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Hewitt Quarterly
Asia Pacific
is made possible through the combined skills and experience
of Hewitt consultants from across the Asia-Pacific region.
For further information please
contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com
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| "Organizations with high engagement are 78 percent
more productive and 40 percent more profi table than
those organizations with low levels of engagement." |
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All organizations recognize that employees are a business cost. Just like the cost
of material, equipment, or even the depreciation of plant, employee salaries appear as an item on the financial statement. Most organizations therefore believe they know how to manage their employee costs. Some recognize and track additional employee overheads such as recruitment, training, and lost productivity due to staff turnover, but do they collectively
reflect the true cost of the workforce?
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Beyond these tangible costs, there is another seemingly indirect cost that few organizations
measure - the impact that underperforming employees have on the business. Two employees
with identical skills, identical job descriptions and similar compensation can contribute very differently. How is this? Consider these two typical comments from unhappy employees.
"When I'm disengaged, I discourage others from joining us. I tell stories that criticize or complain about our organization."
"Demotivation, inequality, some employees here are just rewarded for their good chemistry with superiors and managers. Performance is the secondary parameter for appraisals. They are not market leaders. I feel very embarrassed to say that I don't have anything good to say about my company."
"Imagine what these people might say when speaking to customers or what type of service he or she provides," says Ted Marusarz, Hewitt's Global Leader for Engagement & Knowledge Management. "Beyond that, they take longer to complete their work, create additional burden for their managers and have a negative impact on the bottom line. In other words, they are not engaged."
This trend can be reversed, and profitability
improved, by focusing on changing employee
behavior. To help organizations understand the
impact employee behavior has on businesses,
Hewitt recently considered the issue of
disengagement as part of the Best Employer in Asia 2007 study's ongoing research. The analysis
found that organizations with high engagement are 78 percent more productive and 40 percent more
profitable than those organizations with low levels of engagement. Those with disengaged employees
had an average profit loss of $8,000 to $10,000 profit each year for each disengaged employee.
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The Typical Engagement Trend
Hewitt's data further reveals that short tenured
employees - those with less than six months of
experience - typically have the highest levels of
engagement.
This can soon turn to low engagement if
employees join and then find the work, the
environment or the opportunities are different
from what was promised during the interview and
recruitment process.
Such employees often feel misinformed and
confused. They have infrequent interaction with
leaders, report that they don't consistently get the
information they need or become distrustful of the
information they do receive.
The managers at such organizations often lack
the capability to provide guidance and feedback
on what's expected from employees in order to
have a successful career. They lack the necessary performance management skills and don't hold all
employees equally accountable for results.
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These organizations tend to focus on hitting
financial targets. The result is a frequent change in
priorities and an inconsistent message regarding
appropriate employee behavior.
In low engagement organizations, the
relationship between leaders, human resources,
managers and employees is misaligned. There is
less consensus among these groups on the goal
setting process, the feedback employees receive
and the contribution of managers. Employees may
feel the goals set for them are too tough, while
leaders may feel they are not tough enough. In
other cases, employees may feel they have met
their individual goals but that the organization
falls short of its own targets.
Finally, HR in such organizations are less
efficient and their focus is on tactical and
administrative activity. The ratio of HR to
employees is 60 percent higher in enterprises with
low engagement. They may administer pay and
benefits and provide a performance management
system, but the focus is on process rather than on
a system that manages performance well. These
organizations lack the management capability
required to drive performance.
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Getting it right
Some organizations are able to maintain a high level of engagement beyond the six-month
'honeymoon' period. How do they do it? First, such workplaces often have a positive atmosphere. Employees treat their
customers with respect and support each other to achieve strong results. Hewitt's study reveals these employees' comments.
"I am proud to be an employee here. There is a sense of excitement to go and do your job. There's a good sense of
contribution, team spirit and belonging. If things aren't going as well as they should, it just makes you want to work harder
to put things back on track."
"People here care for and respect the feelings of other employees. It feels like a second home and most of us enjoy working
and staying in this ' family'."
One of the main differences between high engagement and low engagement organizations is the way they act on information
employees provide. For successful enterprises, collecting information is a starting point. They focus on understanding and
taking responsibility for the feedback - both positive and negative - and communicate how they intend to respond. They take a
holistic approach to measuring performance that goes beyond the numbers, to include their employees, customers and processes.
More importantly, they create a specific employee promise, ensure that employees have the right expectations and deliver on
them, and create a bond between themselves and their employees.
As one Best Employer describes it, "We foster a culture that attracts the best local talent and nurtures the best team. The key components are our core values. These connect us as a team and provide a common bond and shared philosophy."
In high engagement enterprises, leaders are more visible, and have a high level of personal engagement. They act as role models by demonstrating organizational values, and build relationships at all levels. As a result, employees feel informed, valued and respected, and come to share their leaders' passion and commitment to success.
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It is easy to see that these organizations have made different decisions about their employees. They invest time and effort
in creating high levels of engagement in their workplaces. They see their human resources not as costs to be managed, but as
assets which can deliver high returns to the organization.
Marusarz sums this up best, "Treating employees well may seem like common sense, but our research shows just what impact low
engagement can have. Put those costs per disengaged employee into your financial analysis and you can assess the impact it
has on your organization. The good news is that if the engagement issue is addressed properly, employees once again rightly
become an investment, rather than a non-refundable expense".
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