ENGAGE. Sustainable Engagement. Diversity Employee Survey ROI Global Trends Listening Strategies. Employee Surveys Issue 2015 towerswatson.

Transcription

1 ENGAGE Employee Surveys Issue 2015 towerswatson.com Diversity Employee Survey ROI Global Trends Listening Strategies Sustainable Engagement

2 XXXXXXXX 2 towerswatson.co.uk

3 ENGAGE Contents 04 Targeted incentives Targeted incentives can be a useful tool for employers seeking to drive sustainable engagement into their organisation. 11 Listening strategies Business leaders have access to more data than ever from their workforce but when is the best time and what is the the best way to gather opinions? 17 Global trends This article looks at global trends in employee attraction, retention and engagement and the key drivers for sustainable engagement. 06 Engagement Survey ROI Employee engagement surveys are becoming more common in organisations, but how can you ensure a positive return on investment from them? 20 Boosting innovation culture A case study showing how a global organisation used a survey to promote a culture of innovation. 09 Diversity and inclusion A diverse and inclusive workforce can bring many business benefi ts. This article examines how and the best ways to foster such a culture. 14 Assessing employee engagement The HR function is often tasked with measuring employee engagement but what do we find when we ask: how engaged are HR professionals themselves? Engage 3

4 Using targeted incentives to drive sustainable engagement Corporate belt tightening and global economic volatility continue to put pressure on HR budgets. In response, companies are scrutinising the pace of benefit cost increases, salary increase budgets and staffing levels. In most organisations, total rewards represent the single largest line item expense in their operating budget. While it is understandable that companies should focus their attention on the costs of foundational rewards such as salary and benefits, it is also important for companies to ensure they are making the best use of their performance-based rewards, including incentive programmes. Many organisations provide a signifi cant amount of compensation through incentive programmes such as bonuses, profi t sharing or stock-based incentives. In general, incentive compensation is used to improve attraction and retention outcomes or to help improve quality, customer service or productivity through better performance and greater engagement. But companies have struggled to show a link between incentive programmes and employee engagement, not to mention a positive return on incentive programme investments. Our recent work reveals that these companies may need to rethink the concept of engagement given the changing nature of the global work environment and gain a better understanding of how incentives drive engagement among different employee groups. Incentives in perspective Organisations use incentive programmes to accomplish multiple objectives. First, incentives enable companies, often in slow growth markets, to shift some of their fi xed compensation costs to variable pay programmes. Salaries and benefi ts represent fi xed costs. Organisations have to make changes to the programmes or head count in order to reduce these fi xed costs in down times. In contrast, short- and long-term incentives tied to company performance represent variable costs; that is, payouts increase as a company s performance improves and decrease when performance declines. Because these incentive payouts typically decrease during tough times when a company s business is under pressure, they help to stabilise cash fl ow and reduce a company s cash-fl ow volatility. For example, when a company with no incentive programme shifts a portion of its fi xed compensation costs to fund an incentive programme, incentives can serve this purpose. In addition, companies use incentive programmes to reward particular types of behaviour by an individual employee or team for example, by offering commission rates on the sale of new products that differ from those offered on the sale of more established products. The behaviours that organisations can promote via incentive plans are limited only by their ability to observe, measure and communicate them. While the potential gains from the use of incentives can be signifi cant, these programmes can also have potential downsides. Any form of incentive compensation transfers risk from the organisation to the employee. Since most employees are at least somewhat risk averse, many employers end up offering some sort of risk premium that is, offering bonus plans that have a slightly higher expected payout than the incremental base pay they would need to provide. In order for this type of investment to have a positive return on investment, the use of incentive compensation has to accomplish its intended objectives, which can include improving employee engagement. But as long as a company cannot establish a clear link between pay for performance and employee engagement, it will not be able to gauge whether, or to what extent, its investments in incentive programmes aimed at building engagement are paying off. 4 towerswatson.co.uk

5 Targeted incentives The behaviours that organisations can promote via incentive plans are limited only by their ability to observe, measure and communicate them. Rethinking engagement Engagement has traditionally been defi ned as a willingness to give discretionary effort in order to achieve work-related goals. Although employees who are more engaged by this measure often have a more favourable view of incentive compensation programmes in their organisation, prior research has provided little evidence that these programmes help to drive employee engagement. While many organisations rely on traditional engagement measures to help them manage their employees, some have found that these measures fall short insofar as their business needs are concerned. Having invested in initiatives to drive engagement as traditionally defi ned, these employers are not seeing the results, such as signifi cant sustained increases in fi nancial performance, they hoped for. The changing nature of the work environment may help to explain why it is not enough for companies to simply emphasise the traditional drivers of employee engagement. From the mid-1990s until 2007, when except for the period following the 2001 recession labour markets were tight and unemployment was low, a lack of employee commitment to the organisation and incremental effort could often be the factors hindering organisational success. But, more recently, with higher unemployment, lower labour force participation rates and underemployment in many markets, and after years of asking employees to work more hours and do more with less, we have reached a point where other issues related to the work environment may be limiting organisational success. These changes have prompted us to rethink the concept of employee engagement and its drivers. To succeed in today s high-pressure work environment, companies require sustainable engagement, which incorporates the components of enablement and energy into the equation. To achieve maximum improvements in performance, employees must not only be committed to realising company goals, they must be enabled by internal support and tools, and energised by an environment that promotes emotional, physical and social well-being. Therefore, sustainable engagement includes: Engagement The intensity of employees connection to their organisation, marked by a committed effort to achieve work goals. Enablement Creating conditions that optimise performance in an environment of limited budgets and resources. Energy Embracing practices and programmes that promote broad well-being (beyond purely physical) to help people manage stress and find a desired balance between work and personal lives. By examining the components of this broader concept of engagement, we can uncover a relationship to pay for performance. Companies seeking to drive sustainable engagement through pay for performance should tailor their incentive programmes to different employee segments. Such programmes enable organisations to better manage their limited resources and offer tailored packages to employees with critical skills by adjusting eligibility and target payouts. The right mix of incentives targeted to the right employee groups will improve sustainable engagement as well as business results. Carole Hathaway EMEA Practice Leader, Reward Nick Tatchell Director, Organisational Surveys and Insights Engage 5

6 Five ways to maximise employee engagement survey ROI Create a more disciplined post-survey process There are two primary ways to maximise your return on investment (ROI) on an employee engagement survey programme. One is to slash costs by deploying a short, sample pulse survey requiring limited follow-up. The return in terms of insights is also limited, which can be acceptable given the low costs of such an effort. This can be a good option when it is necessary to get a quick read of employee sentiment on a focused topic or to capture a high-level employee pulse on a frequent basis. Stephen Young EMEA Practice Leader, Organisational Surveys and Insights Unfortunately, this is generally not an option when the goal is to drive true sustainable organisational change a situation requiring a more comprehensive, large-scale employee survey. In such an instance, although a larger investment is required, a far greater return can be achieved in the form of a transformed culture, heightened employee engagement and elevated business performance. At Towers Watson, we believe one of the keys to capturing this increased ROI is through the disciplined execution of a thoughtfully designed post-survey process. This requires candid discussion early on in the project, before the survey is even launched, with all relevant stakeholders. To guide these discussions, we focus on the following fi ve factors: 1 Who gets results? Many companies struggle with this basic fi rst step, which sets the foundation for the entire post-survey process. Using the minimum group size cutoff as a guide, many assume that all managers with at least 10 employees should get a report and develop an action plan. This may indeed be appropriate for some companies, but for others, it simply is not. The issue is the level at which the company wants to drive action. When you consider that much of the content in a typical employee engagement survey is focused on issues above the front-line manager, and that front-line managers in many companies have a very narrow degree of authority and infl uence, it often makes sense to report results and set expectations for taking action a level or two above the front line. 6 towerswatson.co.uk

7 Maximise employee engagement That s not to say results for smaller groups shouldn t be examined to better understand the impact of individual managers, especially in the areas of empowerment and trust. But results are typically owned by a high-level leader. The exact level where results are owned will vary for each company, but it is important to make this determination early in the process and get alignment on the approach. (There is also a growing trend of empowering individual employees to take action post-survey on their own engagement, in parallel to leader/manager action; see our previous Sustainably Engaged on The Whirlpool Corporation. 2 What is shared with employees? In most companies, employees learn about high-level, companywide survey findings in a written communication or town hall meeting. They see local results in person so they can ask questions and join a discussion. There are two key tactics that will ensure success in this process. The first is having line leaders and not HR colleagues personally share the results. This underscores leaders commitment to the process and intention to act on the findings. If viewed as merely another HR initiative, this process will likely be ignored. The second is to provide some guidelines as to what specifically will be shared across the company. While leaders should be allowed to exercise some discretion in what they share locally, a few parameters (for example summary category scores, comparison to benchmarks, top or bottom 10 individual questions) need to be established. Providing employees in one department with a very granular review and others with only high-level findings can cause some to question the level of transparency. 3 When is the information communicated? Another vital consideration in sharing results with employees is timing. Generally, the sooner employees hear about results, the better. In fact, the longer you wait to share results, the higher employees expectations that you will also be in a position to share the details of how you will address any issues that have surfaced. For this reason, by sharing results earlier, you actually buy yourself more time for thoughtfully creating a plan to address your priority areas. When planning a result cascade, it is also important to consider how much time each level of leadership may require. For example, it often comes as a surprise to HR colleagues that once executive leaders have reviewed the survey findings, they may not be comfortable launching a broader cascade of communications until they ve communicated their perspective on the issues. While this reaction is understandable, it will delay the post-survey process (perhaps considerably) and so communication of leadership perspectives should be planned in advance. A final consideration related to timing involves the coordination across groups in sharing local results. While perfect synchronisation is not needed, having one department hear about results three weeks before another should be avoided, if possible. Providing employees in one department with a very granular review and others with only high-level findings can cause some to question the level of transparency. Engage 7

8 Maximise employee engagement 4 5 Where do solutions come from? If leaders have been properly motivated to identify and communicate priorities, it is likely they will also be eager to find solutions to address these issues. To exploit this eagerness, the organisation must have resources readily available. This might involve, for example, the ability to quickly commission focus groups, arrange meetings with internal or external subject matter experts, and connect managers who are struggling to find solutions with others who can help. It may also require the ability to provide automated, self-service solutions, such as a best practice library of recommendations for common issues. In many organisations, numerous requests for help are directed to HR during a very short post-survey window. If well prepared and coordinated, HR can seize the opportunity and act as a truly valued partner to the business. If the window of opportunity is missed, leaders may quickly turn their attention elsewhere, and the momentum sparked by the survey results will be lost. How will action plans be logged and progress tracked? A final issue to consider is the mechanism for recording and tracking progress across the company. Without this, you will inevitably be scrambling to identify what actions, if any, occurred in response to the survey not exactly a recipe for continuous improvement. Solutions can range from old-fashioned manual approaches to sleek online tools specifically designed to facilitate post-survey follow-up. And of course, organisations should leverage existing goal-setting and performance management processes. It is critical to identify the system of record and communicate to leaders that they are expected to update it at clearly specified intervals. At Towers Watson, we believe the overwhelming majority of business leaders, at all organisational levels, genuinely want to improve the company. Further, we believe that if you provide these leaders with compelling insights into the factors that will drive improvement, and a clear way for them to take action, they will do so. These beliefs guide our work with each client. We strive to design and execute an overall post-survey process based on our validated best practices and careful consideration of each company s unique needs. An open dialogue among all relevant stakeholders about the five factors discussed above in the early stages of the survey project will help ensure a successful post-survey process. Generally, the sooner employees hear about results, the better. 8 towerswatson.co.uk

9 Embracing diversity and equality for a more inclusive organisation Diversity itself covers a wide range of dimensions that differentiate groups and individuals from one another. There are the aspects of which most employers will be aware age, race, gender, sexual orientation, religious beliefs and physical ability however, this list can also extend to other factors such as parental status, geographical location, social class, political beliefs and even hobbies and interests. In a business context, there are a number of powerful drivers towards embracing a diverse workforce and inclusive culture. These include the increasingly globalised nature of business, with clients, suppliers and competition often coming from overseas; the changing values of today s workforce, with employees themselves often more attracted to a diverse and inclusive workforce, and the manner in which the organisation is perceived externally, by potential customers and the wider public. More practically, a genuinely diverse workforce can help to tackle issues created by fundamental shifts, including an ageing labour force and talent shortages in certain sectors, giving organisations a competitive edge in today s economy. Over the past decade there has been a greater understanding of the business benefi ts which a diverse workforce can bring, says Nick Tatchell, Director, Employee Surveys, at Towers Watson, and with this a stronger emphasis on the inclusivity aspect of talent management. The biggest focus for talent management some years ago was exclusivity; the search for the few special people who had the X-factor, he says. Now transformative talent management refers to the workforce in its entirety; you can still segment but it s about enabling the whole workforce to perform to its full potential. Despite this, a lot of organisations have considerable work to do. Too often, the motivation is to do the bare minimum with the focus being on compliance with legislation, says Tatchell. While that is necessary, it s far from suffi cient in terms of realising the true opportunity that comes from diversity and inclusion. There are, though, still barriers to implementing diversity in practice. At a recent Engagement Network seminar run by Towers Watson, over half of HR specialists (57%) felt traditional structures including factors such as a fear of change and an unconscious tendency for those in the majority to surround themselves with people of a similar background were the biggest block to implementation in their business. More than a fi fth (22%) felt the biggest barrier to diversity is down to a range of misconceptions, such as the view that diversity can lead to impaired organisational effectiveness, that some groups lack commitment, or that it may drive up the overall cost of employment. A further danger is that organisations which introduce programmes designed to create a more diverse workforce are often disappointed when business benefi ts in the form of greater productivity or higher profi ts do not immediately materialise. Commentators and researchers alike are often guilty of making the direct link between diversity and business performance, but this is only likely to happen if they have also taken steps to create a truly inclusive culture which leads to employees being more sustainably engaged. Where the right processes are in place, however, there is evidence of links to better business performance. Towers Watson s own client work has revealed that increases in inclusion lead to a rise in employee engagement, which is directly linked to performance. However, managers and boards need to be aware there is no silver bullet, and that some aspects of performance can even dip before bouncing back. The starting point for any evaluation of how and where an organisation can improve the diversity of its workforce is data: analysing the composition of the workforce as a whole across different levels of seniority, length of service and other demographic groups. For example, one organisation found that a gender gap emerges with length of service; Towers Watson analysed their data and found a relatively equal split of 53:47 male/female ratio among staff who have served less than six months, but this widened over time to stand at 61:39 for those with between 10 and 15 years Engage 9

10 Diversity and inclusion Having senior leaders support the concept of diversity and inclusion, alongside efforts to put it into practice is essential, and can go a long way to building a more loyal and engaged workforce. service. For those who had been with the organisation for more than 15 years, the gap was even more significant, with a 73:27 split in favour of men. There are underlying demographic reasons for this many women give up work or move jobs after having children but such analysis can be a useful means of identifying potential problems and solutions. More in-depth analysis can be conducted into employee attitudes, which again can be segmented by particular groups or sections of the workforce, to identify trends or anomalies. This data can then be compared with external benchmarks to provide context. For example, this can reveal a gradual disillusionment creeping in with age; morale often decreases among workers in their mid-30s, for instance, and rises again around the age of 50. Such understanding of wider trends can be important in identifying and understanding where genuine issues with diversity may lie. However, organisations must also be careful to act on the findings of any such employee research if the entire exercise is not to be counterproductive and only serve to alienate those who already feel less included. There are signs that diversity is being taken more seriously by organisations in general. At the recent Engagement Network seminar on diversity and inclusion, 80% of delegates agreed that the management of their organisation supported diversity in the workforce. Having senior leaders support the concept of diversity and inclusion, alongside efforts to put it into practice is essential, and can go a long way to building a more loyal and engaged workforce. Gonzalo Shoobridge, Senior Consultant, Organisational Surveys and Insights, at Towers Watson, gives the example of a retail organisation where those from ethnic minority backgrounds would often find themselves subject to targeted abuse from customers. The chief executive said this was unacceptable, he says. They looked into it and found that all those shops with higher levels of bullying and harassment by customers were located near pubs, it was decided to implement a zero tolerance approach, put in extra staff and security cameras with a link through to the police. Through these actions, the company s leadership and respect for corporate values really came across and was appreciated by employees. Often, it is not just about what organisations can do to improve diversity and inclusion it is important for employees to be involved too. Employee networks and communities can be a good way to achieve this. Emma Palfreyman, co-chair of Towers Watson s own Women and Supporters Associate Community, says being a part of a community is an opportunity for associates from different parts of the business to get to know each other, leading to a better connected workforce and more engaged employees. For us, we see involvement in running the community as a valuable development opportunity for the volunteers. Having commitment from the organisation and fellow employees is also vital, says Palfreyman. To make our community sustainable in the long run, we have worked hard from the outset to get the governance set up right ensuring we are connected with the business and reporting back regularly on progress being made, she says. We also have strong support from leadership and that is key to the success of any community. In some cases, there may also be a need for incentives to encourage organisations to address this issue. Fiona Hathorn is Managing Director of Women on Boards UK, an organisation that supports women to navigate their pathway to the boardroom. She gives an example from Australia. There they have changed the law so if you employ more than 100 people and you don t display data around diversity you can t bid for government contracts, she says. That s what we need here in the UK. While issues of diversity and inclusion in the workplace can be highly political and complex, the business benefits to organisations that create a genuinely inclusive culture are becoming clearer in terms of improved engagement, greater innovation, enhanced reputation as an employer, and ultimately stronger more sustainable business performance. This link to performance is vital, says Shoobridge. However, we can t lose sight of the moral case for promoting diversity and inclusion in the workplace it is simply the right thing to do. Gonzalo Shoobridge Senior Consultant, Organisational Surveys and Insights Emma Palfreyman Senior Consultant, Benefits Nick Tatchell Director, Organisational Surveys and Insights 10 towerswatson.co.uk

11 Capturing meaningful employee opinion data When to census, when to pulse, and when to listen Today s business leaders are inundated with a vast ongoing flow of information. Technological advances allow us to track financial results, customer behaviour and operational performance on an up-to-the-minute basis. Nick Lynn Director, Organisational Surveys and Insights It is therefore only natural for leaders to expect that all business-relevant information including employee opinion should be gathered and reported on an equally frequent basis. But does that really make sense? The pitfalls of over-surveying The fi rst issue to consider is how frequently the different types of employee opinions we are measuring are likely to change. Consider two questions commonly used to measure employee engagement: Do you believe strongly in the goals and objectives of this company? and Are you proud to be associated with this company? Responses to these questions are not likely to change on an hourly, daily, weekly or even monthly basis. The same is true for questions that measure aspects of organisational culture. Although responses to these questions may change and, we hope, improve over time, such change is noteworthy only if linked to a genuine change in the work environment. For example, opinions that change in response to a company initiative or difference in behaviour are more noteworthy than those attributed to the ups and downs of everyday life in a big company. Indeed, Towers Watson s experience suggests that a quarterly check of employee opinion is frequent enough, and even that is often too frequent. Measuring engagement and culture too frequently can lead one to over-interpret minor fl uctuations, which may be nothing more than measurement error or a refl ection of confusion among employees at being asked the same questions repeatedly without experiencing any true change. Some opinions require regular monitoring Are we to conclude that there is no value in measuring employee views on a more regular, ongoing basis? Not at all, but we need to focus on exactly what we are measuring and how often the views being measured truly change. For example, more organisations are now interested in measuring employee mood or overall sentiment as well as the kind of water cooler conversations that occur every day. Advances in technology and the prevalence of mobile devices make measuring these kinds of employee opinions easier and less intrusive than ever before. Although no clear link currently exists between employee mood or sentiment and organisational performance, it is plausible that over time, these sentiments may infl uence the more stable employee opinions that do reliably link to performance. Therefore, there may be value in having a continuous ongoing scan of this information as a possible leading indicator. This information can also provide valuable context to help inform more stable opinions such as employee engagement and organisational culture. Engage 11

12 Listening strategies Another example of employee opinion that might be valuable to assess on a more frequent basis is employee reaction to a particular event or business issue (for example, a new product launch, recent acquisition or reorganisation), which by definition is time-limited. This type of assessment can send a strong signal that employee input is valued. Indeed, better decisions may ultimately be reached through this broader input. There is a broad range of tools that enable organisations to capture these kinds of opinions. Some of the most popular include: Social media analysis A regular culling of comments made on internal and external social media sites about the company and employees work experience. Continuous polling An ongoing, always open, single-question poll rating one s current sentiment toward the company. Qualitative pulsing An open-ended opportunity to respond to a single question on a pressing topic. Online chats/jams A facilitated online dialogue on a particular issue or business problem. Exit/entry surveys A brief survey automatically deployed to all onboarding and exiting employees. While none of these techniques may be suitable for robustly measuring employee engagement or organisational culture in a way that will reliably predict business performance, they can be used to collect other types of employee opinion on a more real-time basis and therefore usefully supplement the more stable opinions. In fact, we have recently worked with several clients to explore an overall listening strategy that combines ongoing measurement of these kinds of opinions with the more focused, intentional measures of engagement and culture. Developing a listening strategy The listening strategy approach utilises a full census survey taken on a 12-, 18- or even 24-month basis and shorter, focused pulse surveys in between. The full census provides a comprehensive picture of employee engagement and organisational culture. The pulse survey, typically including 20 or fewer questions and involving a small representative sample of employees, measures progress on the priorities identified through the census. While circumstances vary regarding when the pulse survey is deployed relative to the census, it often occurs at the midway mark between census surveys. Such an interval may feel like an eternity given today s technology, but this is not fundamentally a matter of technology; it is a matter of the pace of organisational change. One must consider the time needed to implement solutions to drive engagement and performance, and for employees to experience the impact of those solutions. Simply put, it provides no value to repeatedly ask employees about a particular issue that has not been addressed, even if you have created a terrific app to measure their views seamlessly every hour. Advances in technology and the prevalence of mobile devices allow measuring these kinds of employee opinions easier and less intrusive than ever before. Listening strategy Census Pulse Census Pulse Census Social media analysis Social media analysis Social media analysis Social media analysis Start +9 months +18 months +27 months +36 months Continuous single question sentiment poll, aggregated/reported weekly Exit/entry survey to all entering/departing employees, aggregated/reported monthly 12 towerswatson.co.uk

13 Listening strategies Note that this approach also uses a range of techniques on a more regular basis to measure employee sentiment as well as opinions on particular business topics. For example, a single-question poll measuring overall sentiment is available continuously, and aggregated and reported every week. Social media scanning is also done continuously and reported on a quarterly basis. All new and departing employees receive a short survey upon their onboarding or exit, and focused online chats and qualitative pulse surveys are used to gauge reactions to unique events. However these and other issues are ultimately addressed, it seems clear that the future of employee opinion gathering will involve a combination of thoughtfully timed measurements of engagement and culture along with ongoing assessments of employee sentiment and reactions to events as they occur. Of course, when embarking on this type of comprehensive listening strategy, there are several important factors to consider: Communication. It is important to communicate with employees and leaders regarding what you are measuring with each listening tool and why, and what follow-up actions may or may not occur. Clearly the expectations will be different for a census versus a pulse survey, and even more so for any kind of social media analysis, continuous polling or online chats. Survey fatigue. A second issue is the need to avoid survey fatigue, or the point at which repeated surveying of employees becomes overly burdensome or intrusive. Segmenting the population so as to distribute participation can be one solution here, although it may not practically allow you to gather the insights needed from the populations of interest. Stressing the voluntary nature of participation is another approach, which will likely differ based on the particular tool. Confidentiality and other policy considerations. A final set of issues relates to confidentiality, specifically to employee expectations and employer policies regarding the mere collection and analysis of data as well as how it will be handled. Clearly, these issues vary greatly depending on the particular listening tool deployed and can have a range of impacts on the information collected, known and unknown. As in most cases, open communication and transparency are generally the wisest courses of action here. In other words, if you are regularly monitoring your internal social network to inform your people programmes, you should let employees know this is the case. Engage 13

14 Assessing employee engagement among HR professionals How do they measure up? What do the responses of HR professionals on employee engagement surveys reveal about their strengths and opportunities for improvement? Yves Duhaldeborde Director, Organisational Surveys and Insights This is a critical question given that, in most large companies today, the HR department is viewed as a source of guidance and support on matters related to employee engagement. With this in mind, we recently examined the survey responses of HR professionals in hundreds of companies in an effort to spot important trends. Above the global average So, how engaged is HR? The answer is very engaged. Specifi cally, the engagement score for HR professionals globally is 87%, which far exceeds the 66% average for a global roll-up including all employees. Further, this relatively high score is not a recent phenomenon, but rather has held steady for the last several years. This is reassuring in that a highly engaged population is likely to be far better equipped to promote engagement among employees inside their organisations. Although we may be disappointed that HR engagement is not improving, simply maintaining this high level of engagement over time is noteworthy in and of itself. Examining the drivers of HR engagement In addition to understanding the absolute level of HR engagement, it is equally important to consider what drives this engagement and how these factors might differ from those infl uencing employee engagement more broadly. To answer this question, we looked at the strongest statistical predictors of engagement for HR professionals and compared them to the global employee drivers. We found that some key HR engagement drivers overlap with those of all employees, but others are unique. Specifi cally, the number one driver of engagement for both HR and employees generally is leadership. In other words, all else being equal, employees perception of leadership has the strongest impact on their level of engagement, inside and outside of HR. The remaining drivers among the top fi ve for employees generally are stress, balance and workload, goals and objectives, supervision and company image. HR colleagues share three of these fi ve with the general employee population: stress, balance and workload, and goals and objectives. However, HR colleagues have two distinctive factors that drive their engagement: working relationships and career development. Why might these two factors be uniquely important for HR? As a function, HR relies heavily on relationship building inside the organisation to deliver value. Therefore, it is not surprising that the quality of these relationships has a signifi cant impact on HR employees engagement. And the importance HR employees place on career development might actually refl ect a characteristic of those who are drawn to HR, and who place great value on growth and development. 14 towerswatson.co.uk

15 Assessing employee engagement Uncovering strengths and improvement opportunities Beyond these differences in engagement and its drivers, what else do the survey scores of HR professionals reveal? On the positive side, we see that HR colleagues tend to respond more favourably to questions related to teamwork, empowerment and technology. While the first two strengths have been stable over the last few years, technology has shown steady improvement. This finding is not surprising given all the ways technology has transformed the HR function, and may also refl ect the fact that it often takes time before the full benefi ts of technology-based transitions are realised. On the opportunities side, we see HR colleagues responding less favourably to questions on different aspects of operational effectiveness. These questions cover issues related to having suffi cient staffing, maintaining a balanced workload, making timely decisions and keeping priorities consistent in order to make progress. The first two of these findings may refl ect the impact of a relatively weak economy in many parts of the world on HR. The latter two may be connected to the fact that HR is often heavily reliant on the decisions and priorities of other business leaders in order to be effective. Whatever the underlying causes, these results serve as a valuable window into the unique perspectives of those working in HR. This context, when combined with survey fi ndings from our own HR departments, can help us understand how effective HR colleagues might be in supporting engagement programmes inside our organisations. This knowledge can also help to identify opportunities to improve the engagement and effectiveness of the HR function itself. We found that some key HR engagement drivers overlap with those of all employees, but others are unique. The engagement score for HR professionals globally is 87%, which far exceeds the 66% average for a global roll-up including all employees. Engage 15

16 The power to change New compelling, engaging and action-orientated employee survey platform technology from Towers Watson Smart: Algorithm identifies strengths and opportunities Integrated: Seamless integration between action planning and analysis of results Clean: Intuitive functionality creates a highly-engaging user experience Powerful: Changes in organisational structure are immediately reflected Fast: Instant overview of key findings and pre-populated action plan Just a few of the key benefits of our new employee survey technology include: Engaging consumer grade experience Dashboard that highlights action priorities Dynamic enterprise analytics Online access with a premium quality export Integrated action planning For more information please contact Stephen Young, Director, Organisational Surveys and Insights, EMEA at or stephen.young@towerswatson.com Towers Watson. A global company with a singular focus on our clients. Benefits Risk and Financial Services Talent and Rewards towerswatson.com

17 Global trends in employee attraction, retention and engagement How the 2014 Global Workforce and Global Talent Management and Rewards Studies relate to sustainably engaged employees In 2014, we set out to explore employee and employer perspectives on current and emerging issues shaping the global workplace and the employment deal. Angela Paul EMEA Head of Employee Research Through the 2014 Global Workforce Study, and the 2014 Global Talent Management and Rewards Study we have gained insights into the driving factors of attraction, retention and sustainable engagement, and the relative importance of effective talent management strategies and employee reward programmes. Top drivers of employee attraction We begin by considering the top drivers of employee attraction, as many organisations are finding it increasingly difficult to attract critical talent. For insight on this issue, we asked employees to choose from a list of the top factors that are most important to them when joining a company, and separately asked employers what they believe to be the top issues driving employee attraction. The answers are shown in Figure 01. As you can see, there is some alignment between the employee and employer views, and also some divergence. Both groups see the importance of base pay and career advancement opportunities, as these issues appear among the top three in both lists. Learning opportunities and the organisation s reputation are also viewed similarly, within the top seven factors, but not among the top three, for both groups. One clear area of disconnect is the importance of job security. While this is the second most important attraction driver for employees, it ranks seventh on the employers list of these drivers. This particular disconnect is a relatively recent phenomenon and has worsened since it first appeared in At that time, job security was the second most important attraction driver for employees (as it is today), but it was rated fourth most important by employers, suggesting they had greater insight into employees concerns than they do now. It may be that employers believe job security concerns among employees have decreased with a slowly improving economy, when in fact they have not. Figure 01. Top attraction drivers employer versus employee view Employer view Talent Management and Rewards Study Employee view Global Workforce Study 1 Career advancement opportunities Base pay/salary 2 Base pay/salary Job security 3 Challenging work Career advancement opportunities 4 Organisation s reputation as good employer Learning and development opportunities 5 Organisation s mission/vision/values Challenging work 6 Learning and development opportunities Organisation s reputation as good employer 7 Job security Vacation/paid time off Engage 17

18 Global trends A second area of disconnect involves employers overestimating the importance of company mission, vision and values. While employers believe this is the fi fth most important factor in driving attraction, it doesn t even rank among employees top seven. This disconnect does not necessarily indicate that employees do not care at all about a company s mission, but may instead suggest that potential employers and only companies with engaging missions are considered for employment. Top drivers of employee retention There is strong alignment between employers and employees on the two most important factors infl uencing retention: base pay and career advancement. Looking further down the list, we can see areas of disconnect. Specifi cally, employees indicate the third most important driver is trust/confi dence in senior leadership, which does not appear at all among employers top seven retention drivers. This fi nding is consistent with a trend Towers Watson has noted before, which is the tendency of many companies to underestimate the impact senior leaders have on employees, and to overestimate the impact of frontline supervisors. In fact, both levels of management play an important role. Similar to what we observed in our examination of attraction drivers, there is a disconnect between employers and employees with regard to job security, with employers underestimating its importance as a retention driver. While attracting and retaining employees is vitally important, it is employee engagement that is the most consistent predictor of business performance, which is why an understanding of the drivers of employee engagement is so important to most companies. As a reminder, Towers Watson focuses on sustainable engagement, which includes three components: Engaged. Feeling attached to the company and willing to exert extra effort on its behalf. Enabled. Having the tools and resources to be successful. Energised. Working in an environment that supports one s health and well-being. Figure 02. Top retention drivers employer versus employee view Employer view Talent Management and Rewards Study Employee view Global Workforce Study 1 Base pay/salary Base pay/salary 2 Career advancement opportunities Career advancement opportunities 3 Relationship with supervisor/manager Trust/confi dence in senior leadership 4 Manage/limit work-related stress Job security 5 Learning and development opportunities Length of commute 6 Short-term incentives Relationship with supervisor/manager 7 Challenging work Manage/limit work-related stress Figure 03. Global engagement segments 17% Detached 24% Disengaged 19% Unsupported 40% Highly engaged Using this three-part formulation, we are able to determine the current percentage of employees who are highly engaged favourable on all three components, and disengaged unfavourable on all three components. Further, we can determine the percentage of employees who are unsupported (that is, traditionally engaged but not enabled or energised, or both) and detached (that is, enabled and energised but not engaged). As shown in Figure 03, current global results indicate that 40% of employees are engaged, while 24% are disengaged. Seventeen percent can be considered detached, compared with 19% who are unsupported. This last group may represent the biggest opportunity, as it refl ects employees who generally believe in the company and are willing to work hard on its behalf, but simply do not have the tools to do the job or do not work in a healthy environment (or both). Highly engaged: Employees who scored high on all three elements of sustainable engagement Unsupported: Employees who are traditionally engaged but lack the enablement and/or energy for sustainable engagement Detached: Employees who feel supported and/or energised but lack a sense of traditional engagement Disengaged: Employees with less favourable scores for all three aspects of sustainable engagement There is strong alignment between employers and employees on the two most important factors influencing retention: base pay and career advancement. 18 towerswatson.co.uk

19 Global trends While it is valuable for an organisation to understand the current level of engagement, it is arguably far more important to understand engagement drivers or top statistical predictors of engagement. When we understand the drivers of engagement we can then focus on improving those drivers and, ultimately, improve engagement. To identify the drivers of engagement in the Global Workforce Study, a statistical analysis was conducted that predicts engagement using dozens of questions measuring the full range of employee work experiences. Those questions with the strongest statistical link to engagement are considered to be drivers. The results are depicted in Figure 04 and reveal the following drivers in descending order of impact on engagement: leadership, goals and objectives, workload and work/life, company image and empowerment. What this means is that, all else being equal, efforts to improve perceptions of company leadership will likely have a bigger positive impact on engagement than the other drivers. Further, any of these drivers will likely have a bigger impact than those not on this list, for example, perceptions of pay or immediate supervision. Of course, the results presented here are global trends, and results for a particular company may look different. A company-specifi c survey remains the only reliable method for determining the drivers unique to each organisation. Nonetheless, these results provide a valuable context for interpreting company-specifi c fi ndings and understanding employee workforce trends more broadly. Figure 04. The top five drivers of sustainable engagement Leadership Goals and objectives Workload and work/life Image Empowerment Effective at growing the business Sincere interest in employees well-being Behaves consistently with organisation s core values Trust and confi dence in job being done Good understanding of organisation s business goals and steps needed to reach those goals Understanding of how job contributes to the organisation achieving its business goals Healthy balance between work and personal life Work arrangements are fl exible Enough employees in work group to get job done right Amount of work required is reasonable Organisation highly regarded by general public Organisation conducts its business with honesty and integrity Management involves employees in decisions that affect them Organisation seeks opinions/suggestions of employees Organisation acts on employee suggestions These insights have been gleaned from the 2014 Global Workforce Study (GWS) and the 2014 Talent Management and Rewards Study (TM&R), both recently released by Towers Watson, focusing on current global trends in employee attraction, retention, and engagement from both the employee and employer perspectives. These two studies collectively represent the views of more than 1,600 companies and 32,000 employees from over 24 markets globally. We have touched on a very small portion of the fi ndings from these studies, to fi nd out more please visit: Engage 19

20 Boosting innovation culture as an outcome of the employee survey Bayer conducted its third global employee survey in conjunction with Towers Watson in 2014 (previous surveys were carried out in 2010 and 2012). The goal was to continue the established methodology from the previous years but at the same time to raise the survey to a new level in terms of both technology and content in order to gain even deeper insights. Stephen Young EMEA Practice Leader, Organisational Surveys and Insights This would enable Bayer managers and employees to make even greater use of the survey, and mean that the questionnaire would be further embedded as a leadership instrument. HR business partners would also be better able to support management in working with and on the results. To achieve this goal, various innovative elements were integrated into the project. Survey background In 2010, with the help of Towers Watson, Bayer combined more than 25 varying approaches to employee surveys with differing questionnaires into a unified global concept. The survey was repeated successfully in 2012 but for 2014 it was decided that the strategy, technology and content of the concept could be even more closely customised to Bayer s needs. This would make the subsequent work with the results more attractive and straightforward and also highlight even further the survey s value to the whole organisation. In face of the complexity of the project and the necessity of continuity and progress metrics, this was no easy task. It mainly meant select but noticeable improvements to different aspects of the overall project: internal Bayer processes, the survey design, the communication campaign, and the way results would be reported. However, some fundamental decisions were also made that clearly emphasised the significance of the survey: Increased transparency: immediate delivery of reports; no waiting on prior presentation to the Executive Board. Attention to a Bayer-wide area and to follow the survey results with the entire organisation aligning itself accordingly. This focus area should fulfil a variety of requirements: relevance to all employees, the need to catch up with high-performance companies, strategic relevance and support of the employer brand. Strengthening of responsibility, for example, country-specifi c measures in line with the focus area and early integration of all managers and HR business partners. Establishment of the Bayer-wide focus area as a part of the company-wide Bayer goals in One of the most important indicators for the success of the project was the rate of participation. For the 2010 and 2012 surveys, the participation rate was 69% and 70% of employees respectively. This rose to 79% in The main reasons for this were the survey experience that had been built up, the involvement of managers at all levels, and contribution and competence of the coordinators who organised the project on site and provided crucial input. 20 towerswatson.co.uk