A View into the Global Workforce Study

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1 A View into the Global Workforce Study Global Trends and Canadian Results October Towers Watson. All rights reserved.

2 Discussion Outline The 2012 Global Workforce Study Overview and objectives Global themes, Canadian findings A fresh look at drivers of attraction and retention The new Sustainable Engagement Model Implications for organizations and leadership teams 1

3 The 2012 GWS was designed to reflect a changing business climate and new pressures on both employers and employees Understand how four-plus years of economic challenges and volatility have affected employee attitudes and the employment deal Improve our ability to advise clients on workforce and workplace issues most important to their growth and performance Enhance Towers Watson s industry thought leadership Introduce and test our new sustainable engagement model Key Facts about the 2012 GWS Fielded online between February and March, with over 32,000 randomly selected employees chosen from large global consumer research panels (1,000 in Canada) Respondents must work full-time for mid to large size organizations to qualify for the survey Covers 29 markets across 28 countries, weighted to accurately represent local working population and global economic impact 2

4 The survey covers a wide range of topics to enhance our intellectual capital development and consulting support Attraction, Retention and SUSTAINABLE Engagement Careers/Training Talent Mobility Health and Well-Being EVP & Total Rewards Communication Effectiveness Leader/manager Effectiveness Stress, Workload Work-life Balance Performance Management Work Environment Retirement Security 3

5 The big picture: the major global themes in 2012 Organizations are running 21st century businesses with 20th century workplace practices and programs Stress on the job and anxiety about achieving a financially secure future are widespread Attracting employees is a security proposition, with salary and job security topping list of what people want Retaining employees is also about salary, along with career opportunity and the quality of leadership and immediate management There are doubts about the level of interest and support coming from above, in terms of both level of senior leadership interest in employee well-being and managers having time (ability) to handle people aspects of their role Engaging employees is more challenging than ever Only about a third of workers globally can be called highly engaged and a quarter are completely disengaged The risks to an organization s productivity and performance goals are real and material Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 4

6 While Talent 2021 research paints a starker picture of future change, reinforcing the importance of getting ahead of the curve Business transformation demands new skills from digital ability to agile thinking to interpersonal (virtual teaming) to global operating ability As employers begin to reskill, they will find talent pools moving from industrialized to emerging markets Already, more college graduates are coming out of the emerging markets of Brazil, China, India, Indonesia and Turkey than the G7 countries Labor shortages are likely in many mature markets, given aging populations and already high educational levels, leaving little room for improvement Talent mismatches will put more pressure on companies to explore alternative work arrangements like teleworking or disaggregate jobs in component specialties that can be sourced around the globe Technology will decrease the need for physical mobility, replacing it with virtual accessibility Source: Oxford Economics Global Talent

7 The common thread is an imperative for change Businesses are operating differently, and will continue to evolve and innovate but their people practices are not keeping pace Employers Intensive cost pressures Increasing global competition places more focus on labour cost structures and new skill sets Constant enhancements in technology pressure to invest to maintain competitive parity Aging populations and lower birth rates mean imbalances globally Employees Often doing more with less and for less - with increased concerns about financial security More job competition and cheaper labour Heightened demands on stressed workers to be available/accessible (if not physically present) 24/7 and evolving drivers of employee engagement Unprepared workforce short on skills; older workers Source: 2012 Global Workforce Study. 6

8 A fresh look at attraction & retention: employers need to rethink the core deal, especially what it takes to attract and retain in the current environment In Canada, the focus on security, stability and less stress shows up in the drivers of both attraction and retention, although in some different ways Top 6 Canadian Drivers Attraction Drivers Retention Drivers 1 Base pay Base pay 2 Job security Career advancement opportunities 3 Career advancement opportunities Trust/confidence in senior leadership 4 Challenging work Relationship with supervisor/manager 5 Learning and development opportunities Manage/limit work-related stress 6 Convenient work location Job security Source: 2012 Global Workforce Study Canada. 7

9 Employer perceptions of employee opinion may not always be in-step with changing employee priorities Attraction Drivers Employee View Employer View Base pay/salary 1 4 Job security 2 Career advancement opportunities 3 1 Challenging work 4 2 Learning and development opportunities 5 Convenient work location 6 Vacation/paid time off 7 Organization s reputation as a good employer 3 Organization s mission/vision/values 5 Flexibility/choice of benefits 6 Ability to impact organization s performance 7 Source: Towers Watson 2012 Global Workforce Study, 2012 Talent Management and Rewards Study Canada. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 8

10 Employer perceptions of employee opinion may not always be in-step with changing employee priorities Retention Drivers Employee View Employer View* Base pay/salary 1 2 Career advancement opportunities 2 1 Trust/confidence in senior leadership 3 Relationship with supervisor/manager 4 3 Manage/limit work-related stress 5 4 Job security 6 5T Learning and development opportunities 7 Organization s financial performance 5T Short-term incentives 7T Flexible work arrangements 7T *T = identifies drivers with the same numeric response Source: Towers Watson 2012 Global Workforce Study, 2012 Talent Management and Rewards Study Canada. Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 9

11 Finding a way to help employees secure their future, without increasing or adding long-term financial obligations, is a major challenge for employers 50% of Canadian respondents agree their organization s retirement benefits meet their needs But only 46% are comfortable providing for their retirement income needs 31% of respondents expect to retire later than originally anticipated 54% are confident they have enough financial resources to live comfortably 15 years into retirement, but over the longer time horizon 25 years only 37% are confident Employees are willing to trade almost anything for guaranteed retirement benefits including having less paid time off (46%) and accepting lower pay increases (48%) Source: 2012 Global Workforce Study Canada. 10

12 The significant risk for employers has to do with engagement and whether it s sustainable over time 33% 24% 17% 26% Source: 2012 Global Workforce Study Canada 11

13 Employees are already struggling with the level and pace of change and their concerns transcend location, age, job level and gender 33% of the Canadian respondents are highly engaged and 26% are disengaged Worried about their futures especially long-term financial futures Employees are under a lot of stress and many (26%) say they would leave their organization because of it Don t seek mobility over half (56%) want to remain with their current employer and would prefer not to move for another job Doubts about both senior leadership and their direct supervisor Roughly 44% have doubts about their company s commitment to paying for performance Source: 2012 Global Workforce Study Canada. 12

14 Our new engagement model is an important evolution in the science of workforce behavior fully charged in three ways Sustainable Engagement is the intensity of employees connection to their organization, marked by committed effort to achieve work goals (being engaged) in environments that support productivity (being enabled) and maintain personal well-being (feeling energized) Traditionally Engaged Belief in company goals and objectives Emotional connection (pride, recommendation) Willingness to give extra effort to support success Enabled Freedom from obstacles to success at work Availability of resources to achieve excellent performance Ability to meet work challenges effectively Energized Sustaining the energy needed at work Social supports in the work environment Feelings of enthusiasm/ accomplishment at work In a world where people are dispersed, sometimes isolated, working longer hours with fewer resources, engagement will not hold up over time without enablement and energy 13

15 By the numbers: The value of achieving high sustainable engagement 3x operating margin High sustainable engagement companies operating margins are 3x higher than those with the lowest levels of engagement 6.5 fewer days Lower presenteeism: An average of 7.6 days lost per year for employees with high engagement vs days lost per year for the disengaged 41% lower retention risk Only 17% of employees with high engagement are high retention risks compared to 58% of disengaged employees Source: Towers Watson Normative Database 14 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

16 So what drives sustainable engagement? To answer that question, we tested 12 workplace elements Leadership Supervision Career Development Performance Review Stress, Balance and Workload Image Sustainable Engagement Performance Management Empowerment Benefits Goals and Objectives Pay Communication 15

17 Within the drivers perceptions that matter Top 5 Canadian Drivers 1 Leadership 2 Stress, Balance and Workload Effective at growing the business Sincere interest in employees well-being Behave consistently with organization s core values Trust and confidence in job being done Stress levels at work are manageable Healthy balance between work and personal life Work arrangements are flexible Enough employees in work group to get job done right 3 Career Development 4 Supervision Opportunities for personal development Career planning tools and resources that are helpful Access to training needed to develop Treats me with respect Encourages new ideas and ways of doing things Acts in ways consistent with his or her words Effective career development conversations 5 Goals and Objectives Good understanding of organization s business goals and steps needed to reach those goals Understanding of how job contributes to the organization achieving its business goals 16

18 DRIVER #1: LEADERSHIP Leaders get reasonably good marks for core values and managing operational aspects of their role, but often fall short on softer items Senior leadership behaves consistently with the organization s core values Source: 2012 Global Workforce Study Canada. Senior management grows the business Senior management manages costs Senior management sincerely interested in employee well-being Senior management develops future leaders Leadership 31% 39% 45% 43% 52% What employers can do: Determine leadership competencies needed and update succession planning approach Assess leaders capabilities against new competencies needed and update leadership development approach Provide leaders with better tools and more accountability for developing future leaders Clarify key aspects of employee well-being specific to population's physical(health), emotional psychological and financial characteristics Build strategy to demonstrate leadership and company commitment to employee wellbeing via program design, communication 17

19 DRIVER #2: STRESS, BALANCE AND WORKLOAD Addressing stress involves focusing on providing work/life balance and organizing/prioritizing workloads Organization's work arrangements flexible enough to meet my needs Stress levels at work are manageable Organization allows for healthy work/life balance Employees have been working more hours than normal over the past three years Work group has enough employees to get the job done right Stress, Balance and Workload 49% 47% 47% 46% 58% What employers can do: Review workforce planning strategies and identify critical skills Consider flexible work arrangements programs Establish effective tools and resources to support well-being and manage stress Provide more flexibility in hours or location where feasible Educate leaders and managers that balance is important to engagement and long-term productivity Rethink how work is organized and deployed across individuals and teams Source: 2012 Global Workforce Study Canada 18

20 DRIVER #3: CAREER DEVELOPMENT Employees lack clarity and confidence regarding advancement opportunity Organization provides opportunities for personal development Career development discussions with manager have furthered development Organization has effective training programs Organization provides useful career planning tools/ resources Organization does a good job of retaining highly qualified employees Must join another organization to advance career ( % disagree) Career Development 48% 44% 40% 38% 37% 25% What can employers do? Emphasize career development in the EVP and sustain a transparent and well-defined career advancement programme. Consider alternative ways to advance employees beyond the traditional ladder. For example creating progression as SMEs rather than simply through people or financial leadership positions. Communicate career advancement opportunities as part of the total rewards package. Ensure managers are playing a role in guiding career growth and equip them to do performance management well Provide opportunity for learning including building competency for the current role and the next level Source: 2012 Global Workforce Study Canada Proprietary and Confidential. For Towers Watson and Towers Watson client use only. 19

21 DRIVER #4: SUPERVISION Managers do very well on traditional tasks, but fall shorter on the people aspects of the job Supervision What employers can do: Manager assigns tasks well suited to my skills/abilities Acts in ways consistent with his/her words 49% 63% Review manager role and competency profiles Assess managers against competency requirements Measure and reward managers for communication effectiveness Works with employees to set appropriate performance goals for individual performance Manager has enough time to handle people aspects of the job 45% 44% Provide manager training on people aspects of the role Hold managers accountable for effective people management Manager makes fair decisions about performance/pay 39% Source: 2012 Global Workforce Study Canada. 20

22 DRIVER #5: GOALS AND OBJECTIVES Employees understand their organization s business goals and how they contribute, but are less clear on the steps needed for success Understand how job contributes to reach organization's business goals Good understanding of organization's business goals Immediate manager communicates goals Understand steps taken to reach organization's business goals Goals and Objectives 54% 51% 71% 68% What employers can do: Determine gaps in understanding and create communication and change management plans to address Train managers to have direct conversations aligning business and personal objectives Ensure cascade and understanding of business plans, and annual operating objectives Inform employees of new behaviors required to support organizational changes and then hold them accountable for exhibiting them align reward programs and performance management Source: 2012 Global Workforce Study Canada. 21

23 From a Total Rewards Perspective, Still Room for a Better Communicated, Better Integrated Value Proposition.. 37% of employees indicate their organization has a reputation for providing a good employee value proposition EVP (only 34% believe their organization has a formal EVP) Employees indicating their organizations do a good job of communicating aspects of the total rewards mix: Pay programs: 49% How to advance one s career: 32% Learning and development opportunities: 44% The value of our Total Rewards Programs: 37% Source: 2012 Global Workforce Study Canada Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

24 Implications for Organizations 23 23

25 Savvy employers need to think very differently about their practices in the future Apply the same rigor, effort and sophistication to human capital planning as to business planning Think more broadly and creatively about where talent is sourced Embrace the virtual workplace and support a wide range of different work scenarios Invest more heavily in retraining and reskilling Rethink and restructure how certain work is accomplished Understand what it takes to sustain employee engagement over time Source: Oxford Economics Global Talent

26 The path forward: Bring workplace practices into the 21st century Apply the same rigor, effort and sophistication to human capital planning as they do to business planning Think more broadly and creatively about where and how they source, deploy and develop talent Build a total reward strategy and related EVP that recognize employees needs and concerns and optimize the rewards portfolio for different segments of the workforce Understand the implications of the virtual workplace for people s ability to collaborate, communicate and stay engaged and build practices and programs for a wide range of different work scenarios Evaluate manager capability to support employees on the ground (virtually or not) and provide training and support as needed Invest more heavily in retraining and reskilling 25 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

27 26

28 Discussion Items Are you optimizing your investments to achieve the right cost, behavior and performance outcomes? What do you understand about how attraction, retention and engagement drivers vary by cohort? Do your programs reinforce the desired deal with your employees (i.e., aligning employee behaviors with key business needs and direction of the company)? What is the level of your employees understanding and appreciation of your Total Rewards portfolio? What behaviors, practices, and programs currently in place align well with sustainable engagement drivers? Where are there gaps? What tools and resources are in place to support workforce health and well-being? 27 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

29 APPENDIX Canada Global US Comparisons 28

30 Top drivers of attraction employee view Attraction Drivers GLOBAL Employee View U.S. Employee View Canada Employee View Base pay/salary Job security Career advancement opportunities Convenient work location Learning and development opportunities Challenging work 6 4 Organization s reputation as good employer 7 4 Vacation / Paid Time Off 7 Organization s mission, vision and values Health care/wellness benefits 7 Organization s financial performance Caliber of co-workers Source: Towers Watson 2012 Global Workforce Study. 29 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

31 Top retention drivers employee view GLOBAL U.S. Canada Retention Drivers Employee View Employee View Employee View Base pay/salary Career advancement opportunities Relationship with supervisor/manager Trust/confidence in senior leadership Manage/limit work-related stress Job security Convenient work location 7 6 Learning and development opportunities 7 Challenging work Short-term incentives Flexible work arrangements Ability to impact organization's performance Source: Towers Watson 2012 Global Workforce Study. 30 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

32 The current status of the workforce Global U.S. Source: Towers Watson 2012 Global Workforce Study Global. 31 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

33 Top drivers of sustainable engagement Driver Global Argentina Brazil Canada Mexico U.S. 1 Leadership Image Career Development 2 Stress, Balance and Workload 3 Goals and Objectives Performance Management Goals and Objectives Image Goals and Objectives 4 Supervision Leadership Performance Management 5 Image Supervision Stress, Balance and Workload Leadership Stress, Balance and Workload Career Development Supervision Goals and Objectives Career Development Image Performance Management Goals and Objectives Benefits Leadership Stress, Balance and Workload Goals and Objectives Supervision Image Source: Towers Watson 2012 Global Workforce Study Global Results. 32 Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

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