Mercer: What's Working Research on Employee Engagement
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Mercer: What's Working Research on Employee Engagement

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As part of Mercer's commitment to providing clients with research-based solutions, Mercer’s employee research group conducts a series of national studies around the globe, entitled What’s ...

As part of Mercer's commitment to providing clients with research-based solutions, Mercer’s employee research group conducts a series of national studies around the globe, entitled What’s Working™.


These studies allow us to analyze national trends regarding employee perceptions and to identify the key drivers of employee engagement – by country and on a global basis.

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Mercer: What's Working Research on Employee Engagement Mercer: What's Working Research on Employee Engagement Document Transcript

  • Engaging Employeesto Drive GlobalBusiness SuccessInsights from Mercer’sWhat’s Working ™ research
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  • Engaging employees to drive globalbusiness success:Insights from Mercer’s What’s Working™ researchO n the surface, a workforce composed of employees who aresatisfied with their jobs may seem It reflects how employees feel about the overall work experience – the organization, its leaders, the worklike a desirable and even optimal environment, and the recognition andstate for an organization. But in rewards they receive for their efforts.today’s global business environment,it is becoming clear that job satisfac- Employee engagement fosters andtion is not enough to help forge the drives discretionary behavior, elicit-link between employee performance ing employees’ highest productivity,and positive business results. their best ideas and their genuine commitment to the success of theOver the past two decades, employ- organization. Engagement contrib-ers’ needs and interests have utes significantly to an organization’smoved from creating conditions and performance, leading to improve-programs that result in employees ments in service quality, customerwho are merely “satisfied” with pay, satisfaction and long-term financialbenefits and working conditions, to results. All other factors being equal,employees who are “committed” to it also serves the individual, fulfillingthe organization and not considering a basic human need to be connecteda move, to those who are genuinely to worthwhile endeavors and make“engaged” in the work and mission a significant contribution. In short,of the organization. For employers, engagement is good for the companyengagement has become the search and for the employee.for the “Holy Grail” of the 21st century. Substantial research has been undertaken by the management andWhat is employee behavioral sciences that supportsengagement? the theory that when employees are engaged, service quality, customerWe define engagement as a psycho- satisfaction, employee retention,logical state in which employees feel productivity and financial perfor-a vested interest in the company’s mance improve.1 By contrast, whensuccess and are both willing and employees are alienated or disen-motivated to perform to levels that gaged, organizations experienceexceed the stated job requirements. declines in all of these areas.1 See, for example, Harter JK, Schmidt FL and Hayes TL. “Business-unit-level relation- ship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis.” Journal of Applied Psychology, Volume 87 (2002), pp. 268–279. 1
  • While it is fairly easy to say what the code to employee engagement engagement is and why it is good – learning how organizations can for organizations, it has proven win the hearts and minds of their more difficult for organizations – employees – remains a complex yet particularly multinationals with critically important challenge facing heterogeneous employee organizations as they strive to reach populations – to determine how the highest levels of performance in to increase engagement. Cracking changing and competitive environments. About our What’s Working surveys As part of our commitment to research-based consulting, Mercer conducts a series of national studies across the globe titled What’s Working. These stud- ies allow us to identify trends and perceptions of work in many countries. The studies give us general insights into workers’ attitudes and what drives their engagement. The What’s Working research is then used to both design our clients’ internal research studies and evaluate their specific employee survey results. With benchmarks of 30,000 respondents in 17 countries, covering companies of all sizes, the surveys maintain a consistent methodology for effective global comparisons. Our sophisticated analysis includes both conjoint analysis to identify what employees value most and regression analysis to identify key engagement drivers and other important correlations. More than 100 questions in each study elicit views across 12 dimensions: n Work processes n Quality and customer focus n Communication n Work/life balance n Job security and career growth n Teamwork and cooperation n Ethics and integrity n Immediate manager n Performance management n Rewards (compensation and benefits) and recognition n Leadership and direction n Training and development You can find additional information about the What’s Working studies and results from the country reports at www.mercer.com/whatsworking.2
  • Identifying the drivers of percentage-point improvementemployee engagement in favorable scores would reduce employee turnover – a measure ofThe changing nature of work and the disengagement – by three percentageemergence of the global economy points. This translated into aboth have affected not only what potential $3 million improvement inemployers want from their employ- the company’s bottom line throughees, but also what employees want annual cost savings associated withfrom their work and their careers. recruiting, training and customer retention. Convinced of the valueAs employers endeavor to build of working toward higher levels ofcompetitive advantage in the global engagement, the company targetedeconomy, engagement is its HR efforts to improve these areasessential for optimizing human by replicating across all its operatingcapital. More than ever, employers groups the best practices of thoseneed to apply those practices that units identified as having highlylead to higher levels of employee engaged employees.engagement. Those companies thathave identified drivers of workforceengagement, and the specific HR/ What drives engagement?organizational practices that affectemployee experience of those drivers, Research has confirmed over timehave been able to use this knowledge that employee perceptions about theto allocate resources more strategi- work experience differ by country,cally to achieve greater engagement. industry sector and organization. National culture shapes the real-Case in point ity of the employee experience and,A large US-based financial services therefore, engagement. Thus, forcompany analyzed the drivers of employers expanding their opera-engagement among the 12,500 tions around the globe, the questionemployees in its major operating of what drives engagement takesgroups. The data on employee per- on both increasing complexity andceptions showed that the factors importance as their workforcesthat have the greatest impact on become more culturally diverse.engagement are: Even if business leaders of multi-1. The chance to do challenging work national companies know how to2. Access to needed information engage staff in their home-country offices, they might not succeed in3. Ability to reach career goals delivering the most value for their4. Access to needed training HR investments if they simply transfer HR policies and practices toWhen the company then compared other countries.employee perceptions results,including the drivers of employeeturnover rates, it found that a five 3
  • Using the Employee Engagement Index© to identify engagement drivers Using the What’s Working data, Mercer first devised a measure of engage- ment, the Employee Engagement Index©, which quantifies the degree of engagement among a group of employees based on their responses to the following five statements: n I feel a strong sense of commitment to this company. n I am proud to work for this company. n I would recommend my organization to others as a good place to work. n I am not considering leaving this company in the next 12 months. n I am willing to go “above and beyond” in my job to help this company be successful. The Employee Engagement Index score is then compared to employees’ responses to other survey items, yielding information about those factors that correlate with a high level of engagement. Employers can use this information to focus organizational and HR efforts in those areas that affect employee perceptions about those factors. Over the past several years, Mercer mance management, training and has conducted What’s Working™ development, work/life balance, and studies around the world in order pay and benefits. (See “About our to capture and track employee What’s Working Surveys” on page 2.) perceptions and attitudes about work; identify the drivers that Through this research, not only has contribute the most to employee Mercer learned about employee engagement in various countries; perceptions and how they dif- and develop reliable normative fer by country and by region, but, or comparative data that enable more important, it has been able employers to assess their own levels to identify and quantify particular of employee engagement relative to drivers of engagement. (See “Using national or regional benchmarks. the Employee Engagement Index© to Identify Engagement Drivers.”) This Each national study’s results are has yielded a wealth of information based on data collected from a sta- that CEOs, HR directors and other tistically valid sample from a broad executives with global workforce- cross-section of employees designed management responsibilities can act to represent the nation’s workforce. on to improve employee engagement More than 100 questions in each and enhance business results, such study elicit views in such areas as as customer service, productivity communication, leadership, perfor- and turnover.4
  • Findings: Global drivers Using the research toof engagement enhance engagementOur research and client experiencedemonstrate that the drivers of Leveraging the global driversengagement will vary considerably Throughout their operations, multi-by country, by industry sector and by nationals should look for both com-organization. In all instances, Mercer mon threads of engagement acrossrecommends that these key drivers countries and distinct or uniquebe identified within the organiza- drivers in each major cluster or loca-tion’s context, which will allow it to tion. This can provide the frameworkidentify the drivers that will have for a global engagement strategy,the greatest impact on performance. lending cohesiveness, consistency and efficiency to engagement initiatives.While the specific set of key driverswill vary by organization, Mercer’s Strategic HR management practicesWhat’s Working research has also across the organization also supportidentified four relatively consistent a global employer brand, a sense ofglobal drivers of employee engage- common corporate culture, a con-ment. These are: sistent basis for leadership training, more permeable internal boundar-n The work itself, including oppor- ies for employees’ cross-unit moves, tunities for development and other benefits.n Confidence and trust in leadershipn Recognition and rewardsn Organizational communicationIn the absence of any additionalinformation, focusing on thesefour drivers would enable a globalorganization to focus on areas thatcould significantly raise levels ofemployee engagement. Examiningthe organization’s employee surveydata could lead to a refinement ofthe key driver analysis – identifyingthe specific issues that would havethe greatest impact on engagement,given the organization’s context. 5
  • Following are some of the hallmarks n Recognition and rewards. of organizations that excel in lever- Recognizing individual and group aging these four global drivers to performance and contributions enhance engagement: in tangible and immediate ways enhances an employee’s sense of n The work itself, including the organization’s appreciation and opportunities for development. support of his or her efforts. While Engagement-focused companies competitive pay and cash bonuses have found ways to make work are not, in and of themselves, an effective driver of employee engagement drivers, they should be engagement. For example, although structured so as to be internally fair these companies may have flat- and externally competitive and, there- tened their organizations, limiting fore, not de-motivators. Nonmonetary the opportunities for traditional rewards, both formal and informal, promotions and upward advance- are an effective part of a reward ment, they allow employees mix that supports engagement. to grow within a job through expanded training opportunities n Organizational communication. and to move laterally within the In organizations with engaged organization. Particularly important workforces, information cascades in these companies is explaining from top management to employ- how jobs fit into the overall mosaic ees in a timely and orderly fashion, of the functions and activities that with processes established to build bring services and products to cus- upward flow of information from tomers, so employees can map out employees to top management. and understand how their contribu- Supervisors are trained to actively tions fit into the larger scheme of disseminate information, handle things. These factors are in addition questions and provide feedback – to the work itself, which may have effective ways to build awareness, intrinsic appeal to each employee. understanding and cooperation. Communication is planned, yet it n Confidence and trust in leadership. is flexible enough to meet the day- Engaged employees see and to-day needs of information-thirsty experience their leaders acting in employees and crafted to take into accord with the expressed values account the various learning styles of the organization and allocating within the organization and the resources in ways that support communication vehicles preferred strategy. Strong leaders believe in by employees (for example, acting in visible and transparent face-to-face meetings, email, ways that generate involvement intranets, print newsletters or with customers and employees. regular home mailings). Leaders who can help employees see how strategy relates to various processes and procedures build engagement.6*
  • Case in point For example, even if a survey indi-A global manufacturing company cates that employees in a givenconducted a broad-based employee country rate a company’s perfor-engagement study of its 90,000 mance in a particular area to beemployees at locations across major “low,” this information alone doesindustrial countries. When the not tell leaders whether this isresults were interpreted in light of unusual for this country (that is,national cultural differences, the do employees working for a broadcompany identified several global cross-section of employers in theissues as well as guidelines for country also give this item a low rat-regional and local interventions to ing, such that the company’s perfor-address the company’s issues. For mance in this area is at least as goodexample, one engagement issue for as – or perhaps even better than –employees worldwide related to how that of its competitors?).the company adopted new tech-nology. In response, the company Without this type of information, thedeveloped a uniform program for organization could allocate resourcesfuture technology rollouts. But it also to solving a problem that might nottailored its implementation to reflect be a problem, but a reflection ofregional differences. In its Nordic general attitudes and culture in thatregion, for instance, the program- country. Meanwhile, executives mightmatic actions were spearheaded by ignore an area in which the organiza-the immediate supervisors, whereas tion’s absolute score was “high” butin Japan, with its more formal and which could have been expected tohierarchical culture, the highest unit be higher given local norms.executive in the locale took the leadin launching the changes, which The combination of specificwere then cascaded down into the employee survey results with normorganization. This is a powerful comparisons allows the organiza-example of how to blend local and tion to identify issues and follow upglobal drivers of engagement based with interventions that will have theon information and insight derived greatest impact on employee engage-from employee research. ment – and ultimately on business performance. (See “Using EmployeeUsing norms to better interpret Surveys to Drive Business Decisions”internal employee survey data on page 8.)While employee surveys providevaluable insights about employeeperceptions within an organization,multinationals that seek to comparefindings across regions or assess theirperformance as a whole, withoutreference to local and global norms,could misinterpret the results. * 7
  • Using employee surveys to drive business decisions Because each organization is unique, organizations need to measure work- force viewpoints using employee research. Yet internal surveys by themselves are not sufficient if organizations are to develop meaningful insights they can use to form their human capital strategies. Results must be analyzed in light of normative data and, when available, historical data to develop a more complete assessment of engagement. Mercer’s What’s Working studies are used to develop norms that are used both to design internal research studies using the core survey items, and to evaluate and interpret survey results to guide organizations, thus helping them interpret their own results. Glancing at the chart at right, it might be easy to conclude that, in general, Indian employees are delighted with their work situation and may be more engaged, while their Japanese counterparts are less engaged. But these results do not tell the whole story. For example, they take little account of differences in sectors or the cultural biases in upward communication such as surveys. To properly assess responses, Mercer combines normative data with historical data (how employees’ views have changed over time) to produce Who’s happiest? The danger of a more robust interpretation of jumping to conclusions employee perceptions. In that way, India 25% Mexico 19% an executive team can see where China 15% the company is performing well Brazil 11% and not so well against norms and Canada 5% historical trends. When this is com- Ireland 4% bined with an analysis to identify Global percent US 1% the key drivers of engagement in favorable for -1% Australia all items = 57% the organization, executives can -2% UK set priorities and allocate resources -4% Sweden -5% Germany based on a deeper understand- -7% France ing of the factors that are likely to -8% Singapore have an impact on organizational -10% Portugal engagement outcomes, such as cus- -19% Korea tomer service. -23% Japan -30% -20% -10% 0% 10% 20% 30%8
  • Crucial insights n The “norm” varies widely from one country to another.As leaders and managers of multi- When analyzing employee surveynationals work to apply research results, it is crucial that businessderived from employee perceptions to leaders have data on nationalenhance employee engagement with norms so they can correctlythe aim of improved business results, interpret the results for operation,there are some key lessons to keep country by country. If they do notin mind: have that data, they risk making decisions that will fail to addressn Global HR decisions have to genuine areas of employee con- be viewed in the context of cern. By comparing internal national cultures. survey results to norms for a par- Business leaders cannot assume ticular country, leaders can iden- that a global economy means a tify areas of strength and areas of homogeneous workforce. What genuine employee concern. engages employees in the US might be very different from n Employee engagement is related to what engages their colleagues in employment branding. Australia or India. Valid research, The same elements within the properly interpreted and applied, organization that create employee can help tailor HR strategies to engagement create the employ meet the expectations and needs ment brand, and vice versa. of local workforces and businesses. Thus, research on engagement can also help to inform employ-n National stereotypes are a danger- ment branding efforts across ous way to frame HR policies. the marketing, communications It is important to base HR prac- and HR functions. Conversely, tices designed for a local popula- if the drivers of engagement are tion on valid research findings ignored within the organization, rather than on informal impres- no amount of effort on the brand sions or beliefs. Although the itself will transform the company What’s Working research might into an employer of choice. sometimes support national stereotypes, it adds a depth of n Culture trumps everything in the understanding that goes beyond effort to build an engaged workforce. stereotypical conclusions. Failure Finally, how the organization to align practices with actual conducts its work is a reflection employee attitudes and percep- of its culture – how employees tions can seriously undermine are treated and, in turn, treat one employee engagement efforts. another and customers – and is inextricably tied to engagement. None of the drivers of engage- ment can be effectively applied to enhance engagement if employees feel alienated from the organization. 9
  • Cracking the code for About Mercer optimal performance Mercer is a leading global provider Even as research confirms the influ- of consulting, outsourcing and ence of national culture on employ- investment services, with more than ees’ perceptions of their employers’ 27,000 clients worldwide. Mercer practices and actions, research has consultants help clients design and also discovered new areas of com- manage health, retirement and monality emerging among workers other benefits and optimize human worldwide. Such information could capital. The firm also provides cus- empower a global company to lever- tomized administration, technology age those practices that lead to a and total benefit outsourcing solu- globally valued work experience, tions. Mercer’s investment services even as it responds to the needs and include global leadership in invest- preferences unique to each culture ment consulting and multimanager represented in its workforce. Global investment management. companies that use this information to approach engagement as a strate- Mercer’s global network of more gic goal can expect to see a positive than 20,000 employees, based in impact on profitability, retention, over 40 countries, helps ensure productivity and more. integrated, worldwide solutions. Our consultants work with clients to develop solutions that address global and country-specific chal- lenges and opportunities. Mercer is experienced in assisting both major and growing, midsize companies. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. Visit www.mercer.com/whatsworking for additional information about our What’s Working studies, results from the various country reports and contact informa- tion for our Organization Research & Effectiveness consulting experts.10
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