Hewitt Analysis Shows Steady Decline in Global Employee Engagement Levels
July 29 2010 - 9:00AM
Business Wire
While the economy is slowly recovering, a recent analysis by
Hewitt Associates, a global human resources consulting and
outsourcing company, shows employee engagement and morale in the
workplace are not. Almost half of organizations around the world
saw a significant drop in employee engagement levels at the end of
the June 2010 quarter—the largest decline Hewitt has observed since
it began conducting employee engagement research 15 years ago. This
highlights the growing tension between employers—many of which are
struggling to stabilize their financial situation—and employees,
who are showing fatigue in response to a lengthy period of stress,
uncertainty and confusion brought about by the recession and their
company's actions.
Since July 2008, at the onset of the economic downturn, Hewitt
began closely analyzing changes in employee engagement levels by
quarter for more than 900 organizations globally that conducted
annual engagement studies. These studies covered topics such as
employee morale, confidence in the organization, career
opportunities, rewards and recognition programs, and trust in
leadership.
Historically, Hewitt’s research shows that about half of these
organizations improved their engagement levels in a one-or-two year
period, while only 15 percent had experienced a decline. However,
the past two years have been more challenging: the percent of
organizations with declining engagement has been steadily growing.
This trend is particularly notable in 2010. Hewitt’s research shows
that 46 percent of organizations experienced a decline in
engagement levels in the quarter ending June 2010, while just 30
percent saw an improvement.
“The economic situation over the past two years has clearly
strained the connection between employers and employees and the
stress continues to increase,” said Ted Marusarz, leader of Global
Engagement and Culture at Hewitt. “Organizations are struggling to
improve employee engagement, but they need to stay focused. The
extra effort companies put forth now will make a difference in how
successful they are at boosting employee morale and retaining top
talent as the economy stabilizes and employee opportunities open
up.”
Engagement Linked to Financial Performance
Hewitt’s analysis suggests a clear link between employee
engagement levels and financial performance. Organizations with
high levels of engagement (where 65 percent or more of employees
are engaged) outperformed the total stock market index even in
volatile economic conditions. During 2009, total shareholder return
for these companies was 19 percent higher than the average total
shareholder return. Conversely, companies with low engagement
(where less than 40 percent of employees are engaged) had a total
shareholder return that was 44 percent lower than the average.
Steps to Improve Employee Engagement
In its work with organizations around the world, Hewitt has
uncovered key factors that differentiate organizations that improve
their engagement from those that are not. According to Hewitt,
companies with improved engagement levels:
- Focus on the long term:
While many of these organizations did cost-cutting and reductions
in staff, they made changes consistent with their principles and
values and without losing sight of their overall goals.
- Obtain buy-in from
leadership: Engagement is a top priority for leaders at
companies that saw improved engagement scores. Leaders at these
organizations were visible and provided ongoing updates to reduce
employee uncertainty and stress. They also created excitement among
employees about the future of the organization (82 percent compared
to 51 percent at other companies).
- Implement measurable
actions: Successful organizations use employee information as a
call to action rather than an assessment. They define specific and
measurable actions and take steps in areas where the organization
will see a clear impact.
- Involve all stakeholders:
Organizations with improved engagement understand that creating a
"high engagement" environment requires the involvement of multiple
stakeholders—the organization (leadership, policies and program),
managers and employees. They communicate to these stakeholders to
ensure everyone is clear on their role in the process and on the
employment proposition.
- Understand key employee
segments: Successful organizations understand that not all
employees are necessarily equal. They focus on key segments and
critical talent so that they’re able to engage or re-engage them
once the job market improves.
- Utilize a broader array of
information and analytics: Hewitt’s analysis shows that 34
percent of organizations help employees through the on-boarding
process to minimize the dip in engagement most organizations see in
the first year of employment. Additionally, almost three quarters
conduct exit surveys to understand why employees are leaving and
proactively identify potential hot spots.
“Understanding what drives employee behavior—in good times and
in bad—is critical to business success,” said Marusarz. “All
organizations face similar pressures. Companies that are successful
at improving engagement in spite of these pressures are the ones
that create an environment focused on key human capital elements.
They may make adjustments to their engagement strategies, but they
don’t lose sight of their overall goals.”
About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organizations
around the world with expert human resources consulting and
outsourcing solutions to help them anticipate and solve their most
complex benefits, talent, and related financial challenges. Hewitt
works with companies to design, implement, communicate, and
administer a wide range of human resources, retirement, investment
management, health care, compensation, and talent management
strategies. With a history of exceptional client service since
1940, Hewitt has offices in more than 30 countries and employs
approximately 23,000 associates who are helping make the world a
better place to work. For more information, please visit
www.hewitt.com.
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