Beyond the Glassdoor Stars

TL;DR: In Part 1, we talked about Glassdoor ratings as a reliable information resource if you know how to detect if the ratings are genuine. This Part 2 is about Glassdoor Engagement Ratio, how to calculate it for your business, and how to use Glassdoor as performance improvement tool and a communication channel – and see almost immediate results. 

Higher employee satisfaction translates into improved organizational performance. Genuine Glassdoor reviews are a reliable indicator of employee satisfaction. According to research, boosting employee satisfaction by one Glassdoor rating point raises the market value of a company by 7.9%.

Positive Glassdoor reviews improve talent attraction, and that’s a huge benefit (see part 1 for the math). Also, an improved Glassdoor rating leads to better employee retention – and that’s another saving, almost invisible.

Did you know that the actual cost of replacement of an employee is between 20% and 200% of the annual salary?

But that’s only half of the story.

Correlated with satisfaction is employee engagement, which indeed is a better indicator of your team’s performance and potential. The good news: you can benchmark your team’s engagement level using Glassdoor data.

The difference between employee engagement and employee satisfaction is subtle but significant. Employee satisfaction creates a positive and relaxed work environment that many employees enjoy. Typical “satisfied” reviews often mention “awesome benefits,” “great food,” and “free beer.” By all means, satisfaction is good.

Employee engagement comes from the innate desire of the employees to help achieve their company goals. Sustained employee engagement is observed when the individual values are aligned with the company Purpose.

Employee engagement is usually accompanied by satisfaction but not the other way round. The dynamic relationship between the two is similar to that of Maslow’s hierarchy of values, and like in the case of human needs, it is not linear. Although there is an overlap, the two concepts are not interchangeable.

If your team has high satisfaction but a relatively low engagement level, the employees feel connected to the job (it pays the bills) and may have developed loyalty to the company. But as they do not get their higher-order needs, they are probably “open to opportunities” outside their company and will leave as soon as the right opportunity comes along.

To keep the employee satisfaction level continuously high, the business owner will have to increase compensation expenses continuously, and that is not feasible in most cases. Thus, in order to maintain high operational efficiency, business operators must focus on employee engagement. As a minimum, it is important to monitor its level and at least keep it stable. Benchmarking your current engagement level would be the first step.

Here’s how to do it – with Glassdoor.

Calculate Your Employee Engagement Ratio

Based on the analysis of three dozen companies, I came up with the notion of Engagement Ratio. The E.Ratio is calculated as the number of Glassdoor reviews divided by the current actual headcount. I do not claim the E.Ratio to be scientific or precise. It is just a simple benchmark readily available to any business that wants to improve performance within its business niche.

This is how the 30 companies from my sample look like on the Glassdoor Ratings & Engagement graph (Fig.1). 

(As I make good companies better, it is not a surprise to see this sample biased towards high satisfaction and engagement level.)

As you may recall from Part 1, the average company rating on Glassdoor is about 3.3-3.4. My research gives the average E.Ratio of 10%. The two coordinates mark may be used as the central point of a Satisfaction-Engagement Matrix.

Most business leaders would want to see their teams in the upper right quadrant – Q1 (high satisfaction and high engagement, HS/HE), or at least in Q2. That’s where I see most companies from my biased sample.

One may expect to see many entrepreneurial organizations in the LS/HE Quadrant. The reason why we do not see any in Q3 is that LS/HE can only be a transient state. It is unrealistic to expect any team to remain engaged infinitely if the company does not improve employee satisfaction. Most likely, the business will move to Q4 – or disappear.

In real life, there are quite a few companies in quadrant Q4. Finding your business in the LS/LE quadrant is a sign of very poor efficiency. The only good news I have for you is that you could probably double your productivity. If you make it your goal, improving job satisfaction will be easy: it is determined by the organization and could be improved without much effort. However, employee engagement depends on the company leadership, on all levels, and improving it is not a simple matter.

Beyond doubt: Q1 and Q2 are the best place to be for all employees. But there is a striking cultural difference between the two quadrants, even with a small sample. If we separate private companies from highly regulated ones (e.g.: private vs. government agencies), and distinguish between hi-tech and low-tech industries, the relative positions of the rolled-up averages will demonstrate the cultural differences. Read the legend on the Satisfaction & Engagement graph (Fig.2) – and the picture will be clear.

Satisfied employees are happy to be employed.
Engaged employees are changing the world.

Three Takeaways for Business Leaders

Wherever your business is today on the Satisfaction-Engagement matrix, there is always room for improvement, and Glassdoor provides a free benchmark to help you monitor the progress. Here is what you can do without any investment or major effort:

1. To get started, check your GD rating and E.Ratio and compare your “location” to those of your competitors. Most probably, you want to see your company higher and to the right from them.
2. For a company with less than 100 people, every rating counts. Encourage your employees to leave feedback on Glassdoor. Do not be afraid of low ratings. Respond to the reviews honestly. The closer you are to quadrant #1, the more impressive and swifter will be the change – and it will be reflected in the improving reviews (they can be edited or removed by the author).
3. Take possession of your Glassdoor page. It does not cost you anything and it provides a confidential communication channel with your employees. Most companies in quadrant #4 do that, and the “Engaged Employer” green dot on your Glassdoor page will improve your brand image.

Start with these three points, keep communication channels with your employees open – and you will see your ratings going up within weeks, guaranteed. Let me know if it doesn’t.

Full disclosure: I am not associated with Glassdoor in any way.