Employees do not believe their organizations or their senior management are doing enough to help them become fully engaged and contribute to their companies' success, according to a new global workforce study conducted by Towers Perrin, a global professional services firm.
Just 21% of the employees surveyed around the world are engaged in their work, meaning they're willing to go the extra mile to help their companies succeed. Fully 38% are partly to fully disengaged. The result is a gap -- which Towers Perrin has dubbed the "engagement gap" -- between the discretionary effort companies need and people actually want to invest and companies' effectiveness in channeling this effort to enhance performance. The study found that companies with the highest levels of employee engagement achieve better financial results and are more successful in retaining their most valued employees than companies with lower levels of engagement.
The most striking data about the linkage between employee engagement and financial performance come from a study of 40 global companies which involved a regression analysis of company financial results against engagement data. It found that firms with the highest percentage of engaged employees collectively increased operating income 19% and earnings per share 28% year to year. Those companies with the lowest percentage of engaged employees showed year-to-year declines of 33% in operating income and 11% in earnings per share.
In a related study over a longer time horizon (three years), the firms with the highest levels of employee engagement achieved a 3.7% increase in operating margins, while those with the lowest levels of engagement suffered a drop of 2%.
Engaged employees also are more likely to see a direct connection between what they do and company results, according to the study. More than 80% of engaged employees believe they can and do contribute to the quality of products and services, and to customer satisfaction. Only half as many of the disengaged share that view.
In addition, engagement has a direct impact on retaining employees. Half of the engaged employees had no plans to leave their company, compared with just 15% of the disengaged ¾ and roughly a third of the workforce overall. Less than 5% of engaged employees said they were actively looking for another job compared with more than one in four of the disengaged employees.
The Towers Perrin study also debunks a widely held view that engagement is an innate trait. Rather, it is the organization itself -- and most particularly, its senior leadership -- that has the biggest impact on engagement levels.
The study's findings point to three areas of focus for companies to increase engagement and tap the reservoir of employee discretionary effort.
1. Employees need their senior leaders to demonstrate inspiration, vision and commitment. Only 38% of employees surveyed felt senior management communicates openly and honestly, and just 44% agreed senior management tries to be visible and accessible. In addition, only 10% of employees agreed that "senior management treats us as if we're the most important part of the organization." More than half felt that senior management "treats us as just another part of the organization to be managed" or "as if we don't matter."
2. Employees want to give more to their companies and their jobs, but also want a clearer picture of what's in it for them. The study shows that employees are optimistic about their jobs and have a strong desire to learn and grow. More than three out of four employees love or like their job (86%) and their organization (77%). In addition, 83% "look for opportunities to develop new knowledge or skills," and 84% "enjoy challenging work that will allow them to learn new skills." But, as the engagement scores show, they are not delivering the full discretionary effort these views would suggest because they don't feel their companies and leaders are meeting these needs and creating the conditions that will sustain engagement. For instance, just 36% agreed they have excellent career opportunities at their organization, and more than two-thirds said they are sometimes or frequently frustrated by their organization's people-related decisions. And while 68% agreed their organization has a reputation for financial stability, only 54% agreed it had a reputation as a great place to work.
3. Employees want to work for a company that is seen as a leader. A big part of what's in it for employees is an organization's reputation. Employees worldwide show a desire to work for an organization that strives for excellence in the eyes of its employees, customers and the world at large. According to the survey, top drivers of higher engagement ¾ all within the organization's control ¾ include senior leadership behavior, a commitment to corporate social responsibility, the company's reputation, and sufficient opportunities for learning and development.
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