Even with access to data, many HR teams struggle to know how to use it and what to do with it. This is especially true with engagement data; it is a powerful source of intelligence if used well, but largely useless if not.
There are many ways to gather employee feedback and engagement data; annual and pulse surveys, consultancy or platform led or organised internally. You can even analyse emotion and sentiment via processing of emails and work social media. Setting aside the debate round privacy, there are fundamental questions to answer before jumping into a solution.
Applying good principles, a rigorous approach and specific techniques should enable you to improve the way you use data to solve problems. It specifically helps get more power from engagement data. Previously, HR teams largely relied on intuition alone. Now answers have to be evidence based. Here are some critical questions you need to think about when using engagement data.
1. Why does engagement matter to you?
HR experts should not need to be convinced of this even if others do. Getting a deep appreciation for the importance of engagement, well-being and happiness is the first step.
We believe that speaking the language the rest of the business uses is essential to helping everyone get the importance of engagement. Everyone can find research on the benefits of a highly engaged workforce and how engagement improves performance. Over and above this, there is a critical fact that is often ignored, and puts beyond doubt the reason for focusing first on employees:
“Most of the value of organisations today comes from assets not on the balance sheet. Today, approximately 84% of value is in “intangibles”. 40 years ago it was only 17%. Intangibles are a result of human input – including human capital, culture, reputation and brand.”
This is the overriding reason that working on your employees ability to contribute to your company is the most important thing that you can do in business.
2. Why does data matter?
Without being able to use data effectively, you are less able to understand what choices to make and whether they have worked. Indeed, having data and doing nothing with it is even worse. After all, data without action is just an overhead.
There is ample evidence that organisations using people analytics to support business decisions get better results:
31% greater productivity and 27% higher sales when employees are cheerful or satisfied. (HBR)
82% higher three-year avg. profits than their low-maturity counterparts. (Bersin by Deloitte)
8% higher sales growth, 24% higher operating income and 58% higher sales per employee. (MIT & IBM)
A £13.01 paid back for every pound spent. (MIT & IBM)
A 5% increase in employee engagement linked to a 3% increase in revenues after 1 year (AON Hewitt)
3. What does engagement mean today?
Engagement has become the catch-all term for how your employees feel about working for you. Companies offering ways to improve engagement range from HR systems, employee perks, coaching, training, on-site services through to car leasing schemes. There is also plenty of room for interpretation on how to define engagement; for example companies specialising in feedback solutions and associated consultancy all have a slightly different view, typically backed up by evidence on the validity of their model. We believe there are 2 sides to understand:
Engagement. Organisations care about how productive their employees are. A higher level of engagement means their people do better work, stick around for longer, and contribute more. This is a focus on the company rather than the individual. Being purpose led, having inspiring values and leaders, trustworthy and capable managers, honest and transparent communication all contribute to people wanting to go above and beyond the call of duty.
Happiness. People care about their own sense of satisfaction and well-being. This is a personal focus and is characterised by people enjoying their job, liking their colleagues, being appropriately remunerated, having a balance between their work and personal life, and working somewhere with career development opportunities.
Historically, the focus has been on engagement rather than happiness. There has been more research into the organisational benefits of engagement. Mental health and well-being is a rapidly growing trend and will continue to be prioritised in today's world. Whilst there is a growing amount of research into the link between happiness and performance it is less universally accepted at present, although expect that to change.
4. What feedback should you collect?
You should work out the problems you are trying to solve before jumping to thinking about this. Understand your desired outcomes first. It is true that people want to communicate, connect and respond, particularly at the moment and be aware that;
Not acting on the feedback you receive can be more harmful than not soliciting the feedback in the first place.
Your people will give feedback whether you like it or not, and whether you listen to it or not. So listen carefully in whatever form that takes.
Formal feedback needs to strike a balance by being comprehensive enough to answer your questions, but not so onerous that people get tired of answering or that you are unable to analyse and do something about it.
Once this is understood, you can start to configure and understand the types of feedback to get. There are a lot of options; formal or informal, anonymous or identified, qualitative or quantitative, face to face or not, strategic or operational? The answer of what to get is going to be determined by what you are trying to find out.
5. What other data should you use?
Usually, engagement data sits in a vacuum; analysed on its own not connected to other data sources. Whilst it does illicit insight, its impact can be transformed by connecting data sets together. Other functions do it, there is no reason why HR shouldn’t. Here are some sources and measures to consider:
Other HR data - if you have an HR system, you’ll likely know sickness and absence rates as an example. Linking these two together is an important first step in understanding how to improve your business.
Financial data - a key measure of human output is called Human Capital Return on Investment. It evaluates the profit added by your workforce as a proportion of the money spent on them. Looking at the value employees create alongside levels of engagement becomes a powerful way to build business cases.
Performance data - linking engagement and performance data enables you to see how they relate. Whilst being aware that some of this might be objective, the ultimate aim is to see how engagement impacts on how people perform and vice versa.
Benchmarking data - with all of the caveats that do with this, there is lots of external data that can help you to put your metrics in context. ENPS benchmarks are widely available as an example. Even though your business is unique, external data can give you a guide as to how you are getting on.
Combining other sets with your engagement data should elevate your level of understanding helping you to bring more insight to your decision making
6. How is engagement impacting on your company’s performance?
With engagement data typically sitting on its own, evidence for the impact of increasing engagement has relied on academic studies and case studies. That may be hard to relate to your situation. Like most things, there is rarely a cut and dried case proving correlation or causation.
Other business functions have created models to help inform decision making. For example, working out where new customers come from is notoriously tricky, so marketing will use the best evidence and models alongside intuition to decide where to spend budget. The HR function needs to be comfortable doing the same; How do you work out whether Investing in training, salary, non-financial reward, culture, or flexible working is going to improve retention most?
To understand how engagement impacts performance, use measures and find ways to link them. We believe answering 3 questions is the starting point;
Importance - How structurally important are your people to your organisation’s performance?
Impact - To what extent is your culture allowing your employees to thrive?
Value - How effectively are you running your business to allow everyone to contribute as much as possible?
We take various sources of data and proven formulas to establish the link. When trying to build a business case for doing something, having evidence helps. This is what data analysis provides.
7. How can you use data most effectively?
All businesses are at a different level of maturity in their adoption of HR analytics. It is vital to work with the ambitions and capabilities of your organisation. The more advanced the capability, the more value you can get, although the more complicated it becomes. You still add value when working at a more basic level, as long as it is taking you forward.
If you’ve never done it, start now. If you don’t have the time, the capability or the willingness internally, there are plenty of people who can help you. Start on something small, solve it, then gradually work up to working on bigger problems with bigger business cases and more impact.
Like all data, information on engagement is only as good as the thought you put into it at the start, the way you interrogate it, how it makes things happen, and how you evaluate what impact it has had. Now is the time for HR people to embrace a data-led approach. Employees and organisations need a compassionate human-led route to creating thriving economies, successful businesses and personal well-being. Rather than being mutually exclusive, these things can work together to create a better world.