Hewitt Analysis Shows Steady Decline in Global Employee Engagement Levels

While the economy is slowly recovering, a recent analysis by Hewitt Associates, a global human resources consulting and outsourcing company, shows employee engagement and morale in the workplace are not. Almost half of organizations around the world saw a significant drop in employee engagement levels at the end of the June 2010 quarter -- the largest decline Hewitt has observed since it began conducting employee engagement research 15 years ago. This highlights the growing tension between employers -- many of which are struggling to stabilize their financial situation -- and employees, who are showing fatigue in response to a lengthy period of stress, uncertainty and confusion brought about by the recession and their company's actions.

Historically, Hewitt's research shows that about half of organizations improved their engagement levels in a one-or-two year period, while only 15 percent had experienced a decline. However, the past two years have been more challenging: the percent of organizations with declining engagement has been steadily growing. This trend is particularly notable in 2010. Hewitt's research shows that 46 percent of organizations experienced a decline in engagement levels in the quarter ending June 2010, while just 30 percent saw an improvement.

Hewitt's analysis suggests a clear link between employee engagement levels and financial performance. Organizations with high levels of engagement (where 65 percent or more of employees are engaged) outperformed the total stock market index even in volatile economic conditions. During 2009, total shareholder return for these companies was 19 percent higher than the average total shareholder return. Conversely, companies with low engagement (where less than 40 percent of employees are engaged) had a total shareholder return that was 44 percent lower than the average.

In its work with organizations around the world, Hewitt has uncovered key factors that differentiate organizations that improve their engagement from those that are not. According to Hewitt, companies with improved engagement levels:

-- Focus on the long term: While many of these organizations did cost-cutting and reductions in staff, they made changes consistent with their principles and values and without losing sight of their overall goals.

-- Obtain buy-in from leadership: Engagement is a top priority for leaders at companies that saw improved engagement scores. Leaders at these organizations were visible and provided ongoing updates to reduce employee uncertainty and stress. They also created excitement among employees about the future of the organization (82 percent compared to 51 percent at other companies).

-- Implement measurable actions: Successful organizations use employee information as a call to action rather than an assessment. They define specific and measurable actions and take steps in areas where the organization will see a clear impact.

-- Involve all stakeholders: Organizations with improved engagement understand that creating a "high engagement" environment requires the involvement of multiple stakeholders -- the organization (leadership, policies and program), managers and employees. They communicate to these stakeholders to ensure everyone is clear on their role in the process and on the employment proposition.

-- Understand key employee segments: Successful organizations understand that not all employees are necessarily equal. They focus on key segments and critical talent so that they're able to engage or re-engage them once the job market improves.

-- Utilize a broader array of information and analytics: Hewitt's analysis shows that 34 percent of organizations help employees through the on-boarding process to minimize the dip in engagement most organizations see in the first year of employment. Additionally, almost three quarters conduct exit surveys to understand why employees are leaving and proactively identify potential hot spots.

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Cloud Proponents Outnumber Skeptics for First Time

More enterprises consider cloud computing a viable technology, with nearly 60 percent saying they view it as a business enabler versus less than 40 percent who say the technology will take years to mature, if it ever does. That's a big change from 2009, when just 37 percent saw it as an enabler and 63 percent were taking a wait-and-see attitude or considering the cloud more marketing hype than reality.

A new report from Yankee Group, "2010 FastView Survey: Cloud Computing Grows Up", uncovers this and other enterprise cloud adoption trends, including:

-- Private clouds win: Due to security and privacy issues, most enterprises (67 percent) prefer private/internal clouds to public cloud infrastructures.

-- Google/Amazon envy: Enterprises want to make their IT cloud infrastructure like Amazon's or Google's, but just 17 percent say they view either vendor as a trusted cloud partner. Instead, 29 percent turn to systems integrators like Accenture, IBM and HP's EDS, while 23 percent look to infrastructure vendors like Cisco and VMware.

Trust and Ethics in the Workplace Have Been Battered by the Recession

According to Deloitte’s fourth annual Ethics & Workplace Survey, one-third (34 percent) of employed Americans plan to look for a new job when the economy gets better. Within this group of respondents, 48 percent cite loss of trust in their employer and 46 percent say lack of transparent communication from their company’s leadership are the primary reasons for pursuing new employment at the end of the recession. Additionally, a large majority (65 percent) of Fortune 1000 executives who are concerned employees will be job hunting in the coming months believe trust will be a factor in a potential increase in voluntary turnover.

While the survey found 59 percent of employees feel more is being demanded of them because of today’s business climate, 72 percent say their employers continue to support their work-life needs and 77 percent of executives say they remain supportive of employee personal needs outside of work. Sixty percent of employees suggest that technology plays an important role in helping them meet their professional and personal demands, which is enabling them to trust their employers more.

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More Than Half of Large, Downsized U.S. Businesses Plan to Rebuild Their Workforces To Pre-Recession Levels by 2012

More than half (54 percent) of large U.S. businesses that reduced staff in the past 12 months plan to rebuild their workforces to pre-recession levels within two years, according to a study released by Accenture. The survey confirmed that companies are shifting their focus away from cost control and returning to growth. The percentage of U.S. companies focused primarily on cost control will decrease from 41 percent in mid-2009 to 18 percent in 2011, according to the study.

Companies’ sales and customer service workforces are the employee groups identified as most important by executives surveyed. However, many of the executives reported significant skills challenges in both of these critical areas. Among those executives who rated sales or customer service as one of their organization’s most important workforces, only 23 percent reported that their sales forces perform at a high level and 34 percent said the same about their customer service workers.

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Multi-Channel Service Delivery: The Path to Creating a Great Service Experience

The latest research report published by the Aberdeen Group, a Harte-Hanks Company, found that leading service companies were not only looking to utilize channels other than the contact center as a means to capture customer requests and deliver service, but also invest resources in ensuring the consistency and efficacy of information and the overall experience available on all delivery channels.

While the contact center, fax, and email have been the traditional channels available for customer service requests, channels such as live chat, customer-specific web portals, and others have seen increased support in the last three years. Looking ahead, organizations are actively looking to increase the availability of service information via live chat, social media platforms, messaging, and technical forums and discussion boards.

Research findings in the Multi-Channel Service Delivery report indicate that while all firms are looking to improve time to repair and first-call resolution, leading firms focus on increasing access to customer -- and service-specific information and knowledge across the organization. As such, these firms exhibited the following:

* An 85% current performance in first-call resolution, in contrast to a 56% performance for all others

* A 21% reduction in total support costs over the last 12 months, as opposed to a 1% reduction for all others

* An 86% current performance in customer retention when compared to a 74% performance for all other organizations

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CIOs Should Have a Plan in Place Now to Tackle a Second Economic Downturn

In 2008, most CIOs were forgiven for being unprepared to deal with the global recession, but if another recession unfolds in the next 12 to 18 months, no CIO will be forgiven for being unprepared a second time, according to Gartner, Inc.

In May 2010, investor doubts about the health of the global economy returned to the world's capital markets with a vengeance. The possibility of nations defaulting on repaying massive loans, high unemployment rates, depressed housing prices, limited access to consumer and business credit, a growing belief that a sustained economic recovery may not be possible this year, and an array of other factors have all combined to shake investor confidence to its core.

As these and other factors were unfolding, many economists were still maintaining that 2010 and beyond would be a period of modest recovery and growth. Because so much uncertainty exists about the sustainability of the current recovery, CIOs should confront such uncertainty with clear and decisive action. They should augment current near-term plans by preparing for a second recession.

Gartner recommends that CIOs take the following key actions to ensure that their enterprises are best placed to weather any potential financial storms over the next 12 to 18 months:

Enlist C-Level Action Now -- As IT leaders learned from the recent recession, executives will once again have to make a multitude of decisions to minimize the effects of a second business downturn. Because most official national recession declarations are announced well after the actual start of a recession, IT leaders should suggest that their enterprise executives convene now, so that business downturn response guidelines may be established before capital markets, customers, suppliers, creditors, etc. panic in the wake of bad economic news.

Focus on the Current Fiscal Year -- To save money as quickly as possible in the event of another business downturn, CIOs should work with executives to determine which IT projects scheduled and approved under the current IT budget may be postponed and which may be entirely canceled. Likewise, once all projects for the next fiscal year are identified, CIOs should determine which of those projects may be postponed and which may be entirely canceled.

Focus on the Next Fiscal Year --Once all projects for 2011 are identified, simultaneously determine which of those 2011 projects are relatively expendable and, therefore, may be postponed and which may be canceled, should deteriorating business conditions warrant such steps. Of course, the decision process for determining which projects may be postponed or canceled must include an assessment of the contractual exposures that may exist or arise with IT vendors for hardware, software and services.

Use Zero-Based Budgeting for Projects -- As CIOs begin preparing for their 2011 budgets, they should adopt zero-based budgeting for projects in 2011. CIOs need to strongly suggest to C-level executives that all business unit executives sign documents affirming their understanding of:

The one-time costs that will be incurred to implement their 2011 projects

The annual recurring costs required to maintain those projects once they are completed

Use Zero-Based Budgeting for Existing Applications -- CIOs should compile an inventory of existing applications that are maintained by the IT staff and assign a reasonable estimate of the annual cost incurred to maintain each application. Once calculated, Gartner recommends having the business unit executives sign a document affirming their understanding of the estimated annual cost for overseeing and maintaining their applications.

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Gartner Trims Worldwide IT Spending Growth Forecast to 3.9 Percent for 2010

Worldwide IT spending is forecast to total $3.350 trillion in 2010, an increase of 3.9 percent from 2009 spending of $3.225 trillion, according to the latest outlook by Gartner, Inc. Gartner has lowered its outlook for the IT industry from the first quarter of this year when it forecast worldwide IT spending to grow 5.3 percent, primarily due to the devaluation of the euro versus the U.S. dollar since the beginning of the year.

Worldwide computing hardware spending is forecast to reach $365 billion in 2010, up 9.1 percent from 2009 spending. In software, IT services and telecommunications, the appreciation in the value of the U.S. dollar, especially against the euro, has acted to dampen U.S.-dollar-denominated growth in 2010.

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