It’s Time to Rethink Employee Engagement Benchmarking

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“Wait, is that good?”

That’s usually the first question that comes to mind when we get employee engagement survey results. Instinctively, our next step is to look for benchmarks.

Unfortunately, comparing your engagement scores to other companies’ (even if they share your industry or headcount) isn’t as useful as you might think. As HR consultant Jen Randle puts it, you’re “comparing apples to zucchini.” Let me explain why.

1. Your “peers” are not who you think they are.

We often hear teams ask for benchmarks by general criteria like industry and company size. The intent is to find the dataset most relevant to them.

But while this approach seems sufficient in narrowing down your comparison set, it may actually be leading you astray. Finding your true peers (companies just like yours) means asking more nuanced questions — questions that are unfortunately much more difficult to answer, like:

● How does our company’s annual cycle compare to theirs?
The same survey, conducted at different times of the year, can tell a very different story about an organization. Business cadence plays a big part in this: If folks are just coming off of their busy season, they’ll either be more stressed or more energized (likely both) than if they’re in their slow season.

Of course, if you’re looking at a benchmark composed of hundreds of companies, these differences get flattened. Therein lies the problem: The benchmark isn’t accounting for your organization’s position in its own cycle.

● Are they growing at the same rate as us?
Newer employees tend to be more engaged because of confirmation bias. In other words, they want to feel better about their decision to join. If you have more or fewer new employees than the average, then once again, the benchmark isn’t useful.

● How’s their tenure compared to yours? What about gender, racial, and age diversity?
Unless your comparison set’s employee base looks similar to yours across all these markers, your benchmarks will be skewed. Consider a company that has made strides in hiring diverse racial candidates but still has work to do on the inclusion and belonging front. Now consider a comparison set that’s lagging in diversity, or a scenario where the most racially homogeneous workplaces end up scoring high on belonging. What a backward message that would send!

2. Your culture can’t be bucketed.

Culture is a slippery fish. It comprises all the norms and behavioral expectations, written and unwritten, that exist within a company. And like it or not, things like enthusiasm and realism — which can lead to so-called “grade inflation” or “grade deflation,” respectively — are part of your culture. That means that different cultures will have different engagement baselines.

Imagine two companies with the following behavioral norms:

● Company A
○ We celebrate every win.
○ We encourage positivity, both internally and with our customers.
○ We have a growth mindset, turning “we can’t” into “how could we.”

● Company B
○ We tell it like it is.
○ We don’t jump to solutions without identifying problems first.
○ We are constantly separating the wheat from the chaff.

Holding all other variables constant, which of these companies do you expect to have higher than average engagement scores?

This isn’t as extreme of an example as you might think. Culture has a real, pronounced impact on scoring. A study conducted by Bain & Company measured the average employee Net Promoter Score (eNPS) in relation to the culture of the area where their office was located. The delineations were not determined by borders on a map, but rather based on traditions and religion.

The study revealed a 73-point spread between the highest and lowest scores. Culture, both societal and organizational, determines a great deal about how we behave and how we think. It also happens to be one of the most difficult things to account for when seeking out “good” benchmarks.

3. The world is your employees’ oyster.

Let’s step back and consider why you’re asking for benchmarking data: You want to know how you stack up against the competition. You want to retain your employees, and part of that means making sure their alternatives aren’t so superior that they turn into flight risks.

Until a few decades ago, people generally started and ended their careers in the same professions or even at the same companies. Today, it’s easy to imagine a worker two decades into their career who has spent time at twelve different companies, with headcounts ranging from three to 40,000 employees, across six distinct industries and four geographies. (It’s easy to imagine because that worker happens to be me.)

But if the point of benchmarking is to identify our employees’ alternatives, then narrowing down scores by specific industries, company sizes, or geographies ignores the evolving nature of modern work. And let’s not overlook the influx of remote-only opportunities. Your peer set, in the eyes of the employees, is essentially every employer, everywhere.

Implications

If this article strikes you as counterculture, that’s because it is. As business leaders, we’re taught to collect as much data as we can, seek out insights from external sources, and look to market trends for ideas. We want to know that our decisions are aligned with what others have done in the past. In fact, doing so is often imperative for our colleagues in other departments, like customer experience or operations.

So should you never compare scores? Two comparison sets still matter: historical data and internal data cuts. These two will give you more insight than any external benchmark and are already contextualized to your culture, employees, and annual cycle. In other words, you are your closest peer.

If you still feel a pull towards external benchmarks, perhaps because you’re concerned that you’re lagging behind your employees’ alternatives, here are a few guardrails to remember. First, stick to survey questions that you know are drivers of engagement, and not the outcome measures themselves (like belonging or likelihood to recommend). If the question is a strong driver of engagement and you’re comparatively weak in it, then it could be a reason why your employees may be looking elsewhere. Next, be thoughtful about your comparison set — sticking just to your industry and company size may not serve you as well as you originally thought. And lastly, this kind of external benchmark analysis should happen only after you’ve already looked closely at engagement survey comments and focus group discussions. In most cases, that’s where you will find your best answers on what change is needed.

In the end, no matter how much we want to compare ourselves to our neighbors, external benchmarks will never be as useful to the engagement world as they are to other business functions. Sure, we can get some creative ideas from others, but however you cut it, each engagement path is unique. Our best bet is to stop looking over our shoulders, grab our internal compasses, and forge ahead.

3 COMMENTS

  1. Bill Fotsch and I are largely in agreement. A related issue is that any mainstream company employee study – Gallup, Bain, eNPS – largely deals with employee engagement, a 30 year old concept based on elements of the Service-Profit Chain. As Bill notes, engagement focuses inward, and tends to be pretty passive in nature. Today, we’re in an entirely different state of play, and the value of employee experience, like customer experience, is front-and-center: https://customerthink.com/for-employees-and-customers-should-the-goal-be-higher-engagement-or-higher-experience-value/

  2. Thanks for your comments, Bill and Michael. I very much agree that employee and customer experience are fundamentally intertwined. But for both of your comments, I believe it’s not a question of ‘or’, but rather one of ‘and’. Bill, research has shown time and again that intrinsic motivation — like alignment of purpose, autonomy, and trust — is just as important as, if not more important than, extrinsic motivation (i.e. money) when it comes to creative / right-brained tasks like building a company. The two work incredibly well in tandem, but you won’t get far with just the latter (I’m willing to bet that the case studies in the Forbes article you shared also went far to ensure that their employees were aligned, that they believed their company was fair, that there was trust, etc). And to address your comment, Michael, regarding the Service Profit Chain: I spent many years working on the very problem of engaging employees in the customer experience (check out https://www.linkedin.com/pulse/why-customer-experience-professionals-knocking-hr-doors-julia-markish/), and I found that, again, it’s a question of and — now more than ever. Healthy companies ensure that employees are constantly talking about, reviewing, and enhancing the customer experience, *and* those conversations are made possible by the trust, alignment, and autonomy that are hallmarks of engagement.

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