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8/3/2019 A2 - Using HR Metrics to Understand Employee Engagement June 2007
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Using HR Metrics to Understand
the Drivers of EmployeeEngagement
Karen N. Caruso, Ph.D.www.viapeople.com
All Rights Reserved. This material may not be
reproduced whole or in part and in any media withoutwritten permission from viaPeople, Inc.
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Agenda• Introductions
• HR Metrics and Workforce Analytics• Employee Engagement
• Drivers of Employee Engagement
• Workforce Analytics Example
• Summary of Critical Findings
• Workforce Analytics Within Your Organization• Questions
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The Importance of HR Metrics
• There are hundreds of metrics in use by HR
today, ranging from the most basic (employeeturnover) to highly complex scorecards andworkforce analytics.
• Senior managers are looking for meaningfulmeasures of human capital factors and theirimpact on business outcomes.
• HR functions are using metrics to track andmanage their performance and to drive
decisions in the HR function.
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Beyond HR Metrics
The integration of HR metrics with other business metrics from within, as well as
outside of the organization, to understand the complex factors which affect the current workforce and make
predictive decisions about the future workforce.
Workforce Analytics
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Source: Survey of 189 senior financial executives conducted by CFO Research Services in fall2002. Figures are % of respondents
To what extent do you know thereturn on your investments inhuman capital?
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*Survey of 148 US financial services companies
Ittner & Larker, Decisions That Matter:The Wharton Research Program 2000
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Ittner & Larker: Decisions That Matter 1999
Non-Financial Measures:
Under-Rated & Under-Measured
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Why Workforce Analytics?
• Human capital is one of the least measured and
analyzed investments, despite the fact that morethan 70% of company costs are labor related.1
• Executives are realizing that they do not have afirm grasp on the characteristics and capabilities
of their workforce.• Investors are asking for ‘human capital’
statements to be included as part of annualreports because human capital drives the
performance of all other assets.2• Need to justify how workforce investments
impact business performance.
1 Brookings institute2 Barrette, 2004
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Stages of Workforce Analytics
• 4 Stages of Maturity when using Workforce
Analytics - Jim Holincheck, Gartner Group – Stage 1: Basic Reporting – Regulatory reporting that
is reasonably automated
– Stage 2: Access to Metrics – Key PerformanceIndicators (KPIs) that are distributed effectively todifferent people
– Stage 3: Detailed Workforce Analyses - Multi-
dimensional analyses so one can “slice and dice” – Stage 4: Advanced Analytics – Taking data and
applying it to make better decisions about how tomanage Human Capital (e.g., predictive analyses)
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What HR metrics are used
at your organization?
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Commonly Used Metrics
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Source: ISR, 2005
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Employee Engagement
• Employee’s feelings of enthusiasm and
involvement in their work.
• Engaged employees feel involved in theirwork and the people with whom they work;they feel recognized, encouraged, and
supported.
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Is your company engaged?
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Importance of EmployeeEngagement
• Engaged workers are more productive than
disengaged workers.1• Companies who can successfully engage
their employees can achieve higher levels of
performance and deliver greater returns toshareholders. 2
• Actively disengaged workers undermine thework of engaged workers.
• Unfortunately - Estimates indicate thenumber of actively disengaged workers to beanywhere from 16% - 50% of the workforce.1
1 Deloitte & Touche/Gallup research2 Hewitt research
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What factors impact employeeengagement?
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What Drives EmployeeEngagement?
• Organizations with motivating
organizational climates and positivecultures have employees who are activelyengaged.
– Linked to employee performance, customersatisfaction, organizational performance
• Leadership behavior one key factor in
creating and reinforcing organizationalculture.
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Workforce Analytics Example:Leadership Impact Study
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Leadership Impact Study -Purpose
• Confirm linkage between leadership
performance and employee engagement.• Identify specific leadership performance
factors that drive employee engagement.
• Pinpoint how positive changes in leaderperformance impact employee
engagement.
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Leadership Impact Study -
Methodology
• Measured leadership performance using360-degree feedback process
• Measured Employee Engagement through
Employee Opinion Survey (EOS)• Statistically analyzed data using Multiple
Regression
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Measurement of
Leadership Behavior
• 8 competencies measured by 37
behaviors• Communication• Coaching & Developing• Planning & Organizing
• Leadership• Interpersonal Skills• Self Management• Innovation• Organizational Strategy
• Ratings from self, leader, peers, directreports, and others
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Measurement of Employee
Engagement
• Employee Engagement measured as part
of employee opinion survey initiative – 5 factors measured by 57 items
– Factors of interest:• Pride
• Credibility
• Respect
– Ratings made by individual employees
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Overall Findings
• “Significant” Results
• More effective leaders manage employeeswho report high levels of employee
engagement.• Numerous relationships reveal specific
leader behaviors of interest.
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Pride• Clear relationship established between
several components of leaderperformance and employee feelings ofPride.
• Self-Management
– Follows through on commitments. (r = .33)
– Employees are willing to give extra to get the job done. (Pride)
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Pride - cont’d.• Planning & Organizing
– Keeps things organized so that the work goessmoothly. (r = .31) – Focuses time, resources, and energy on priorities
that matter to the business. (r = .29)
– Employees are willing to give extra to get the job done. (Pride)
– Focuses time, resources, and energy on priorities
that matter to the business. (r = .30) – When I look at what we accomplish, I feel a sense of
pride. (Pride)
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Pride - cont’d.• Leadership
– Sets clear expectations and provides clear direction
to others. (r = .32) – Employees are willing to give extra to get the job
done. (Pride)
• Organizational Strategy
– Pursues solutions to problems that are directed atachieving long-term success versus short-term gain.(r = .28)
– Ensures that objectives established within his/herarea of expertise are consistent with the companyvalues, policies and practices. (r=.23)
– Employees are willing to give extra to get the job
done. (Pride)
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Credibility
• Clear relationship established between
leadership performance related to Innovationand employee’s perceptions of Credibility. – Challenges the status quo. (r = .22)
– Management is approachable and easy to talk to.(Credibility)
– Challenges the status quo. (r = .23)
– Employees are kept informed about important issues and changes. (Credibility)
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Respect
• Clear relationship established between
leadership performance related toInnovation and employee’s feelings ofRespect. – Challenges the status quo. (r = .24)
– Employees are involved in decisions that affect their job/work environment. (Respect)
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Summary• Integrity, Communication, and
Organizational Skills facilitate pride,commitment and hard work.
– Leaders who follow through on commitments
facilitate employee commitment and energy.
– Leaders who focus on critical priorities, setclear expectations and provide direction lead
employees who are more engaged and workhard to accomplish goals.
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Summary• Innovation and Courage facilitate feelings
of respect and involvement. – Leaders who take risks and challenge lead
employees who feel involved in the
organization and informed about things thatimpact them.
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Caveats
• Sample size (n=84)
• Timing – Employee engagement data collected before
leadership performance data
– Changes post EOS
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Further Questions• Will these relationships change over time?
• Do those teams with higher employeeengagement produce better results (asmeasured by quality or financialindicators)?
• What impact might training have on leader
performance and employee engagement?
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Enhancing Engagement throughLeadership Development
• Identify the key drivers of engagement within yourorganization
• Conduct a comprehensive assessment to identify whichleaders may or may not have the requisite skills to
support employee engagement• Develop training curriculum to support the key drivers of
engagement
• Provide coaches or mentors who have skills in theunique drivers of engagement
• Generate interview/selection tools which probe for thespecific behaviors identified in the analysis
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How can you apply workforceanalytics within your
organization?
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Metrics Within Your
Organization Bottom-Line Measures:
Financialperformance
Market share
Employeeproductivity
Customer service
Quality
Safety
Turnover/retention
And more . . .
Other Measures:
Level of trust
Employeecommitment / alignment
Satisfaction withManagement
Perception ofcompanyculture/workenvironment
Job satisfaction
And more . . .
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Workforce Analytics Ideas
• How does sales leader performance
impact sales, as measured by financialindicators/market share?
• How does employee engagement impactinternal or external customer service?
• How does internal customer service
influence external customer service?• Other ideas?
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Questions?