Beyond Engagement Score: Creating a Framework for Measuring the ROI of Employee Experience

Many organizations and HR teams rely on engagement scores to measure employee sentiment. While helpful, this information might not be enough to secure long-term leadership support. HR leaders must then develop a more comprehensive approach to assess the overall employee experience (EX) and its impact on organizational growth.

The Limits of Traditional Engagement Metrics

Employee engagement scores are one way to measure workers’ experience in their roles. These metrics can capture how people feel, but not necessarily the factors that influence these feelings and how they impact business outcomes.

Relying solely on these scores can lead HR teams and businesses to overlook structural issues, like ineffective leadership or poor communication. A company might have a strong engagement rate yet still struggle with turnover or productivity. Leadership might even question the purpose of measuring this data in the first place.

HR professionals thus bear the task of accurately measuring and proving the return on investment (ROI) of EX, which requires a more comprehensive approach that ties employee sentiment to operational and financial performance.

How Employee Experience Affects the Bottom Line

Engagement is an important metric in HR. It is often a good indicator of performance in critical business outcomes. According to Gallup research, employee engagement in best-practice organizations stands at 70%, which is significantly higher than the global average of 21%.

However, engagement is only one aspect of the employee experience, which encompasses every interaction an individual has with the organization. A positive experience makes workers happier and directly impacts retention and profitability.

Research shows that employee happiness leads to 12% higher productivity. A motivated workforce translates into measurable outcomes like stronger performance, reduced absences and higher customer satisfaction.

When coupled with robust strategy and resource allocation, these benefits can translate into cost savings and increased revenue.

Metrics to Prioritize to Demonstrate the ROI of Employee Experience

A comprehensive EX measurement framework should utilize employee engagement data in conjunction with other quantifiable metrics. These indicators can help HR professionals connect EX to business value.

Turnover Rates

Turnover is a direct indicator of EX success or failure. High turnover rates suggest a misalignment between employee expectations and the reality of the workplace. It costs money, too. If more workers are leaving the company over shorter periods, the HR team will need to spend more time and resources hiring and onboarding new people.

Reducing turnover by even a few percentage points can save organizations a significant amount each year. For example, if the average cost of replacing an employee is $15,000, improving EX to retain 10 employees saves $200,000 annually.

Retention Rates

In contrast, high retention rates reflect the strength of a company’s EX. Tracking retention among high performers and critical roles provides a clear picture of an EX strategy’s effectiveness. If this number improves after implementing mentorship programs or hybrid work options, it can demonstrate the measurable value of EX initiatives.

Consistent retention translates to solid institutional knowledge and stronger internal ties, which drive efficiency and innovation over time.

Revenue per Employee

This metric bridges HR and finance. Revenue per employee indicates how efficiently the workforce generates revenue, which can be calculated by dividing the total revenue by the number of workers.

To calculate ROI, HR teams can compare the revenue per employee before and after introducing EX improvements like updated training or improved collaboration tools. Even small percentages can add up, tying positive EX with workforce effectiveness and financial gains.

Absenteeism and Presenteeism

Absenteeism measures the time when employees don’t show up due to illness or other reasons. Presenteeism captures a subtler cost. It is when employees show up physically but not mentally. Both can drain productivity and morale.

Targeted EX initiatives, such as wellness programs, stress management resources, or improvements in workload distribution, can reduce these losses. Tracking absences and conducting anonymous wellness surveys can quantify potential enhancements.

Customer Satisfaction Scores

EX directly influences customer outcomes. Satisfied employees are more likely to deliver better service and make fewer mistakes. Monitoring metrics like customer satisfaction score (CSAT), net promoter score (NPS) or client retention alongside EX efforts can reveal some correlations.

Leveraging Data for Decision-Making and Improvement

Collecting data is the first step. To create impact, companies should translate this information into decisions that continuously refine EX initiatives that influence business outcomes.

Raw numbers require context and processing to tell a clear story. Strategies like prescriptive analytics provide recommendations and solutions to achieve a specific goal or prevent undesired results.

Qualitative questions and employee feedback can also add critical context. Open-ended responses, exit interviews and focus groups can create connections between specific numbers and the reasons behind them.

Measuring EX should also align directly with the organization’s overall strategy. EX initiatives should reinforce business goals to clearly showcase their value. Experts look forward to a future where organizations leverage people management initiatives and data to improve organizational performance.

These efforts to expand and contextualize EX data can make it easier to communicate its value to company leadership. HR must create narratives that resonate with executive teams, especially those who are more focused on financial results.

Fostering Continuous Improvement

A comprehensive framework for measuring EX initiatives enables HR teams to more effectively link people management efforts to business outcomes. By interpreting these results through the lens of financial or organizational goals, HR leaders can make a compelling case for investing in EX improvements.

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Devin Partida is the Editor-in-Chief of ReHack.com, and is especially interested in writing about human resources and BizTech. Devin's work has been featured on Entrepreneur, Forbes and Nasdaq.