Employee morale is second only to the quality of the management team in influencing the long term success of a business or for that matter of any organization.
The employee morale is a very good indicator of the quality of the management team since it is the most direct outcome of good management. After all, a good management team will do everything to engage their employees.
- You might find interesting Employee Engagement article
- Data for the real-time morale KPI on your scorecard
Traditional survey to measure employee morale
However, the best way to measure employee morale is not the traditional survey. After all, this is not just costly and very periodic information, but it is typically very biased and unrepresentative. People are generally not very aware of how they feel and are unlikely to express their feelings in a place where management whom they might not trust will see it.
They are even less likely to produce meaningful responses if they are faced with a multiple choice or Likert scale to describe their morale. Even if the data was perfect, the management would have limited ability to analyze it and act upon it, since they would have no way of separating the aspects of how people feel that are due to things happening within the organization from the feelings that are just their frustrations or joys bleeding over from other aspects of their life.
Neither is absenteeism, or tardiness necessarily a good indicator of employee morale, because appropriate external threats and rewards can cause people to show up on time and be there every day even if they dread their jobs.
They would be miserable there and have very low productivity.
This leaves us with engagement. After all if employees love their job they will care and be engaged. And even if it were possible for them to love their job but be disengaged and not care, this would be of little value to the business.
Thus engagement is what we really want to measure. But how do we measure it? The best approach that I have found is based on the assumption that:
People who care will tend to want to improve the facilities around them and that if they are allowed to do so, they will like where they work and care about it even more.
By picking this variable we can insure that the very process of measurement will propel the organization in the right direction. (Unlike a survey, since someone might not even realize that they are unhappy until they have to say that they are on a monthly survey)
- So, the KPI of employee engagement is the number of employee recommended changes that have actually been implemented per full-time employee equivalent.
This indicator should closely correlate with the quality of the management team, since the changes can only get implemented and employees can only be happy when there are open channels of communication between them and the management. Study after study have shown that good employee morale has a positive impact on the bottom line and I suspect that this is a large part of the reason why.
While employee engagement is a lagging indicator for management ability, it is a leading indicator for process improvement, customer loyalty and financial performance.