Believe it or not, the success of your company relies on a lot more than a solid business plan, strategic market positioning, or even an awesome product. A large part of your success relies on how successful you are with people and culture â in other words, on employee satisfaction and overall company environment.
Donât believe us? Some of the most powerful companies in the world â like Google and Salesforce â also have an awesome company culture. Is it a coincidence that they have happy employees, a positive company culture, and sky-high revenue?
Probably not. In fact, companies with highly engaged employees are reported to have a 50% higher market premium than those who do not.Â
Hereâs the thing about measuring your success in these areas: you canât make assumptions.
Donât assume that your employees are happy with their jobs because they smile when they come into work. Donât assume that youâve got a great company culture because your employees grab beers together after work. Donât assume people are going to work for your company for a long time because you offer a competitive salary.Â
In the following article, weâll take a look at why itâs so important to use KPIs to measure employee satisfaction and overall company culture, and three core KPIs you can use to measure success.
Why Use KPIs to Measure Success
As mentioned above, you can never assume that your employees are happy or engaged, or that youâve got a great company culture.Â
The best way to get an accurate assessment?Â
Collect KPIs â key performance indicators that give you measurable insight into how satisfied employees actually are (an indication of a healthy culture).Â
KPIs give you an accurate read on success for the following reasons:
- They help you to track performance over time. Comparing your scores from the same time last year can help you measure how well youâve improved â or worsened.
- KPIs are objective. Reading open-ended employee feedback can be very helpful, but it also leaves room open for interpretation (For example, âMy job is adequateâ can sound positive or negative, depending on the interpretation of the person reading it).Â
- Finally, KPIs help you to compare your business to others in the same industry. How are other companies in the same space faring in terms of employee satisfaction and company culture? Using KPIs will help you to make an objective comparison.Â
Ultimately, youâll want to combine KPIs with open-ended feedback to get the richest insight into your success with people and culture. In a minute, weâll talk about a tool that can help you get both. But first, letâs take a look at three core KPIs that youâll need as a foundationâŠ
eNPS: Employee Net Promoter Score
eNPS, or Employee Net Promoter Score, is a metric that helps you assess your employeesâ enthusiasm about working for your company. If theyâre enthusiastic, theyâre likely to recommend your company as a place to work; if not, theyâre likely to steer away from friends and potential colleagues.Â
Why is this an important insight?
Because employee enthusiasm indicates more than basic job satisfaction. It indicates that your employees believe that you have a company culture worth engaging in, and a business worth committing to. And it indicates that your company is likely successful. Just look at Zoom â the most popular video conferencing tool in America, worth $35 billion â which has an extraordinarily high eNPS of 84).Â
Hereâs how to collect and measure eNPS:
- First, youâll send out a survey through Nailted â a simple tool that can help you collect, calculate, and track your eNPS. The basic question youâll ask is: How likely are you to recommend this company as a place to work to others?
- The resulting 0-10 answer will divide eNPS survey takers into three basic categories: Promoters (9 or 10); Passives (7 or 8); or Detractors (6 and below).
- The answer will be calculated with the following equation:Â
[# of promoters/total # of survey takers] â [# of detractors/total # of survey takers] = eNPS
- The resulting answer can range from -100 to +100, so donât be discouraged by a 30-50 score! If youâre in the 50âs and above, you know youâre doing well!
- Finally, youâll ask an open-ended question (which you can also do through Nailted) â Please explain your answer. This gives your employees a much-needed opportunity to explain their scoreâŠand you an opportunity to gain insight into actionable ways you can improve their overall enthusiasm.
Tracking eNPS over time has several valuable benefits:
- Helps you measure the impact of your own efforts to improve company culture and team morale.
- Can help give you insight into specific events (such as a new client or project) that impact eNPS.
- Lets your employees know that you are continually invested in their satisfaction.Â
ESI: Employee Satisfaction Index
ESI, or Employee Satisfaction Index, is a broader indicator of employee satisfaction than eNPS because it encompasses expectations as well as enthusiasm.Â
ESI surveys rely on three basic indicators of an employeeâs satisfaction:
- How satisfied the employees are with their workplace or jobâŠ
- How much their workplace/job is meeting their expectationsâŠ.
- And how close their current workplace is to âideal.â
For each of these questions, employees will have the opportunity to respond on a 1-10 scale.Â
Then, youâll use the following equation to calculate your response:
[question mean value/3] x 100 = ESI
Just as with eNPS, you can use the employee satisfaction index (ESI) to track progress over time, compare your success with other companies in your industry, and assess how specific events in your company impacted scores.Â
Employee Turnover Rate
Employee retention is a key indicator of the current and future success of your company. When employees stay longer, they grow in value, knowledge, and skill â and contribute more to your company.Â
Employee turnover, on the other hand, is costly and damaging to your business. In fact, an employee thatâs paid only $40k a year will ultimately cost at least $8k to replace â 20% of their total salary. And for higher-paid employees, that percentage only escalates â for managers who make $100k per year, replacement can cost a business as much as $213k.Â
The bottom line? High employee turnover indicates that youâre definitely not performing well in the areas of company culture and employee satisfaction.Â
And, it indicates that you might be spending more than you need to on hiring, onboarding, and retraining (not to mention, loss of valuable knowledge and morale).
Measuring your employee turnover can help you get an honest assessment of how youâre performing in terms of retention â and if you desperately need to make changes.Â
Your employee turnover rate is measured by calculating the number of employees who left in a given time period divided by the number of average employees in the same time period. Then, multiply by 100.
In other words:
[employees who left in a given time period/ (employees at the beginning of the same time period + employees at the end of the same time period/2)] x 100 = employee turnover rate
If youâre lower than average in your results (average employee turnover across all industries was 17.8% in 2016 across all industries), then youâll want to take action to make changes. How can you improve employee satisfaction and company culture to make sure employees stay longer at your company?
Retention Rate
Measure how many employees decide to stay for a defined period. For example, taking into account the 100 first days of new hires, detected as decisive, can be a starting point.Â
# new hires who stay with the company for at least 100 days / # new hires in the same period = retention rate
Â
Once again, Nailted can help you get the answers to these questions â and more â with regular employee surveys that:
- Give your employees a regular opportunity to share optionally anonymous feedback with you and other employees.
- Give employees a chance to show recognition through âclaps,â creating a healthier, more positive company culture.
- Run individualized campaigns to help understand employeesâ progress, goals, and company alignment.
- And more.
Improving Employee Satisfaction Through a Culture of Feedback
Now that you have a clear understanding of which KPIs you need to succeed, why not incorporate a feedback culture that allows you to implement them?
Start by building a habit with your team: ask them to give feedback once a week. Little by little, they will get used to it and build confidence, consequently making their feedback more detailed and sincere.Â
And so, creating a culture of feedback through regular employee surveys can ultimately help you to improve employee satisfaction and company culture.Â
Why?Â
Employees get the opportunity to share actionable strategies for change with you; theyâre given value and a voice; and theyâre encouraged to share positive feedback with one another, as well as constructive criticism â ultimately creating healthier communication. If youâd like to see how Nailted can help you achieve greater success with people and culture book a demo with one of our team experts!