You've read the studies that show the strong relationship between employee engagement and business outcomes. Research by HBR, Gallup and others show that “70% of respondents rank employee engagement as very important to achieving overall organizational success” and that “engagement correlates highly with customer experience.” Research shows that companies with highly engaged employees deliver higher Earnings Per Share (EPS), lower Cost of Goods Sold, (CGS) stronger revenues, fewer safety incidents, less theft, lower turnover, and less absenteeism. The list of benefits goes on and on.
So what’s the issue with engagement?
I’ll explain with an analogy:
We all know that there’s a direct link between losing weight and improving your physical health. The benefits of weight loss are abundantly clear - it reduces the likelihood of heart disease and stroke, reduces blood pressure, lowers body fat, prevents diabetes, and bolsters self-esteem.
Losing weight doesn’t happen by chance – it requires one to reduce their calorie intake, increase the amount of physical activity they do, or both. The amount of weight lost and the speed at which it is lost depends on how much one reduces their calorie intake and how much more time and effort one expends on physical activity. Different combinations will yield different results.
From a formulaic perspective, calorie intake and exercise are the inputs that generate the weight loss outcome, and the weight loss outcome can generate a secondary outcome which is improved physical health. In order to optimize either or both of the outcomes, one must understand what the inputs are, and how increasing or decreasing the inputs will impact the outcome.
Leading and lagging indicators
In performance management, the terms “lagging” and “leading” indicators are often used to describe these dependencies. Lagging indicators relate to the “output” of a process, while leading indicators relate to the “inputs” of the process. Lagging indicators are typically easy to measure but hard to improve, while leading indicators are typically harder to measure and easy to influence.
To measure your weight loss progress, you have a simple lagging indicator that’s easy to measure using a bathroom scale. But how do you actually reach your weight loss goal? You need to measure the leading indicators (the inputs) by keeping track of your calorie intake and how much you’re exercising. If your output isn’t changing quickly enough, you can speed it up by adjusting the inputs. The key is to measure both leading and lagging indicators. If you’re only checking the scale and not watching your calories and exercise, you’ll have very little control over the outcome of your efforts.
Engagement is a lagging indicator - easy to measure but hard to influence
The same goes for engagement. Measuring engagement is like using the bathroom scale -- in order to be successful, you also need to identify, measure and optimize the inputs. Calories and exercise are like workforce stress and empowerment -- reduce the former and increase the latter, and your engagement levels will improve.
Engagement has been touted as a key workforce health indicator for years because it’s easy to measure – it’s a lagging indicator, after all. But without understanding and measuring the leading indicators of engagement, it’s difficult to improve. Leading indicators of engagement are typically harder to measure, but they’re much easier to influence.
Measure what you can actually influence
While some of the most commonly cited factors that drive engagement are probed in engagement surveys, the real drivers are harder to measure. Quantifying positive inputs like empowerment levels, and negative inputs like levels of stress and fatigue, require very different diagnostic tools. As leading indicators though, they are highly predictive of future engagement levels.
Surveys are valuable for multiple reasons, and they're one of the best ways to let your team know that you're listening and that you value their perspective. But rather than measuring engagement, focus on gathering insights that will help you identify, measure, and optimize the inputs of engagement. Not only are leading indicators like empowerment and stress far easier to influence, but you’ll also be measuring and improving things that directly impact your employees and your management - and they'll feel the impact of these improvements every single day.