Measuring the Impact of a Holistic Approach to Employee Engagement

This theoretical case study of a wholesale food company demonstrates how statistical process controls long used in total quality management make it easy to effectively measure the impact of almost any type of engagement effort.

The case study below demonstrates the practical use of statistical process controls long used in hospitals and factories around the world to measure the

impact of efforts to improve safety and quality. The only reason more organizations overlook them? The majority of regular incentive, recognition and loyalty efforts generally receive much less analysis, according to Jack and Patti Phillips, Chairman and CEO respectively of the ROI Institute Inc., Birmingham, AL, worldwide recognized authorities on the subject and advisors to the Enterprise Engagement Alliance.

In response to the increasing demand for measurability in the world of engagement, the Enterprise Engagement Alliance with input from an Impact Council, is developing a set of open-source processes and metrics to help organizations measure the impact of almost any type of people engagement process. Statistical process controls were first proposed for this use by the American Productivity and Quality Center in a report entitled, “Master Measurement Model” produced for the Incentive Research Foundation in the early 2000s.

The EEA freely shares the methodology because it’s already used in probably over one million companies as part of total quality management practices. In fact, the concept of strategic management and statistical process controls is baked into the 14 Management Principles of W. Edward Deming, one of the early innovators in management consulting and total quality management.

The Enterprise Engagement Alliance Impact Academy offers formal training on the implementation of this process and provides customizable ROI templates; the PVIC analytics tools to help companies and solution providers better analyze impact and correlations, and the ability to benchmark with outside data and with the aggregate and anonymous data of other organizations over time. For organizations seeking an outside expert for impact analysis, the International Center for Enterprise Engagement is the first to offer these services.

The Measurable Impact of Holistic Employee Engagement: A Three-Year Study

In 2022, the XYX farm equipment company invested in a comprehensive engagement and recognition initiative to boost productivity, referrals, and innovation while reducing

turnover costs. The program included an employee engagement technology that supported:

An effort to improve productivity through a proactive suggestion program to encourage cost-savings or innovations.
A new job training program to encourage more job sharing.
A formal referral program to reduce the cost of turnover.
A peer-to-peer recognition program giving employees a budget for recognizing peers for excellent internal customer service and timely and diligent completion of tasks.
An ongoing communications program that provided frequent, concise reminders about the various programs as well as short profiles of people who make useful suggestions, refer employees who get hired, get recognized for great service and diligence, excel at the training program.
Each employee had a $400 budget for giving points and an unlimited ability to recognize through other forms of appreciation.
In addition, the company awarded points for successful completion of training, referrals, and suggestions.

The Results (2022–2023)

Financial Performance:

Revenues grew from $249 million in 2021 to $287 million in 2023 an overall 15% increase in two years.
Net profit rose 27%, from $17.4 million to $22.2 million, with profit margins improving from 7% to 7.7%.
Profits per employee jumped 24%, reaching nearly $96K per employee by 2023.
Human Capital ROI rose from 2.32 to 2.91 (+25%).

Engagement and Participation:

Engagement scores climbed from 0.72 → 0.83 (+15%).
768 recognitions were given in peer recognition in 2023, with 877 recognized using points (avg. $150 each).
Recognition costs totaled $71,250 (2022) and $131,550 (2023).

Retention and Turnover Savings:

Voluntary departures dropped from 29 to 8 over two years, a 72% decrease.
Cost of voluntary departures fell from $441K to $136K, saving $305K annually by 2023.

Referrals and Innovation:

Value of referrals grew from $588K to $1.38 million (+135%).
Suggestion submissions increased to 136 per year with 16 accepted, generating $123K in value.

Overall ROI:

Analysis shows the program returned $37–$44 for every $1 spent in recognition and engagement costs when factoring in incremental profit, turnover savings, and referral value.

After Program Termination (2024)

When the program was scaled back in 2024, many metrics reversed:

Engagement scores fell to 0.71 (−14%).
Voluntary departures jumped back to 27, tripling turnover costs to $402K.
Value of referrals dropped 55%, to $616K.
Profit growth slowed to just +2%, and profit margins slipped back to 7.1%.