Workers highlight engagement gap

by 30 Oct 2007

EMPLOYEES DO not believe their organisations or their senior management are doing enough to help them become fully engaged and contribute to their companies’ success, according to a new global workforce study.

Just 21 per cent of the employees surveyed around the world are engaged in their work, meaning they’re willing to go the extra mile to help their companies succeed. Fully 38 per cent are partly to fully disengaged.

The result is an ‘engagement gap’between the discretionary effort companies need and people actually want to invest and companies’ effectiveness in channelling this effort to enhance performance.

The study, which was conducted by Towers Perrin, also found that companies with the highest levels of employee engagement achieve better financial results and are more successful in retaining their most valued employees than companies with lower levels of engagement.

The most striking data about the linkage between employee engagement and financial performance come from a study of 40 global companies which involved a regression analysis of company financial results against engagement data.

It found that firms with the highest percentage of engaged employees collectively increased operating income 19 per cent and earnings per share 28 per cent year-to-year. Those companies with the lowest percentage of engaged employees showed year-to-year declines of 33 per cent in operating income and 11 per cent in earnings per share.

In a related study over a longer time horizon (three years), the firms with the highest levels of employee engagement achieved a 3.7 per cent increase in operating margins, while those with the lowest levels of engagement suffered a drop of 2 per cent.

Engaged employees also are more likely to see a direct connection between what they do and company results, according to the study. More than 80 per cent of engaged employees believe they can and do contribute to the quality of products and services, and to customer satisfaction. Only half as many of the disengaged share that view.

In addition, engagement has a direct impact on retaining employees. Half of the engaged employees had no plans to leave their company, compared with just 15 per cent of the disengaged – and roughly a third of the workforce overall.

Less than 5 per cent of engaged employees said they were actively looking for another job compared with more than one in four of the disengaged employees.

The study also debunked a widely held view that engagement is an innate trait. Rather, it is the organisation itself –and most particularly, its senior leadership – that has the biggest impact on engagement levels.

“It’s impossible to overstate the importance of an engaged workforce on a company’s bottom line,” said Julie Gebauer, managing director and leader of Towers Perrin’s workforce effectiveness consulting practice.

“One of the study’s key finding is that the organisation itself is the most powerful influencer of employee engagement. Personal values and work experience factors have less of an impact on engagement than what the company does – particularly the extent to which employees believe senior management is sincerely interested in their wellbeing. This was the number one element driving engagement on a global basis,” she said.

“People’s views about the company are also shaped more by what senior leaders say and do than by what the individuals’ direct bosses say or do. This too contradicts conventional wisdom and suggests that companies have a real opportunity to dramatically improve both engagement levels – starting with listening to what their own employees have to say.”

The study pointed to three areas of focus for companies to increase engagement and tap the reservoir of employee discretionary effort.

Employees need their senior leaders to demonstrate inspiration, vision and commitment. Only 38 per cent of employees surveyed felt senior management communicates openly and honestly, and just 44 per cent agreed senior management tries to be visible and accessible.

In addition, only 10 per cent of employees agreed that “senior management treats us as if we’re the most important part of the organisation”. More than half felt that senior management “treats us as just another part of the organisation to be managed” or “as if we don’t matter”.

According to the survey, top drivers of higher engagement – all within the organisation’s control – include senior leadership behaviour, a commitment to corporate social responsibility, the company’s reputation, and sufficient opportunities for learning and development.

The Towers Perrin Global Workforce Study draws upon two sources of data that come directly from employees. One is a survey of nearly 90,000 workers in 18 countries, and the other is the world’s largest employee normative database with more than two million employee records in total.

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