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Thought Leadership Whitepaper
IBM Software
Leveraging employee surveys
to influence business performance
Why the employee engagement construct is important to business leaders
there is one defined detailed story, we may find it helpful to
understand how individual pieces fit together and establish
phased deliverables. Additionally, it is important to identify
team members and their roles at both the organization and
within IBM. We want to confirm that the proper people are
involved in the initiative. Finally, the needed timeline is
determined to match up with an organization’s strategic
planning and operations cycles, critical reporting points or
corporate events, if applicable.
Over the past 20 years, a significant body of research has
emerged documenting the linkage between organizational and
leadership practices and important business outcomes such as
customer satisfaction and business performance (e.g., Wiley,
1996).1
The more an organization displays a strong orientation
toward serving the customer, places a clear emphasis on the
quality of products and services, verifies that employees are
well-trained, and involves them in decision making, the more
aligned employees are to the goals of the organization, the
more cooperative their teamwork, the less likely they are to
voluntarily resign and the higher their engagement. Under
these conditions, they are better positioned to deliver the
organization’s value proposition and thus achieve
organizational goals.
A technology firm’s quest for
understanding retention
Though retention is a focus for many organizations regardless
of industry, there is likely no industry that faces more
competition for keeping desirable employees than technology-
focused firms. A 19,000 member high-technology equipment
development firm that operates in multiple countries across the
world needed to examine opportunities to retain key
performers in the organization.
Leveraging employee surveys to influence business performance
2
It is critical to have an understanding of how an organization’s
investment in its talent management initiatives (e.g., employee
survey) are returned through the influence on the bottom line
or performance measures of an organization. An understanding
of this return on investment (ROI) enables an organization to
strategically align the efforts prioritized for its human capital
management initiatives to those that can have the most
influence on the performance outcomes. Once the most
influential aspects of an organization’s human capital or
talent management efforts have been identified, they enable
the organization to prioritize the resource allocation across
the many efforts. This can result in the organization having
one of the greatest impacts on the bottom line and
performance of the business.
With respect to organizational employee surveys, linkage
research should be conducted to examine the relationships
between these valuable employee opinions and desirable
business outcomes. The process for conducting linkage
research involves an identification and definition of important
business outcomes:
•	 How is your organization evaluated?
•	 Are these metrics measured?
•	 How is the data stored?
•	 How can the data be shared?
•	 Is new data collection needed?
Once the definition of what can help clarify business outcomes
and ROI perspectives through the lens of the employee survey
responses is defined, the data available must be examined to
determine level(s) of analysis and to identify how the disparate
data files will be brought together through matching variables.
Furthermore, the phases of analysis must be defined. Though
These employee responses were used to create a profile that
depicted those who stayed and those who chose to leave the
organization. These “leaver and stayer” profiles were created
for multiple geographic locations, those with different tenure,
and those in different job functions. Additionally, performance
management data was leveraged to analyze leaver and stayer
profiles for high performing employees. Key findings from
these profiles were used to enhance retention strategies
targeting different types of employees.
Figure 2: Performance excellence index quartile
Like many other efforts, the linkage work was initially started
by examining turnover and retention across all employees, but
by targeting key employee groups, segmenting behaviors
(e.g., leavers versus stayers), and leveraging additional human
capital data, IBM researchers and the organization were able
to more clearly identify both perceptions that were widely
held as well as those that were uniquely held by a particular
group. These findings can impact how companies approach
retention strategies and suggest that targeting messages to key
subpopulations (e.g., high performers, Asia-Pacific hires,
recent college graduates) can increase the likelihood of
retaining these key segments of their workforce.
3
Figure 1: Talent management initiatives link to organizational performance
ratings of employees
To optimize the organization’s capacity to grow across its
diverse product divisions, the organization had focused on
retaining employees as a key part of its overall human capital
strategy. Through the careful observation, the company noticed
that over the past couple years, it had experienced a particular
spike in turnover, especially with those who have only relatively
few years of tenure with the organization (less than four years).
In response, it employed multiple organizational efforts that put
a special focus on examining the drivers of turnover through
multiple sources of data. One such source of information came
from the employees’ survey responses. Combining employees’
perceptions about organizational experiences with turnover data
provided a rich source of information, enabling the organization
to compare and contrast how the employees who both stayed
and left felt about the organization. Multiple aspects of the
employee experience such as the match between job demands
and employee skills and abilities, perceiving growth and
development opportunities, focus on the customer, opinions of
organizational reward and recognition processes, and
experiences with organizational processes provided an
understanding of what mattered most to employees.
100
80
60
40
20
0
STRONG
MANAGEMENT CULTURE
WEAK TALENT MANAGEMENT
CULTURE
BOTTOM LOW HIGH TOP
SALESCOMPS
0.06
0.04
0.02
0.00
-0.02
-0.04
-0.02
-0.01
0.01
0.04
Leveraging employee surveys to influence business performance
4
The goal of this linkage study was to identify the levers where
employee experiences could be most leveraged to confirm that
performance was improved. Action plans were created that
focused on:
•	 Keeping a clear focus on the customer and sharing business
information
•	 Maintaining open, involving climate
•	 Building teams and respecting employee needs
•	 Demonstrating follow-through on survey self-improvement
efforts
Furthermore, targets and accountabilities were set for
accomplishing these action plans along with planned follow-up
on the subsequent organizational survey.
Employee engagement and organizational
performance across organizations
Much of the linkage research has focused on a common
organizational level as the unit of analysis (e.g., retail store),
and potentially included an examination across divisions or
major business units. Through these examinations, researchers
have uncovered relationships between employee opinions and
performance metrics of interest. Limitations, however, do exist
as studies examining these important relationships have
sometimes shown to be difficult to replicate.
IBM conducted two studies exploring the relationship between
employee opinions and important performance and economic
metrics.
Retailer store performance
An international retail firm utilized its employee survey as a
tool to drive improvement efforts toward what mattered most
to its stores’ performance. The goal was to discover a short list
of the most “potent” employee experiences through the
identification of the survey items where these experiences
were codified.
The retailer’s employee survey focused on components of a
high performance organization such as customer orientation,
cooperation across employees, having clear expectations for
what behaviors indicated success, receiving appropriate
recognition when a good job is done, being well-informed
about business objectives, and factors of employee engagement.
Specifically, the stores’ performance was evaluated with
respect to the sales growth, units sold per transaction and gross
margin percentage.
The key factors that differentiated between higher and lower
performing stores were employees having a focus on customer
service and teamwork. Furthermore, employees of stores who
were more favorable toward perceiving open and clear
communication of targets and performance against them
(e.g., business objectives, expectations, recognition) performed
better. It was also noted that in stores where the components of
a higher performing organization were present (e.g., customer
orientation), employees were also more engaged.
This retail organization had embedded items from the
Performance Excellence Index into the survey.
Specifically, these items measured how employees felt about:
•	 Consistently providing excellent customer service
•	 Working well together as a team
•	 Feeling valued by their department
•	 Expectations for success clearly communicated
•	 Open, honest communication independent of level
•	 Regularly receiving recognition for doing a good job
•	 Being informed about business objectives
5
The second study, conducted across 39 organizations,
examined the relationship between employee engagement and
Total Shareholder Return (TSR) (see Figure 4). The results
indicate that organizations with highly engaged employees
achieve seven times greater 5-year TSR than organizations
whose employees are less engaged.
Figure 4: Total shareholder return and engagement
These results clearly demonstrate that there are measurable
and compelling differences between those organizations that
are high on employee engagement and those that lag behind.
Employee engagement is a means to an end; in these studies,
the ends are higher annual net income and stronger TSR.
Interestingly, these studies produce correlations between
employee engagement and important business performance
metrics that are two to three times higher than previously
reported studies. When we consider that having engaged
employees influences how an organization performs, it is easy
to grasp that employers who optimize employee engagement
are those who improve their chances for business success.
Improvements in employee engagement produce measurable
improvements in business metrics. This is why the employee
engagement construct is so important to business leaders today.
For more information
To learn how to build a smarter workforce, visit:
ibm.com/social-business
The first study examined 64 organizations in more than
20 industries and explored the relationship between employee
engagement and annual net income (i.e., earnings or profit)
controlling for organization size. Survey data were gathered
across these organizations through their annual employee
surveys; performance metrics were gathered by accessing
information available through public means (e.g., annual
reports). Engagement was measured using items that
examined the pride, advocacy, satisfaction and retention
intentions of employees.
Figure 3: Annual net income and engagement
Organizations with highly engaged employees achieved twice
the annual net income compared with organizations where
employees lag behind on engagement (r (64) = .316, p < .05).
There were clear differences between those organizations
higher on engagement and those lower on engagement and
their respective Annual Net Income.
This study is important because it represents one of the first
efforts to examine employee engagement across organizations,
industries, organization size and geographic location (i.e., global/
multi-national organizations). Additionally, this study showed
the correlation between employee engagement and business
performance as almost three times larger than previously
reported efforts (e.g., Harter, Schmidt, & Hayes, 2002).2
ANNUAL NET INCOME ($ US IN MILLIONS)
6000
5000
4000
3000
2000
1000
0
TOP 25% OF ORGANIZATIONS ON
ENGAGEMENT
BOTTOM 25% OF ORGANIZATIONS
ON ENGAGEMENT
BOTTOM 25% OF ORGANIZATIONS ON
ENGAGEMENT
20
15
10
5
0
-5
TOP 25% OF ORGANIZATIONS
ON ENGAGEMENT
TOTAL SHAREHOLDER RETURN
LOW14108-USEN-00
Please Recycle
© Copyright IBM Corporation 2014
IBM Corporation
Software Group
Route 100
Somers, NY 10589
Produced in the United States of America
February 2014
IBM, the IBM logo and ibm.com are trademarks of International Business Machines
Corporation in the United States, other countries or both. If these and other IBM
trademarked terms are marked on their first occurrence in this information with a
trademark symbol (® or TM), these symbols indicate U.S. registered or common law
trademarks owned by IBM at the time this information was published. Such trademarks
may also be registered or common law trademarks in other countries. Other product,
company or service names may be trademarks or service marks of others. A current list of
IBM trademarks is available at “Copyright and trademark information” at:
ibm.com/legal/copytrade.shtml
The content in this document (including currency OR pricing references which exclude
applicable taxes) is current as of the initial date of publication and may be changed by
IBM at any time. Not all offerings are available in every country in which IBM operates.
The performance data discussed herein is presented as derived under specific operating
conditions. Actual results may vary. THE INFORMATION IN THIS DOCUMENT
IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED,
INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR
CONDITION OF NONINFRINGEMENT. IBM products are warranted according
to the terms and conditions of the agreements under which they are provided.
1 Wiley, J.W. (1996). Linking survey results to customer satisfaction and business
performance. In A. I. Kraut (Ed.), Organization surveys: Tools for assessment and
change. San Francisco: Jossey-Bass. http://www.getcited.org/pub/10110673.
2 Harter, J.K., Schmidt, F.L., & Hayes, T.L. (2002). Business-unit-level relationship
between employee satisfaction, employee engagement, and business outcomes:
A meta-analysis. Journal of applied Psychology, 87, 268-279. http://www.
apaexcellence.org/resources/research/detail/1048.

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Employee Engagement Strategies - InspireOne

  • 1. Thought Leadership Whitepaper IBM Software Leveraging employee surveys to influence business performance Why the employee engagement construct is important to business leaders
  • 2. there is one defined detailed story, we may find it helpful to understand how individual pieces fit together and establish phased deliverables. Additionally, it is important to identify team members and their roles at both the organization and within IBM. We want to confirm that the proper people are involved in the initiative. Finally, the needed timeline is determined to match up with an organization’s strategic planning and operations cycles, critical reporting points or corporate events, if applicable. Over the past 20 years, a significant body of research has emerged documenting the linkage between organizational and leadership practices and important business outcomes such as customer satisfaction and business performance (e.g., Wiley, 1996).1 The more an organization displays a strong orientation toward serving the customer, places a clear emphasis on the quality of products and services, verifies that employees are well-trained, and involves them in decision making, the more aligned employees are to the goals of the organization, the more cooperative their teamwork, the less likely they are to voluntarily resign and the higher their engagement. Under these conditions, they are better positioned to deliver the organization’s value proposition and thus achieve organizational goals. A technology firm’s quest for understanding retention Though retention is a focus for many organizations regardless of industry, there is likely no industry that faces more competition for keeping desirable employees than technology- focused firms. A 19,000 member high-technology equipment development firm that operates in multiple countries across the world needed to examine opportunities to retain key performers in the organization. Leveraging employee surveys to influence business performance 2 It is critical to have an understanding of how an organization’s investment in its talent management initiatives (e.g., employee survey) are returned through the influence on the bottom line or performance measures of an organization. An understanding of this return on investment (ROI) enables an organization to strategically align the efforts prioritized for its human capital management initiatives to those that can have the most influence on the performance outcomes. Once the most influential aspects of an organization’s human capital or talent management efforts have been identified, they enable the organization to prioritize the resource allocation across the many efforts. This can result in the organization having one of the greatest impacts on the bottom line and performance of the business. With respect to organizational employee surveys, linkage research should be conducted to examine the relationships between these valuable employee opinions and desirable business outcomes. The process for conducting linkage research involves an identification and definition of important business outcomes: • How is your organization evaluated? • Are these metrics measured? • How is the data stored? • How can the data be shared? • Is new data collection needed? Once the definition of what can help clarify business outcomes and ROI perspectives through the lens of the employee survey responses is defined, the data available must be examined to determine level(s) of analysis and to identify how the disparate data files will be brought together through matching variables. Furthermore, the phases of analysis must be defined. Though
  • 3. These employee responses were used to create a profile that depicted those who stayed and those who chose to leave the organization. These “leaver and stayer” profiles were created for multiple geographic locations, those with different tenure, and those in different job functions. Additionally, performance management data was leveraged to analyze leaver and stayer profiles for high performing employees. Key findings from these profiles were used to enhance retention strategies targeting different types of employees. Figure 2: Performance excellence index quartile Like many other efforts, the linkage work was initially started by examining turnover and retention across all employees, but by targeting key employee groups, segmenting behaviors (e.g., leavers versus stayers), and leveraging additional human capital data, IBM researchers and the organization were able to more clearly identify both perceptions that were widely held as well as those that were uniquely held by a particular group. These findings can impact how companies approach retention strategies and suggest that targeting messages to key subpopulations (e.g., high performers, Asia-Pacific hires, recent college graduates) can increase the likelihood of retaining these key segments of their workforce. 3 Figure 1: Talent management initiatives link to organizational performance ratings of employees To optimize the organization’s capacity to grow across its diverse product divisions, the organization had focused on retaining employees as a key part of its overall human capital strategy. Through the careful observation, the company noticed that over the past couple years, it had experienced a particular spike in turnover, especially with those who have only relatively few years of tenure with the organization (less than four years). In response, it employed multiple organizational efforts that put a special focus on examining the drivers of turnover through multiple sources of data. One such source of information came from the employees’ survey responses. Combining employees’ perceptions about organizational experiences with turnover data provided a rich source of information, enabling the organization to compare and contrast how the employees who both stayed and left felt about the organization. Multiple aspects of the employee experience such as the match between job demands and employee skills and abilities, perceiving growth and development opportunities, focus on the customer, opinions of organizational reward and recognition processes, and experiences with organizational processes provided an understanding of what mattered most to employees. 100 80 60 40 20 0 STRONG MANAGEMENT CULTURE WEAK TALENT MANAGEMENT CULTURE BOTTOM LOW HIGH TOP SALESCOMPS 0.06 0.04 0.02 0.00 -0.02 -0.04 -0.02 -0.01 0.01 0.04
  • 4. Leveraging employee surveys to influence business performance 4 The goal of this linkage study was to identify the levers where employee experiences could be most leveraged to confirm that performance was improved. Action plans were created that focused on: • Keeping a clear focus on the customer and sharing business information • Maintaining open, involving climate • Building teams and respecting employee needs • Demonstrating follow-through on survey self-improvement efforts Furthermore, targets and accountabilities were set for accomplishing these action plans along with planned follow-up on the subsequent organizational survey. Employee engagement and organizational performance across organizations Much of the linkage research has focused on a common organizational level as the unit of analysis (e.g., retail store), and potentially included an examination across divisions or major business units. Through these examinations, researchers have uncovered relationships between employee opinions and performance metrics of interest. Limitations, however, do exist as studies examining these important relationships have sometimes shown to be difficult to replicate. IBM conducted two studies exploring the relationship between employee opinions and important performance and economic metrics. Retailer store performance An international retail firm utilized its employee survey as a tool to drive improvement efforts toward what mattered most to its stores’ performance. The goal was to discover a short list of the most “potent” employee experiences through the identification of the survey items where these experiences were codified. The retailer’s employee survey focused on components of a high performance organization such as customer orientation, cooperation across employees, having clear expectations for what behaviors indicated success, receiving appropriate recognition when a good job is done, being well-informed about business objectives, and factors of employee engagement. Specifically, the stores’ performance was evaluated with respect to the sales growth, units sold per transaction and gross margin percentage. The key factors that differentiated between higher and lower performing stores were employees having a focus on customer service and teamwork. Furthermore, employees of stores who were more favorable toward perceiving open and clear communication of targets and performance against them (e.g., business objectives, expectations, recognition) performed better. It was also noted that in stores where the components of a higher performing organization were present (e.g., customer orientation), employees were also more engaged. This retail organization had embedded items from the Performance Excellence Index into the survey. Specifically, these items measured how employees felt about: • Consistently providing excellent customer service • Working well together as a team • Feeling valued by their department • Expectations for success clearly communicated • Open, honest communication independent of level • Regularly receiving recognition for doing a good job • Being informed about business objectives
  • 5. 5 The second study, conducted across 39 organizations, examined the relationship between employee engagement and Total Shareholder Return (TSR) (see Figure 4). The results indicate that organizations with highly engaged employees achieve seven times greater 5-year TSR than organizations whose employees are less engaged. Figure 4: Total shareholder return and engagement These results clearly demonstrate that there are measurable and compelling differences between those organizations that are high on employee engagement and those that lag behind. Employee engagement is a means to an end; in these studies, the ends are higher annual net income and stronger TSR. Interestingly, these studies produce correlations between employee engagement and important business performance metrics that are two to three times higher than previously reported studies. When we consider that having engaged employees influences how an organization performs, it is easy to grasp that employers who optimize employee engagement are those who improve their chances for business success. Improvements in employee engagement produce measurable improvements in business metrics. This is why the employee engagement construct is so important to business leaders today. For more information To learn how to build a smarter workforce, visit: ibm.com/social-business The first study examined 64 organizations in more than 20 industries and explored the relationship between employee engagement and annual net income (i.e., earnings or profit) controlling for organization size. Survey data were gathered across these organizations through their annual employee surveys; performance metrics were gathered by accessing information available through public means (e.g., annual reports). Engagement was measured using items that examined the pride, advocacy, satisfaction and retention intentions of employees. Figure 3: Annual net income and engagement Organizations with highly engaged employees achieved twice the annual net income compared with organizations where employees lag behind on engagement (r (64) = .316, p < .05). There were clear differences between those organizations higher on engagement and those lower on engagement and their respective Annual Net Income. This study is important because it represents one of the first efforts to examine employee engagement across organizations, industries, organization size and geographic location (i.e., global/ multi-national organizations). Additionally, this study showed the correlation between employee engagement and business performance as almost three times larger than previously reported efforts (e.g., Harter, Schmidt, & Hayes, 2002).2 ANNUAL NET INCOME ($ US IN MILLIONS) 6000 5000 4000 3000 2000 1000 0 TOP 25% OF ORGANIZATIONS ON ENGAGEMENT BOTTOM 25% OF ORGANIZATIONS ON ENGAGEMENT BOTTOM 25% OF ORGANIZATIONS ON ENGAGEMENT 20 15 10 5 0 -5 TOP 25% OF ORGANIZATIONS ON ENGAGEMENT TOTAL SHAREHOLDER RETURN
  • 6. LOW14108-USEN-00 Please Recycle © Copyright IBM Corporation 2014 IBM Corporation Software Group Route 100 Somers, NY 10589 Produced in the United States of America February 2014 IBM, the IBM logo and ibm.com are trademarks of International Business Machines Corporation in the United States, other countries or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or TM), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. Other product, company or service names may be trademarks or service marks of others. A current list of IBM trademarks is available at “Copyright and trademark information” at: ibm.com/legal/copytrade.shtml The content in this document (including currency OR pricing references which exclude applicable taxes) is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The performance data discussed herein is presented as derived under specific operating conditions. Actual results may vary. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NONINFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. 1 Wiley, J.W. (1996). Linking survey results to customer satisfaction and business performance. In A. I. Kraut (Ed.), Organization surveys: Tools for assessment and change. San Francisco: Jossey-Bass. http://www.getcited.org/pub/10110673. 2 Harter, J.K., Schmidt, F.L., & Hayes, T.L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of applied Psychology, 87, 268-279. http://www. apaexcellence.org/resources/research/detail/1048.