© 2007 Towers Perrin Does being a Top Employer make a difference in employee engagement? How - And Why - Top Employers Are Building An Oasis for Talent

© 2007 Towers Perrin

Does being a Top Employer make a difference in employee engagement?

How - And Why - Top Employers

Are Building An Oasis for Talent

Canada’s Top Employers

March 22-23, 2007

© 2007 Towers Perrin 2

Why are we all here?

A. Public recognition of workplace excellence

B. Because the CEO said it was important

C.Because people make the difference between success and failure


Why be on the list?

Easier to attract good candidates

Management and shareholder recognition of what your HR programs are all about

Shows your current and future employees the kind of workplace you want to be or become

A visible sign that helps shape your reputation as a good employer

Recognition that your internal employment deal supports your external customer brand


Why CEOs are placing Talent Management front and centre

A global playing field is heightening competition for business and talent

The competition for leadership talent among top companies has intensified, and companies are looking at new ways to attract and retain top talent

“People-driven” enterprises are setting themselves apart in terms of overall business performance

While the world’s population will continue to grow, demographic projections point to a coming skills shortage in such areas as management, customer service and research


Organizations have identified critical gaps — in retaining current leaders and growing future leaders

32%

41%

13%

38%

54%

47%

53%

29%

34%

39%

42%

46%

47%

70%

0% 20% 40% 60% 80% 100%

Developing existing leadership talent

Attracting the right leadership talent

Retaining the right leadership talent

Engaging leadership talent

Identifying existing leadership talent

Deploying existing leadership talent

Lack of leadership capability at senior levels

Leadership Talent Management Challenges — Current and Future

Source: 2006 Towers Perrin Talent Management Survey

Future challenge

Current challenge


The world in numbers…

6.0

6.5

7.0

7.5

8.0

8.5

9.0

2006 2020 2030

World Population % in Developed World

Billions of PeoplePercentage in

Developed World

19%

18%

17%

16%

15%

14%

13%


People systems and programs

Employeebehaviour

Customerbehaviour

Financial performance

Engagement Values Customer

service Productivity/

operational Adaptability Retention Learning

Customer satisfaction

Customer loyalty Customer value

ROI Revenue growth Net earnings Stock

performance

Staffing Compensation Benefits People

development Workforce

relations Organizational

management Work

environment

Leading organizations make the critical link between people, programs and results

“People systems” should start from and support the organization’s specific performance goals


Towers Perrin and Canada’s Top 100 share the view that:

Employee engagement is a fundamental metric of company “health” and of the day-to-day work experience

Including such a measure as part of the overall assessment of a company as a place to work makes great sense

Towers Perrin has a well-tested (externally validated) and relatively simple model for measuring engagement


Understanding what engagement means, how it’s measured and what drives it

We define engagement as employees’ willingness and ability to contribute to company success, in large part by delivering discretionary effort on a sustained basis

We measure it using nine items that capture employees’ emotional and rational connections to work Respondents’ scores across all nine items determine their

level of engagement: high, moderate or low

We derive the drivers of engagement — the elements of the work environment that influence it — via statistical analysis

Employees’ level of engagement

Workplace elements thatdrive engagement

up...or down

Emotional and rationalconnections to work


Employee engagement is critical in driving the way people behave at work

85%

45%

66%

0% 20% 40% 60% 80% 100%

74%

38%

56%

0% 20% 40% 60% 80%

53%

16%

29%

0% 10% 20% 30% 40% 50% 60%

46%

14%

25%

0% 10% 20% 30% 40% 50%

64%

39%

22%

0% 10% 20% 30% 40% 50% 60% 70%

I can positively impact quality I can positively impact costs

I can positively impact customer service I can positively impact overall profitability

I can positively impact revenue growth

DisengagedModerately EngagedHighly Engaged

Key:

Source: Towers Perrin Global Workforce Study: Canada


More engaged employees are more likely to stay with the organization

Highly Engaged DisengagedModerately Engaged

8%

1%2%

63%

26%

No plans to leaveNot looking, but would consider another offerActively looking for another jobMade plans to leave current jobPlan to retire in the next few years

12%

9%

29%

12%

38%

10%3%

9% 30%

48%

(Canadian data)

Source: Towers Perrin Global Workforce Study: Canada


Operating Margin With 5%, 10%, 15% Change in Engagement

% Change in People Engagement

Current

11.4%

5%

11.8%

10%

12.2%

15%

12.6%

For a $3B company, that’s $24,000,000*

Source: Towers Perrin 2003 Talent Report. Financials are illustrative and do not represent any specific company

10%

14%

18%

22%

26%

30%

LOW HIGHEngagement Index Score

Revenue Growth

Engagement Index Score62%

64%

66%

68%

70%

72%

74%

LOW HIGH

Cost of Goods Sold

SG&A

Note: Employee engagement strongly correlated to intention to stay.

Intent to Stay19%

21%

23%

25%

27%

LOW HIGH

Employee engagement and financial performance are highly correlated


The Top 100 Employers Pilot Engagement Survey - 2006

Six organizations volunteered to join us for the pilot

From these organizations, we gathered 1,667 employee responses

As a benefit of participation, each organization received a report of their individual results

Aggregate results were not released…until now


How did they do?

Canada Workforce Top 100 Applicants (Pilot)

High (17%)Disengaged (17%)

Moderate (66%)

High (36%)Disengaged (6%)

Moderate (58%)


What Drives Engagement in Canada? Canada Workforce vs. Top Employers Pilot 2006

Top 100 Employers Pilot SurveyCanada Workforce Study

67%

85%

80%

71%

72%

46%

87%

72%

73%

39%

79%

56%

60%

59%

39%

70%

61%

67%

61%76%

0% 20% 40% 60% 80% 100%

Senior management interest in employee well-being

Improved my skills and capabilities over the last year

Reputation of the organization as a good employer

Input into decision-making in my department

Opportunities to learn and develop new skills

Salary determination fair and consistent

Organization focus on customer satisfaction

Appropriate amount of decision-making authority

Employees understand what it takes to satisfy customers

In combination with government programs, my benefits meet my needs

Favourable Score:


100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

High Favourability – Higher Impact on

Engagement

Strength of relationship between item and Employee Engagement

% F

avo

ura

ble

Prioritizing by relationship to engagement

High Favourability – Lower Impact on

Engagement

15

28

25

Item

15. Improved my skills and capabilities

28. Reputation as a good employer

21. Salary determination is fair and consistent

10. Senior management has a sincere interest in employees

18. Appropriate amount of decision making authority to do my job

25. Retaining employees with the skills needed for the organization to succeed

39. I have excellent career opportunities at this organization

41. In combination with government programs, my benefits meet my needs

10 39

18

INCREASING

Low Favourability – Higher Impact on

Engagement

Low Favourability – Lower Impact on

Engagement

41

21

Best Practice: Diagnosing Engagement


Build workforce plans that align with the long-term business growth strategy

Workforce required to

execute business plan

Workforce currently in place and available in

the market

Workforce Demand Workforce Supply

AttractionEngagement

Retention

Sourcing, deployment, people processes/programs

1

2

3Identify key drivers to ensure workforce supply and desired behaviours

4Align talent strategy and optimize processes / programs

Analyze business plans to understand

required workforce

Identify potential workforce gaps

Business plan and required capabilities

Best Practice: Strategic Workforce Planning


Decrease

Increase

Impact on Cost

Impact onEmployee

Engagement

Cost/Benefit Scenarios

Decrease

Current State:No change to

investment; Current employee

engagement

IncreaseA

B

C

Understand employee preferences to “optimize” ROI on your total rewards

KEY

A) Optimal cost savings: The reward mix that maximizes cost reduction with a neutral impact on employee engagement

B) Optimal reallocation of current investment: The reward mix that reallocates the current total spend across programs in a way that maximizes employee engagementC) Optimal investment: The reward mix beyond which there are diminishing returns in employee engagement

ILLUSTRATIVE

Best Practice: Optimizing rewards


Learning & Development Programs

Career Management Resource Centre

Career Ladders/Competency Models

PerformanceManagement

ProcessPeer Mentoring Network

Define career models, clarify paths and calibrate rewards

Best Practice: Improving career framework


To truly influence engagement (and workforce effectiveness) you need a holistic approach


Sustaining a Top 100 Culture

Employee engagement is rapidly emerging as a key indicator of business performance

Leading organizations will use engagement metrics, including performance relative to key drivers, as a roadmap for action

The road will curve as the drivers of engagement change over time

Top employers will keep ahead of the curve by paying close attention to the evolving needs of their employees


Questions?

Kevin Aselstine [email protected] (416) 960-2712

Charlie Watts [email protected] (617) 638-3942

Documents

© 2007 Towers Perrin Does being a Top Employer make a difference in employee engagement? How - And Why - Top Employers Are Building An Oasis for Talent