Don’t Let Low Engagement Drag Down Your Bottom Line

The 2008 recession hit many organizations like a giant wave, swamping them in a rising tide of red ink that led to deep budget cuts and legions of job losses. On the positive side, it also buoyed employee engagement as remaining workers battened down the hatches and focused on rebuilding and boosting productivity.

But as the recession’s wave slowly recedes, it threatens to drag that higher engagement with it. Employee engagement has dropped significantly and remains mired at dangerously low levels, according to an analysis conducted by Aon Hewitt, a human resources consulting firm. Organizations’ financial results could drown in the process.

The Ebb of Employee Engagement
At the height of the recession in 2009, engagement increased to relatively high levels, said Dan Rubin, Aon Hewitt’s employee engagement practice leader. Many employees were simply grateful to have a job as they watched friends and colleagues lose theirs, and their employers did a relatively good job of communicating about the challenges they all faced. It’s been a different story since.

At the end of 2011, the firm analyzed its employee engagement database of 5,700 employers, representing a total of 5 million employees. Employees were asked if they would recommend their employer to a friend, whether or not they intend to stay and how motivated they are to give extra effort.

According to Aon Hewitt’s analysis, engagement levels were parked around 56 percent in 2011, approximately the same as 2010 and lower than 2009 (60 percent) and 2008 (57 percent). Organizations whose employees score above the 65 percent range — meaning they respond more positively — tend to deliver 22 percent higher shareholder return than their underperforming counterparts.

“As the recession drags on, employees are becoming increasingly challenged by how to continue to get by with fewer people doing the same work and they’re really looking for the light at the end of the tunnel,” Rubin said.

With aggregated engagement scores floundering well below the 65 percent tipping point, it’s apparent that many organizations are treading water and could see shareholder return wash out to sea along with employees’ overall positivity.

How Employees Get Their Groove Back
Overall, the drivers of higher employee engagement don’t shift much over time. Career opportunity, effectively managing performance, organizational reputation and individual recognition are primary drivers arising out of Aon Hewitt’s analysis.

The difference after the recession, Rubin said, is in the kind of options available, forcing companies to be more creative in how they define career opportunity and implement development. That could mean more lateral moves, cross-functional training and teaming.

“Employees are expecting something different in terms of career opportunity now,” he said. “They recognize that they’re not going to be able to move up the organization chart nearly as quickly as they once were, but they’re still interested in growing and developing as employees.”

Communication is another area of potential focus. Effective communication rose into the top five drivers of employee engagement last year, but less than half (42 percent) of North American employees said their organization’s overall communication is effective, compared to 52 percent two years ago.

“Employees really need to see the line of sight between what they’re doing day by day and how that impacts what the organization is doing and how that’s serving the organization’s customers and markets,” Rubin said. “Employees really need to feel like they’re in the game, rather than just a cog in the wheel.”

The good news is that while engagement is ebbing, companies can still take steps to stem the tide. Business results and employee engagement form a virtuous cycle, reinforcing and bolstering each other as they progress.

“I don’t think organizations are out of options in terms of improving engagement,” Rubin said. “Each organization’s path to improved engagement can be different.”

He cited a real estate management company that he worked with that identified a 15 percent increase in engagement and made the link to a 22 percent reduction in turnover, 13 percent increase in customer service scores and a 3 percent reduction in customer churn that ultimately led to a 9 percent increase in operating income.

Any organization can make that kind of link between engagement and business results, he said. It starts with identifying what priorities and measures are most important to that particular company.

“Organizations today are measuring everything,” Rubin said. “It’s a matter of paring it down to measures that are most critical to the success of your organization and then linking your employee perceptions with those measures.”

Mike Prokopeak is editorial director at Talent Management magazine. He can be reached at