2024 HR Research: How to Measure the ROI of Employee Engagement Software

2024 HR Research: How to Measure the ROI of Employee Engagement Software

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Amidst the economic challenges of 2023, WorkTango raised a valid question: are investments in employees still important? Do employee engagement and recognition programs still make good financial sense for businesses facing headwinds?

WorkTango’s latest research study, conducted in Q4 2023 in partnership with third-party analyst firm Lighthouse Research & Advisory, provides the answer.

90% of employers agree that it’s more important than ever – even in challenging economic conditions – to invest in employee experience and employee engagement programs and software.

The following article dives into the data behind why over 1,000 organizations are still investing in employee experience software and programs, and offers best practices on how to make a business case for (and measure the return on investment of) similar programs at your organization.

What Employee Experience (EX) technologies are companies investing in?

Surveying 1,077 different companies revealed that employers are investing primarily in the following employee experience technologies:

  • 70% of employers invest in Performance Management tools (such as facilitating regular feedback and check-ins between managers and employees)
  • 67% of employers invest in Employee Recognition & Rewards tools. And employers who utilize Recognition & Rewards tools are 28% more likely to say they receive positive ROI from their EX investments.
  • 56% of employers invest in Employee Surveys & Listening tools. And employers using Employee Surveys software are 31% more likely to say they receive positive ROI from their EX investments.

When looking to invest in these employee experience technologies, the study found that most organizations prioritize features that enable robust reporting and analytics.

The proven return on investment (ROI) of Employee Experience software

WorkTango and Lighthouse Research & Advisory’s 2024 research study revealed that more than 900 of companies out of a panel of 1,077 believe investing in EX software provides positive value to their business. The study also found that, when measuring ROI, organizations tend to look at the return on their people, their output, and the impact of the program on employees.

As explained by the employers surveyed, the quantifiable benefits of investing in EX software extend across a number of different categories, including:

Increases in employee productivity

65% of the organizations surveyed said that investing in Employee Experience software improved their employees’ productivity and performance. The right tools seem to enhance efficiency and help drive better business outcomes.

Cost savings compared to previous programs / tools

In addition to boosting productivity, a significant number of companies reported substantial cost savings as a direct result of implementing Employee Experience software. For example, Emmaus Homes saved $25,000 in rewards budget by consolidating manual efforts such as expensed gift cards and other decentralized rewards  into one centralized software program.

Improved customer satisfaction

It makes sense that employees who are happier at work and who feel recognized and rewarded by their managers and peers would infuse that energy into serving their customers the very best they can. Input from the 1,077 employers surveyed in the 2024 research confirms this hypothesis. In fact, credit union RBFCU saw a 68% increase in employees hitting high customer service scores as a result of their investment in Recognition & Rewards technology.

Increased employee retention

Many organizations who utilize Employee Recognition & Rewards software or Employee Survey software ultimately see a reduction in regrettable  employee turnover. Arrowhead, one such company, reduced turnover by 49% after implementing Recognition & Rewards software.

Program administration efficiency gains

Utilizing EX software instead of running programs manually can lead to significant efficiencies in the form of time saved by HR team members. They can then dedicate that time to other strategic efforts and can focus on increasing employee participation in programs. For example, HR team members at online learning platform Schoox spend only 45 mins a week on program admin tasks now that they are utilizing employee experience software, instead of hours.

Higher employee engagement and employee Net Promoter (eNPS) scores

Utilizing employee experience technology can significantly impact employee engagement and eNPS scores. For example, WorkTango customer Rexall improved its eNPS from 0 to 42.2 and Engagement Score from 43% to 77% by using Surveys & Insights from WorkTango to administer frequent employee surveys and provide regular opportunities for employees to give feedback to the leadership team.

What can organizations do to improve the employee experience?

Leverage technology

A significant portion of companies are turning to digital solutions to elevate the employee experience. And, based on the research, these solutions and software platforms work. By pairing technology with a genuine commitment to employee welfare, companies can drive positive business results from a more engaged, satisfied, and productive workforce.

Create a culture of frequent recognition and feedback

Cultivating a workplace where recognition and employee feedback are foundational elements not only boosts employee retention and satisfaction, but becomes a strategic investment. Our research shows that, out of those who have a program in place, organizations who frequently and consistently engage in giving recognition, hold frequent career & development conversations, and administer employee surveys are the ones who get the most positive ROI out of such programs.

Best practices for unlocking employee engagement ROI

    1. Start measuring the ROI of EX investments: Organizations who measure ROI using hard data are 5x more likely to say they got a positive ROI from their investment in the employee experience. The most efficient way to measure ROI is to think of measuring metrics aligned to one of 3 key types of employee experience ROI:
      1. Employee-focused Metrics – Measure changes in eNPS and employee satisfaction
      2. HR-focused Metrics – Measure cost savings and HR efficiency
      3. Organizational Performance-focused Metrics – Measure changes in CSAT and baseline critical results
        Try implementing these metrics to quantify the impact of engagement strategies on performance and people.
    2. Create a culture of frequent, meaningful recognition: Regular and sincere recognition has many benefits, such as boosting morale and motivating employees to maintain high performance levels. However, our 2024 research also shows that employees who receive frequent recognition from their employers experience higher levels of satisfaction and engagement. 
    3. Utilize employee feedback throughout the entire employee lifecycle: Emphasizing regular, meaningful feedback throughout the employee lifecycle fosters a culture of continuous growth and engagement, which significantly enhances ROI. Frequent interaction and responsiveness to employee feedback leads to higher employee satisfaction and organizational agility.

In our recent webinar, How to Unlock Employee Engagement ROI, Lighthouse Research & Advisory Chief Research Officer Ben Eubanks unpacked the direct correlation between engagement initiatives and positive impact on organizational productivity, retention rates, and financial performance. He also provided guidance on how to track and measure the effectiveness of these programs, ensuring that investments translate into real ROI – and offered up best practices for organizations looking to improve their programs and ROI tracking.