The journals below should help give you some direction:

Measuring employee engagement:

Soane, E., Truss, C., Alfes, K., Shantz, A., Rees, C., & Gatenby, M. (2012). Development and application of a new measure of employee engagement: the ISA Engagement Scale. Human Resource Development International, 15(5), 529-547.

Langford, P. H. (2009). Measuring organisational climate and employee engagement: Evidence for a 7 Ps model of work practices and outcomes. Australian Journal of Psychology, 61(4), 185-198.

Financial incentives for encouraging engagement:

Anderson, D. R., Grossmeier, J., Seaverson, E. L., & Snyder, D. (2008). The role of financial incentives in driving employee engagement in health management. ACSM's Health & Fitness Journal, 12(4), 18-22.

Generation "Y" specific:

Robinson, C. C., & Hullinger, H. (2008). New benchmarks in higher education: Student engagement in online learning. Journal of Education for Business, 84(2), 101-109.

I think the following research provide valuable insights:

Viljevac, A., Cooper-Thomas, H. D., & Saks, A. M. (2012). An Investigation into the Validity of Two Measures of Work Engagement. International Journal of Human Resource Management, 23(17), 3692–3709.

Wefald, A. J., Mills, M. J., Smith, M. R., & Downey, R. G. (2012). A Comparison of Three Job Engagement Measures: Examining their Factorial and Criterion-Related Validity. Applied Psychology: Health and Well-Being, 4(1), 67–90.

One key is to know what it is you are measuring - the psychological aspect, the behavioural aspect, or both.  My experience with engagement assessments is that they are often superficial, telling what people like or don't like but not why, the underlying drivers.  When tracked over time, and analysed in depth, they can provide valuable information.  I've also seen how such assessments can be influenced by recent events.  If something very negative happens relatively close before the survey, people may report lower levels of engagement.  I also know of a CEO who used to run surveys the week after annual bonuses were paid :). 

Of course, first there needs to be common understanding in the organization about what the term engagement means. In the literature there is no common definition. In many ways, I think to define it is to kill it.  It's too complex to capture in a single sentence. 

Attached is a research model proposed by Prof. Lisa Nisshi from the School of Industrial and Labor Relations at Cornell University for a climate survey. 

There are two major approaches to this - one quantitative, the other qualitative. The quantitative approach is exemplified by the NHS annual Staff Survey where a standard number of questions are repeated every year in order to identify particular trends. The qualitative approach relies on focus groups which, if carefully facilitated, can identify "hot" areas, relative strength of feeling, etc. 

https://hbr.org/2014/11/a-primer-on-measuring-employee-engagement#

Here's a good article by Ryan Fuller, the CEO and co-founder of VoloMetrix, a people analytics technology company that provides actionable insights to improve organizational responsiveness and drive productivity. This is good enough synopsis of the concept 'Employee Engagement' and measuring it, I believe!

It depends on what you mean by employee engagement...

I suggest Schaufeli's work on "work engagement". He defines work engagement as “a positive fulfilling, affective, motivational state of work-related well-being, described by vigor, dedication, and absorption” (Schaufeli, Salanova, Gonzalez-Roma, & Bakker, 2002, p. 74). The short version of the Utrecht Work Engagement Scale (UWES; Schaufeli et al., 2002) includes the three dimensions of work engagement: vigor (e.g., “At my work, I feel bursting of energy”), dedication (e.g., “I am enthusiastic about my job”) and absorption (e.g., “I am immersed in my work”).

Here is the reference:

Schaufeli, W. B., Salanova, M., Gonzalez-Roma, V., & Bakker, A. (2002). The measurement of burnout and engagement: A confirmatory factor analytic approach. Journal of Happiness Studies, 3, 71-92. doi:10.1023/A:1015630930326.

Hope it will help!

Gall up, DDI, etc assessed the engagement. I found they were fantastic. Even UChicago had also assessed the engagement. I employed DDI and Gallup concept of understanding engagement in  corporate context of India.

Hi,

I agree with Florence, Schaufeli and colleagues' model can be useful. You can find information regarding the scale here:

http://www.wilmarschaufeli.nl/publications/Schaufeli/Test%20Manuals/Test_manual_UWES_English.pdf

All the best,

Patricia

A simple tool I'd suggest is measure the level of repsect shown by senior executives to the most junior staff; look when pressure is being applied to the executives.

 Suggest you may want to have a look at the KMAT assessment tool as an example. It was, I believe, created by The American and Quality Association in conjunction with Arthur Anderson in the 1990's. The principle is the key thing and the criteria on that model will not all be applicable to your situation but can be changed to meet the circumstances. Being able to view in a simple RADAR chart also provides simple feedback mechanism (where are we and where do we want to be) to all involved. I have more detail should you require it.

Salam Prof,

From my point of view, employee engagement can be measure in  terms of reciprocity, platform to engage, eagerness to achieve company's objectives and empowerment level. However, when we are discussing about Gen Y (a product of developing towards developed country), there's an urgent need for us to learn and implement best practices of advanced countries policies and rules (in our own mold). Some of our work policies not compatible with Gen Y because this generation why of thinking and expectation are different than the previous Gen.

Hello Khairul,

I have attached the following Engagement scales:

Methodologies included,

I have also attached an additional study for your ref.

Good Luck, 

Daryn

I suggest on you to read about KPI Key performance indicator.

All the best