Disengagement is Expensive: Employee Engagement Software Isn’t (anymore)

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Recent conversations with senior HR figures has caused me to think about the power of the human memory and the perceptions it creates, regardless of clear evidence to the contrary.  The context to these conversations involved discussions on the cost of on-line Employee Engagement Surveys and Software.  Most of these products are delivered on a Software as a Service (SaaS) basis.

The problem is that SaaS was once quite an expensive business model for the customer who would incur a monthly fee per employee.  This is no longer the case as the market has been changing and SaaS Employee Engagement Surveys now offer excellent value for money.  Plus there is huge choice of high quality offerings out there now.  A HR Manager can now consider a wide range of employee engagement software offerings and choose the best fit for the culture and requirements of the organization.

It seems that the previous high costs of this type of software product is still to the front of many HR professionals minds.  It is understandable that potential clients are wary of the cost, but this means that many organizations are missing out on the many HR and business benefits offered by employee engagement software.

In this article, I will explore why Employee Engagement Software has now become a very cost effective investment for most organizations.  Truth be told, it has become a ‘no brainer’.

The Cost of Disengagement

Most people reading this article will be reasonably familiar with the costs associated with low employee engagement.  Here are some of the figures to highlight this cost:

  • - Disengaged employees are absent 6.2 days per year, compared with 2.7 days for engaged employees
  • - Only 3% of disengaged employees feel creative at work, compared to 59% of engaged employees
  • - 31% of disengaged employees, on average, are actively looking for a new job
  • - Cost of replacing an employee can be up to 150% of the leaver’s salary
  • - Engaged employees are 87% less likely to leave their company than the disengaged.
  • - Disengaged employees experience a 60% drop in Quality and a 1,000% increase in errors.
  • - Companies with engaged employees experience a 24% increase in customer loyalty

Employee Engagement Software: Quality & Choice Increase While Costs Come Down

Over the past 1-2 years the SaaS market, in relation to employee engagement software, has been changing.  There has been an increase in the number of software solutions - including surveys, collaborative, and communication solutions - offering the customer much more choice than before. 

Business owners, CEOs and HR Managers are no longer tied to the large, established providers when choosing employee engagement software.  In fact, many of the new providers in this space offer more agile and niche solutions.  There is greater flexibility on offer and many of the new providers are suited to a specific type of customer.  The key thing, though, is that the established providers can not simply point to a ‘quality product’ as something the smaller provider can’t match.  Most of the smaller employee engagement software offerings are designed and programmed by experienced SaaS professionals.  Others have similarly experienced and skilled developers implementing the design of HR & Psychology professionals, providing customers with a well informed and high quality product.

More importantly, though, is that prices have been coming down and have now settled at a very affordable rate for most businesses.  Most employee engagement software providers have dumped the ‘$x per employee per month’ business model to a ‘per year’ figure.  About 18 months ago, the average cost of this type of software was $5+ per employee per month.  It is now on average $5 per employee per year, with higher quality technology and a greater range of features such as real-time dashboards.  A small number of these software platforms offer much more than an employee engagement survey, for the same price.

However, as always, the Return on Investment figures will be important here.

Return on Investment

We have created a Return on Investment projection based on the following assumptions :

  • - 300 employees (requiring an annual investment of only £1,000 / $1,500 on average)
  • - 50% reporting as ‘not engaged’
  • - Reducing ‘not engaged’ respondents to 40%
  • - Software implemented over time to build engagement (at least 4 quarterly reports)
  • - Using CIPD and other published costs and averages
  •  
etimes2 RoI Case Study
Employee Engagement: Return on Investment:
Short term absenteeism Saving of at least £20,832.00 per year
Employee retention and replacement Save £225,000 per annum
Productive working days Add 180 productive working days per year
Quality and errors 30 re-engaged employees avoiding a 60% drop in quality and 1000% increase in errors
Productivity and performance (Contact Centres) 30 re-engaged employees achieving 35% less downtime between calls, creating the equivalent of 3.75 additional employees
Direct cost savings £56 per employee = £17,024 per annum
Customer focus 7% increase in staff understanding of customer need & retaining customers.

You can now see why I said earlier that Employee Engagement Software has become a ‘no brainer’.  The investment for this type of software now costs similar to a training consultant for a single day.  The impact, though, is much greater and more sustainable.  So, how do you get the most from your investment in employee engagement software?

7 Tips to Select Your Employee Engagement Software Provider

It is a buyer’s market at present with so much choice on offer.  This is a good thing for both the customer and the provider.  The customer has a choice of a range of high quality products, many designed for a niche market which might just be you, at a reasonable price.  The providers are driven by the competition to deliver high quality and innovative products giving excellent value for money to customers.  There is little room now for poor quality or badly designed employee engagement software solutions.

That said, however, the customer should use the following tips to select the software provider that best suits his/her company.  After all, some of the software on offer will fit some companies while being out of place in others.

  • 1. Who is the business and why do they do employee engagement?

It is worthwhile getting a feel for the back story behind the business providing the software.  Visit their website, read their blog and check them out on LinkedIn and other relevant sites.  Do they fit your company values and requirements?  How passionate are they about employee engagement?  Why have they got involved in providing employee engagement software?  Check out their definition and understanding of employee engagement – does it match or improve upon yours?

  • 2. Free trial on offer?

The best thing about such software products is that it is very easy to set up a free trial.  If there isn’t an option on the website to request a free trial, email the provider and ask for one.  You can have a closer look at the software with one of your teams and discuss its effectiveness with them.

  • 3. Ask for a demo with a detailed talk through of the product

Why not ask the provider to arrange a demo where s/he talks you through the products features and benefits of the software.  Again, this is easy to arrange remotely so you can ‘attend’ from your own desk.  It will give you a good feel for the product and highlight key features you might have missed, even on a free trial.

  • 4. Who has designed the product – a technical person or an experienced HR person?

This is important.  You are looking for ‘domain expertise’ here.  Ideally, you are looking for a product where the design/ideas of an experienced HR professional – Occupational/Organizational Psychologist, Organizational Development, Human Capital etc – have been enabled by a skilled software developer.  Ask yourself the question, do the key people have the required HR credibility?  If software wasn’t involved, would you hire them to carry out a HR/Employee Engagement consultancy project in your company?

  • 5. Real time reporting

There is no real reason why you can’t have a good range of data and feedback provided almost immediately on real-time dashboards.

  • 6. Key features and benefits

What are you looking for from an Employee Engagement Software solution?  Draw up your list of ‘buying criteria’ so you can check out the features and benefits of the range of offerings and make an informed decision.

  • 7. What depth of data do you require?

Will a simple survey do? Or do you want to customise the survey or avoid the big annual survey by using more frequent pulse surveys?  There are a small number of offerings available that dig much deeper than just a survey.  Do you want engagement levels but also a clear indication of team cultures mapped across your organization?  Maybe you require each employee to receive individualized feedback and action planning features to share responsibility for his/her own engagement. 

It is all available at the above prices.  It is a buyer’s market and the new affordability of these high quality products mean it is worth your while to check them out and choose the one that fits your needs.  Whichever product you choose, it has become a ‘no brainer’.

What do you need from your Employee Engagement Software?  Does this represent a good investment for your business?

Nigel McPolin is the creator and founder of Etimes2, an Engagement Building Platform that drives sustained behaviour, engagement and performance throughout the organisation.

Visit www.etimes2.com for more information and a free trial.

About etimes2

etimes2 ltd, Together We Work Better

Nigel McPolin is an Organisational Psychologist, Employee Engagement Specialist and the Founder & CEO of etimes2 ltd. 

etimes2 ltd is an Organisational Psychology consultancy and host of the Amazing Workplaces programme, where our psychologists work closely with our clients, utilising both their expertise and our software to discover the key engagement and performance drivers specific to their business.  Our psychologists help the client explore and understand all aspects of their workforce including engagement, empowerment, motivation, and performance.  etimes2 empowers our clients to build Amazing Workplaces.

Replies (4)

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By Mary Schaefer
15th Sep 2015 16:24

Hello. Thanks for this post. Very informative.

What is the source for the statistics you cite about employee disengagement.

My Best,

Mary Schaefer

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By Sean O'Leary
15th Sep 2015 18:03

These 7 tips are spot on and as the head of business development for an employee engagement suite, these are the exact questions and steps we see prospects with real interest taking. This said, I would like to dive a bit deeper into what needs to happen before companies start the search for a solution. One of the biggest missteps we have seen companies make is not having a clear understanding of current engagement standings and needs. I have talked with a number of HR professionals who had simply seen the headlines around employee engagement and culture and thought they needed to jump on the train. I have also heard things like, turnover is really high or we are growing to fast to maintain that same focus we were once able to have on our people. While these things may indicate or validate a potential need, they do not even begin to paint the picture of what YOUR solution should look like. To do this, we have recommended companies hold open forums, one-on-one meetings and even release anonymous surveys to assess their current engagement levels, pain points, and to hear feedback on what their people think the solution should look like. Taking the information gathered here into the search and applying the 7 Steps mentioned above allows companies to select a provider with confidence. Not only will the solution be a better fit but management can also expect a higher adoption/participation rate from their employees whose needs have been identified and met. 

Great article!

Sean O'Leary- Teamphoria

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etimes2 ltd, Together We Work Better
By etimes2
15th Sep 2015 23:40

Hi Mary, thanks for your kind feedback.  The data used here all comes from published sources including CIPD and Gallup.  If you are looking for a good source of data on employee engagement check out Kevin Kruse - www.kevinkruse.com/employee-engagement-research-master-list-of-29-studies/

I hope this helps.

 

Nigel

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etimes2 ltd, Together We Work Better
By etimes2
15th Sep 2015 23:45

Hi Sean, thanks for the compliments on the article and your great addition to the 7 steps.  You are right, it is best to stand back and specify the need and solution.

Nigel

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