction: If you want to know how someone feels about something, one of the best ways to find out is to ask. Querying employees about their job satisfaction through surveys provides invaluable insights that can help shape priorities and procedures.
Consider using a consistent survey so you can trend on an apples-to-apples basis over time.
Asking for questions to be answered on a one-to-five scale turns opinions into measurable data. Split your questions into sections that measure satisfaction with the overall organization, the employee’s department, supervisor and day-to-day job. There are a number of survey tools and services that administer these polls; the Society for Human Resources Management provides a useful guide. Make sure that responses are collected anonymously so you get an honest assessment.
Some typical questions:
On a scale of one to five, where one is not at all supported and five is very supported:
Do you feel supported by the company? By your direct manager or supervisor? By your coworkers?
On a scale of one to five, where one is not at all and five is very much so:
Do you feel that your contributions are valued? Do you feel that work is fairly distributed in your group? Do you have the tools and support to do your job well? Do you feel that you have opportunities to acquire new skills? For advancement within the company? That the company values work/life balance?
Employee productivity: A study by Oxford University’s Saïd Business School says that happy workers are 13% more productive than unhappy workers. That seems a little low to us, but the gist is to look at employee productivity as a directional measure of employee happiness and a positive employee experience. Instead of getting too hung up on current results or a specific number, it’s best to look at this trend over time when used specifically for gauging the employee experience.
Measuring your workers’ productivity rates per hour, per day or per month can help determine if you’re trending in the right direction. In addition to tracking productivity for employee experience KPIs, you can use this data for other business decisions, like workforce planning, or in some cases to calculate financial metrics like cost of goods sold.
Employee wellness: Stress and life challenges may show up in employee health through high blood pressure, unhealthy weight gain and other adverse conditions. You can’t control employee diets or lifestyles outside of work, but stress at work certainly impacts employee health and wellness.
If your business provides health insurance, you may have the ability to run an on-site employee biometric screening. If you can access the results in aggregate, shielding sensitive health information, you may be able to plug in wellness data as an employee experience KPI. This can be especially valuable for a remote workforce.
Employee retention: Engaged and satisfied employees generally want to stick around. In addition to the high costs of replacing people who leave and training new hires, a high turnover rate is a sign of a poor employee experience.
To calculate your employee retention rate, follow this formula:
(Employees at end of period / employees at start of period) * 100
For example, an employer that started the quarter with 100 employees and ended with 95 of would have a retention rate of 95%. A higher retention rate is better.
Employee recruitment: For recruitment, you have a few potential KPIs to measure. In general, when newly hired employees stay past their “early hire” periods, it means your company is doing something right in terms of selecting candidates. Further, a high percentage of employees who come in through referrals is a signal that your current employees are generally happy and want to share the experience.
Additional metrics for this HR-focused area of your business include time to hire, new employee impact and satisfaction with the onboarding process.
Employee engagement: In a way, all of the KPIs on this list add up to a measure of employee engagement. However, you can use specific tracking to understand employee engagement, and that could flow into a KPI scorecard.
Short “employee pulse” surveys could give you insights here, as could employee productivity. Moving beyond those typical measures, you can assess how employees take the initiative to work on new ideas, efforts to improve the workplace and participation rates with internal tools like communications platforms, intranets and ERPs. The former two items are more qualitative than numbers driven, so a best practice is to ask managers to assess these items and back up their responses with bullet points, such as actual new initiatives or improvements.
Employee Net Promoter Score (eNPS): One popular and at least somewhat standardized method for tracking the effectiveness of a company’s culture is the Employee Net Promoter Score. Some companies use a survey question about how likely it is that the employee would recommend the company as a place to work. Others also measure how likely the employee is to recommend the company’s products or services to friends and family.
In both cases, the core of what you’re trying to measure is how comfortable your employees are promoting the company to their network of friends, family and acquaintances. If an employee is willing to do that, they are most likely excited about what they produce and engaged with their work and the company mission. That’s a great sign that you’re providing a positive employee experience. A bonus of eNPS is that you may be able to measure your results against an industry average.
Employee absenteeism: There are plenty of good reasons to miss work every once in a while. However, a company-wide trend of high absenteeism, particularly unplanned days off, could signify a poor employee experience.
An overworked team could be tired, stressed and more likely to get sick. Or, if workplace culture deteriorates, an employee could just use a sick day as an excuse to avoid conflict.
To calculate absenteeism, add up the number of unplanned absences and the total number of planned workdays. The percentage missed is your KPI for absenteeism.
Formula: Unplanned absences / Total planned workdays
Example: 7 missed shifts in a month with 120 planned shifts
7 / 120 = 5.8% unplanned absence rate
In this case, lower is better. But that doesn’t mean all time off is a negative—quite the contrary, in fact.
Vacation days used: On the flip side of unplanned absences, it’s a good thing for employees to use their vacation days. Taking advantage of PTO is a sign that employees feel their workplace is well managed, that their teams won’t suffer from their absence and that they don't feel subject to pressure or guilt about missing work.
When employees use their vacation time, they come back recharged with less stress and better mental health. Studies show that employee vacations actually benefit workplace productivity. The win-win of time off means you should track vacation days used among your employee experience metrics.
Internal promotions: Ambitious high performers want to know that their efforts are noticed and may lead to growth opportunities. While it may make sense to bring in expertise from outside the business for a position, it could be demoralizing to not consider existing team members for promotion before venturing out for a new hire.
Employees notice when their peers are promoted, and it can be good for morale to have people regularly recognized for moving up the ranks. Tracking the number of internal promotions per month, quarter or year can be a valuable KPI.
Employee-rating websites: Think of these sites, such as Glassdoor and PayScale, as Yelp for workplaces. They’re popular outlets for current and past employees to post salaries and rate job experiences. While these sites are most likely going to be used by job hunters deciding if your workplace is right for them, they can also give you insights into how happy or frustrated your workers are with their employee experiences.
Glassdoor includes an overall company review on a one-to-five scale, the percent of employees who would recommend it to a friend and CEO approval, among other data points.
Customer ratings: Last but certainly not least: customer ratings. If your customers have an overall positive view of your company and want to return, it’s likely because of the great work your team did to sell your product or service.
Tracking customer ratings, customer service ratings, customer satisfaction ratings and similar data is a great way to round out your employee experience metrics dashboard.
Creating an Employee Experience KPI Dashboard
Savvy, forward-thinking companies may already have the tools in place to build a KPI dashboard. Your ERP and human capital management (HCM) systems, for example, likely include dozens of useful KPIs out of the box. Advanced users can develop additional KPIs and dashboards or hire an integration partner to create more customized results.
For more basic needs, you can put a dashboard and scorecard together using a spreadsheet. Set up recurring data exports that follow the same template each month. Then, copy and paste those results into your spreadsheet, which can automatically update a scorecard with essential KPIs.
How to Improve Your Employee Experience KPIs
Once you have your employee experience KPI dashboard in place, you can start tracking how well your employees are doing today and watch how trendlines move in the future. But it’s not enough to track your KPIs. You should make efforts to improve them over time.
It’s important to not take every KPI at face value, as some correlations do not indicate causation. But when you do spot potentially problematic indicators, you can chart out a strategy to improve.
As an example, say you decide to watch overtime. Most people don’t mind putting in extra hours during big projects, but a steady upward tick in OT expenses without a corresponding reason—like that you’re a retailer and it’s the holidays—may be a leading indicator of employee burnout. OT is also pretty easy to track using your time-entry and time-off management systems, which typically calculate scheduled hours versus actual hours worked. By pulling these reports, you may decide that you need a new hire or to reallocate some tasks.
Tracking, Measuring and Improving Employee Experience Metrics with HR Technology
In addition to helping track KPIs around vacation days, absenteeism, turnover rates and other data from one central database, powerful HCM platforms feature full payroll and self-service that gives you and your employees an excellent experience.
One thing’s certain: If you don’t track employee experience metrics, you don’t have any way to know how you’re doing and the direction you’re headed. When you employ top-of-the-line human resources technology, putting an employee experience dashboard together is an efficient process that can pay business dividends for years to come.