The ROI Methodology: Measuring the Effect of Employee Engagement Programs

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There is probably no other topic more frequently discussed in human resources than employee engagement. Fully engaged employees remain with their organization, produce more, and are more efficient. In addition, they will satisfy customers and increase sales. This is achieved by examining not only the why, what, and how of the work but also where and when the work is done, addressing alternative and flexible work systems and workspace design. When these issues are addressed properly, they can foster long-lasting, high-performing work teams comprising engaged employees contributing to the organization’s success.

However, employees who are not engaged or who are actively disengaged cost the world $8.8 trillion in lost productivity, according to Gallup’s State of the Global Workplace: 2023 Report. That’s equal to 9% of global GDP. This data is concerning, considering organizations spend hundreds of millions of dollars on employee engagement programs. What’s missing is a credible framework to measure, prove, and improve investments in employee engagement.

Don’t miss this intriguing
webinar from HRDQ-U

Don’t miss this intriguing webinar from HRDQ-U

Measuring the Success of Employee Engagement

The ROI Methodology® serves as a crucial system for accountability in measuring the success of employee engagement programs. This methodology emphasizes the use of return on investment (ROI) as an effective measure for engagement by showcasing bottom-line results, drawing on its rich historical application, aligning with senior management language, generating attention among key stakeholders, and enforcing the strategic alignment of engagement initiatives with business needs. In the current business landscape, haphazard investment in human capital without evidence of its impact is no longer sustainable, making the ROI Methodology a foundational tool for engagement practitioners to rethink and implement in their projects.

In far too many situations, employee engagement programs are implemented without a complete picture of the reason for the program. Pursuing initiatives without knowing why or identifying clear performance and business needs upfront can be disastrous in today’s economic climate. Evaluation is too often an afterthought. The role of measurement and evaluation is crucial for establishing the impact and credibility of employee engagement. It is time for the field to fully endorse and implement this data-driven approach. Several factors make ROI an effective measure of engagement:

  • ROI shows bottom-line results. Return on investment represents the ultimate range of measurement – a comparison of the actual cost of a project with its monetary benefits. This is done by using the same standard ratio that accountants have used for years to show the return on investment for a variety of investments, such as technology, equipment, and buildings.
  • ROI has a rich history of application. The ROI Methodology is not a passing trend – it is a measure of accountability that has existed for centuries. When resources are invested to address a business need, the ROI Methodology shows the financial impact of the investment.
  • Learn to speak the same language as senior management. Most managers have knowledge and skills for managing a business. These managers understand the need for a process to establish solid business cases and calculate a return on investment. They use ROI for various projects and are very interested in seeing the monetary results from large investments.
  • ROI attracts stakeholders’ attention. Positive ROI outcomes create buzz and attention, particularly when the value exceeds expectations. Most stakeholders involved in employee engagement programs intuitively believe that the programs add value. Fortunately, they can use ROI as a credible and valid measurement tool to confirm this hunch.
  • Using ROI Methodology promotes strategic alignment. By following the steps in the ROI Methodology, engagement will be more closely aligned with the strategic and operational needs of the business.

 

Gone are the days of broadly increasing investment in human capital without any evidence regarding its impact on the business. When budget cuts loom, human capital often rises to the top of the list, and engagement projects are no exception. Showing the value of investments can protect your projects and programs.

Author
Headshot of Jack Phillips
Jack J. Phillips, Ph.D.

Jack J. Phillips, Ph.D., chairman, ROI Institute, is a world-renowned accountability, measurement, and evaluation expert. Phillips provides consulting services for Fortune 500 companies and major global organizations. The author or editor of over 100 books, he conducts workshops and presents at conferences worldwide.

Jack has served as training and development manager at two Fortune 500 firms, senior human resource officer at two firms, president of a regional bank, and management professor at a major state university.

This background led Jack to develop the ROI Methodology, a revolutionary process that provides bottom-line figures and accountability for all types of learning, performance improvement, human resource, technology, and public policy programs.

Jack has consulted with various organizations on employee engagement projects, including The Conference Board, and has taught thousands of individuals how to show the value of engagement.

Phillips has received several awards for his books and work. The Society for Human Resource Management presented him with an award for one of his books and honored an ROI study with its highest award for creativity. In November 2019, Jack and his wife, Patti Phillips were named two of the top 50 coaches in the world, by the Thinkers 50 organization. In addition, they were named finalists for the Marshall Goldsmith Distinguished Achievement Award for Coaching.

Connect with Jack on LinkedIn.

Recommended Webinar
Measuring the Success of Employee Engagement

Learn how to define engagement and its importance in the workplace, how to measure employee engagement, and make a plan for your organization.

Measuring the Success of Employee Engagement | HRDQ-U
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