What Makes Your Employees Tick?

Research

	Research
	Research Reports
	WorkAsia™

What makes your employees tick? This is the perennial question on every business leader’s mind. In order for any organization to succeed, it is vital that employees are able to exert the required effort to produce the desired output. However, this is easier said than done. In today’s complex business environment, there are many factors affecting employee performance, both internally and externally. Unfortunately, in the past, there have not been proper tools that enabled organizations to accurately assess their strengths and weaknesses in terms of employee engagement and link these findings toward the right actions. (Engagement is a term used to describe a situation where employees are motivated to help the organization succeed and know how to help it achieve its goals.) As a result, many organizations have been investing time and money in ways that do little to increase employee engagement and effectiveness. Thus, employers may be missing out on an opportunity to motivate and focus employees in ways that will have a real impact on productivity and financial performance leading to an increase in shareholder value.

Is there a link between employee attitudes about their work (e.g. how they work, rewards received from working and who they work with) and the financial success of their organizations? According to a Watson Wyatt Human Capital Index (HCI) study between human capital practices and workforce productivity and engagement...there is! Better human capital practices produce employees who are motivated, productive, and accountable. Having an effective and engaged workforce positively impacts a company’s external service value thereby resulting in a more satisfied and loyal customer base. Moreover, having loyal and satisfied customers correlates positively with better business performance. Having established that there is a correlation between employee attitudes and business success, we will describe how this relationship can be measured and applied to our work environment.

Employee Opinion Surveys (EOS)

Employee Opinion Surveys (EOS) have typically been used in the past to assess employee satisfaction. The common perception was that satisfied employees would in turn be productive and thus help the business achieve its goals. However, Watson Wyatt research demonstrates that employee satisfaction can be a limited and often inaccurate measure of business performance. For example, employees can be satisfied because they get paid well regardless of how the company or business unit is performing. They can also be satisfied because they have job security owing to long tenure and due to the organization lacking performance metrics to assess productivity and competency. Mediocre employees can be satisfied because the company does not differentiate its rewards system between high performers and non-performers (i.e. everyone is treated the same). To properly gauge business performance by using employee attitudes as a basis, relevant measures and factors must be included and analyzed in the EOS questionnaire.

The metrics that are essential are: employee commitment, line of sight, enablement, and integrity/ethics. Commitment is the extent to which employees express pride in their company, describe it as a good place to work, demonstrate a desire to stay and show confidence in its future success. Line of Sight is the extent to which employees perceive that they understand their company’s business strategies/goals, and what they personally have to do to help the company reach those goals. Enablement is the extent to which employees perceive that they have the right tools, resources, information and support to do their jobs well. Integrity is the extent to which employees understand and live up to their organization’s values and expect the same from others.

Our international research clearly demonstrates that companies that score well in these four areas consistently achieve superior financial success. A Watson Wyatt study indicated that companies with employees that score high on all four factors had a Total Return to Shareholders (TRS) that is three times higher than a typical firm. Thus, employee engagement and effectiveness, not satisfaction, are the keys to success. This translates to giving the employees the training, resources, tools and equipment to work effectively and create an environment where the organization demonstrates its values and creates a culture of trust and ethical behavior.

Employment Deal

So how does one determine if the current workforce is engaged and effective? How would a CEO find out if the Human Capital policies and practices designed and implemented throughout the organization are working and are worth the investment in time, money, and resources? Fortunately, Employee Opinion Surveys have evolved to become the sophisticated and scientific assessment tools designed specifically for these purposes. No longer just measuring employee satisfaction, they are insightful and invaluable instruments in revealing the state of the organization from the employees’ perspective.

The breadth and depth of the issues and factors covered by an EOS should be designed to study all aspects of the Employment Deal - the compelling employment partnership between the employer and the employee. Ideally, an EOS should have most of the following categories:

• Commitment to the Company
• Communications
• Compensation & Benefits
• Customer Focus
• Hiring and Advancement
• Line of Sight
• Performance Leadership
• Process Improvement/Innovation
• Strategic Direction/Leadership
• Training and Development
• Trust & Ethics
• Values
• Workforce Diversity
• Work Environment/Team
• Work/Life Balance

The employer’s concern is creating value through its people. Thus, its main concerns are attracting, developing and engaging the right talent for its business needs. It is focused on employees’ commitment, ownership and loyalty in order to make the company achieve consistent and continued growth. On the other hand, the employees’ main concern is in finding meaningful work experience through personal fulfillment, competitive pay and benefits, job security, wealth accumulation and having a healthy work environment. The sweet spot in this employment partnership is achieving a balance between what employers want and what employees value. It is upon realizing this balance that the company is able to provide the right environment in which employees thrive to become a fully engaged and effective workforce.

Conclusion

As mentioned, in the past, good money has been thrown into policies and practices that have not had real impact on improving employee effectiveness and engagement. One of the primary reasons is that the policies and practices implemented in the organization do not address the actual problems. Drivers of employee engagement vary from one industry to another, from one organization to another and even from one employee group to another. This means that managers and senior leaders need to measure engagement within their own organizations and identify the specific factors for their own employees. Organizations must be able to identify and understand their own unique needs and situation. Only when this information is obtained can they make the correct gap analysis, design the appropriate interventions, and prioritize action steps to tackle their most pressing issues.

Finally, one of the most important things Watson Wyatt research shows is that there is a gap between the design of programs and how well these programs are implemented. By measuring engagement over time, organizations can leverage their own data to design programs that have real impact on engagement. They can also pinpoint differences among employee groups, business units and locations so they can better tailor and target these programs. The results of this measurement process is an enhanced ability to design human capital programs that achieve desired results and deliver a solid return on investment.

In conclusion, as organizations embark on programs to enhance their human capital practices, they need to re-evaluate their beliefs and understand the unique set of factors that affect attitudes and behavior within their workforce. Subsequently, companies that increase employee engagement and effectiveness position themselves to deliver higher returns to shareholders, make better use of assets and benefit from a more productive workforce.

This article is written by Carlo C. Felicia, an Associate Consultant & Manager at Watson Wyatt Worldwide, a leading global consulting firm on people and financial issues. The Manila-based Mr. Felicia has worked in areas of Expatriate and Domestic Compensation as well as Salary Surveys and Employee Climate Surveys. He is a graduate of Vassar College in Poughkeepsie, New York and has an MBA in Finance from Fordham University. If you are interested to conduct an assessment of your employees, please contact Mr. Felicia at carlo.felicia@watsonwyatt.com.