Employee Engagement Surveys – Cost-Cutting Strategy When Using a Vendor

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Those of you in smaller organizations who have worked in HR/OD for even just a few years are sure to be familiar with organizational surveys. You then also know – depending on the size and complexity of the organization – how costly this effort can be when you hire a vendor to carry this out. To help control your cost in conducting your employee survey, let me try to separate out the “essentials” from the “non-essentials” or those that can be done at a lower cost.

 
In just about any survey effort, there are five major steps: (a) survey questionnaire planning & design, (b) data collection, (c) data analysis, (d) data interpretation, and (e) reporting/results presentation. Again, if you’re working with a vendor, you’ll need to take into account a sixth, project management fees. The following table illustrates the average cost proportion breakdown by major phase or step:

 

Survey step Cost proportion (%) Is the cost justified?
Questionnaire design 15% Yes
Data collection 20% No
Data analysis 15% No
Data interpretation 15% No
Reporting/presentation 20% Yes
Project management 15% Yes
Total 100%

As you can see, vendors typically charge a significant amount for data collection, analysis, and interpretation (typically over 50% of the total cost).  Regarding data collection, technology has come a long way in just the past 5 years such that in many cases, any one of a dozen online survey tool will do the trick; they are secure, flexible, and, most importantly, cost just a fraction of what a vendor will typically charge.

 

When working with a vendor, one should always request that the obtained data be sent to you in a MS Excel file (for up to 62,000 employees) or a DAT file.  Once received, data can be organized and analyzed by an in-house analysts or statistician using popular statistical packages (e.g., SAS, SPSS).  If an analyst is not available, you can often negotiate the cost of advanced analyses primarily because analytical techniques – e.g., regression, factor analysis, cluster analysis – necessary for most organizational surveys are relatively straight-forward, requiring little actual time.

 

Finally, accuracy and validity of the interpreted data depend more on the validity of the questionnaire design than on a consultant’s experience or analytical skills.  You know more about your organization than any outside consultant can ever know.  Hence, if possible, use an in-house analyst or statistician.  If not, negotiate with the vendor to around 5% of the total project cost.  Profit margin for data interpretation is high; meaning there’s usually quite a bit of room for negotiations.


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