Towers Watson Viewpoints Expo Engage

8/6/2019 Towers Watson Viewpoints Expo Engage

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Employee Engagementto the Power o Three

Q

Measuring employee engagement has risen in

importance over the course o the last ewdecades. How do we defne employee engagement,

and what are its main components?

AZuckerman: Employee engagement is both the

rational and the emotional connection an

employee has to the organization, combined with his

or her willingness to exert discretionary eort.

Research has consistently ound that more engaged

employees produce better nancial returns or their

businesses.

Kulesa: Looking at three-year and ve-year changes in

operating margins and net prot margins, weve seen

that companies with higher engagement scores do

better nancially. For example, our three-year study o

41 multinational organizations ound those with high

engagement levels had 2% to 4% improvement

n operating margin and net prot margin, whereas

those with low engagement showed a decline o about

1.5% to 2%.

Q

Why has employee engagement become more

important in recent years?

AZuckerman: Engaged employees working in a

high-perormance culture give companies a real

competitive edge one thats dicult or competitors

to replicate. Its one o the ew things that can provide

a sustained advantage, and business leaders

recognize that.

Kulesa: Also, HR leaders now realize the concept o

engagement allows them to measure an important

people-related component o business success.

Those metrics are no longer just nice to have; theyre

necessary i a company expects to maximize employee

and company perormance. Advances in the science

o measuring and infuencing engagement have given

HR leaders an additional tool and an even stronger

voice within the organization in terms o how to drive

corporate perormance.

Patrick Kulesa

Research Leader

Jennier Meder

Senior Consultant

Adam Zuckerman

Senior Consultant

Exponential engagementis the latest

development in research into how

employee behavior and attitudes aectbusiness perormance. Senior consultants

rom Towers Watsons Organizational

Surveys & Insights practice recently

discussed how a ocus on exponential

engagement can help employers take

perormance to the next level.


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Employee Engagement to the Power o Thtowerswatson.com

QHow does exponential engagementbuild on the

traditional concept o engagement? And how

does it relate to business perormance?

AMeder: Over the past 40 years, employee

research has been a critical component o

organizational strategy. At rst, we looked at employee

satisaction, then moved on to commitment and thento engagement. Thats where weve held steady over

the past decade.

According to our more recent research, engagement

takes a company only so ar. Weve learned that certain

actors related to the work environment aect employee

perormance and thereore the entire organization

whether or not employees are engaged.

We think about exponential engagement as engagement

to the power o three. In addition to engagement, the

other two elements are enablement and energy. Theyre

crucial supplements to engagement in boosting

perormance.

Zuckerman: Enablement operates primarily at the

work-group level. Its about having in place the equip-

ment, supplies, processes and training that enable

employees to actually get the job done without barriers

or obstacles.

To realize the ull benets o employee engagement, a

company needs that enablement actor. Workers can be

excited about the companys mission and values, but i

they arent enabled to do the job, that excitement will

ead to rustration rather than translating into high

perormance.

n addition to being engaged and enabled, employees

need to work in an environment that promotes and

supports their well-being. When that energy is in place,

engagement is more readily sustained over time. When

that kind o environment doesnt exist, the energy isnt

there, and engagement can be short-lived.

Employers are paying more attention to energy with

wellness programs to help employees manage their

health. But wellness isnt related only to benet

programs. You also need to support employee well-

being through the environment, the workload, goal

clarity and other things.

Kulesa: The energy actor the third element o our

exponential engagement model is rmly connected

to employee well-being. Weve studied several aspects

o well-being: social, psychological and physical. The

social aspect is employees sense o belonging and

connection to the workplace. The psychological is

related to workers stress and emotional outlook. And

physical health is about the vitality that people carry

around with them on the job.

The day-to-day sense o enablement and energy is

crucial. Unlike traditional models o engagement,

exponential engagement deals primarily with the local

unit level, rather than with the bond o the employee to

the organization as a whole. Enablement and energy

have more to do with the employees day-to-day work

environment. Are supports in place to oster productiv-

ity? Is rustration putting workers engagement at risk?

In our studies across organizations, weve ound that

exponential engagement gives companies a nancial

perormance advantage. Specically, weve seen triple

the operating margin in companies that are high on all

three o the exponential engagement measures,

compared with those with low engagement levels

and even double the operating margin compared with

companies that get engagement right but lack the other

two elements: enablement and energy.

Zuckerman: Employees who arent just engaged but are

also energized and enabled produce ar greater nancial

benets than employees who are simply engaged.

Meder: Thats why we call this concept our exponentialengagement model. The combination o those three

pieces engagement, enablement and energy can

boost nancial perormance to ar greater heights than

can engagement alone.

Employers are paying more attention to energy

with wellness programs to help employees man-

age their health. But wellness isnt related onlyto beneft programs. You also need to support

employee well-being through the environment,

the workload, goal clarity and other things.


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Employee Engagement to the Power o Thtowerswatson.com

QTo examine the connections between employee

engagement and business perormance, what

specifc measures can companies use?

AZuckerman: Weve statistically linked employee

engagement with nearly every organizational

outcome or metric there is. By almost any measure,

more engaged employees produce better outcomes,

ranging rom more satised or more loyal customers

to higher revenue, more prot and greater eciency.

Kulesa: There are our general metrics that have strong

inks to engagement. When we work with clients, we

oten start by asking i theyre measuring those things.

One is the marketplace measures, which include

customer satisaction and broader issues such as

the organizations reputation among its current and

potential customers. The second group includes the

more traditional HR measures: turnover, absenteeism

and presenteeism the elements many HR depart-

ments routinely track. In the third bucket are the

nancial areas that Adam just touched on: sales,

protability, and other measures specic to the top

and bottom lines. The ourth area includes operational

measures: eciency, just-in-time delivery, quality and

saety incidents in the workplace.

We look at whats being tracked consistently at the

unit level across the organization. Is there an important

measure the business believes in, and measures

requently, that we can tie to engagement? It needs to

be one that will cause everyone to stand up and take

notice when you say, Engagement is connected to

this measure.

QHow do employers begin the process o

measuring exponential engagement, especially

i theyre already measuring engagement through

regular employee surveys?

AZuckerman: Employee opinion surveys are still

the best way to gather employees views and

measure their engagement. To measure exponential

engagement, we add a group o nine questions to the

regular survey that delve into not only core engage-

ment but also whether employees eel enabled and

energized. Those questions are grouped so we can

create an exponential engagement index.

That index allows us to see the level o employee

engagement and how it compares to benchmarks.

We also can identiy the top predictors or drivers o

that index. This helps companies prioritize their eorts

around the actors most likely to enhance exponential

engagement.

Kulesa: This concept sits within traditional employeeengagement approaches quite well. It doesnt require

a company to discard its process and build something

entirely new. Its just a smarter way o doing something

companies are already doing: taking the pulse o their

employees via the employee survey process.

QWhich drivers o engagement are the most

critical or organizations to address right now?

AZuckerman: Its important or each organization to

understand its employees well enough to be able

to identiy the unique drivers or each workorce group,

and even or subgroups.

The important drivers o engagement vary by industry

sector and by country. And they certainly change over

time. But there are general trends. One common driver

is career development. In general, employees who have

avorable views o their career development opportuni-

ties tend to be more engaged than other workers.

Another powerul driver o engagement is the condence

employees have in their leaders. Theyre more engaged

when leaders are clear about the organizations

strategic goals and show an interest in and concern

or employees. A third common driver is empowerment

the ability o employees to make decisions and take

actions in order to successully perorm their work.

In general, employees who have

avorable views o their career

development opportunities tend

to be more engaged than other

workers.


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Copyright 2011 Towers Watson. All rights reser ved.

TW-NA-2011-19633

towerswatson.com

About Towers WatsonTowers Watson is a leading global proessional servicescompany that helps organizations improve perormance through

eective people, risk and nancial management. With 14,000

associates around the world, we oer solutions in the areas

o employee benets, talent management, rewards, and risk and

capital management.

Kulesa: Also, throughout the recession, weve been

tracking additional issues that have moved on and o

the list as the economy has changed.

Weve seen employees perception o their companys

mage or reputation come into play. When a company

s struggling or receiving government assistance, those

diculties can negatively aect engagement. At thesame time, other companies nd their reputation

maintained or even enhanced by competitors

problems, and they experience a boost in engagement.

The organizations image becomes a more powerul

driver when leaders look at their employees and ask,

Are we healthy as a company? Are we going to make it

through this dicult period? That brings the companys

good image to the oreront or employees, enhancing

engagement.

Another driver we saw at the back end o the recession

was clarity in the companys goals and objectives. As

the economy began to show signs o a turnaround,employees collectively seemed to be exhaling and

asking, Now what? Leaders who responded immedi-

ately and clearly about the organizations goals and

objectives improved employee engagement levels.

Meder: Thats particularly relevant in organizations that

have made signicant workorce cuts but havent done

the needed goal setting. Where you have individual

employees now doing several jobs, clariying goals is

going to be crucial to keeping those workers engaged.

Our three-year study o 41 multinational

organizations ound those with high

engagement levels had 2% to 4% improvement

in operating margin and net proft margin,

whereas those with low engagement showeda decline o about 1.5% to 2%.

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Towers Watson Viewpoints Expo Engage