Post on 22-Jun-2015
Leadership Opportunities—Leadership Opportunities—Increased Bottom Line ResultsIncreased Bottom Line ResultsThrough Improved Staff Through Improved Staff EngagementEngagement
Slide 2
Theme
‘Kiss Goodbye to Commodity
• Engineering?’
• Kiss goodbye to Commodity
• Staffing!
Slide 3
Improving Staff Engagement is a Business and Leadership …
• Opportunity:— To attract, motivate and retain talented staff— To build and sustain business performance through people
• Challenge:— To understand how to measure and build Engagement — To provide the leadership and perseverance required to engage
staff
• Imperative:— Because of the changing dynamics of the labour markets— Because people are increasingly the source of competitive
advantage (especially in knowledge worker sectors)
Slide 4
Defining Employee Engagement
• Engagement is the energy, passion, or ‘fire in the belly’ employees have for their employer
‘Stay’—Desire to be a member of the organisation
‘Say’—Speak positively about the organisation
‘Strive’—Go beyond what is minimally required
Defining Defining EngagementEngagement
Defining Defining EngagementEngagement
Slide 5
The 21st Century Workforce
• The New Dynamics:
— Globalisation
— Movement of workers across national boundaries
— Working virtually (place and time less relevant)
— Different attitudes; generation X/Y verses baby boomers
— Strong desire for autonomy and empowerment
— Shift to knowledge economy/workplace
Slide 6
The 21st Century Workforce
• The New Demographics:
— The workforce is aging.
— The number of younger workers overall is declining
— The overall size of the workforce is shrinking
— The workforce is more educated
— The workforce is more diverse:» More ethnic groups» More migrant workers» More females
—
Slide 7
The 21st Century Workforce
• The New Demographics in New Zealand
The workforce is aging. The median age will rise from 36 in 1991 to 42 by 2020
- Workers aged 65+ expected to increase from 25k in 1991
100k by 2021
The growth of the workforce slows after 2011 and declines after
2020.
An increasing proportion of Maori, Pacific Islanders and
Asians
- 25% of workforce currently born outside NZ
Slide 8
21st Century Workforce
• Some Implications:— More jobs than workers available. Especially in knowledge
worker sector
— Power in the employment relationship shifting to workers
— Challenges of managing a diverse workforce greater and more complex than previously
• 20th Century strategies for managing people increasingly redundant:— Think differently and strategically about long–term worker
requirements
— ‘One size fits all’ approach less and less relevant
— Employment branding increasingly important
— Greater and better use of people metrics and data
Slide 9
And Yet…..
• We follow the old patterns….• - CEO’s ranked engaging ee’s 6th and leveraging diversity 17th as• top management concerns for the future. (Conference Board Survey)
• - 60% of organisations don’t account for workforce aging (SHRM)
• - HR spends less than 25% of its time thinking about and• preparing for the 21st Century workforce. (Hewitt)
• And, employees are giving us signals…• - Only 1 out of 2 workers in NZ are engaged
• - 28% of workers say they are actively in the job market
• - 40% would like to work elsewhere within 1 year
Slide 10
“They’re Just Employees…”
VeteransBaby
boomers Gen X Gen Y
Core Values:• Diversity• Thinking globally• Balance• Techno literacy• Fun• Informality• Self Reliance• Pragmatism
Core Values:• Optimism• Civic duty• Confidence• Achievement• Sociability• Morality• Street smarts• Diversity
Core Values:• Hard work• Duty before pleasure• Honour• Delayed reward• Patience• Law and order
Core Values:• Optimism• Team orientation• Health & wellness• Personal gratification• Involvement• Work• Youth
Job security
Rewards
Recognition
Autonomy
Meaningful work
Slide 11
21st Century Workforce
• The Imperative:— The competition for talent will intensify
— The competition for talent will be a constant for years to come
— We will need to be very good at attracting, motivating and retaining talent to sustain and grow our businesses, especially in the knowledge sector.
• In the context of the 21st Century Workforce understanding how engaged our staff are in our business and how to build Engagement becomes a key business and leadership strategy.
Slide 12
Human Capital
• Human Capital— Our workforce is our human capital;
» 70% of organisational spending is human capital related » Use it well—we generate value and gain competitive advantage» Use it poorly—we undermine value and lose competitive advantage» Human capital is a company’s biggest asset and its largest liability
• Human Capital is the experience, knowledge, relationships and energy people bring to work:
— An increasing imperative to measure and report on human capital
— Measuring Engagement is one of the new human capital metrics on the block
Slide 13
Human Capital Measurement
• How:— Efficiency measures —traditional, most prevalent, operational,
lag indicators, cost focussed, e.g: » Employee headcounts, turnover rates, training costs by employee,
etc.
— Effectiveness Measures —new, less prevalent, focussed on HR’s impact on staff, shift to value creation (not just costs), e.g:» Percentage of new staff performing well after 6 months, revenue
per employee; retention of high performers, percentage of engaged employees, etc.
— Impact Measures —the ‘Holy Grail’, strategic—how people directly impact financial and other business results, e.g:» Measures that show relationship and causation between human
capital and profitability
Slide 14
Human Capital Link to Building Engagement
• Engagement is a fundamental Human Capital value added metric
But its more than that….
Engagement methodology also provides a roadmap for how to build Engagement amongst your employees….
If you want to take the journey.
Those that do will gain competitive advantage through their people
““The best companies now know, without a doubt, The best companies now know, without a doubt, where productivity—real and limitless productivity—where productivity—real and limitless productivity—comes from. It comes from challenged, empowered, comes from. It comes from challenged, empowered, excited, rewarded teams of people. It comes from excited, rewarded teams of people. It comes from engaging every single mind in the organization, engaging every single mind in the organization, making everyone part of the action, and allowing making everyone part of the action, and allowing everyone to have a voice—a role—in the success of everyone to have a voice—a role—in the success of the enterprise. Doing so raises productivity not the enterprise. Doing so raises productivity not incrementally, but by multiplesincrementally, but by multiples .” .”
Jack WelchFormer Chairman and CEO of General ElectricHuman Resources, 10 September 2003
Slide 16
Defining Employee Engagement
• Engagement is the energy, passion, or ‘fire in the belly’ employees have for their employer
‘Stay’—Desire to be a member of the organisation
‘Say’—Speak positively about the organisation
‘Strive’—Go beyond what is minimally required
Defining Defining EngagementEngagement
Defining Defining EngagementEngagement
Slide 17
STRIVESTRIVESTRIVESTRIVE
33
STAYSTAYSTAYSTAY
22
SAYSAYSAYSAY
11
Engaged
or
Not Engaged
Respondent 1
Measuring Current Levels of Engagement
• Engagement is measured at the individual level—by taking the average rank (on a six–point scale) of an individual’s responses to the Engagement items around ‘Say’, ‘Stay’ and ‘Strive’ we can determine whether they are engaged or not engaged
Slide 18
Distribution of Engagement
• It is possible to categorise employees by the ‘extent’ of their Engagement which helps us to understand how large the task is of engaging more employees
12%
32%25%
32%
0%
20%
40%
60%
80%
100%
Disengaged Not Engaged Nearly Engaged Engaged
There is strong opportunity to move employees from
‘Nearly Engaged’ to ‘Engaged’
Slide 19
Defining Employee Engagement—The Drivers
Company Practices People Practices Policies Diversity Performance Assessment Company Reputation
Total Rewards Pay Benefits Recognition
People Senior Leadership Immediate Manager Co–workers Customers
Engagement
Opportunities Career Opportunities Learning/Development
Quality of Life Work/Life Balance Physical Work Environment
Work Work Activities Resources Processes
Slide 20
Satisfaction
Commitment
Engagement
Employee Research Over Time
Po
siti
ve
Co
rrel
atio
n W
ith
Bu
sin
ess
Per
form
ance
Lower
Higher
How much peoplelike it here
How much people want to improve business results
How much people want—and actually do—improve business results
Engagement – The Evolutionary Journey
Slide 21
Engagement Research
• Hewitt Proprietary Research:— Hewitt’s Engagement and Best Employer studies around the
world covers more than 2,000 companies and over four million employees
— Comparison of Engagement Scores with actual business results (Total Shareholder Return [TSR] and sales growth) over the last decade
• Double–Digit Growth (DDG) Research:— Hewitt examines the characteristics that contribute to the
consistent success of DDG companies
• Academic Research:— Australian Graduate School of Management works with Hewitt
to analyse and understand Hewitt Best Employer results
Slide 22
Source: Best Employers to Work for in Australia 2001 and 2003 studies
1998–2000
18%
62%
25%
48%
0%
10%
20%
30%
40%
50%
60%
70%
OtherOrganisations
OtherOrganisations
Best
Employers
Best
Employers
Average Revenue GrowthAverage Profit
Growth
2000–2002
13%
7%
21%
-12%
-20%
-10%
0%
10%
20%
30%
Best
Employers
Best
Employers
Average Revenue GrowthAverage Profit
Growth
Other Organisations
Other Organisations
Engagement and the Link to Business Performance
• Hewitt Best Employers have stronger three and five–year growth in revenues and profits than Other Organisations in the study and typically out–perform Other Organisations in their industry sector
Slide 23
Hewitt Best Employers and Financial Performance
Country/Region Financial Measure The Best The Rest
Asia Average annual growth rate, 1999–2001 14.9% 10.1%
Australia Average revenue growth rate, 2000–2002
13% 7%
Australia Average profit growth rate, 2000–2002 21% -12%
Canada Five–year annualised TSR, 1997–2001 4.6% 1.5%
Canada Five–year annualised TSR in excess of industry sub–index
11.2% 9.3%
Slide 24
Double–Digit Growth Companies
• Employee Engagement at DDG companies exceeds employee Engagement at single–digit growth companies by over 20%
• Commitment to Engagement by DDG companies is reflected in:— Analysing metrics such as Engagement data to understand
markets, business and talent— Focusing on a multi–faceted set of elements that contribute to
growth, including employee Engagement— Fostering a collective will, a passion, determination and
emotional energy to overcome obstacles and meet goals— Building the Engagement of key employees, especially ‘high
potentials’
Engagement does drive results—data suggests that Engagement levels need to be at 60% or higher to drive results
Slide 25
Benchmarking Employee Engagement
• Employees are indifferent to their employers and more apt to switch for slightly better offers. Employees may stay but not contribute
• Characterised by higher levels of uncertainty, often due to reorganisation or mergers
• Most employees are engaged and contribute to the achievement of the company goals
• Three quarters of employees are not engaged
DestructiveZone
SeriousZone
Indifferent Zone
High Performance/
Hewitt Best Employer
Zone
25%
100%0%
60%40%
Average TSR = 20.2%
Average TSR = 5.6%
Average TSR = –9.6%
Slide 26
A Few Examples of Other Insights From the Engagement Data
• Average Engagement Scores across Other Organisations is 52%
• Average Engagement Scores of Hewitt Best Employers is 77%
Around the world, one out of every two employees is engaged at work
Slide 27
Common Engagement Drivers Across Companies
• Percentages of Companies with driver as one of top three in potential positive impact
83%
64% 61%60% 59%
47%30%
Career Opportunities
Company Practices
Senior Leadership
Work Resources
Recognition Business Unit Leadership
Pay
Slide 28
Engagement by Age
61%
55%
51%
48%
51%
0% 20% 40% 60%
55 years and over
45 to 54 years
35 to 44 years
25 to 34 years
20 to 24 years
Based on data from 25,459 Australia and NZ employees
8
Slide 29
Less Engaged
Resistant to Change
Increased Absenteeism
Less Enthusiasmfor Technology
Cynical
Less Energy
Prejudices Against Older Workers?
Shorter Paybackfrom Training
7
Slide 30
Engagement by Level
52%
50%
70%
0% 20% 40% 60% 80% 100%
Team Member
Manager/Professional/SeniorSpecialist
Senior Management
Slide 31
Engagement by Organisational Change (Case
Study)
59%
50%
0% 20% 40% 60% 80% 100%
After
Before
Slide 32
Leadershipcommitment
Leadershipcommitment
Compelling promise to employees
Compelling promise to employees
Aligned people
practices
Aligned people
practices
Connection to
the companyand strategy
Connection to
the companyand strategy
Engagedemployees
Engagedemployees
Differentiatedhigh–
performance culture
Differentiatedhigh–
performance culture Measure the
impact on strategy
Measure the impact on strategy
What the Best Have in Common
Slide 33
Conclusion
• The competition for talent means that we have to be very good at attracting, motivating and retaining talent
• Our talented human capital is our biggest asset and liability and we need to measure how well its adding value
• Engagement is an increasingly important human capital metric because:— Engagement levels correlate with business performance
— Measuring Engagement tells us how well we are doing in the competition for talent
— Driving Engagement levels higher improves our ability to attract, motivate and retain talent and so generate value from our human capital investment.
Slide 34
Conclusion
• Final Point
• Building an Engaged Workforce means• ‘kissing goodbye’ to Commodity Staff