How to Measure Employee Satisfaction Using KPIs

KPIs are a must when it comes to performance management. They provide quantifiable ways to track behaviors. This enables you to measure outcomes that directly impact goal achievement.

KPIs are used in performance management to measure things like sales volume, customer satisfaction, and quality, but they can also be an effective way to measure, track, and manage employee satisfaction. But exactly how do you measure employee satisfaction KPIs?

Before we dive into how to calculate and measure employee satisfaction, let’s define exactly what a KPI for employee satisfaction is with some actionable examples you can integrate into your performance management strategy.

What Is a KPI for Employee Satisfaction?

Employee satisfaction is an extremely important metric to measure because the happiness of your employees can affect your bottom line. Happy employees are 12% more productive than unhappy employees. Having happy employees also comes with a low absenteeism rate and improved retention.

Measuring satisfaction can be a challenge, though. It can feel unquantifiable, but the truth is, it can be measured with KPIs.

A KPI for employee satisfaction is a quantifiable way for you to measure the level of satisfaction among your employees. These KPIs enable you to pinpoint what to measure and give you a way to measure them consistently. Armed with clear data, you can rate and compare responses to other employees, departments, cohorts, and more.

A few KPIs you can use to measure employee satisfaction include:

• Turnover rate
• Absenteeism
• Recognition
• Employee net promoter score (NPS)
• Employee Satisfaction Index (ESI)

Turnover rate

When employees are happy with their jobs, they are a lot less likely to look for a job somewhere else. That's good for your bottom line because replacing an employee costs anywhere between one-half to two times their annual salary.

You can calculate your turnover rate by:

(total number of employees that quit ÷ total number of employees at the beginning of the timeframe you're measuring) x 100

You can calculate the turnover rate for your entire organization, or you can calculate metrics for specific departments and teams. If you conduct exit interviews, you can also create specialized metrics that calculate your turnover rate according to the reason why employees quit.

Absenteeism

Happy employees are less likely to call in absent, which makes this a powerful KPI to measure. You can measure it by:

(total number of days absent per employee ÷ total number of days worked) x 100

This KPI is especially enlightening when you calculate metrics for different cohorts. For example, you might see if there’s a certain age group that is absent more often than others. You might discover that middle-aged workers are absent more often due to family obligations, and implementing a system of flexible start and end times might help boost their attendance and happiness levels.

Measuring the types of absences can also be a good idea. You might find that planned absences are low but short-notice absences are high. In this case, you would want to look into why employees aren’t scheduling regular time off.

Recognition

Recognition is often overlooked, but it is extremely important to employee satisfaction. A whopping 81% of respondents in one survey report elevated job satisfaction levels when they feel highly appreciated and 87% reported it positively impacts their motivation and confidence at work.

There are a few different ways you can measure this metric include:

• Frequency of acknowledgment within a certain period
• Participation rate of employees who are involved in recognition programs
• Recognition source that identifies where recognition comes from, like managers, peers, or someone else
• Recognition type, which differentiates between verbal praise, written appraisals, awards, bonuses, and others
• Recipients, which identifies which employees have received recognition

Employee net promoter score (NPS)

The employee net promoter score (NPS) measures how likely your employees are to recommend your company to others. It can be a great way to track employee satisfaction because only happy employees are likely to recommend the company to others who are looking for a job.

It's easy too. All you have to do is ask the following question:

On a scale of 0-10, with 0 being “not at all” and 10 being “without hesitation,” how likely would you be to recommend working for our company?

Then, you divide the responses into categories that include:

• 9-10: promoters
• 7-8: passives
• 0-6: detractors

Finally, you calculate the eNPS by:

(Promoters – detractors) ÷ total participants x 100

Not only can you compare the scores of different departments and cohorts, but you can also compare your scores to other companies. You can see where you stand compared to others in your region, country, and even the world.

Employee Satisfaction Index (ESI)

The employee satisfaction index (ESI) uses three questions to get answers that are more in-depth than the eNPS. The three questions you ask are:

• How satisfied are you with your current workplace?
• How well does your current workplace meet your expectations?
• How close is your current workplace to the ideal one?

The questions are answered by using a scale of 1-10. The simplest way to calculate the ESI for each question is by:

(total number of employees who responded positively ÷ total number of employees who participated) x 100

You can also combine your findings to get an overall score by:

(question mean value ÷ 3) x 100

Different scores can be compared between departments and cohorts, as well as industry-wide.

How Do You Calculate an Employee Satisfaction Rating?

Surveys are a great way to get employee feedback on their happiness, but figuring out exactly how to measure an employee satisfaction survey can be difficult. To be able to accurately measure responses, you have to ask the right questions.

For example, questions that ask employees to rate their satisfaction on a scale of 1-10 are easily measurable. Simper rating scales of 1-3 can also be useful, as can “yes” or “no” responses.

A few formulas for calculating different employee satisfaction ratings include:

• Turnover rate = (total number of employees that quit ÷ total number of employees at the beginning of the timeframe you're measuring) x 100
• Absenteeism = (total number of days absent per employee ÷ total number of days worked) x 100
• eNPS = (Promoters – detractors) ÷ total participants x 100
• ESI = (total number of employees who responded positively ÷ total number of employees who participated) x 100

Fill-in-the-blank responses are quick and easy for employees to answer, and they are quick and easy for HR and managers to measure too. For example, you might ask employees, "I am __________ with the support of my supervisor." Employees would fill in the blank with “satisfied,” “neutral,” or “unsatisfied.”

Collecting measurable data like this is important, but that doesn’t mean you should forgo asking open-ended questions altogether. You can learn more about the why behind the quantitative data you uncover when you also ask qualitative questions.

How to Measure Employee Satisfaction Without a Survey?

Surveys are an easy way to collect employee satisfaction data, but it’s also useful to learn how to measure employee satisfaction without a survey.

That's because not all employees will complete the survey. The lower the response rate, the less accurate your data will be. Any response rate under 100 percent means you're missing important input from some of your employees. Especially since the ones who are less likely to complete the survey are also more likely to be your most unsatisfied employees.

By learning alternative measurements of job satisfaction in organizational behavior you can create a more complete picture of the true satisfaction of all your employees.

Calculating your turnover and absenteeism rate can give you a sense of how happy your employees are without a survey. A few other ways you can measure employee satisfaction without a survey include:

• Frequent meetings with one-on-one meeting software help employees get more comfortable with managers so they’re more likely to mention what’s making them unhappy
• Continuous feedback software allows employees to share their feedback and ideas at any time—not just when they get a survey or have a performance review.
• Create a physical or digital suggestion box where employees can leave their feedback and ideas anonymously.
• Observe office culture and team dynamics and be on the lookout for low energy, lack of collaboration, and skipped breaks as potential signs that employees may be unhappy.

How Do You Measure if an Employee Is Happy?

Directly asking employees about their happiness at work and keeping the lines of communication open are important ways to measure job satisfaction, but there are a few other things to keep an eye on when measuring if your employees are satisfied.

Pay attention to and measure employee wellness regularly as it has a direct impact on employee happiness. Measure stress levels and whether or not employees have access to stress-relieving resources. Low-stress levels and the ability to utilize wellness resources, like a free gym membership or free therapy sessions, are indications that you have a happy workforce.

Company culture is also important to employee happiness. You might ask employees about the culture directly on a survey or you might observe their behavior and compare it to your organization’s values to see if they match up.

A few other ways to tell if your employees are happy include:

• They have the autonomy to customize their position and work on projects that interest them
• They show up on time or early every day
• They have positive relationships with their coworkers
• They feel comfortable offering suggestions and coming up with creative solutions to problems

How to Make Measuring Employee Satisfaction Easier

Measuring employee satisfaction isn’t something that should only get attention once or twice a year. Supporting employee happiness means regularly evaluating how they feel and making necessary changes through open communication and regular feedback.

Keeping track of important data like the employee satisfaction index and eNPS over time is vital to creating a complete picture of how your employees feel at work. That’s a lot easier when you have a dedicated platform to collect, manage, and store employee satisfaction data.

Performance management software can make it easier. Not only does the PerformYard platform support continuous feedback, but it also keeps all of your data and information in the same place so you can create visual reports, compare different cohorts, and track changes over time. Our employee engagement software also enables you to create custom surveys so you can get feedback from your employees at a cadence that’s right for you.

Discover exactly how PerformYard can support employee satisfaction in your workplace and get a demo today!