Measuring the ROI of employee engagement [free calculator]

High employee engagement is closely tied to increased organizational productivity and retention. Yet, only 23% of employees worldwide feel engaged at work.*

That’s a tough pill to swallow for any manager, human resources professional, or operations leader who understands the importance of engagement — especially as 48% of HR leaders struggle to demonstrate ROI with data,** making it harder to secure budget approvals for employee well-being initiatives.

To help you quantify the return of your engagement strategies and gain leadership’s buy-in, we’ve put together seven actionable methods to measure employee engagement ROI — we’ve even included a free ROI calculator!

*Gallup, 2024

**Leapsome’s Workforce Trends Report, 2024

💵 How much could you save? 

‍Discover the potential ROI of investing in better people enablement processes.

👉 Use the ROI calculator

What is employee engagement ROI?

Employee engagement ROI measures the financial returns from investing in engagement strategies. It’s calculated similarly to other types of ROI: divide the profits generated from engagement initiatives by their cost.

However, financial profitability is just one lens. Engagement investments also yield other measurable returns — such as higher productivity, improved work quality, and greater customer satisfaction.
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Leapsome’s employee engagement ROI calculator

To calculate your organization’s employee engagement ROI, use Leapsome’s free ROI calculator. 

By simply entering the three inputs below, you can estimate the financial impact of boosting employee engagement:

• Number of employees
• Average salary 
• Employee turnover rate 

Here’s a step-by-step guide to using the calculator effectively:
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Step 1: Enter your number of employees

Our ROI calculator needs to know how big your team is before it can estimate potential savings.

Let’s say you run a medium-sized tech company with approximately 110 employees. Start entering that data into the calculator, and you’ll immediately see how much you could save on productivity by improving your people enablement processes.

If headcount fluctuates due to high turnover, use a yearly average.

Step 2: Input your average annual salary

Next, enter the average annual salary in your company and select the appropriate currency for your region. 

If your payroll software doesn’t already tell you this, you can work it out manually by adding together all the salaries in your organization or chosen department and dividing the total by the number of employees.

For instance, with an average salary of US$40,000, the calculator shows savings of US$88,000 from reduced absenteeism — and a whopping US$220,000 in productivity savings. 

Step 3: Add your employee turnover rate

Finally, enter your organization’s employee turnover rate into the calculator. This is a crucial metric for assessing the ROI of employee engagement, as it can indicate whether people enjoy working with your company and provide insight into the effectiveness of your current People processes.

💡 If you need help calculating your employee turnover rate, we’ve got an article to assist you with that, too!

The average employee turnover rate in the tech industry is around 13%. When we put that data into the calculator, it estimates turnover-related savings of US$128,700 for businesses that invest in better people enablement. 

All of the above amounts to a massive total saving of US$436,700 for this example company. That just goes to show how much revenue business decision-makers can miss out on if they don’t prioritize investing in employee engagement and enablement. 

An example of great employee engagement ROI in action: Eurowings Digital

After reaching 50 employees, Natasa Kovacevic, People & Culture Manager at Eurowings Digital, was eager to turn employee feedback into actionable insights to improve the company’s work environment and culture. 

So, Natasa and her team adopted Leapsome to run processes like employee engagement surveys and uncover the main people management challenges they needed to tackle across the organization.

Using features like Reviews, Surveys, Goals, and Learning, Eurowings Digital achieved the following results in just two years — alongside rapid company growth:

• Employee turnover rate reduced from 18% to 5.8%
• eNPS question score average increased from 7.9 to 8.5
• Survey participation rate increased from 60% to 82%

These impressive statistics demonstrate the potential ROI of employee engagement software, helping People teams quantify the results of their hard work to support well-being, motivation, and culture.

Using an ROI calculator, you can showcase these kinds of results within your own organization, helping you to benchmark employee engagement and find new areas for improvement.   

“People are expecting a lot more from their workplaces in terms of culture and well-being,” Natasa pointed out. “So, if People professionals aren’t measuring that sentiment, they should absolutely start doing so and then actually follow up on it.”
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7 ways to measure the ROI of employee engagement

Measuring engagement ROI goes beyond looking at financial outcomes. Here are seven methods to help you evaluate its broader impact:

1. Employee involvement

Greater employee involvement and satisfaction at work are among the first outcomes of an effective engagement strategy. Engagement tends to have a ripple effect: that sense of fulfillment positively impacts performance with increased productivity and work quality.

That’s why monitoring employee satisfaction and motivation is fundamental to determining if you’re getting an adequate return on your engagement efforts and investment. If you’ve already researched how to measure employee engagement, you may know what metrics to look into. But if not, here are some suggestions:

• Conduct pulse surveys — Pulse surveys are short, quick-to-complete questionnaires that gauge employee sentiment around a particular topic (like remote work, professional development, or career growth opportunities).
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• Run diversity surveys — These are pulse surveys that investigate how your company is doing regarding diversity, equity, inclusion, and belonging (DEIB). And they’re also a great way to determine the state of psychological safety within your organization; when everyone feels accepted and included, they’re more likely to feel comfortable and satisfied at work.
  
  

• Find out your employee Net Promoter Score (eNPS) — Your eNPS quantifies how your company is doing based on the answer to one question: How likely are you to recommend [Company] to your family and friends as a place to work?

A word of caution: There is such a thing as overdoing it with engagement surveys.  Employees could feel survey fatigue — especially if they don’t think managers and leaders will take action on the feedback they share. And a lack of action leads to disengaged staff.

💡 Do you need to get buy-in from C-level execs to support your employee engagement initiatives? Watch our webinar to discover how to speak the CEO language and learn practical strategies to build a strong business case!

2. Productivity 

Engaged employees work more productively because they’re more driven. Of course, they’re motivated by factors like recognition and monetary rewards — but highly engaged professionals are inspired by intrinsic factors, too. They feel appreciated at their workplace and enjoy learning, growing, and seeing their efforts bear fruit.

But how do you know if your engagement efforts are impacting employee productivity? Try tracking productivity metrics and comparing them against your engagement program.

For example, did you notice an uptick in sales when you started focusing on employee engagement? It might be because your strategies are working!

You can track team member productivity within a certain period by looking at:

• Total sales — This is a common productivity metric. You can calculate it by dividing your total sales by the number of hours employees worked.
  

• Performance reviews — Analyzing team members’ previous performance reviews can give you insights into productivity shifts or improvements.
  

• 360-degree reviews — This type of review looks at performance holistically. Employees assess their own performance and receive feedback from managers, peers, and reports, and can even include clients or service providers.
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3. Turnover

Engaged staff tend to stay with organizations longer, and attrition rates can help you assess employee engagement. 

But on their own, decreased turnover rates may not be a fully accurate indicator of engagement. That’s why it’s critical to have a holistic mindset regarding engagement ROI.

Of course, other factors can influence an employee’s decision to stay with a company — they may not feel confident about external opportunities, for example.

In a tight labor market, and with companies incentivizing employees with bonuses and merit pay, people may find that monetary rewards are motivation enough to stay in their current jobs — even if they don’t feel satisfied.

“I've interviewed CEOs that have made positive changes to corporate culture, and they say it takes almost two years until employees know that this is serious and not just another fad initiative.

Still skeptical? There are exchange-traded funds (ETFs) that you can invest in based on the impact of human capital. Yes, the companies that get the human capital part right outperform their peers — and it is an investable strategy.”

— Dave Bookbinder, valuation expert and author of The New ROI: Return on Individuals

4. Absenteeism

Absenteeism, like turnover, is a helpful engagement ROI metric, but you must analyze it with caution. Indeed, absenteeism can be a symptom of disengagement and a warning sign of employee burnout. It can also happen because of personal, family, or medical issues.

But you can help mitigate these problems by establishing a generous and flexible time-off policy. You should also encourage your people to really take time off! One way to do so is by setting a minimum number of days employees must book off every year; this is currently done by many companies that offer unlimited time off.

A comprehensive time-off policy shows your workforce you care about their needs outside of work, and it should be one of your employee engagement initiatives. And if your people feel that the organization pays attention to their basic needs, they’ll be more likely to feel satisfied and safe at work.
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5. Focus on quality

Highly engaged teams aren’t only more motivated: they’re also more committed to producing high-quality work. Happy employees work harder and smarter.

But it’s up to your company to determine what excellent work quality looks like. And as organizations change and grow, the metrics they track to measure quality might shift. Still, there are a few ways you can use work quality to measure your employee engagement ROI: 

• Setting and monitoring cascading goals — Cascading goals translate company-wide, high-level goals into objectives that are measurable at each level (including the individual). You can use them to check for improved quality of work by comparing individual and team performance with your company and department-wide goals.
  
  

• Tracking objectives and key results (OKRs) — OKRs don’t just help you reach your goals more quickly; they allow you to define what your goals look like in the first place. So, the more specific you get with your OKRs, the more they’ll help you measure your work in terms of quality.
  
  

• Analyzing peer and manager feedback in performance reviews — Your employee may be keeping up with their usual output, but has the standard of their work improved in general? And if so, has their performance boost coincided with your engagement strategies? 

🚀 See tangible results from employee engagement 

‍Discover how much you could save by investing in a people enablement platform like Leapsome today.

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6. Customer satisfaction

Not enough organizations are investing in the employee experience of their customer care professionals. And it shows, as great customer care talent is getting scarce. 

All companies should prioritize the engagement of their customer success team. When employees feel satisfied with their jobs, they’re more likely to stay in their roles, learn, develop, and be attentive to customer needs.

For organizations that are already working on improving the customer experience from all angles, here’s how you can tell if your engagement efforts are positively affecting customer satisfaction:

• Customer Satisfaction Score (CSAT) — Businesses try to capture this rating immediately after customers interact with their organization, service, or product. To calculate your CSAT, divide the number of positive responses (your satisfied customers) by the total number of responses. Then, multiply that number by 100 to come up with a percentage.
  
  

• Net Promoter Score (NPS) — This score helps you measure customer satisfaction and loyalty.
  To calculate your NPS, ask customers to answer the question, “How likely are you to recommend our product or service to family, friends, or colleagues (on a scale from zero to ten)?” If your customer gives you a nine or ten, they’re a promoter. If they choose seven or eight, they’re passive. Anyone who gives you less than a seven is considered a detractor.
  
  You can then figure out your NPS by subtracting your number of detractors from your number of promoters and then dividing that amount by your total number of responses. Multiply that by 100 to get your NPS, which is a whole number, not a percentage. Keep in mind that most companies have scores between 31 and 50.
  
  

• Customer Effort Score (CES) — This metric measures the convenience or ease of your customers’ experience with your team, product, or service. When people don’t have to make much effort in an exchange or transaction, they’re likely to have a more positive experience.
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7. Profitability

There’s a clear connection between disengaged employees and negative business outcomes. In fact, Gallup’s 2024 State of Global Workplace report estimated that low worker engagement is costing the global economy a staggering US$8.9 trillion. 

If increasing employee engagement is in your purview as a manager or leader, then you know profitability is one of the most important metrics for getting a green light from budgetary decision-makers.

When thinking about profitability, it’s important to make this distinction: 

• Profit is the absolute financial gain your business generates after expenses.
  
  
• Profitability measures your business’s efficiency in generating profit relative to revenue or sales. It’s usually expressed as a percentage.

Companies determine this by using profit margin ratios:

💵 Gross profit margin ratio = (Revenue – Cost of Goods Sold) ÷ Revenue x 100

📈 Operating profit margin ratio = (Operating Income ÷ Revenue) x 100 

📊 Net profit margin ratio = (Net Income ÷ Revenue) x 100 

Once you’ve calculated your margin ratios, you’ll want to compare them against your industry averages. And, as with our other metrics for measuring employee engagement ROI, you’ll also want to see if an increase in profitability correlates with an increase in employee engagement efforts.
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The efficient way to track employee engagement

Improving employee engagement requires targeted strategies and cultural investments. The good news is that these investments can really benefit your people and your business — and those benefits are measurable.

Launching employee engagement initiatives can feel overwhelming, but Leapsome makes it simple with tools designed to help you measure and improve employee engagement.

Our platform has a range of built-in features that can support your employee enablement initiatives, including:

• Performance reviews
  
  
• Goals and OKRs
  
  
• Engagement surveys
  
  
• Instant feedback

… and much more!

These tools have already helped thousands of companies like Eurowings Digital reduce turnover and increase satisfaction scores. By tracking core employee engagement data, you can gain deeper insights into how your people feel and secure the leadership buy-in you need to make ongoing improvements.

Want to know how much you could save by investing in a platform like Leapsome? Use our straightforward ROI calculator to see the potential impact of prioritizing people enablement and building high-performing, resilient teams with our software.

⭐️ Engage your people and track results with Leapsome

Leapsome can guide you through every step of your employee engagement program, helping you build workflows from start to finish.

👉 Book a demo‍‍