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Perceptions of certain areas like safety and benefits have improved (+6 points and +5 points, respectively), yet there is deterioration in strategic areas like business unit leadership (-4 points), innovation (-2 points) and a compelling employee value proposition (falling 2 points for each of the last two consecutive years).
“A number of factors, including social, demographic, technological and macro-level economic changes, have challenged business leaders to create agile, innovative organisations that can grow,” said Dr. Ken Oehler, Aon Hewitt’s global engagement practice leader. “But creating this type of organisation is impossible without having engaged employees, and companies with low-to-moderate engagement levels will struggle. Our study shows that organisations overcoming business and people challenges are investing in a culture of engagement built on performance focus, strong reputation and superior leadership. These investments are resulting in stronger company performance.”
Aon Hewitt’s study found that high-performing companies (known as Aon Hewitt Best Employers) drive better business outcomes. Marked by strong leadership, reputation, performance orientation and employee engagement, these companies outperform average companies on sales growth (+6 points), operating margin (+4 points) and total shareholder return (+6 points). They even outperform those companies with high employee engagement alone.
2013 engagement levels by region
With its forecasted population and growth, the region with the largest engagement increases in 2013 was Africa/Middle East (with a gain of eight percentage points). Asia Pacific’s engagement increased for the first time in two years (up by three percentage points) reaching the global average of 61%. North America recovered from its 2012 decline (increasing by two percentage points), while Europe remained flat at 57% engagement. Though Latin America remains at the top of the engagement leader board worldwide, the region dropped four percentage points to 70% engagement.
Drivers of employee engagement
Additional meta-analysis was conducted across nearly 3,000 organisations in Aon Hewitt’s database, representing more than three million employees worldwide to identify the 2013 top five drivers of global employee engagement.
As in past years, career opportunities ranked as the highest driver of engagement globally. Managing performance ranked second, followed by organisational reputation. Pay, which ranked as the third highest driver of engagement in 2012, dropped to fourth. Communication rounded out the top five.
While the top three drivers in North America were consistent with the global rankings, employees in this region placed more importance on brand alignment and recognition, outranking pay. Managing performance ranked second globally and fifth in both Asia Pacific and Europe.
"A number of factors, including social, demographic, technological and macro-level economic changes, have challenged business leaders to create agile, innovative organisations that can grow. But creating this type of organisation is impossible without having engaged employees, and companies with low-to-moderate engagement levels will struggle. Our study shows that organisations overcoming business and people challenges are investing in a culture of engagement built on performance focus, strong reputation and superior leadership. These investments are resulting in stronger company performance – Dr. Ken Oehler, Aon Hewitt’s global engagement practice leader"
Millennials least engaged generation
Baby Boomers continue to hold the highest level of engagement, with 66% engaged, followed by Generation X (60%) and Millennials (56%).
“While differences in geography, culture and generation impact what drives engagement for employees globally, Aon Hewitt’s research also shows that there is actually more harmony than discord,” said Gabriela Domicelj, Regional Engagement Practice Leader, Asia Pacific. “Universally, employees want to be part of an organisation that offers career opportunities, provides rewards for performance and has a solid reputation. However, there is no one-size-fits-all solution. Understanding your employees and what drives them, and subsequently tailoring your communication and people initiatives to resonate best with respective groups, will pay dividends in making engagement happen.”
Leadership engagement highest and on the rise
Consistent with Aon Hewitt’s 2012 analysis, engagement levels continue to vary by job level. Executives and senior managers remain the most engaged with 75% engagement globally. This group also saw the largest increase in engagement over last year with an increase of nine percentage points. Middle managers and frontline employees saw slight increases to 65% and 61% respectively, while professional employees, such as engineers, lawyers and nurses, maintained their status of having the lowest level of engagement globally, with only 54% engaged (decrease of one percentage point from 2012).
“Our research shows that raising the bar on employee engagement starts with the leaders themselves,” said Oehler. “The continuous rise in executive-level engagement may be a promising sign to come that we’ll see an upward shift in engagement levels of other employee segments in the near future.”
Call to action – Make engagement happen
According to Aon Hewitt, evolving economic, technological, demographic and social changes are requiring businesses to rapidly respond to the myriad of extraordinary pressures they now face. Organisations have to look deeper and focus on engaging talent in the right core behaviors. To make engagement happen, Aon Hewitt experts believe organisations must:
Understand talent trends. Understanding the global economic and technological trends affecting businesses is essential to building a relevant talent strategy. It is important to be aware of the generational and demographical characteristics of employees, as they will, in large part, define the expectations these employees have of their company.
Focus on the behaviors required for performance and business success. Organisations must clearly define for employees what engagement looks like. “For many employers, there is an increasing need for agility, flexibility, speed and an ability to learn and adapt,” said Oehler. “Organisations can further encourage behaviors that signify engagement by aligning performance management, learning and development, and rewards and recognition with their expectations for success.”
Deliver on a compelling Employee Value Proposition (EVP). According to Aon Hewitt, there is a growing disconnect between what companies require, what they are offering and what employees expect in return. Organisation reputation being a top engagement driver provides insight into how employees define value from their company. Aon Hewitt’s research shows that companies that deliver on their EVP are more likely to have employees who speak positively about their organisation, more likely to retain people, and more likely to cultivate an environment of employees who aim for excellence.
Create a culture of engagement. According to Aon Hewitt’s study, an organisation’s health is based on employees’ perceptions of its brand, reputation, performance focus and leadership excellence. To build a culture of engagement, organisations first must understand the composition of their workforce (generational, functional and organisational) and build tailored programs that motivate and inspire the unique makeup of their employee base. “Employers often find that there are basic elements of their HR programs, such as benefits, safety and work life balance, that may be key drivers inhibiting engagement,” said Oehler. “Getting the foundation right is often the first step in building a culture of engagement.”
“We believe that companies across Asia Pacific are taking employee engagement more seriously and investing more wisely in their workforces. The key driver for this focus on employee engagement improvement is the chronic talent shortage across many Asian markets,” said Domicelj.
Build engaging leaders. Previous Aon Hewitt research has indicated that leaders own the employee engagement equation. They make critical decisions on the key factors within an organisation that impact employee engagement, such as performance goals, pay and recognition, type and frequency of communication to employees, as well as work process and innovation. Leaders’ decisions can effectively drive or hinder engagement. Leaders who seize the opportunity to engage themselves, engage others and holistically drive a culture of brand, reputation, performance and engagement will help their teams and organisations achieve better business outcomes.
