The eNPS isn’t Telling the Whole Story!
There has been no shortage of opportunities to rethink prior beliefs and assumptions over the 21 months since the beginning of the COVID-19 pandemic. In a short amount of time, many companies have made radical changes around their support of remote work, expanding the discussion around well-being to include ideas of psychological safety, supporting the whole person, and, in many cases, reimagining their efforts around inclusion and diversity to increase its impact by incorporating the concepts of equity and belonging.
With all of that going on, employee engagement is also being increasingly impacted, so we need to ask, “Is using the Employee Net Promoter Score (eNPS) still a good proxy measurement for employee engagement?” This is one area in which my opinion has changed, and it has the potential to impact people analytics. In this article, I’ll review what changed, and why eNPS, though still valuable, falls short when compared to a full engagement index, which most often asks four distinct questions using five-point agreement scales.
We’ve talked about this topic before, but as a quick refresher, the Net Promoter Score (NPS) is an indication of overall satisfaction. The measure began with a customer focus asking consumers to indicate how likely they would be to recommend a product or service to others on a scale of 0-10. The NPS scale is subdivided into three groups where “Promoters” are those who responded with a 9 or 10, “Passives” respond with a 7 or 8, and “Detractors” are those who respond with a 0 through 6. The NPS score is calculated by subtracting the percent of Detractors from the percent of Promoters. Using this approach, the range of possible NPS scores goes from -100 (all Detractors) to +100 (all Promoters). A positive NPS score indicates there are more 9s and 10s than 0-6s. A score of zero indicates there is an even number of Promoters and Detractors. As the methodology gained popularity among customer research organizations and leaders became more familiar with the metric, the logical question was, “Can we use this with our own employees as a measure of engagement?” Thus, the eNPS was born where organizations asked employees how likely they were to recommend the organization as an employer with the same 0-10 scale and score calculation.
From a quantitative measurement perspective, there is value in the eNPS metric. It is a quick and easy question, specifically How likely is it that you would recommend [company X] as a place to work?, that organizations can include in a pulse, census, or lifecycle survey. It is a metric that easily shows change over time. Organizations can correlate NPS and eNPS to understand the connection between employee experience and customer satisfaction. Organizations can identify key correlates with eNPS to identify factors that have a positive or negative connection to eNPS. Positive factors are often labeled drivers while negative factors are barriers to engagement within a given population. That all remains the same, and it is good.
Engagement is influenced by both internal and external factors. Organizations pursue engagement because it is positively associated with employee retention and performance. When an organization creates an engaging environment where they retain their best people and set them up to do great work, it increases the likelihood of success or progress for both individuals and the organization. Ultimately, the success or progress will feed back into the internal and external factors through growth, scale, additional resources, etc. where this becomes a positive cycle that builds on itself over time. Employees learn to anticipate this success, which is in itself engaging, supercharging the altruistic cycle. As Jack Morehouse, co-founder of Perceptyx, often said, “Nothing succeeds like success, and people will engage to the degree they anticipate gaining their desired measure of success.”
The shortfall, specific to eNPS, comes when we look at engagement trends today. A recent client conducted their annual employee survey using Perceptyx’s standard four-item measure of employee engagement. At the index level, they saw no statistically significant change in engagement. If they used eNPS as their measure, the results likely would have been almost the same. However, when we expanded the index and explored the data at the question-level, it told a very different story. If the organization were a river, the water would look calm from above but there are very strong currents moving below the surface. The four questions that contribute to the engagement index are:
- I am proud to work for the company.
- I would recommend the company as a great place to work.
- My work gives me a feeling of personal accomplishment.
- I intend to stay with the company for at least the next 12 months.
For this company, questions about pride, referral behavior, and intrinsic motivation all saw some improvement with the greatest gain coming from the work giving a feeling of personal accomplishment. Employees’ intent to stay, our best predictor of talent retention, saw a decline of more than 10 points, which also correlates with a recent increase in attrition. If it were not for the additional granularity gained by including the four-question engagement index, leaders in the business may believe there is no meaningful change in engagement from 2020 to 2021 when that’s simply not the case. People are engaged and motivated by the work but feel less connected and less valued by the organization. This means there is a significant risk of employees leaving to engage in similarly meaningful work but with a different company. This pattern is not unique and is likely one of the main factors contributing to record numbers of people voluntarily leaving their jobs.
Willingness to recommend a company as a great place to work remains a key indicator of engagement but it does not tell the whole story. The three other indicators included in Perceptyx’s core Engagement Index are critically important as well. Pride in the company is most strongly connected to external brand and market perceptions. The feeling of personal accomplishment is an indicator of intrinsic motivation, and this is a strong predictor of performance because employees who experience intrinsic motivation will go above and beyond even when nobody is looking because the work itself is meaningful to them. And finally, intent to stay is an indicator of commitment and predicts higher levels of employee retention.
When so many companies are experiencing increased voluntary attrition and employees are less committed to one organization, the ability to drill in and explore specific drivers of intent to stay represents value we cannot realize if engagement is only measured with the single eNPS question. Every organization operates with limited resources. In the face of the Great Resignation, adopting a special focus on those elements of the employee experience that contribute most to decreased commitment and intent to stay is a smart strategy. While all of the indicators of engagement are intercorrelated, organizations will experience very limited return on investment if they focus on improving their investment in employees only to see those same individuals leave in the next six to nine months.
At Perceptyx, our purpose is to enable people and organizations to thrive. We accomplish this by assisting leaders in making more informed decisions with greater speed and confidence. When it comes to key decisions about organizational effectiveness and employee engagement, the eNPS has value as a high-level measure, but it lacks the granularity offered by the full four-question engagement index. When leaders can peel back the index and explore ideas individually like pride and commitment, they can experience greater confidence in the effectiveness of strategies developed to impact engagement.