4 Ways to Calculate Employment Engagement ROI
Research clearly shows that when employees are highly engaged, businesses perform better. Profits at companies with an engaged workforce grow three times faster than at competitor businesses with low levels of staff engagement. When employees are disengaged, it costs employers money: Disengaged employees are a drag on the U.S. economy to the tune of an astonishing $350 billion per year due to poor productivity.
Forward-thinking companies increasingly are turning to engagement strategies such as gamification and digital motivation to improve performance and gain an edge over competitors. Gartner Research estimated that gamification soon will be the primary operations improvement driver for 40 percent of Global 1000 companies.
If you’re looking for a way to improve performance at your company, it makes sense to consider a gamification strategy. But first, you’ll need a way to calculate the potential return on investment (ROI). Here are four ways to calculate potential ROI from a gamification strategy using a model of a company with 1,000 staff and an average cost of $68,750 per person per year.
- Increasing productivity: On average, workers spend a little more than 24 hours per week communicating or collaborating internally. Research estimates that companies using collaboration technologies can increase productivity 25 percent to 35 percent, and some gamification programs have achieved collaboration increases of up to 55 percent. Better collaboration means more sharing of content and best practices, which translates into employees serving their customers more effectively. Collaboration also signifies that people are working with a much broader group than they were before. As a result, the positive impact of sharing multiplies. Real-world experience at a leading, global company shows that the benefits of increased collaboration can lead to annualized benefits of $5,661,562.50.
- Reducing absenteeism: According to research from SHRM, absenteeism generates costs on several fronts, including replacement expenses, costs from adjusting workflows and other employees’ workloads, and productivity impact on co-workers. Companies with a gamification-focused employee engagement strategy have compared absenteeism for employees using gamification to peers who were not. They found that the employees using gamification had a 24 percent higher attendance rate. That meant these employees were working one day more a week than those who were not using a gamification approach. Assuming employees are working 240 days a year, a company could realize $595,200 in savings.
- Accelerating learning and development: Learning and development is especially important in a rapidly changing information economy. A survey found that only 15 percent of hiring managers said nearly all or most job seekers have the skills and traits their companies are looking for, which indicates a significant gap. To close this gap and give staffers the best odds of keeping their careers on track, companies are providing tools to help employees find success. But how do you motivate people to embrace lifelong learning? Gamification and digital motivation is the key, as Deloitte and other major companies have found. Accenture saw a 1,020 percent increase in computer-based training (CBT) completions. With the right gamification solution, Deloitte saw the speed of course completion increase by 50 percent. Assuming the addition of 100 new employees who spend 100 days a year in training, you’d save the company $390,437.20 annually because of faster training completion and a shorter learning curve.
- Identifying attrition: Engagement has a profound impact on employee performance and retention. The Corporate Leadership Council found that highly engaged employees are 87 percent less likely to leave the organization. Through measuring employee engagement levels, gamification and digital motivation solutions identify those who are most at risk of leaving the organization. Through early identification of at-risk employees, companies can reduce turnover. Assuming average turnover costs are 38 percent of annual salary, current turnover rate is 25 percent, and increasing employee engagement reduces turnover by 66 percent, a company of 1000 would realize $4,310,625 in savings.
As multiple studies and real-world implementations have demonstrated time and again, gamification can be a game-changer for companies, especially when combined with intrinsic motivators such as digital reputation management. Given the numbers involved, it makes sense for businesses to consider a gamification and digital motivation approach.
But as with all business proposals, it’s important to assess a strategy’s potential for ROI before making an investment. By calculating potential productivity gains, absenteeism reduction savings, a shortened training cycle, and reduced attrition, you can build a solid business case for a fresh approach to increasing employee engagement.
Karen Hsu is vice president of Marketing at Badgeville. With more than 18 years of experience in enterprise software, Hsu has co-authored four patents and worked in marketing, engineering, and sales roles. At IBM, Informatica, Datameer, and SugarCRM, she drove product strategy, product management, sales enablement, and marketing to bring cloud, business intelligence, customer relationship management (CRM), and data security solutions to market. At Oracle, Hsu led product management and marketing for pricing and configuration products. She has a Bachelor’s of Science degree in Management Science and Engineering from Stanford University.