Employee Engagement Monitoring

This white paper was published by KeenCorporation and Hay Group to elaborate on unique thought leadership in human capital management and support the introduction of a revolutionary tool to unobtrusively monitor employee engagement in real-time through psycho-linguistic analysis and tension detection, enabling companies to leverage human capital for strategic advantage, without the need to fill in time-consuming surveys.

The asset paradox: we neglect to continuously govern our primary asset class: our peopleFor several years, human resources executives have argued that the focus within the HR Prism should shift from output maximization to strategic value creation. But what does this shift really mean? How do you gain insight in and more important, how and how often do you measure contributions of human capital initiatives toward improved shareholder value? If talent management is the new motto in retaining employees how do you aggregate this highly personalized and diffuse data into relevant and actionable information? Answers to these questions are difficult to attain and in current situations mostly subjective and qualitative.

Let’s take a step back: if employees are to be considered the primary driver of organizational performance, why aren’t they valued as a separate asset class on company financial statements? If balance sheets reflect the financial health of “hard” business assets upon which strategic, financial and operating decisions are made, it is remarkable that until now no one has demanded that the so called “most valuable asset” of companies, its employees, should be capitalized as “soft” assets to present a “true and fair view” of company solvency.

To date and in particular relevant in Western Europe and the USA, where in excess of 70% of all companies operate in the service economy, we seem to accept that in shareholder value creation, the premier value driver, i.e. the employee, is excluded from day-to-day performance metrics

©2012 Hay Group. All rights reserved

Employee engagement monitoring Simple, efficient and visualized in Real-time

Rotterdam | April 2012


2 Employee engangement monitoring: Simple, Efficient and visualized in Real-time

Company leadership is selected, rewarded and increasingly more accountable for its ability to manage capital assets, realize growth and create measurable shareholder value. “Hard” capital assets are acquired, deployed, maintained and written-off, all in view of generating an acceptable return on capital employed.

Interestingly though, the well-known financial ratio “capital employed” is calculated as: total assets -/- current liabilities, and hence does not include the only real “employed” part of corporate assets, being its employees.

The lifecycle of “soft” assets, employees, is not monitored against certain standard conventions, in comparison with “hard assets” which are tested against generally accepted principles in corporate and financial management. We all know that what we can’t measure we can’t manage.

In short: corporate governance relating to employees is largely “invisible” to stakeholders in external reporting and the entire HR Topic is frequently earmarked as “soft”. Governance thus remains at the sole discretion of management which discloses a massive “blind spot” for stakeholders and shareholders. This leaves us with the inconvenient feeling that in external reporting “we may be measuring” the wrong things in our assessments of company health and performance.

Employee engagement is the prime subject for governanceEmployee engagement is defined as a measurable degree of an employee’s positive or negative emotional attachment to their job, colleagues and organization, which profoundly influences their willingness to learn and perform at work. Thus engagement is distinctively different from employee satisfaction and organizational culture.

Hay Group research has shown that the main drivers of engagement are a clear and challenging company direction, confidence in leadership, focus on customers and quality, development opportunities, respect and recognition and favorable compensation and benefits.

Disengaged, unmotivated employees cost organizations billions of dollars each

year. According to research of Hay Group (2009) employee engagement is the largest driver of bottom-line results. So engaged employees make the difference. Organizations in the top quartile on engagement demonstrate revenue growth of 2.5x greater than organizations in the bottom quartile, while companies in the top quartile on both engagement and enablement achieve revenue growth 4.5x greater than those in the bottom quartile. Gallup (2011), a large US research institute has also shown that organizations with high employee engagement have 3.9x better profit growth rates (EPS) than their average-performing peers.

However, few methods exist to monitor and quantify employee engagement in real-time. Current data collection methods still depend on traditional techniques such as surveys, questionnaires and direct interviews which are time consuming, expensive and obtrusive. A few observations on this:

Timeliness Due to processing and analysis & reporting time such surveys tend to provide management with dated information. Data is not captured in real-time which obstructs active intervention.

Obtrusiveness Employees need to break away from their daily routine to participate in such surveys, which frequently are conducted annually, semi-annually or at best quarterly as a component of the performance appraisal process.

Biased outcomes Surveys are likely to be influenced by local circumstances, mood and mindset of the individual, time, etc. which could result in challenges to accuracy and usefulness of the outcomes.

System integration As surveys are often reported separately from existing enterprise resource systems, it is complicated to:

integrate outcomes and recommendations for improvement in management reporting;

interface with other performance indicators for correlation and regression analysis.

“Failure to adequately incorporate effective metrics into design and implementation of strategy, is the largest gap in talent management”

IBM INSTUTUTE FOR BUSINESS VALUE, INTEGRATED TALENT MANAGEMENT REPORT

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Employee engagement should be monitored continuously like other assetsEquivalent to a control unit at an assembly line which monitors cycle time, machine temperature and capacity utilization, in an ideal world management should have constant, live and detailed information about employee engagement. Imagine a “heart rate monitor” for employees….

Similar to such a machine control unit, this information should be displayed automatically without the need of human interaction to capture process or filter this data. Data needs to be accessible 24x7x365 and updated in real-time so that management can easily interpret this and use this status information on the relevant asset. Effectively management will be enabled to pinpoint problem areas within the organization, render cause & effects and identify underlying problems of shifts and trends in employee engagement.

With such information it becomes possible to intervene quickly in departments where problems arise and assess the immediate effect of an intervention. Well performing departments are detected and their success methods can be replicated throughout the organization. Similarly this information can be partially distributed to employees, making it possible to compare departmental engagement with historic performance or other internal departments.

This could initiate a paradigm shift on human capital measurement and management: instead of reactive measures based on discrete performance reviews, company leadership including HR Professionals can now proactively design & deploy intervention programs to optimize yields on human capital via this “early warning system”. Moreover, sustainable benefits of effective HR Policy on financial performance can be measured, a direct correlation between employee engagement and other performance indicators can be construed and “return on capital employed” is finally properly calculated.

And now what we’ve all been waiting for… employee engagement can be monitored continuously!! KeenCorp© has developed a unique software solution which enables real-time, unobtrusive insight in employee engagement of an organization. Employee engagement is measured using a single ratio: the Engagement Behavioral Index (“EBI”). Hay Group was able to validate the EBI-index with one of world’s largest databases on engagement and can deliver the norms to give the index meaning: how good or bad is it what we measure compared to the country, business sector, or when we compare ourselves to the best business performers.

The EBI visualizes the index and changes in employee engagement within a specific organization and/or department “with a push of one button”. To measure the EBI KeenCorp’s algorithm can automatically process any digitally written text as input, primarily e-mail, but other written text which can be considered are corporate messengers (e.g. Skype, Communicator, Yammer) and daily-reports.

From written text KeenCorp’s algorithm combines psycho-linguistic language information with tension detection to construct a single index. Privacy and confidentiality are fully guaranteed as for every text, sender-receiver pairs are anonymized up until the level of a pre-defined group (e.g. accounting or management) and as a result of this a single measurement can never be back-traced to an individual. In addition, for each processed text, names, place names and company names are automatically anonymized before processing. Finally, the only information stored is a single combined index for each defined department. Technical integration of KeenCorp’s solution is comparable with the integration of a SPAM filter, which processes incoming email and measures the possibility whether the message is SPAM or regular e-mail.

“KeenCorp’s flagship product, Attitude Heat-map, enables corporate leadership to measure employee engagement in real-time and per department. Privacy is fully safeguarded”

Selected impressions of visualizations from the KeenCorp application:


4 Employee engangement monitoring: Simple, Efficient and visualized in Real-time

About Hay Group Hay Group is a global management consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organizations realize their potential.

We have over 2,600 employees working in 85 offices in 49 countries. Our insight is supported by robust data from over 100 countries. Our clients are from the private, public and not-for-profit sectors, across every major industry. For more information please contact your local office through

www.haygroup.com.

About KeenCorporationKeenCorporation is a Dutch software vendor set-up to measure the spirit of enterprise expressed in employee engagement, based on psycho-linguistic analysis and tension detection. Our solutions offer management insight and tools to measure, visualize and improve employee engagement in real-time with an unprecedented level of accuracy.

KeenCorporation was founded in 2011 by seasoned entrepreneurs with backgrounds in artificial intelligence, psychology, strategy and venture capital.

www.keencorporation.com

The stored indices can be visualized to an end-user (e.g. company leadership, employees or other stakeholders) by the two flagship products of KeenCorp©: MoodMetrix© and Attitude Heatmap©.

Combined with the traditional array of HR Metrics and tools now it becomes possible for company leadership to actively monitor employee engagement and its relationship with other business domains in real-time and continue to deliver detailed & personalized human capital management programs, based on existing HR Repositories and systems on employee performance.

MoodMetrix© displays a charted graph with the EBI presented on a timeline. With this tool changes in employee engagement within the organization can be tracked on a day-to-day basis. Comparisons can be made based on weighted averages on year-, quarterly-, month- or week-basis. Graphs can be generated for each predefined group within the organization. Groups can be defined as any cluster of individuals, for example the group “accounting” or “management”, but also groups can be defined as “female employees” or “employees above 40 years of age” or any other division deemed informative. A variety of Hay Group norms can be selected to benchmark against.

Attitude Heatmap© is a visualization tool which presents a detailed drill-down from the MoodMetrix graph and provides a segment status update of the organization, based on the same data. Aforementioned pre-defined groups are visualized in a heatmap, where each sub-division occupies a rectangle shape in the visualization, sized by the volume of the texts processed by KeenCorp’s algorithm and color coded by the change in employee engagement over time. It becomes intuitively clear where problem areas are looming, so management can intervene and immediately measure the effect of this intervention. A variety of Hay Group norms can be selected to benchmark against.

Documents

Employee Engagement Monitoring