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We will focus on the various measurements human resource managers and leaders can use to determine employee satisfaction within an organization. Some of the measurements the lesson will focus on include employee satisfaction with development and engagement or satisfaction rating.
Strategic Human Resource Metrics
Frank wants to measure employee satisfaction within his firm, and he needs to determine the feelings and perceptions of the employees working at his company. Frank is the owner of a hardware store, and the store has had great profits each year, but lately, Frank feels as if his employees are not as motivated as they used to be in the past. Frank values his employees, so he needs to understand how they view their roles at the hardware store. Frank investigates the various employee satisfaction metrics that he can use to get answers to some of his questions about his employees.
Employee Satisfaction Metrics
Some of the metrics Frank will use to determine employee satisfaction are employee satisfaction index, manager quality index, voluntary turnover, employee productivity index, and unscheduled absence rate.
The employee satisfaction index is a measurement of how happy or pleased an employee is with their current job. The employee satisfaction index will help Frank determine if a relationship exists between employee satisfaction feedback and an employee's desire to voluntary leave the company. The employee satisfaction index is based on a series of three survey questions answered by the employee that include how the employee feels about the company. The questions are rated on a scale from 1 to 10 (1 being the worst value, and 10 being the most favorable value). The formula for the index is:
(The total value of the three questions / 3) - 1 / 9 * 100
Frank collects the survey answers, and the total of all of the survey answers is 25. Using the formula, Frank calculates the employee index rate as (25/3)-1/9 *100 = 81. The higher the number, the better employee satisfaction rating.
Manager quality index measures employee satisfaction with their managers. Managers measure employee satisfaction with their managers through the use of surveys. Each survey can contain different types of questions depending on what management wants to discover about the perceptions of their employees. As with the employee satisfaction index, the scores from the manager quality index can be totaled and averaged by the number of questions. The higher the score, the greater the satisfaction of employees with their managers.
The engagement rating measures employees' commitment to their jobs. Employee engagement is usually measured by a series of questions within an employee survey. The formula for the engagement rating is the total number of employees who responded positively to the survey divided by the total number of employees who participated in the survey times 100. For example, Frank measures his employees' engagement and the total number of employees who positively responded to the survey is 7 divided by the total number of employees who participated in the survey, which is 11, * 100. Therefore, the total survey results indicate that Frank's employee engagement rating is 63%. At least more than half of his team is engaged based on the survey results, but Frank would like this rating to be higher than 63%.
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The voluntary turnover rate is a measure of how many employees join a company and voluntarily leave the company within a year. The lower the turnover rate, the better. The voluntary turnover rate is calculated by taking the total number of employees who leave the company voluntarily divided by the total number of employees during the year times 100. Frank had two employees leave the company voluntarily within the year. The total number of employees working for his company now is 15. Therefore, the voluntary turnover rate is 2/15 x 100 = 13%. Although Frank would love to have zero voluntary separations, he is pleased with the low voluntary turnover rate of 13%.
The performance index rating measures the efficiency of employees. The formula for the performance index rating is the total dollar amount of goods and services produced divided by the total number of employees. Frank's employees contributed to $50,000 worth of goods sold during the quarter, and the total number of employees is 15. Therefore, Frank's performance index is $50,000 / 15 = $3,333 worth of goods and services produced per employee each quarter.
Finally, the unscheduled absence ratio measures the amount of time an employee is absent for unexcused reasons. The formula for the unscheduled absence ratio is the number of unscheduled days absent divided by the total number of workdays times 100.
Monitoring Employee Satisfaction
Frank can use each of the employee satisfaction metrics to determine how actively engaged and satisfied his employees are with him and his company as well as with their jobs. The employee satisfaction metrics help Frank and other managers determine employee perceptions and feelings about their jobs during a point in time. Each metric can be measured against the manager's predetermined benchmark to determine if any changes need to be made to increase employee engagement, satisfaction, or productivity.
For example, Frank's employee engagement rating was 63%, but his goal was 80%. Obviously, Frank has some work to do to figure out how to increase the engagement of his employees. Frank's performance index rating is $3,333, which means each employee produces $3,333 worth of goods and services for his company. Frank's performance rating goal is $2,000, which means his current performance rating exceeds his goal. Frank will need to continue to monitor the rating to make sure the rating does not decline quickly over time.
Employee satisfaction metrics are measurements of the perceptions of how pleased employees are with their company and their jobs. Some employee satisfaction metrics measure employee satisfaction with their managers and also how productive employees are at a point in time. Managers can use these measurements to compare engagement and productivity levels at various time periods to look for trends. As leaders monitor trends of employee satisfaction surveys, they can make adjustments to employee programs and how well they manage their employees.
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