What Does It Mean?

Employee satisfaction is an aggregate KPI that measures how happy and engaged a company’s employees are at any given time. The measure combines several smaller indicators that can contribute to a bird’s eye view of your staff’s overall happiness and sense of contentment at work.

Why Does It Matter?

In terms of employee retention, satisfaction is vital. When your employees are engaged and happy with the company, they are less likely to leave and pursue other opportunities.

Employee satisfaction is also crucial for ensuring that your team remains productive and happy when coming to work. As such, understanding how your team feels (through a variety of surveys, interviews, one-on-ones, and more) can help you form a clearer idea of what they like, areas where you can improve, and how you can make your workplace a more harmonious and effective place for employees to contribute.

See it in action:

In the end, happier workers tend to result in a better bottom line for your company—you spend less on rehiring workers, and your team produces more.

How Do You Measure the KPI?

Because of its broad nature, any employee satisfaction KPI tends to be an index of two or more metrics that are combined to paint a fuller picture of overall happiness. This can include taking measures such as net promoter scores (which ask employees how likely they’d be to refer others to your company), informal conversations, employee surveys, and more indirect measures such as absentee rates and productivity figures.

Give Me an Example…

Imagine you notice your company’s attrition rate has been climbing steadily for several months, even though you’re experiencing record growth.

A closer look at the reasons behind this high turnover may highlight that employees are unhappy with their compensation terms, or that the new growth has been accompanied a significantly larger workload. Similarly, turning around low productivity can be as simple as discovering why your team is unhappy.

Understanding employee satisfaction can point to the right areas to implement appropriate changes and ensure your top talent is retained.

What Benchmark/Indicators Should I Use?

Some useful benchmarks include:

  • Employee productivity
  • Attrition rates
  • Employee surveys