1. Engaging Employees
to Drive Global
Business Success
Insights from Mercer’s
What’s Working ™ research

2. *

3. Engaging employees to drive global
business success:
Insights from Mercer’s What’s Working™ research
O n the surface, a workforce
composed of employees who are
satisfied with their jobs may seem
It reflects how employees feel about
the overall work experience – the
organization, its leaders, the work
like a desirable and even optimal environment, and the recognition and
state 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 and
tion 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 the
Over the past two decades, employ- organization. Engagement contrib-
ers’ needs and interests have utes significantly to an organization’s
moved from creating conditions and performance, leading to improve-
programs that result in employees ments in service quality, customer
who are merely “satisfied” with pay, satisfaction and long-term financial
benefits and working conditions, to results. All other factors being equal,
employees who are “committed” to it also serves the individual, fulfilling
the organization and not considering a basic human need to be connected
a 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 company
engagement has become the search and for the employee.
for the “Holy Grail” of the 21st century.
Substantial research has been
undertaken by the management and
What is employee behavioral sciences that supports
engagement? the theory that when employees are
engaged, service quality, customer
We 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, when
success and are both willing and employees are alienated or disen-
motivated to perform to levels that gaged, organizations experience
exceed 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

4. 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

5. Identifying the drivers of percentage-point improvement
employee engagement in favorable scores would reduce
employee turnover – a measure of
The changing nature of work and the disengagement – by three percentage
emergence of the global economy points. This translated into a
both have affected not only what potential $3 million improvement in
employers want from their employ- the company’s bottom line through
ees, but also what employees want annual cost savings associated with
from their work and their careers. recruiting, training and customer
retention. Convinced of the value
As employers endeavor to build of working toward higher levels of
competitive advantage in the global engagement, the company targeted
economy, engagement is its HR efforts to improve these areas
essential for optimizing human by replicating across all its operating
capital. More than ever, employers groups the best practices of those
need to apply those practices that units identified as having highly
lead to higher levels of employee engaged employees.
engagement. Those companies that
have identified drivers of workforce
engagement, and the specific HR/
What drives engagement?
organizational practices that affect
employee experience of those drivers, Research has confirmed over time
have been able to use this knowledge that employee perceptions about the
to 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, for
company analyzed the drivers of employers expanding their opera-
engagement among the 12,500 tions around the globe, the question
employees in its major operating of what drives engagement takes
groups. The data on employee per- on both increasing complexity and
ceptions showed that the factors importance as their workforces
that 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 to
2. Access to needed information engage staff in their home-country
offices, they might not succeed in
3. Ability to reach career goals
delivering the most value for their
4. Access to needed training HR investments if they simply
transfer HR policies and practices to
When the company then compared other countries.
employee perceptions results,
including the drivers of employee
turnover rates, it found that a five
3

6. 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

7. Findings: Global drivers Using the research to
of engagement enhance engagement
Our research and client experience
demonstrate that the drivers of Leveraging the global drivers
engagement 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 across
recommends that these key drivers countries and distinct or unique
be identified within the organiza- drivers in each major cluster or loca-
tion’s context, which will allow it to tion. This can provide the framework
identify 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 drivers
will vary by organization, Mercer’s Strategic HR management practices
What’s Working research has also across the organization also support
identified four relatively consistent a global employer brand, a sense of
global 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 leadership
n Recognition and rewards
n Organizational communication
In the absence of any additional
information, focusing on these
four drivers would enable a global
organization to focus on areas that
could significantly raise levels of
employee engagement. Examining
the organization’s employee survey
data could lead to a refinement of
the key driver analysis – identifying
the specific issues that would have
the greatest impact on engagement,
given the organization’s context.
5

8. 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
*

9. Case in point For example, even if a survey indi-
A global manufacturing company cates that employees in a given
conducted a broad-based employee country rate a company’s perfor-
engagement study of its 90,000 mance in a particular area to be
employees at locations across major “low,” this information alone does
industrial countries. When the not tell leaders whether this is
results were interpreted in light of unusual for this country (that is,
national cultural differences, the do employees working for a broad
company identified several global cross-section of employers in the
issues 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 good
example, 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, the
developed a uniform program for organization could allocate resources
future technology rollouts. But it also to solving a problem that might not
tailored its implementation to reflect be a problem, but a reflection of
regional differences. In its Nordic general attitudes and culture in that
region, for instance, the program- country. Meanwhile, executives might
matic actions were spearheaded by ignore an area in which the organiza-
the immediate supervisors, whereas tion’s absolute score was “high” but
in Japan, with its more formal and which could have been expected to
hierarchical culture, the highest unit be higher given local norms.
executive in the locale took the lead
in launching the changes, which The combination of specific
were then cascaded down into the employee survey results with norm
organization. This is a powerful comparisons allows the organiza-
example of how to blend local and tion to identify issues and follow up
global drivers of engagement based with interventions that will have the
on information and insight derived greatest impact on employee engage-
from employee research. ment – and ultimately on business
performance. (See “Using Employee
Using norms to better interpret Surveys to Drive Business Decisions”
internal employee survey data on page 8.)
While employee surveys provide
valuable insights about employee
perceptions within an organization,
multinationals that seek to compare
findings across regions or assess their
performance as a whole, without
reference to local and global norms,
could misinterpret the results.
*
7

10. 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

11. Crucial insights n The “norm” varies widely from one
country to another.
As leaders and managers of multi- When analyzing employee survey
nationals work to apply research results, it is crucial that business
derived from employee perceptions to leaders have data on national
enhance employee engagement with norms so they can correctly
the aim of improved business results, interpret the results for operation,
there are some key lessons to keep country by country. If they do not
in mind: have that data, they risk making
decisions that will fail to address
n 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

12. 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

13. * *

14. Argentina Mexico
Australia Netherlands
Austria New Zealand
Belgium Norway
Brazil Philippines
Canada Poland
Chile Portugal
China Saudi Arabia
Colombia Singapore
Czech Republic South Korea
Denmark Spain
Finland Sweden For further information, please
contact your local Mercer office or
France Switzerland visit our website at:
Germany Taiwan www.mercer.com
Hong Kong Thailand
India Turkey
Indonesia United Arab Emirates
Ireland United Kingdom
Italy United States
Japan Venezuela
Malaysia
Copyright 2011 Mercer LLC.
04534-HC All rights reserved.