Unlocking Workforce Engagement: The Critical Business Issue of the Decade

Unlocking Workforce Engagement:
The Critical Business Issue of the
Decade
Jim Sillery
Principal
Buck Consultants

Today we will talk about…
• The current situation
• What is creating the disconnect
• What you can do about it
Unlocking Workforce Engagement
2

What is employee engagement?
An "engaged employee" is one who is fully involved in, and enthusiastic
about their work, and thus will act in a way that furthers their
organization's interests.
Employee engagement is a measurable degree of an employee's
positive or negative emotional attachment to their job, colleagues and
organization which profoundly influences their willingness to learn and
perform at work.
As a result, engagement is distinctively different from employee
satisfaction, motivation and organizational culture.
3

Creating engagement sounds simple…
… You just balance organization and individual needs
4

Why is engagement important?
Highly engaged employees outperform their
disengaged colleagues by 20 to 28 percent.
The Conference Board
5

“May you live in interesting times”
During the first 10 years of the 21st Century, there was a major terrorist
attack, an economic recession, and a major downturn in the U.S. stock
market.
Unemployment exceeded the 10 percent mark for the first time since
1983.
After a series of declines, household wealth increased somewhat with
the stock market gains, but remained well below pre-recession levels.
6

As we woke up to
collapsing financial
markets…
And then things got really bad…
7

Followed by
collapsing job
markets…

By 2009, HR had taken a number of steps to
address the impact of the recession
Source: Buck Consultants Salary Planning Survey

By the height of the recession…
Only 28% of employees were engaged in their jobs
54% were not engaged and 18% were actively
disengaged
Source: Gallup Q12 Survey

And everyone was looking for the
light at the end of the tunnel…

Since that time, we have seen…
An improving
economy…

And an improving job market…

New opportunities… new challenges
Today, companies are looking at opportunities opening across global
markets
For many companies, the decisions made today will determine their
success for years to come
To be successful, companies need to fully engage their workforce
Today’s global knowledge-based economy is dependent on people and
their knowledge, skills, and commitment
The challenge:
- Talent shortages exist side by side with high unemployment
- Battered by the recession, workforce discontent spreads
- Retention is jeopardized by “latent turnover”
14

All signs pointing
to an economic
upturn and
global
recovery…

But employee engagement is as bad, if not worse…
… with only 30% engaged in their jobs
Despite sincere efforts by
companies, workforce
engagement remains a
persistent problem, with an
annual cost estimated at
over $550 billion a year.
"But there is a gap between
knowing about engagement
and doing something about
it in most American
workplaces.“ Gallup

Recent college graduates are persistently under employed
More than 50% of Gen Y are prepared to accept a lower wage or
lesser role if their work contributes to something more important
of meaningful
More than 60% of Gen X is looking for a new job within a year
46% of Baby Boomers say career goals are not being advanced
in their current job.
And so, as
companies emerge
from the tunnel, they
find that something
has changed…

Understanding the Disconnect:
It’s a matter of perspective
Companies use
their Left Brain:
• Programs
• Procedures
• Policies Employees use
their Right Brain:
• Perceptions
• Behaviors
• Culture
18

Understanding and managing change
In addressing change,
companies often confuse
process -- visioning,
chartering, change teams,
planning, employee
presentations -- with
dialogue…
And, they often confuse
behavior change with
engagement

The Left-Brain is Driving Company Actions
We communicate a pay for
performance environment,
but…
In 2011, high performers will
average a 4.0% merit
increase
While “middle” performers
will average a 2.7% merit
increase 0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
1974198319851987198919911993199519971999200120032005200720092011
30 Year Salary Budget History
NE EX Exec

Companies try to promote “consumerism”, but too often,
efforts at engagement are aimed at compliance rather than
commitment
In employee benefits, companies have had to communicate
many changes…
But to employees, change
means reduction…
Communication is always
one way…
And choice is a balance
between reward and
punishment…

But the Right-Brain is driving employee response…
“I understand why my company has to
cut costs, but why do they have to cut
what is important to us?”
Employee response to interview question
22

How does engagement fit in to company priorities?
6%
12%
21%
29%
39%
59%
20%
26%
38%
46%
49%
36%
32%
26%
36%
22%
10%
5%
27%
18%
5%
2%
2% 18%
15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Reduce disciplinary issues
Create a new culture
Increase employee morale
Increase productivity
Hire top talent
Retain top talent
Extremely Important Very Important Moderately Important Slightly Important Not Important
Source: Buck Consultants Salary Planning Survey
23

“Today, the greatest
challenge that a
company can face is a
lack of engagement…
and not to be aware of
the situation.
Executive response to interview question

Employee value is tied to perceptions
Behavior economics proposes theories based on
psychology to explain anomalies in the market.
Behavioral economics assumes that the information
structure and the characteristics of market participants
systematically influence individuals' investment decisions
as well as market outcomes.
Behavioral economics can help to better understand how
employees make decisions and how those decisions affect
their perception of the value being delivered.
To an employee, perception is reality
25

How are perceptions formed?
Three main themes in behavioral economics:
• People often make decisions based on “rules of
thumb”, not rational analysis
• The way a problem is presented will affect the
decision a person makes on how to act
• There are behavioral explanations for observed
actions that are contrary to rational expectations
26

Pay Is Not Enough
• As companies seek to re-engage a
workforce battered by the recession,
many find that pay alone is not the
answer
• Best practices show the top drivers of
workforce response are related to
perceptions of careers
• Employees define career as current and
future opportunity for pay, growth,
satisfaction and employability
• Capturing the full potential of careers is
critical to engagement and long-term
commitment
• Capturing this potential requires two-way
communication and mutual understanding
27

Fuel for Career Management…
If companies help manage career and growth
Employee
Perceived value in career motivates behavior change
Career
motivation
Employer
28

… Becomes Fuel for Engagement
Employee
Employer
Engagement
If companies manage value, not cost
The response to value
drives desired behaviors and results
29

Building an engagement strategy
• One size will never fit all
• Look for root causes… “The 5 Whys”
• There are no short-term decisions
• Follow the eight step process
30

1. When you listen, know who you are listening to…
While employee feedback can give you
data…
… Amplified voices can give you
information and insight
31

2. Focus on value delivered
Will the perceived value of pay create a premium or deficit? Should it?
0
50
100
150
200
250
300
350
400
450
1 2 3 4 5 6 7 8 9 10
Actual vs Perceived Value
Premium Actual Discount
32

3. Take a total rewards perspective
A total rewards strategy becomes a filter for responding
to internal and external pressures in a consistent way…
33

4. Understand – and use - your work culture
• How it is organized
• How roles are defined
• Types of people that
succeed
• How performance is
managed
• How people are
rewarded
A company’s work culture defines

5. Understand who your employees are
A demographics analysis can provide insights into why specific
events are occurring, like challenges with attraction, retention,
engagement and performance.
35

5. Understand what your employees want/need
A cost/value analysis will show you where you should
invest money … and where you can cut without pain

6. Base “Career” on what employees are capable of doing, not
what they are doing now
Most companies use
position-based career
development, using “job
ladders” to identify
career paths
This puts current skills
and experience as
primary drivers of
advancement

Differentiating competencies,
which are the true predictor of
future success, can also be
nurtured
Career paths are defined by
developing differentiating
competencies models
The result is a dynamic process
where someone will be pre-
disposed to success
But, studies show the correlation between experience
and high performance is almost zero

7. Build a platform for delivery – “4i’s”
39

8. Profile desired response to “Careers”
40

Questions
Jim Sillery
Principal
+1 (1) 952 806 6114
James.sillery@buckconsultants.com
41

Unlocking Workforce Engagement: The Critical Business Issue of the Decade

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