In times of economic uncertainty it is increasingly important to make fact-based decisions. But, to make the right decisions you need the right facts. For most organizations, employee engagement data represents an untapped opportunity in this regard. While employee engagement has become a widely used business metric routinely employed by many organizations worldwide, most of these organizations measure engagement in isolation. Understanding how and where engagement is impacting business performance in an organization is difficult to achieve through long and deep cyclical measurement efforts. To be effective, measurement needs to be shorter, sharper, more agile, and in line with changing business performance requirements. Here are five step in building an engagement measurement framework: 1. Understand the business and its value drivers. 2. Review business performance against key metrics. 3. Administer the engagement survey. 4. Turn engagement data into business intelligence. 5. Prioritize and focus attention and planning on the greatest opportunities to increase business performance using engagement.

In times of economic uncertainty it is increasingly important to make fact-based decisions. The implications of decisions today can be enormous as companies fight for survival. But, to make the right decisions you need the right facts. And, to make clever decisions, it is sometimes necessary to find ways to uncover and exploit previously unexamined relationships that often exist between fact sets.

For most organisations, employee engagement data represents an untapped opportunity in this regard. While employee engagement has become a widely used business metric routinely employed by many organisations worldwide, most of these organisations measure engagement in isolation. The information is used broadly as an organisation "health check", and the process is owned almost exclusively by Human Resources.

This is unfortunate.

Companies that take the time to examine the linkages between engagement and other business metrics capture powerful information that delivers competitive advantage. These organisations use engagement data to understand where engagement is a factor impacting business performance, and where it is not, which is equally as valuable to know.

A well constructed engagement-business performance measurement model can go even further still. It can help guide decisions regarding the capabilities and deployment of critical employee populations, inform the extent to which employee segments are being utilised efficiently, and shine a light on the extent to which existing people practices are adding or degrading value in each part of the business.

Ultimately, having a deep understanding of what human capital factors should be measured is as critical to a business as understanding any other cost or revenue driver. To seize the competitive advantage that this knowledge offers, companies need to move from simply knowing the levels of engagement to identifying exactly where, how and why engagement impacts their business results at any point in time.

Finding this out is really not as hard as you might think.

Enhancing business performance using engagement metrics

Understanding how and where engagement is impacting business performance in an organisation is difficult to achieve through long and deep cyclical measurement efforts. To be effective, measurement needs to be shorter, sharper, more agile, and in line with changing business performance requirements.

This means reducing the scale and depth of the measurement to focus on the areas where engagement has the greatest potential to directly impact business performance where and when it matters most. Companies should therefore reconsider the annual, "all-employee" measurement cycle in favour of more frequent "sampling based" studies that draw inferences from smaller numbers of respondents.

Divining anything of great value from engagement data independent of financial, operational, and customer performance metrics is problematic. However, the goal of measuring engagement is not simply to drive engagement scores higher and higher. Therefore, businesses need to understand how engagement itself relates to and impacts business performance. Seeking this understanding should be at the heart of engagement measurement, especially in the current economic environment.

Once an organisation knows, without doubt, where engagement is causing or varying performance, it can put in place highly focused action plans to exploit opportunities and correct deficiencies. There are several critical stages to building an engagement measurement framework that is aligned to value generation. These can be described in a simple, five step process, as shown in Figure 1 .

Step 1: Understand the business and its value drivers

Before an organisation measures engagement, it must first clearly understand its operating model, key strategies, priorities, and drivers of value generation in each business and/or business unit. It needs to understand how and where employees can and do contribute to business success by determining how and where they create value for the business.

They must undertake analysis that identifies the key activities performed by employees that are critical to the success of the organisation. The output of this analysis could be an Employee Value Chain, a high level example of which is provided in Figure 2, or a strategy map.

Step 2: Review business performance against key metrics

Understanding each of the critical roles and actívitíes allows for the development of a scorecard incorporating key metrics. These scorecards show the performance baseline for each metric and any variations in performance across and within business units. They also identify internal best practice and areas of poor performance. These metrics in the scorecards might be focused on sales, revenue, customer, operations, or cost. They can reflect the physical activity undertaken by roles (e.g., number of orders processed, number of client contacts, etc.) or they can be gross measures such as revenue per employee. These reference points then become the basis for evaluating the links between engagement and performance in key roles and activities.

Undertaking this process allows a business to look closely at how employees contribute to value creation. It also provides invaluable insight into how a strategy is executed on a business unit level and what increased contributions highly engaged employee groups could make along the value chain.

Step 3: Administer the engagement survey

Once an organisation understands in very clear terms what it is trying to do and how it means to do it as well as what drives value generation across the business and performance against key metrics, the engagement survey can be designed and administered to help understand how engaged people are at each phase of die value generation process, and what factors are driving engagement.

To do this right requires expert design and administration of a concise, highly customised engagement survey. Critical to success at this stage is a focus on keeping the survey short, tightly defined, and timely.

Step 4: Insight and analysis - turning engagement data into business intelligence

The next step is to leverage the knowledge obtained during the earlier phases. It involves applying a straightforward methodology for turning the data from information viewed in isolation into highly relevant business intelligence.

In the example shown in Figure 3, the relationship between engagement level and queue length showed a strong positive correlation. This analysis produced insights into where engagement was a factor impacting performance, where it was not a factor, and where key opportunities existed to leverage engagement for performance improvement (in this example, high impact is achieved by focusing on those operating units falling within the "Growth Zone").

Before proceeding to the final stage of action planning, these insights are then tested and validated with the business and business units to ensure accuracy.

Step 5: Prioritisation and action planning- developing initiative descriptions

The final stage is all about prioritising and focusing attention and planning on the greatest opportunities to increase business performance using engagement.

By this stage, there will be clarity and agreement on where engagement is causing or varying performance against any given metric. All that remains is to work through each opportunity, confirm the scope of the work required to effect the desired change, and then agree who will take the required action and within what timeframe. Each opportunity can then be framed within an initiative description.

Each initiative description should clearly define each individual objective and the associated business performance improvement expected to be attained with successful completion of the initiative. The initiative descriptions also should detail the level of effort required in delivering each objective, the people responsible for execution, and the interdependencies with any other projects or operations within the business.

The benefits of a more focused approach to measuring engagement

It's hard to imagine why any company or business leader wouldn't want to leverage the competitive advantage that measuring engagement in this manner offers. This process is a powerful means of delivering "excellence in execution" that can greatly enhance business results often more than traditional cost-cutting and efficiencyseeking practices that many leaders are employing today.

When applied correctly, the process for linking engagement to business performance can add enormous value by directing attention to the areas of the business that matter most, helping to clearly demonstrate the return on any investments made with respect to human capital management, and equally importantly, by ensuring that limited resources aren't invested in areas that easily obtainable intelligence clearly shows don't need it.

Given that there is an ever decreasing margin (and time for) error in more volatile markets, it makes sense to use available data in creative, innovative ways so that every opportunity is optimised. Linking engagement to business metrics is an innovative step that that companies should be considering, f

This article first appeared in Hewitt Quarterly (HQ) Asia Pacific. It is reprinted with permission of Hewitt Associates LLC, a global Human Resources consulting and outsourcing firm delivering a complete range of human capital management services.