Pay less important for staff engagement

In terms of global employee engagement: career advancement, performance rewards and organisational reputation currently all outrank pay as top engagement drivers.

New research reveals that employee perception of overall work experience is improving in the majority of regions worldwide, and that pay has dropped in significance as a driver of engagement. The Aon Hewitt 2014 Trends in Global Employee Engagement Annual Study, covering 7 million employees in over 6,000 companies, across 155 countries, indicates that the average employee engagement levels increased to 61% in 2013, up 1% from 2012 and 3% from 2011. Changes in the way employees view their overall work experience across the globe were also revealed. Perceptions of certain areas like safety and benefits have improved, yet there is deterioration in strategic areas like business unit leadership, innovation and a compelling employee value proposition.

Dr Ken Oehler, Global Engagement Practice Leader, Aon Hewitt said, “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.” The study clearly indicates that organisations overcoming business and people challenges are investing in a culture of engagement built on performance focus, strong reputation and superior leadership—investments that result in stronger company performance.

Aon Hewitt’s study found that high-performing companies drive better business outcomes. Marked by strong leadership, reputation, performance orientation and employee engagement, these companies outperform average companies on sales growth, operating margin and total shareholder return. 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 8%. Asia Pacific’s engagement increased for the first time in two years, up by 3%, and reaching the global average of 61%.

 Pay—less important
Additional analysis was conducted across nearly 3,000 organisations, representing more than 3 million employees worldwide, to identify the 2013 top five drivers of global employee engagement.

As in previous 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.

Millennials least engaged
Baby Boomers continue to hold the highest level of engagement, with 66% engaged, followed by Generation X, 60%; but with only just over half of Millennials, 56%, feeling engaged in their work. Differences in geography, culture and generation impact what drives engagement for employees globally, and the research indicates that there is actually more harmony than discord among employees.

Gabriela Domicelj, Regional Engagement Practice Leader, Asia Pacific, Aon Hewitt commented, “Universally, employees want to be part of an organisation that offers career opportunities, provides rewards for performance and has a solid reputation. There is, however, 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 on the up
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 9%. 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.

Oehler explained, “Our research shows that raising the bar on employee engagement starts with the leaders themselves. 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.”

______________________________________________________________________________

Tips to enhance employee engagement

Evolving economic, technological, demographic and social changes are requiring businesses to rapidly respond to the myriad of extraordinary pressures they now face. HR now has 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 essential to be aware of the generational and demographical characteristics of employees, as they will largely define the expectations these employees have of their company.

Focus on behaviors facilitating performance & business success
Organisations must clearly define what engagement looks like for employees. For many employers, there is an increasing need for agility, flexibility, speed and an ability to learn and adapt. 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 compelling Employee Value Propositions (EVPs)
There is a growing disconnect between what companies require, what they are offering, and what employees expect in return. Organisational reputation, being a top engagement driver, provides insight into how employees define value from their company. The research shows that companies which deliver on their EVPs are more likely to have employees who speak positively about their organisation, are more likely to retain people, and are more likely to cultivate an environment of employees who aim for excellence.

Culture of engagement
An organisation’s health is based on employee 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 programmes that motivate and inspire the unique makeup of their employee base. Employers often find that there are basic elements of their HR programmes, such as benefits, safety and work life balance, that may be key drivers inhibiting engagement. Getting the foundation right is often the first step in building a culture of engagement. Companies across APAC are taking employee engagement more seriously and investing more wisely in their workforces. A key driver for this focus on employee engagement improvement is the chronic talent shortage across many Asian markets.

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.