Percent of Organizations with Falling Engagement Scores Triples in Two Years; Most Notable Drops Occurring This Year
Percent of Organizations with Falling Engagement Scores Triples in Two Years; Most Notable Drops Occurring This Year
July 30, 2010 — Though the economy is slowly recovering, employee engagement and morale in the workplace are not, according to an analysis by Hewitt Associates. 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 the firm has observed since it began conducting employee engagement research 15 years ago.
This drop, according to Hewitt, highlights the growing tension between employers, many of which are trying 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.
In July 2008, Hewitt began closely analyzing changes in employee engagement levels by quarter for more than 900 organizations globally that conducted annual engagement studies. The studies covered topics such as employee morale, confidence in the organization, career opportunities, rewards and recognition programs, and trust in leadership.
Historically, the firm's research has found that about half of organizations improved engagement levels in a one- or two-year period, while 15% experienced a decline. But the past two years have been more challenging and the percent of organizations with declining engagement has steadily grown. This trend is particularly notable in 2010, with the research finding that 46% of organizations experienced a decline in engagement levels in the quarter ending June 2010, while just 30% saw an improvement.
The analysis also suggests a clear link between employee engagement levels and financial performance. Organizations with high levels of engagement (65% or more of employees are engaged) outperformed the total stock market index even in volatile economic conditions. In 2009, total shareholder return for these companies was 19% higher than the average total shareholder return. Conversely, companies with low engagement (less than 40% of employees are engaged) had a total shareholder return that was 44% lower than the average.
According to the firm, companies with improved engagement levels:
Focus on the long term: While many organizations did cost-cutting and reductions in staff, they made changes consistent with their principles and values without losing sight of their overall goals.
Obtain leadership buy-in: 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% compared to 51% 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 effect.
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 programs), 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 they're able to engage or re-engage them once the job market improves.
Use a broader array of information and analytics: Hewitt's analysis shows that 34% of organizations help employees through the on-boarding process to minimize the dip in engagement mot organizations see in the first year of employment. Also, almost three-quarters conduct exit surveys to understand why employees are leaving and proactively identify potential hot spots.
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