Towers Perrin Study Identifies Factors That Create Engagement and Drive Performance in Today's Workforce; Employees Exhibit Rational Endurance Despite Turbulent Times

NEW YORK--()--Aug. 25, 2003--

  Engagement Involves Rational and Emotional Factors  

Recent research from Towers Perrin shows that U.S. workers remain focused on their jobs despite the tough economic climate, job layoffs and other business challenges of the last two years. The study, which focused on employees of medium to large organizations, demonstrates that employees are in a mode of "rational endurance" -- doing what's required to help keep both themselves and their companies afloat in a tough environment.

But, at the same time, the study also shows that relatively few of the employees surveyed exhibit high levels of engagement in their job, based on a core set of workplace attributes that measure engagement. This finding has implications for companies' longer-term performance and their ability to retain key talent as the economy improves and the job market opens up.

"Employees are getting the job done, which we think has a lot to do with a sense of enlightened self-interest on their part. But their surprising resiliency and mood of rational endurance doesn't equate with true engagement," said Charlie Watts, who heads Towers Perrin's Organization and Employee Research consulting practice. "Engagement, which we define as employees' willingness and ability to contribute to company success, ultimately comes down to people's desire to give discretionary effort in their jobs. That effort can make a huge difference in performance, which is why engagement is the ultimate prize for employers today.

""What we found is that the bulk of employees we surveyed are only moderately engaged," said Watts. "In fact, only a relatively small slice are highly engaged, meaning they are both willing and able to invest that extra level of discretionary effort that separates outstanding performers from the rest of the pack. What companies should be concerned about, of course, is the risk that all those moderately engaged employees could easily slide toward the wrong end of the scale, with serious consequences on productivity and morale."

The study, Working Today: Understanding What Drives Employee Engagement, the Towers Perrin 2003 Talent Report, was completed in April 2003, drawing responses from more than 35,000 employees in companies in the U.S.

Engagement Factors

The study identifies a list of workplace elements that are critical in building engagement among employees and underscores the fact that building engagement is a process that never ends. Importantly, the list of elements includes strong leadership, personal accountability, autonomy, a sense of control over one's environment, a sense of shared destiny, and opportunities for development and advancement.

"This study tells us that there are no substitutes for these fundamentals," said Watts. "We have learned from this research not only what engagement looks like, but also how to build it, including which variables have the most impact on people's behavior and performance."

The study found that engagement rests on a foundation of a meaningful and emotionally enriching work experience. It is not about making people happy or even necessarily paying them more money. Important as pay and benefits are in attracting and retaining people, these elements play a less important role in engaging people in their work.

Defining Engagement -- Rational and Emotional Factors

The study demonstrates that engagement involves both rational and emotional factors relating to work and the overall work experience. The rational factors involve the relationship between the individual and the broader corporation, for instance, the extent to which employees understand their role, and their unit's role, relative to company objectives. The emotional factors tie to people's personal satisfaction -- such as a strong sense of personal accomplishment and the sense of inspiration and affirmation they get from their work and from being part of their organization.

The study found surprisingly positive perceptions on a number of the core measures of engagement, which accounts for the resiliency and strong work ethic found in the workplace. Within the overall sample:

-- 77% really care about the future of their company.

-- 70% are proud to work for their company.

-- 66% have a sense of personal accomplishment from their job.

-- 61% say their company is a good place to work.

-- 50% say their company inspires them to do their best work.

-- 89% understand how their unit/department contributes to company success.

-- 81% understand how their role relates to company goals and objectives.

-- 78% are personally motivated to help their company succeed.

-- 78% are willing to put in a great deal of effort beyond what is normally expected.

However, only 17% of the respondents agreed with all of these statements strongly enough to be defined as highly engaged. And another 19% disagreed, or were too mixed in their responses to qualify as truly disengaged, meaning they likely are just marking time on their jobs.

The results on the last four elements in the list above (the rational factors) indicate that companies have made progress in creating more of a line of sight between individual actions on the job and broader company objectives. However, the lower scores for elements of emotional engagement -- such as having a sense of inspiration -- also pose some risk for employers. In this period of rational endurance, engagement based largely or only on rational factors may be adequate. But as the economy rebounds and choices open up for people, many are likely to consider moving to another employer. At that point, emotional engagement may be the only thing helping retain those people most critical to the business.

"Through these research findings, employees are reminding us that the heart is a tougher battleground than the mind," said Watts. "Today, employers have better tools and approaches for supporting employees in their daily work, and that shows in levels of agreement around some of the rational engagement factors. But companies are still behind where they need to be in inspiring people and providing the personal sense of passion and mission that count so heavily in a rich and meaningful work experience."

Also of note is the finding that a highly engaged workforce is a more stable workforce. Fully two-thirds (66%) of highly engaged employees have no plans to leave their current jobs, versus just a third (36%) of the moderately engaged and only 12% of the disengaged. Therefore, moving employees from a state of moderate to high engagement makes them almost twice as likely to want to stay with the company and invest discretionary effort.

Driving Engagement

Beyond establishing a benchmark of engagement in today's workforce, the study offers insight into what drives the sense of engagement. The research identifies a set of attributes that, in combination, are critical to building high engagement. It also tells employers how workers think they're doing in each of these all-important areas. Below are the elements critical to building engagement in descending order of importance, with the "scores" employees gave their current employers on each element:

-- 42% say their senior management has a sincere interest in employees' well-being, which is the most important driver of engagement.

-- 53% say their company provides challenging work.

-- 61% say they have appropriate decision-making authority.

-- 75% say their company cares a great deal about customer satisfaction.

-- 34% say they have excellent career opportunities.

-- 55% say their company has a reputation as a good employer.

-- 67% say they work well in teams.

-- 58% say they have the resources needed to perform their jobs in a high-quality way.

-- 64% say they have appropriate decision-making input.

-- 45% say senior management communicates clear vision for long-term success.

"While engagement doesn't guarantee retention -- 25% of the highly engaged group remains open to an interesting opportunity -- it does increase the chances of retaining the very people who are probably going to be most attractive in a competitive marketplace," said Watts. "On the flip side of the coin, the study also showed that half of the disengaged people are not actively looking for other jobs. This suggests a company could have a large number of people who are not performing and could be having a negative impact on customers and colleagues.

"The key for employers is to understand which employees and employee groups are most critical to the organization and then determine their levels of engagement. That will help guide the right course of action to ensure the right people are doing the right things with the necessary level of effort and energy."

What About Attraction and Retention?

"Interestingly," says Watts, "we also found that what drives engagement is not necessarily the same as what draws people to a company or keeps them in their job. In fact, our study suggests that applicants first focus on the very basics -- benefits, competitive pay, work/life balance. When it comes to remaining in the job, they begin to look at career advancement opportunities, the caliber of their coworkers, and the overall work environment -- the things that make a big difference day to day. While attraction and retention may not be paramount concerns today, many employers are beginning to prepare for a potential upturn in the economy and an environment in which these factors will once again become critical in developing the workforce they need to succeed in a global, competitive market."

About Towers Perrin

Towers Perrin is one of the world's largest management, human resource consulting and administration firms. It helps organizations manage their investments in people to achieve measurable performance improvements, focusing on human resource strategy and service delivery, benefit and compensation design and implementation, employee and organizational communication, HR technology and outsourced administration. Towers Perrin is part of a larger family of businesses that also includes Tillinghast - Towers Perrin, a management consultancy for financial services companies worldwide, and Towers Perrin Reinsurance, a reinsurance intermediary and consultancy. Together these businesses have over 9,000 employees and 79 offices in 77 cities and 24 countries. More information about Towers Perrin is available at www.towersperrin.com.

Editor's Note: The survey report including charts that illustrate the findings from this study, Working Today: Understanding What Drives Employee Engagement, The Towers Perrin 2003 Talent Report, is available. For a copy, please contact Joe Conway in the Towers Perrin Press Relations office at 914/745 - 4175 or via e-mail at: joseph.p.conway@towers.com.

Contacts

Towers Perrin
Joe Conway, 914/745-4175
joseph.p.conway@towers.com

Contacts

Towers Perrin
Joe Conway, 914/745-4175
joseph.p.conway@towers.com