Measuring and managing engagement in a cross-cultural workforce: New insights for global companies

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© 2006 Wi ley Per iodicals , Inc .Publ ished onl ine in Wi ley InterScience (www.interscience.wi ley.com)

Global Business and Organizat ional Excel lence • DOI : 10.1002/ joe .20120 • November/December 2006

Measuring and Managing Engagement in a Cross-Cultural Workforce: New Insights for Global Companies P A U L S A N C H E Z

A N D D A N M C C A U L E Y

Should a company take a global or local approachto building engagement in its worldwide workforce?Research by Mercer Human Resource Consultingfinds that country norms for drivers of engagement,as well as for other employee perceptions abouttheir work and their employers, differ noticeablyfrom region to region—and not in ways that mightbe expected. But a core set of drivers is emergingglobally. This should help multinational companiesdistinguish between global and local engagementissues, design a manageable global engagementstrategy and initiatives, and tailor implementationto meet the needs and preferences of the local work-force. © 2006 Wiley Periodicals, Inc.

On the surface, a workforce composed of satisfiedemployees, content with their work experience,may seem like the perfect formula for success—andat one time it was. Employee satisfaction and intentto remain with the organization contribute toworkforce stability, which helps maintain produc-tivity and keeps a lid on certain aspects of humanresource costs. In today’s competitive global busi-ness environment, however, it is becoming clearthat a sole focus on satisfaction and stability is notenough to forge the crucial link between individualperformance and positive business results; it mustexpand to include the concept of employee engage-ment. Engagement, which indicates a more com-plex alignment and identification with theorganization, results in higher achievement, bymany measures, on both an individual and enter-prisewide basis. In fact, an analysis of relationshipsbetween employee satisfaction, engagement, andbusiness unit results found that employee engage-ment was directly linked to profitability, sales, cus-

tomer satisfaction/loyalty, employee retention, pro-ductivity, and safety.1

Employee Engagement Model

The development of employees from satisfied tohighly engaged can be viewed as a continuumdepicted in Mercer’s Employee Engagement Model©

(see Exhibit 1), which corresponds to four psycho-logical states, or stages of employee perceptionsabout their work, the work situation, the peoplearound them, and the likely outcomes of their asso-ciation with the organization. These four dynamicstages—satisfied, motivated, committed, and advo-cate—represent increasing levels of engagementwith the organization and its success.

SatisfiedSatisfied employees enjoy doing their jobs and are notdissatisfied with the terms and conditions of employ-ment. Generally, they are content to work alone, reli-ably, without requiring a great deal of managementoversight. At the same time, they are not necessarilyteam players, and tend not to go “above and beyond”in their efforts. Purely satisfied employees are oftenexternally focused—on family life, or on their goalsoutside the workplace—rather than focused on doingall they can to help drive positive business results.

MotivatedMotivated employees occupy the next stage of theemployee engagement continuum. In addition tosharing the attributes of satisfied employees, moti-vated workers contribute energetically, and arehighly focused individual contributors to theenterprise. Mainly, though, they are striving to

42 November/December 2006 DOI : 10.1002/ joe Global Business and Organizat ional Excel lence

achieve individual goals more than team or orga-nizational goals.

CommittedAt the Committed stage, employees have thorough-ly internalized the values and behaviors representedby the previous stages of the engagement model buthave also forged a strong identification with theorganization. They are loyal to the company andoptimistic about its future. They are also openlyambitious and believe the organization will enabletheir best performance. Above all, they have a senseof true belonging to the organization, feeling val-ued and involved, and are thus resilient in responseto any short-term setbacks or dissatisfactions.

AdvocateEmployees at the Advocate stage of the engagementmodel evidence a level of engagement that is indica-

tive of a positive link between employee perfor-mance and business results. Advocate-stage employ-ees have a vested interest in the organization’ssuccess. They freely contribute discretionary effort—a willingness to go the extra mile in executing proj-ects and even the most routine work; are motivatedto perform to the highest standards; and apply cre-ative energy to their work and the work of theirteams. They proactively seek opportunities to servethe mission of the organization. In addition, theyspeak positively about the products and services ofthe organization and recommend it as an employer.They are also willing to withhold criticism and/or beconstructively critical for the good of the organiza-tion. This fourth stage is the most desired outcome.

To quantify the concept of engagement, Mercer hasdevised an Employee Engagement Index©, an over-all measure of the degree of engagement among a

Advocate

Committed

Motivated

Satisfied

Motivated

Contributes energetically

Values and strives to achieve own

professional goals more than

team/organizational goals

Focused individual contributor

Advocate

Contributes discretionary effort

Proactively seeks opportunities to

serve the mission of the

organization

Speaks positively about theorganization’s products and

services

Recommends organization as an

employerIs willing to withhold criticism

and/or be constructively critical for

the good of the organization

Committed

Loyal to organization, optimistic

for the future

Sees the bigger picture with a

sense of how job fits in

Collaborates to achieve teamgoals

Openly ambitious for self, team,

and company

Believes the organization willenable his/her good performance

Has a sense of belonging to

organization; feels valued and

involved at work; expresses views

freelyResilient to short-term dissatisfiers

Satisfied

Enjoys job

Is not dissatisfied with terms and

conditions

Content to work alone

Does not go “above and beyond”Not necessarily a team player

Often externally focused

Exhibit 1. Engagement Model

43Global Business and Organizat ional Excel lence DOI : 10.1002/ joe November/December 2006

group of employees based on their responses to thefollowing five statements:

• I feel a strong sense of commitment to thiscompany.

• I am proud to work for this company.• I would recommend my organization to others as

a good place to work.• I am not considering leaving this company in the

next 12 months.• I am willing to go “above and beyond” in my job

to help this company be successful.

A group of employees that registers a high percent-age of positive responses to this set of statementshas reached a level of involvement with their organ-ization that can only be described as engaged andtermed “Advocate” according to the model shownin Exhibit 1. But what leads employees to become sovested in their work and their employer?

Drivers of Engagement

The changing nature of work and the emergence ofthe global economy have affected not only whatemployers want from their employees, but alsowhat employees want from their work. For exam-ple, in the 1980s, surveys were able to identify suchfactors as pay equity, job security, personal accom-plishment, and the opportunity for employee inputas drivers of employee satisfaction. By the 1990s—with the disruptive trends of corporate reorganiza-tion, outsourcing, and diminished jobsecurity—employees’ relationship to their work hadevolved to where professional development oppor-tunities, a clear sense of corporate direction, andachieving a good work/life balance had become keysto feeling committed as well as satisfied.

During the current decade, as employers focuson building competitive advantage in the newglobal economy, engagement is essential for opti-mizing human capital. More than ever, employ-ers need to leverage those practices that lead to

high levels of employee engagement. A companythat understands what drives engagement in itsworkforce, as well as the specific HR/organiza-tional practices that affect employee perceptionsabout those drivers, is equipped with valuableinformation for taking high-impact actions thatwill deepen workforce engagement.

A good example of a company that put engagementdata to work is a large U.S.-based financial servicescompany that performed an analysis of the driversof engagement among the 12,500 employees in itsmajor operating groups. The data on employee per-ceptions showed that the factors that correlated bestwith higher engagement were

• The chance to do challenging work• Access to needed information• Ability to reach career goals• Access to needed training

By examining the relationship in each operatinggroup between employee perceptions about thesekey drivers and actual employee turnover rates, ameasure of disengagement, the company was ableto quantify one benefit of higher engagement. Itfound that a 5 percent improvement in favorablescores for the four key drivers would boostemployee engagement by 6.1 percentage points,which, in turn, would reduce employee turnoverby 3 percentage points—in this example, a $3 mil-lion improvement in the bottom line throughannual cost savings associated with recruiting,training, and customer retention. Convinced of thevalue of working toward higher engagement, the

During the current decade, as employers focus onbuilding competitive advantage in the new globaleconomy, engagement is essential for optimizinghuman capital.


company moved forward to identify the best prac-tices in those units/groups with highly engagedemployees, with plans to replicate those practicesas appropriate across all the operating groups.

National Drivers of EngagementFor a long time, employee surveys have consistentlyfound that employee perceptions about the workexperience differ by country. National culture shapesthe reality of employee engagement. Thus, foremployers expanding their operations across theglobe, the question of what drives engagement takeson increasing complexity as their workforcesbecome more culturally diverse: Does the solution tobuilding engagement lie in a global strategy, a collec-tion of local approaches, or something in between?

To help answer this question, over the last severalyears, Mercer’s What’s Working™ studies havegathered data in 16 countries (with another 5 soonto be added) and developed statistically validcountry norms on employee perceptions aboutwork.2 Based on 125 survey items in 13 categoriesrelated to people, work processes, management

structure, information and knowledge, decisionmaking, and rewards, the studies have identifiedthe specific survey items that positively correlatewith the statements in the Mercer EmployeeEngagement Index, and they track these drivers tomonitor national trends.

The most recent What’s Working™ studies havefound that the top 7–8 drivers of engagement differfrom country to country, but perhaps not in waysone might expect. The U.K., for example, has moredrivers in common with some emerging economiesthan with the United States, another mature econo-my. As shown in Exhibit 2, U.K. and U.S. employ-ees share only one major driver—a sense of personalaccomplishment, ranked first in the U.K and secondin the United States. However, the leading U.K. driv-ers of engagement parallel six of the top drivers inAsia’s largest market, China.

What could possibly account for such patterns? Itmight be that U.K. employees, who work in a morehighly regulated economy than U.S. employees do,share a mindset with workers in an emerging econ-omy where governmental control may constrain

Exhibit 2. Differences in National Drivers of Employee Engagement

RankDriver U.S. U.K. ChinaConfidence in achieving career objectives 1 — —

A sense of personal accomplishment 2 1 1

Confidence that the organization will be successful 3 — —

Quality as a high priority in the organization 4 — —

Opportunity for growth and development 5 — —

Information and assistance in managing careers 6 — —

Flexibility to provide good customer service 7 — —

Confidence in senior management — 2 4

Opportunities for training — 3 6

Paid fairly, given one’s contribution — 4 2

A good reputation for customer service — 5 —

Receiving regular feedback on performance — 6 7

Comparable benefits to industry — 7 3

IT systems support business trends — — 5


individualism in the workforce and the opportuni-ties for worker input are limited—as in China. Onthe other hand, engagement drivers for workers inthe United States, with its deregulated economy,might reflect a more entrepreneurial mindset andgreater employee participation and latitude. Thus,any conclusion about the drivers of engagement in aworkforce that spans more than one country shouldtake into account each country’s business culture.

Global Engagement Drivers

Although the What’s Working studies have identi-fied country-specific drivers of engagement, theyhave also found that a core or consistent set of driv-ers is emerging globally. The global drivers ofengagement represent four areas of the work expe-rience that employees tend to hold high in impor-tance regardless of their national culture:

• The work itself, including opportunities to develop• Confidence and trust in leadership• Recognition and rewards• Organizational communication

The Work Itself, Including Opportunities to DevelopIn companies with high engagement, employees per-ceive the following to be true:

• Employees are treated with respect and univer-sally feel respected.

• Their work is valued for its overall contribution.• There is real opportunity to grow in each job and

laterally.• Work is aligned with the success of the enterprise.• Employees are participating in developmental

opportunities.

Engagement-driven companies have found cre-ative ways to make this global driver a reality fortheir employees. For example, although they mayhave flattened organizations that limit thechances of traditional promotions and upwardadvancement, they give employees the opportuni-ty to grow within a job and move laterally with-in the organization.

Confidence and Trust in LeadershipHighly engaged employees see their company’s lead-ership doing the following:

• Managers and top management act in accordwith the expressed values of the organization.

• Leadership allocates resources in ways that sup-port strategy and in accord with stated values.

• There is visible and transparent managementinvolvement with the customers and employees.

• Leadership makes the connections between strat-egy and process that will aid employees in seeingthe big picture.

Recognition and RewardsThe approach to total rewards in companies withhigh engagement levels can be characterized in thefollowing ways:

• Employees are recognized in tangible and imme-diate ways.

• Organizational reward practices are perceived asfair and competitive.

• There is a total compensation approach in whichthe benefits components of employment are inte-grated with the total reward package.

• In addition to cash rewards, there is noncashrecognition for outstanding performance.

While competitive pay and cash bonuses are notin and of themselves engagement drivers, theyshould not be so noncompetitive as to be demoti-vating. Recognizing individual and group perfor-mance in tangible and immediate ways enhancesan employee’s sense of organizational support.

Any conclusion about the drivers of engagementin a workforce that spans more than one countryshould take into account each country’s busi-ness culture.


Nonmonetary rewards, both formal—gifts oftravel or merchandise, additional time off—andinformal—a widely distributed memo congratu-lating or praising a worker, an impromptu pizzaparty at the end of a particularly demandingweek—are an effective part of a reward mix thatsupports engagement.

Organizational CommunicationIn companies with highly engaged employees, com-munication is perceived as follows:

• Organizational culture is built on an open two-way exchange of information.

• Communication is planned.• Supervisors are active participants in the cascade

of information.• There is a full mix of media to reach all levels of

the organization.• Supervisors are given communication training.

Information cascades from top management in atimely and orderly fashion. However, the active par-ticipation of supervisors trained in disseminatinginformation and handling questions and feedback isone of the most effective ways to build understand-ing and cooperation. Communication is planned yetflexible enough to meet the day-to-day needs ofinformation-thirsty employees and crafted to takeinto account the various learning styles within theorganization. E-mail and the company intranet areused effectively but in combination with a mix ofother media, since for certain messages electroniccommunication alone may not achieve the desiredimpact. To accommodate those employees that haveno regular access to computers on the job, print

newsletters and regular home mailings alert employ-ees to important changes and events.

National Differences in Employee Perceptions

Although employees around the world increasinglysee eye-to-eye on what they value most about theirwork experience, their perceptions about how welltheir employers are providing it to them varies bycountry. In fact, the What’s Working survey resultsshow that employees in some countries are clearlymore positive—across the board—than are those inother countries.

The percent favorable responses on all 125 items inthe survey are averaged for all employees in a coun-try, and all the country averages are then used to cal-culate a global average. (This is also done for eachitem in the survey). A comparison of the countryaverages with the global norm, shown in Exhibit 3,reveals that employees in several of the largest emer-gent economies are significantly more positive abouttheir work experiences than are employees in moremature economies. India’s country average is 25 per-cent above the global average, followed by Mexico’sat 19 percent and China’s at 15 percent. Conversely,employees in one of the world’s most developedeconomies, Japan, are 23 percent less positive thanthe global composite. South Korea and Portugal alsonoticeably lag the global average by 19 percent and10 percent, respectively. Three of the largest matureeconomies—the United States, Australia, and theU.K.—hover within a few percent of the global norm.

In general, these differences are consistent across the13 What’s Working survey categories—including theitems in the Mercer Employee Engagement Indexand those related to the four emerging global driversof employee engagement. As an example, Exhibit 4displays the actual country averages for the item, “Iwould recommend my organization to others as agood place to work,” one of the five statements inMercer’s Engagement Index for which strongly pos-itive responses reflect the Advocacy position in the

The What’s Working survey results show thatemployees in some countries are clearly morepositive—across the board—than are those inother countries.


engagement model (Exhibit 1). Employees in Brazil,India, and Mexico lead the group, with about fourfifths of employees responding positively to the state-ment; U.S., U.K., and Australian employees are at ornear the global average; and the lowest favorableresponse rates are again from employees in Japan(23 percent favorable), followed by South Korea andSingapore (both 40 percent favorable).

These results might at first seem paradoxical. Infact, in emerging economies, where the work isprized and having a job at all is likely to be viewedas a positive experience, employee engagement canbe higher than it is in mature economies. Themature U.S. and U.K. economies have more sophis-

ticated workers with more articulated expectationsfor everything from rewards to training and devel-opment—presenting employers with opportunitiesto enhance the work experience, along with risks ofdiminished engagement if expectations are not easi-ly or quickly realized. In the case of Japan, anothermature economy, engagement may suffer as a resultof a long industrial tradition of workplace disciplineand the imposition of a demanding work ethic in a“command and control” environment.

The Management Implications for Global Companies

Many companies pursue a unified engagementstrategy and consistent HR management practices

Japan-23%

S. Korea-19%

Portugal-10%

Singapore-8%

France-7%

Germany-5%

Sweden-4%

U.K.-2%

Australia-1%

U.S. 1%

Ireland 4%

Canada 5%

Brazil 11%

China 15%

Mexico 19%

India 25%

%03%02%01%01-%02-%03-

Percent above

Global Average

Percent below

Global Average

Global Average =

57% favorable

response

Exhibit 3. Employee Favorable Responses to All What’s WorkingTM Survey Items: Country Averages Relative to Global Average


throughout the organization as a means of creatinga global employer brand, a common corporate cul-ture, a consistent basis for leadership training,more permeable internal boundaries for employees’cross-unit moves, and other benefits. This is anachievable goal for global companies as well, pro-vided the national differences discussed earlier aretaken into account.

Management Practices Associated with the Stages ofEngagementGenerally speaking, whatever stage an employee isat in the engagement model shown in Exhibit 1,

management efforts are needed to optimize theworking relationship between employee andemployer—and facilitate the movement of theemployee to the next stage in the model. The fol-lowing management practices are associated withthe four stages of engagement:

• Satisfied. Management efforts to optimize theworking relationship to the point of satisfactiongenerally are not that demanding. Satisfiedemployees require adequate work tools,resources, equipment, and an adequate workenvironment, along with an adequate reward

% Favorable

Responses

Global Average

Japan 23%

S. Korea 40%

Singapore 40%

France 53%

Portugal 55%

U.S. 58%

Australia 59%

U.K. 59%

Germany 61%

China 62%

Canada 63%

Ireland 64%

Sweden 64%

Mexico 79%

India 82%

Brazil 82%

ITEM: “I would recommend my organization to others as a place to

work.”

Exhibit 4. Country Averages for Employee Responses to Engagement Item in What’s WorkingTM Survey


level and understanding of any rationale forreward change. Recognition of the employee’swork efforts also facilitates satisfaction.

• Motivated. Management efforts to optimize themotivated stage of employee engagement includethe following:— Establishing fair performance goals— Communicating clear expectations about job

roles— Regularly clarifying priorities and feedback— Supporting by removing obstacles to optimal

performance— Recognizing and rewarding his or her

performance— Delegating work to this employee— Supporting employee skill development

• Committed. Management’s role in optimizingthe Committed stage of engagement includes thefollowing:— Communicating the organization’s progress

and challenges— Relating business results to team and individ-

ual roles— Endorsing a strong customer focus— Sharing an understanding of customer needs

with the team— Challenging and growing through delegation— Establishing comprehensive career develop-

ment plans— Encouraging upward communication— Encouraging innovation— Recognition and rewards

• Advocate. Movement to the Advocate stagecomes about for a variety of reasons, not theleast of which is that the employee, who hasinternalized the importance of mission accom-plishment, sees a mutuality of interest betweenhis or her values and aspirations and those of theorganization. From management’s perspective,facilitating the Advocate phase requires a rein-forcement of the same management efforts as atthe Committed stage, but with stronger emphasison the benefits and rewards for all stakeholders,a focus that appeals to Advocate stage employ-

ees. Management also recognizes that theAdvocate employee can set off a multiplier effectnot seen in the previous stages; a “rank and file”employee speaking and acting positively can ben-efit the organization far more effectively thanmanagement exhortations.

For the multinational company, the managementactions suggested above are meant to be translatedand applied in the context of the national culturesrepresented in the company’s various operating enti-ties around the globe.

Separating the Global from the LocalThe emergence of the four global drivers, discussedearlier in the article, provides a global employerwith the means to focus on those areas with thegreatest potential impact on workforce engagementthroughout its operations, finding the commonthreads of engagement across countries as well aswithin national cultures. This can provide theframework for a global engagement strategy, lend-ing cohesiveness and consistency to engagement ini-tiatives. However, the “best practice” multinationalorganizations realize that even as they strive forcommon management approaches to buildingemployee engagement, they must recognize theinfluence of regional or national cultures onemployees’ perceptions.

Companies that “filter” their engagement datathrough the lens of national patterns can betterinterpret the data to identify the issues commonacross the organization and those that are decid-edly regional, country, or local. By supplementinginternal business-unit comparisons with national

The emergence of the four global drivers ... pro-vides a global employer with the means to focus onthose areas with the greatest potential impact onworkforce engagement throughout its operations.


comparisons—for example, comparing the surveyresults for a company’s Indian employees to thenormative data for other employees in India, on anoverall basis and for individual survey items—management can make better informed decisionsabout what issues should be addressed on a globalbasis through companywide initiatives and whatare specific to a region’s or country’s operationsand merit local response. For organizations con-sidering opening operations in a particular regionor country, the country norms can also be helpfulfor assessing the challenges of cross-cultural oper-ations and devising a means for addressing thembefore they become problems.

Implementation of Engagement InitiativesIn actual practice, companies that make the best useof employee engagement research also take culturaldifferences into account as they implement initia-tives and management practices geared to increasethe engagement of their global workforce. Take thecase of a global manufacturing company that con-ducted a broad-based employee engagement studyof its 90,000 employees at locations in major indus-trial countries around the world. When the resultswere interpreted in light of national cultural differ-ences, the company identified several global issuesand devised interventions to address them. Forexample, one engagement issue for employeesworldwide related to how the company adoptednew technology. In response, the company devel-oped a uniform program for technology rollouts inthe future. But it then tailored its implementation toreflect regional and local differences and prefer-ences. In its Nordic region, for instance, the pro-grammatic actions were spearheaded by theimmediate supervisors, whereas in Japan, with itsmore formal and hierarchical culture, the highestunit executive in the locale took the lead in launch-

ing the changes, which were then cascaded downinto the organization.

Conclusion

Even as research confirms the stamp of national cul-ture on employees’ perceptions of their employer’spractices and actions, research has also discoverednew areas of commonality emerging among work-ers worldwide. Such information empowers a glob-al company to leverage those practices that lead toa work experience valued globally, even as itresponds to the needs and preferences unique toeach culture represented in its workforce. Globalcompanies that use this information to more deeplyengage their employees can hope to reap the positiveimpact of high engagement on profitability, reten-tion, productivity, and more.

Notes1. J.K. Harter, F.L. Schmidt, & T.L. Hayes, Business-unit-level relationship between employee satisfaction, employeeengagement, and business outcomes: A meta-analysis,Journal of Applied Psychology, 87(2) (2002), 268–279.

2. Mercer’s What’s Working™ studies are conducted inAustralia, Brazil, Canada, China, France, Germany, Ireland,India, Japan, South Korea, Mexico, Portugal, Singapore,Sweden, the United Kingdom, and the United States; addi-tional studies in the Czech Republic, Poland, Hungary,Spain, and Italy are in the final stages of completion.

Paul Sanchez is a worldwide partner with Mercer HumanResource Consulting in New York City, as well as the globalleader of the firm’s Organization Research and Effectivenessgroup. He can be contacted at [email protected] McCauley, Ph.D., is a principal with Mercer HumanResource Consulting in Chicago, Illinois, and specializes inorganizational diagnostics and employee survey research. Hecan be contacted at [email protected].

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Measuring and managing engagement in a cross-cultural workforce: New insights for global companies