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Ammunition: What Does the Latest Research Reveal?

An Overview of Recent Studies on Recognition, Motivation and Engagement

Aberdeen Group

Employee Engagement Rooted in Managers’ Leadership Skills

To drive higher levels of employee engagement, companies should work on improving the leadership skills of frontline managers, says a new report from Aberdeen Group.

“Employee engagement is something world-class organizations need to be effective at in today’s competitive environment,” says Mollie Lombardi, an Analyst at Aberdeen. “Learning programs provide individuals and managers with the skills and tools to align goals and priorities, and give a strong foundation which organizations can build on in order to achieve success.”

According to Beyond Satisfaction: Engaging Employees to Retain Customers, more than half of best-in-class organizations provide training and tools to managers to help them better engage employees, and nearly all of the rest (45%) are planning to extend this type of training in the future. The report also found that two programs – onboarding and development plans agreed to by manager and employee – are critical to building high levels of engagement. Onboarding ensures that employees are aligned with the organizational mission and priorities from their earliest days, and development plans ensure that employees and managers remain in alignment when it comes to their role in achieving organizational success.

“This study is important because it highlights the need to develop strong leadership skills at all levels in the organization, not just in the corner office,” notes John Ambrose, Senior Vice President of Strategy, Corporate Development and Emerging Business at SkillSoft, which conducted the research along with Aberdeen Group. “The challenge comes in finding ways to deliver leadership training that are cost-effective and scalable. That is why so many companies are embracing technology-enabled learning as part of an overall leadership development effort.”

For a copy of the report, go to www.aberdeen.com/summary/report/benchmark/6050-RA-employee-customer-retention.asp

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TMP Worldwide

Social Networking Sites Key to Employee Engagement

More than three-quarters of students say social networking sites are key to employers engaging them, and nearly half says social media is ideal for conveying an employer brand, according to new research.

The study of penultimate and final year students by TMP Worldwide and TARGETjobs found that 80% believe organizations active on websites like Facebook and Twitter are working hard to engage their target market. However, respondents were clear that employers should not exploit social media, with 70% noting they wouldn’t want businesses using such sites to “sell” jobs.

Research also revealed that employers who don’t embrace social networking risk being overshadowed, as undergraduates become increasingly social media savvy and expect businesses to do the same. Other key findings:

  • Students actively use social media to research companies and validate whether employer brand messages live up to reality.
  • Almost half of respondents use social media sites to chat with peers about recruitment processes, and 30% chat with current employees to check whether their expectations were met after being hired.
  • 56% say that social networking sites allow job candidates to get a feel for the company’s culture.

Researchers say that employers shouldn’t approach social media half-heartedly, but instead be consistent with their brand and maintain the values they promote online throughout the recruitment, selection and ongoing retention process.

To download a copy of the report, go to www.tmp.com/articles/article_00163.html

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Recognition Plays Critical Role in Organizational Success

Employee recognition programs, when used as part of a “Total Rewards” package, can dramatically improve employee engagement and job performance, as well as positively impact business results, according to new research by the Human Capital Institute, the Forum for People Performance Management and Measurement, and the Incentive Research Foundation.

“This comprehensive report synthesizes recent research by analyzing case studies of successful recognition programs and recommending further investigation into workplace recognition,” says Forum Vice President Beth Schelske of ITAGroup.

The report, The Value and ROI in Employee Recognition: Linking Recognition to Improved Job Performance and Increased Business Value, uncovers significant information about workplace recognition. For example, although compensation and benefits are traditional ways employers retain and motivate workers, a Total Rewards package that includes other incentives such as work-life improvements and recognition help meet an individual’s psychological need for appreciation.

Recent studies show a high correlation between recognition and improved employee engagement, which in turn improves job performance and captures business value. In addition, organizations that actively improve employee engagement through recognition financially outperform their competitors.

The report's highlighted case studies of restructured recognition programs at Scotiabank, Delta Airlines and MGM Grand further demonstrate that recognition programs: 1) must include multiple award forms to satisfy different worker needs; 2) need not be costly (and in fact may have no real monetary value); and 3) are effective when the recognition is of value to the individual worker and is awarded for behaviors linked to specific job performance goals.

“Companies often focus on compensation and bonuses as the means to motivate employees,” says Schelske. “But in our recessionary economy, recognition programs are a proven, low-cost method for creating improved productivity in organizations.”

Researchers recommend these “best principles” for developing and implementing recognition programs to heighten employee engagement, improve job performance and increase business value:

  • Use both formal and informal recognition to build a “culture of recognition.”
  • Provide a wide variety of recognition rewards to appeal to individual preferences.
  • Emphasize recognition of increased quality in performance instead of simply quantity of effort.
  • Recognize workers regularly; sporadic recognition may be worse than no recognition.
  • Link reward activities to specific business objectives and/or cultural values.
  • Measure the cost of the recognition reward system and the benefits gained.

“Without question, this new research points to the critical importance and measurable impact of employee recognition, especially when it comes to improving the bottom line,” says Rodger Stotz, Chief Research Officer of the Incentive Research Foundation, “yet there is still continued work to be done to fully explore and understand these links, and to be able to quantify recognition programs’ business value to organizational leadership.”

A full copy of The Value and ROI in Employee Recognition: Linking Recognition to Improve Job Performance and Increased Business Value is available at www.hci.org

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Hay Group

Increased Engagement Can Lead to Increased Motivation

Companies that have remained focused on employee engagement during this recession have succeeded in maintaining (and even increasing) motivation levels, new data shows.

A global study by Hay Group found that while companies focused on engagement have been successful, harnessing and channeling that motivation is critical to deliver superior financial results, customer satisfaction and employee performance.

“Even while cutting costs, our research shows companies can still engage their employees through soft dollar investments made by their leaders and managers,” says William Werhane, Hay Group Insight’s Global Managing Director. “Our research shows that even during the downturn, companies that have focused on maintaining open and honest communication with employees, ensuring that strategic directions are clear, and fostering trust and confidence in senior leaders are seeing positive returns on their investments.”

The Hay Group Insight study collected data from 41 client organizations across industries and over 1,000,000 employees worldwide, comparing the results of employee opinion surveys conducted in late 2008 or early 2009 with the results of surveys these same clients conducted prior to the downturn. The study found that despite current economic conditions, more than 75% of these organizations realized improvements in survey scores. By emphasizing employee engagement factors, these companies have been able to increase organizational commitment levels and employee satisfaction with job roles. Notably, employees in these companies also show an increased willingness to contribute discretionary effort.

However, it’s not enough to just engage employees. “It’s clear from our research that while many organizations are focused on employee engagement with good reason, leaders must also enable employees to channel their extra efforts productively to deliver superior results,” Werhane explains.

According to Hay Group, there are three tangible benefits of increased engagement and enablement:

  • Business performance. Companies that engage and enable their employees outperform on revenue growth and profitability. Organizations in the top quartile on engagement demonstrate revenue growth 2.5 times that of organizations in the bottom quartile. But companies in the top quartile on both engagement and enablement achieve revenue growth 4.5 times greater. Moreover, companies in the top quartile on both engagement and enablement exceed industry averages on five-year return on assets, return on investment and return on equity by 40% to 60%.
  • Customer satisfaction. Businesses that have high levels of engagement show customer satisfaction scores 22% higher than companies with low levels of engagement. But companies that both engage and enable employees demonstrate a total increase in customer satisfaction of 54%.
  • Employee retention. Companies with high levels of engagement show turnover rates 40% lower than companies with low levels of engagement. But companies that both engage and enable employees demonstrate a total reduction in voluntary turnover of 54%.

For more information, go to www.haygroup.com

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Watson Wyatt

10 Practical Steps to Reconnect Employees

The huge upheaval business has undergone in surviving the recent turbulent economy has had a significant impact on established organizational structures, roles and processes, leaving many employees “disconnected” from the business, according to recent research by Watson Wyatt.

The threat or reality of redundancy programs, combined with reduced or frozen pay, has left many employees more focused on their own short-term futures than on the long-term prosperity of their companies. To begin functioning optimally and position themselves to take advantage when the business climate improves, companies need to reconnect employees to the business.

Watson Wyatt suggests 10 practical steps to reconnect employees that focus on key operational priorities like structure, strategy, systems and culture:

  1. Create an organization structure and job architecture that is clear, effective and efficient so that everyone understands their role and how they contribute to organization success.
  2. Articulate and be honest about your employment deal, even in today's tough, high-unemployment market. This is key to the effective attraction, retention and engagement of key talent.
  3. Review executive compensation to achieve the optimum balance between alignment with shareholders and driving value in the business, including risk effectiveness, performance and retention.
  4. Review sales compensation regularly to ensure that the plans are aligned with new business priorities and drive optimum performance at optimum cost.
  5. Review how performance is managed to ensure it accurately reflects the new corporate reality and is motivating your key talent.
  6. Identify the talent you have to ensure you continue to retain those who will contribute most to your business in the long term.
  7.  Reward for exceptional performance and not the norm. Make this a reality now and it will ensure you are able to manage whatever the economic situation.
  8. Ensure you have excellent management information and let the systems take the strain. Base decisions on facts and analysis, not emotion and rhetoric.
  9. Understand where critical roles and skills sit. In times of retrenchment, businesses may have looked to keep good people rather than those in key roles that will drive future performance.
  10. Continue to keep leadership visible and communication open. Let staff know where the business is heading, what they need to do and how they will be rewarded.

“The business imperative to make significant changes quickly has knocked many organization and employee reward structures out of shape,” says Chantal Free, UK head of Watson Wyatt’s Human Capital Group. “But those companies able to reconnect their employees and move their organization structures and processes back on track will be the ones best positioned to take advantage when the business climate improves.”

For more information, go to www.watsonwyatt.com

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People-Centric Initiatives Can Keep a Company in the Lead

Early results from an upcoming study by the Forum for People Performance Management and Measurement indicate that leaders who establish a people-centric culture in their companies will be well-positioned for an accelerated recovery from the recession.

According to Michelle M. Smith, CPIM, CRP, and Forum President, “As America shifts from a traditional industrial economy that emphasized raw materials, production and machinery, it is vital for corporate leadership to recognize they should be placing a much greater emphasis on their people, who are at the heart of their organizations. This is crucial as experts predict the recovery to be gradual, and the skills and attitudes of employees will likely be the very factors that drive the performance readiness that emerging opportunities will require.” 

The current economic picture leads to uncertainty within the existing workforce, says Jennifer Rosenzweig, Forum Director of Research. “It is vital for business leaders to understand and manage this uncertainty. One step is to develop a more people-centric environment that recognizes the needs and expectations of existing and prospective employees are changing,” she says. “Social networking websites are facilitating stronger ties among co-workers, both within and across organizational divisions. Leaders need to understand these increased human interactions can be the key to optimized organizational performance.”

The study will show two dominant themes that are requisites for a more people-centric organization:

  • Employee enrichment – a concept that goes beyond the basics of workplace environment, salary and benefits and extends to quality of life issues that deal with, among other things, achieving an appropriate and achievable work-life balance. Employees whose employers recognize them as individuals, as well as team members, provide added value to the organization.
  • Human value connectivity – an idea that the workplace is often the most important community in the lives of employees. Leaders should foster strong social connections within their organizational community, as well as in the “external community” that encompasses employees, customers and society as a whole.

For more information, go to www.performanceforum.org

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World@Work/Watson Wyatt

Economy Impacts Employee Engagement

The cost-cutting actions that employers have been making to deal with the economic crisis have caused a sharp decline in the morale and commitment of their workers, especially top performers, according to an annual survey by Watson Wyatt and WorldatWork.

The 2009/2010 U.S. Strategic Rewards Study found that employee engagement levels for all workers at the companies surveyed have dropped by nearly 10% since last year, and by 23% for top performers. Additionally, 36% of top performers say their employer’s situation has worsened in the past 12 months, and the number who would recommend others take jobs at their company has declined by nearly 20%. Compared with last year, top-performing employees are 26% less likely to be satisfied with advancement opportunities at their company. They are also 14% less likely to want to remain with their company.

The survey also found that top-performing employees are 29% less confident in management’s ability to grow the business. And 41% believe that pay and benefit changes made by their employer in the past year have had a negative effect on work quality and customer service.

“The fallout from the actions employers have taken in response to the recession is now coming to light, and it is significant,” notes Laura Sejen, Global Director of Strategic Rewards Consulting at Watson Wyatt.  “Having less engaged and committed workers is a major concern for employers. This could have a long-lasting and detrimental impact on productivity, quality and customer service, as well increase the risk of companies losing their best employees.”

The survey also found that most top-performing employees aren’t expecting to receive the same bonus or pay increase they have in the past, even though historically companies have rewarded them with pay commensurate with their performance. More than six in 10 (61%) say their companies have reduced or suspended bonuses, while only 35% agree their employers reward top employees for performance. Additionally, 43% of top performers said individual performance expectations have increased since last year, while one-third (32%) say their company’s financial performance goals have increased.

“One of the many challenges employers will face as the economy recovers is how to re-engage employees – especially top performers,” says Ryan Johnson, CCP, Vice President of Research at WorldatWork. “Taking a total rewards approach and looking at all of the ways companies can motivate and retain – including compensation, benefits, work-life initiatives and career development – is going to be essential.”

Other findings from the survey include:

  • The percentage of employers reporting difficulty in attracting critical-skill employees declined from 66% in 2008 to 28% this year, while the percentage reporting difficulty retaining these workers declined from 47% to just 16%.
  • Nearly three out of four (72%) employers have gone through a restructuring or made layoffs since the economic downturn began last year.

Access the Watson Wyatt and WorldatWork 2009/2010 Strategic Rewards Study at www.worldatwork.org/waw/adimLink?id=34555

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Fall 2009

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