EMPLOYEE ENGAGEMENT METRICS THAT MATTER AND HOW PEOS CAN HELP DRIVE SUCCESS

From quarterly profits to customer growth to market share, there’s no shortage of ways to measure business success. As president of a strategic PEO general agency and advisory firm with more than 30 years working in the PEO industry, I’ve seen plenty of data points and statistics. However, many company leaders fail to consider one of the most important categories: employee engagement. In today’s highly competitive labor market, it’s critical for companies to assess and understand how employees feel about their workplace as this directly impacts productivity, retention, and long-term organizational success.

Many PEOs fully recognize the connection between engagement and success. As a result, they’re employing the latest AI-powered tools that generate new and actionable insights aimed at improving both the employee experience and business operations. With the right PEO partner, smart company leaders are increasingly learning how powerful data can place them on a pathway to success.

WHY ENGAGEMENT METRICS MATTER MORE THAN EVER

The importance of tracking engagement is underscored by recent Gallup polling. According to some of the analytics and advisory firm’s latest employee engagement tracking data, only 32% of U.S. employees remain fully engaged at work, while 16% are actively disengaged. That disengagement is frequently reflected in employee performance, including lower productivity, higher absenteeism, and increased turnover.

Gallagher’s State of the Sector 2023/24 report further reinforces the seriousness of this challenge. According to the insurance brokerage, risk management and consulting firm’s most recent survey, 32% of company representatives claim disengaged employees are a major issue within their organizations, while 19% reported a lack of engagement analytics or measurement capabilities. This gap is especially common among small and mid-sized businesses with limited HR resources.

It’s also important to recognize that engagement measures are a snapshot in time. These metrics are fluid and shift as employee expectations evolve, leadership changes take place, and workplace dynamics fluctuate. Employee metrics that were accurate two or three years ago may no longer tell the full story of your company’s internal health. This is why continuous tracking and analysis is necessary, allowing organizations to identify trends early and then implement effective interventions that support both employee well-being and healthy business performance.

ENGAGEMENT METRICS THAT PROVIDE THE CLEAREST INSIGHT

While every organization’s workforce is unique, several core metrics consistently provide valuable insight into engagement, satisfaction, and performance. These include:

Overall Employee Engagement. An organization’s overall engagement score is a broad indicator of how enthusiastic, committed, and connected employees feel about their work and their employer. This score is typically derived from engagement surveys that assess employee satisfaction, motivation, their alignment with company values, and intent to stay. While this datapoint should never be viewed in isolation, it can serve as a useful benchmark for measuring progress over time and comparing results across departments or geographic locations.

Employee Turnover Rates. Voluntary turnover is often one of the clearest signals of disengagement. When employees leave at higher-than-expected rates, it can indicate challenges related to management practices, workload, a lack of career growth, or a workplace culture that requires attention. Tracking turnover alongside engagement data allows employers to better understand whether disengagement is directly translating into the loss of workforce and where corrective action may be required.

Employee Well-Being Metrics. Engagement and well-being are closely connected. Metrics related to work-life balance, stress levels, mental health, and overall job satisfaction provide essential context for interpreting engagement scores. Organizations that monitor well-being metrics are better positioned to implement programs that support healthier, more sustainable work environments, which in turn fosters higher engagement. Employees are more likely to stay if they sense their employer genuinely cares about them.

Absenteeism and Participation Trends. Absenteeism rates and participation in surveys, social events, or company volunteer events can offer early indicators of disengagement. Declining participation or increasing unplanned absences often signal issues before they appear in engagement scores or turnover data. These metrics are particularly useful when reviewed consistently rather than at year-end.

TIPS FOR COLLECTING AND INTERPRETING ENGAGEMENT DATA

Annual engagement surveys can provide a comprehensive snapshot and establish benchmarks. Pulse surveys, which are shorter and more frequent, allow organizations to quickly assess sentiment on specific topics or during periods of change. Employee town halls create opportunities for open, two-way dialogue and transparency, while one-on-one meetings between managers and employees support deeper conversations and feedback.

Technology can also play a critical role by organizing and analyzing all this data and making it actionable. Modern HR platforms can automate survey distribution, securely collect responses, and deliver real-time analytics. AI-powered tools increasingly help identify patterns across large data sets, predict potential engagement risks, and recommend targeted solutions. These sources of data and artificial intelligence enable organizations to shift from measuring employee productivity to gauging human performance. For many employers, particularly small and mid-sized organizations, making this shift would be difficult without external expertise and infrastructure.

THE ROLE OF PEOS IN TRANSFORMING METRICS INTO ACTION

This is the part where a trusted PEO partner plays an important role. PEOs can help employers select and implement the right engagement tools, ensure consistent and secure data collection, and provide expert guidance on interpreting results. More importantly, they can help transform engagement metrics into practical action plans.

Rather than simply reporting scores, a PEO partner can help identify root causes and recommend solutions, whether that involves adjusting benefits offerings, improving manager training, enhancing internal communication, or launching targeted wellness initiatives. PEOs also bring experience across industries and company sizes, allowing them to provide context that internal teams may not have.

As all of us at BestFit PEO Solutions frequently explain to the brokers, PEO-focused advisors and small businesses we serve, employee engagement metrics are essential tools for understanding and improving workforce health. However, metrics alone do not drive change. The real value comes from continuous measurement, thoughtful interpretation, and intentional action. With the right PEO partner, employers can streamline the process of collecting and analyzing engagement data and move confidently from insight to execution. As employee expectations continue to evolve, organizations that focus on the engagement metrics that truly matter will be best positioned to build resilient, productive, and loyal workforces.