Each year, companies are spending nearly three-quarters of a billion dollars in an effort to improve employee engagement — yet you’ll get wildly inconsistent answers if you ask managers what that means. Academics, consultants, and leaders have been grappling with that question for decades. Their working definitions range from the simple (“discretionary effort”) to the mind-bending (“complex nomological network encompassing trait, state, and behavioral constructs”).

That murkiness is a problem, because there are still signs that engagement — whatever it is — needs to be managed. In a Gallup survey, for instance, organizations whose employees reported high engagement had 25% to 65% less attrition than their peers (depending on whether they were traditionally low- or high-turnover organizations). They also received higher marks in productivity and customer satisfaction. So defining engagement more clearly isn’t just a philosophical exercise. It has bottom-line implications.

For the most part, companies oversimplify things by viewing personal satisfaction as a proxy for engagement. As a result, they miss key behavioral signals. What use are Mary’s positive thoughts about her manager, for example, if she is not giving her maximum effort at work every day? Other companies use people analytics to examine employees’ behaviors and organizational performance but then fail to take individuals’ perceptions into account. John may be interacting with clients outside work, but is he happy doing so, or is he burned out and miserable?

It’s critical to look at all these factors — employees’ perceptions and behaviors, and their effect on company performance — to figure out which levers to pull to engage the individuals who work for you. The levers that matter to Mary won’t be the same as those that matter to John.

Employee Engagement

When my colleagues and I work with organizations, we conduct surveys and interviews to gauge employees’ perceptions in six areas: culture, job function, advancement, company leadership, management, and total rewards. We also examine self-reported behaviors in six categories: level of effort, personal development, company loyalty, recreation, relationships, and temperament. (We arrived at these metrics by reviewing the academic literature on employee engagement and filling in the gaps with questions about what people actually do, such as going above and beyond direct job responsibilities.) This approach enables organizations without people analytics capabilities to start seeing relationships between employees’ perceptions and actions. Those that already gather and analyze on-the-job behavioral data can use surveys and interviews to capture additional information — such as whether or not their employees are searching for new jobs. Then, over time, organizations can track how their employees’ engagement changes and how it relates to key performance indicators (KPIs), such as sales, customer satisfaction, and attrition.

Returning to our hypothetical examples of Mary and John, we can see how measuring just perceptions or behaviors could mischaracterize their engagement. We know that Mary has a positive view of her manager, but does that make her an All Star employee? Maybe she’s doing just enough to get by, declining to help her colleagues, and refusing additional learning and development opportunities. That would tell us that she’s actually a Brat who needs an extra push. John is showing outward signs of engagement by putting in extra time with clients — but could he be a Workhorse or a Martyr who is suffering in silence? We can find out by looking at how he perceives the meaning of his work, his opportunities for advancement, and his total compensation.

This holistic approach to understanding engagement will yield more-detailed insights into what makes people stick around and do their best work. Instead of viewing engagement in terms of low, medium, and high, organizations will be able to understand how employees perceive them, how that perception relates to their behavior, and in aggregate, how those factors drive bottom-line performance. If organizations don’t dig deep like this, they risk misunderstanding their employees and missing out on all the benefits of high engagement.

Sean Graber is cofounder and CEO of Virtuali, a training firm that helps companies develop and engage Millennial leaders.