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Employee Engagement

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Human Elements next-generation Traditionalist Baby Boomer Gen X Gen Y Birth Range 1922-1945 1946-1964 1965-1980 1981-2000 Total 48.7 million 78.3 million 63.3 million 80.4 million % of Population 17% 28% 23% 29% United States Generations Source: The Human Element Images and Concepts are adaptations of The Dow Chemical Company’s Human Element Commercial; Buahene, A.; Kovary, G. (2007). Loyalty Unplugged, Philadelphia : Xlibris. ISBN 13-978-1-4257-4926-2 n-gen

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Generational Clashpoints <ul><li>Recruitment </li></ul><ul><li>Career Goals </li></ul><ul><li>Rewards </li></ul><ul><li>Balance </li></ul><ul><li>Communication </li></ul><ul><li>Knowledge Share </li></ul><ul><li>Training </li></ul><ul><li>Feedback </li></ul><ul><li>Retention </li></ul><ul><li>Retirement </li></ul>Source: The Human Element Images and Concepts are adaptations of The Dow Chemical Company’s Human Element Commercial; Lancaster, L.; Stillman, D. (2002). When Generations Collide, New York: HarperCollins. ISBN 0-06-662107-0

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From a new perspective, understand your employees in a new light and address their global-generational needs in a new way; start with the basics and target corporate harmony. Maslow, A..; proposed in his 1943 paper A “Theory of Human Motivation”

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Engaged (alive) – 29% Not-Engaged (awake) – 56% Disengaged (asleep) – 15% Source: Gallup Organization 2006 Research 71% of employees are either indifferent to their work or actively disengaged! 3 Types of Employees: Awake Alive Asleep

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Turnover and Job Satisfaction <ul><li>Average turnover rate across all industries is 15%. </li></ul><ul><li>Almost 10% of all new college hires leave their job within 1 year; 25% leave within 5 years. </li></ul><ul><li>From a study of 500 managers and senior executives: </li></ul><ul><li>- More than 40% expected to leave their job within 2 years. </li></ul><ul><li> - 20% expected to leave in 6 months or less. </li></ul><ul><li>More than 44% of these managers reported that employee turnover and the resulting lost expertise had cost them customers. </li></ul><ul><li>Level of job satisfaction is dropping: </li></ul><ul><li>- Over 50% of workers are dissatisfied with their jobs. - Of these, Baby Boomers were the least happy among groups surveyed. </li></ul><ul><li>Martin, C. Managing for the Short Term: The New Rules for Running a Business in a Day-to-Day World (Doubleday). </li></ul>

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Turnover Costs <ul><li>Turnover costs easily reach 150% of the employee’s annual compensation figure. The cost will be significantly higher (200% to 250% of annual compensation) for managerial and sales positions. </li></ul><ul><li>To put this into perspective, let's assume the average salary of employees in a given company is $50,000 per year. Taking the cost of turnover at 150% of salary, the cost of turnover is then $75,000 per employee who leaves the company. For the mid-sized company of 1,000 employees who has a 10% annual rate of turnover, the annual cost of turnover is $7.5 million! </li></ul><ul><li>Costs that are more difficult to estimate include customer service disruption, emotional costs, loss of morale, burnout/absenteeism among remaining employees, loss of experience, continuity, and “corporate memory.” </li></ul>Bliss, W. Cost of Employee Turnover. Small Business Advisor.;Branham, L. Keeping the People Who Keep You in Business: 24 Ways to Hang on to Your Most Valuable Talent . (AMACOM).

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Why do they leave? <ul><li>Key misperception: </li></ul><ul><li>Employers who think their people leave for more money: 89% </li></ul><ul><li>Employees who actually do leave for more money: 12% </li></ul><ul><li> </li></ul><ul><li>The ten most frequently mentioned issues that employees say companies do poorly are: </li></ul><ul><ul><li>Lack of career growth </li></ul></ul><ul><ul><li>Poor management </li></ul></ul><ul><ul><li>Poor communication </li></ul></ul><ul><ul><li>Pay: paid under-market </li></ul></ul><ul><ul><li>Lack of recognition </li></ul></ul><ul><ul><li>Poor senior leadership </li></ul></ul><ul><ul><li>Lack of training </li></ul></ul><ul><ul><li>Excessive workload </li></ul></ul><ul><ul><li>Lack of tools and resources </li></ul></ul><ul><ul><li>Lack of teamwork </li></ul></ul>Source: Saratoga Institute , Disengagement Study

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Difference between Engaged and Disengaged Employees Engagement at high-growth companies exceed those of lower-growth companies by more than 20 percent . This study demonstrates the significant impact of the downstream effects of employee attitudes on market performance, as measured by customer satisfaction, and financial performance, i.e., profitability. Source: “The Link Between Employee Engagement and Business Results”; Hewitt Associates 2004 / “Workforce Study”; Towers Perrin 2005 / Employee Engagement Study; ISR, 2006,“WorkUSA Report”, Watson Wyatt, 2006; “Employee Engagement, Customer Satisfaction and Profitability”, Prof. James Oakley of Ohio State University 84 percent of highly engaged employees believe they can positively impact the quality of their company’s products, compared with only 31 percent of the disengaged. 72 percent of the highly engaged believe they can positively affect customer service, versus 27 percent of the disengaged. 68 percent of the highly engaged believe they can positively impact costs in their job or unit, versus 19 percent of the disengaged. ISR found that high engagement companies had a 13.2 percent improvement in net income while low engagement companies had a 3.8 percent decline. High engagement improved operating income by 19.2 percent while low engagement companies declined 32.7 percent during the 12-month period. Companies with high employee engagement had a 27.8 percent improvement EPS, while low employee engagement companies experienced an 11.2 percent decline in EPS over the same period. Watson Wyatt analyses show that a significant improvement (one standard deviation) in employee engagement is associated with a 1.9 percent increase in revenue per employee. At about $250,000 per employee. That means a significant improvement in engagement is associated with an increase in revenue per employee (productivity) of $4,675. For the typical S&P 500 organization, which employs about 20,000 people, this represents an increase in revenue of $93.5 million.

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n-gen Get’em Keep’em Grow’em Manage generational mix and potential shortages of today’s “Knowledge Worker” Source: The Human Element Images and Concepts are adaptations of The Dow Chemical Company’s Human Element Commercial; Buahene, A.; Kovary, G. (2007). Loyalty Unplugged, Philadelphia : Xlibris. ISBN 13-978-1-4257-4926-2

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Effectiveness (cognition) Engagement Satisfaction (emotion) Motivation (discretion) = Customer Satisfaction Satisfaction + Motivation + Effectiveness = Engagement = Customer Satisfaction Hu 07 7E+09

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<ul><li>Jack Welch, Former CEO of General Electric </li></ul>“ Employee engagement first. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it. That's why you need to take the measure of employee engagement....” “ People want to be part of something larger than themselves. They want to be part of something they’re really proud of, that they’ll fight for, sacrifice for, that they trust.” Howard Schultz, Chairman of Starbucks Let’s see what the experts have to say…

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“ If the employees come first, then they're happy, ... A motivated employee treats the customer well. The customer is happy so they keep coming back, which pleases the shareholders. It's not one of the enduring Green mysteries of all time, it is just the way it works.” Herbert D. Kelleher, CEO of Southwest Airlines “ The people who are doing the work are the moving force behind the Macintosh. My job is to create a space for them…” Steve Jobs, CEO of Apple

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LEADERSHIP PRACTICES KNOWLEDGE ACCESSIBILITY WORKPLACE OPTIMIZATION LEARNING CAPACITY EMPLOYEE ENGAGEMENT EMPLOYEE SATISFACTION, MOTIVATION, EFFECTIVENESS SUPERIOR FINANCIAL PERFORMANCE BRAND DELIVERY COST OPTIMAL TURNOVER HUMAN CAPITAL STRATEGY INCREASED PRODUCTIVITY Source: Adapted from Watson Wyatt Worldwide, Lessons From Watson Wyatt's 2005 HCI: “HR Programs, Turnover Risk and Employee Productivity” Translate Basic Human Elements into Financial Performance ONE-TO-ONE Hu 07 7E+09

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<ul><li>Make better, more informed decisions across the entire human capital spectrum to ensure success by measuring what matters! </li></ul>Executive skills Senior executives eliminate barriers, provide feedback, and inspire Supervisory skills Managers eliminate barriers, provide feedback, and inspire. Inclusiveness Management collaborates with employees and invites input. Communication Management’s communication is open and effective. LEADERSHIP PRACTICES Time Workload allows employees to do well, and enables good work/life. Commitment Jobs are secure, employees are recognized, advancement. Job Design Work is well organized and taps employees’ skills. EMPLOYEE ENGAGEMENT Information sharing Best practices are shared and improved. Collaboration Teamwork is encouraged and enabled. Availability Job-related information and training are readily available. KNOWLEDGE ACCESSIBILITY Hiring Hires are profiled on the basis of skill; complete orientation. Accountability High performance is expected and rewarded. Culture Working conditions support high performance, and “Gel the Culture” Processes Work processes are well defined, and training is effective. WORKPLACE OPTIMIZATION Value and support Leaders reinforce learning and demonstrate that it is valued. Development Employees have formal career development plans. Training Training is rewarded and curriculum paths support goals. Innovation New ideas and suggestions are welcome and rewarded. LEARNING CAPACITY HCM Drivers HCM Practices HUMAN CAPITAL MANAGEMENT (HCM) BLUEPRINT Source: HCM Framework developed by: Bassi, L.; McMurrer, D., “Maximizing Your Return on People”, HBR March 2007 Employee and management surveys can be used to gauge and help drive improvements across the entire human capital spectrum. Your company’s particular framework and focus will vary based on baseline results, strategic direction and ongoing evaluation.

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<ul><li>A 21st Century Marketplace-Brand </li></ul><ul><li>Chemistry </li></ul>(Satisfied / Motivated / Effective) Engaged Employees ▼ Satisfied Customers ▼ Increased Loyalty / Frequency/ Referrals ▼ Increased Profits Source: Don E. Schultz, Ph.D., Founder of the Forum for People Performance Management and Measurement

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Stages of Organizational Development Growth Process <ul><li>High Performance Stage </li></ul><ul><ul><li>Excellent performance results </li></ul></ul><ul><ul><li>Growth from new business opportunities </li></ul></ul><ul><ul><li>Excellent processes, structure, & systems aligned to strategy </li></ul></ul><ul><ul><li>High involvement & empowerment of people </li></ul></ul><ul><ul><li>Respect for people is a part of the culture </li></ul></ul><ul><ul><li>Good communication and information sharing </li></ul></ul><ul><li>Stability Stage </li></ul><ul><ul><li>Consistent performance results </li></ul></ul><ul><ul><li>Basic processes, structure, & systems in place </li></ul></ul><ul><ul><li>Adequate resources in place </li></ul></ul><ul><ul><li>Some clarity of goals and direction </li></ul></ul><ul><ul><li>Consistency of priorities </li></ul></ul><ul><ul><li>Well-defined policies & procedures </li></ul></ul><ul><li>Chaos Stage </li></ul><ul><ul><li>Inconsistent results </li></ul></ul><ul><ul><li>Crisis & short term focus </li></ul></ul><ul><ul><li>Shifting priorities, lack of clear directions, & goals </li></ul></ul><ul><ul><li>Processes, structures, and systems not in place </li></ul></ul><ul><ul><li>Unclear policies & procedures </li></ul></ul><ul><ul><li>Lack of teamwork </li></ul></ul><ul><ul><li>Inadequate people & resources </li></ul></ul>Where Do You Place Yourself or Your Team?

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Transformation Model

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Traditionalist Baby Boomer Gen X Gen Y Birth Range 1922-1945 1946-1964 1965-1980 1981-2000 Total 48.7 million 78.3 million 63.3 million 80.4 million % of Population 17% 28% 23% 29% United States Generations Kovary, G. (2007). Loyalty Unplugged, Philadelphia : Xlibris. ISBN 13-978-1-4257 4926-2 n-gen

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Generational Clashpoints <ul><li>Recruitment </li></ul><ul><li>Career Goals </li></ul><ul><li>Rewards </li></ul><ul><li>Balance </li></ul><ul><li>Communication </li></ul><ul><li>Knowledge Share </li></ul><ul><li>Training </li></ul><ul><li>Feedback </li></ul><ul><li>Retention </li></ul><ul><li>Retirement </li></ul>Stillman, D. (2002). When Generations Collide, New York: HarperCollins. ISBN 0-06-662107-0

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Get’em Keep’em Grow’em Manage generational mix and potential shortages of today’s “Knowledge Worker” Kovary, G. (2007). Loyalty Unplugged, Philadelphia : Xlibris. ISBN 13-978-1-4257-4926-2

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Future Economy Source: 2007 Tough Choices or Tough Times Commission on Skills of the American Workforce

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<ul><li>“ We are not building human capital the way we used to. </li></ul><ul><li>Our primary and secondary schools are falling behind </li></ul><ul><li>the rest of the world’s. Our universities are still </li></ul><ul><li>excellent, but the foreign students who come to them </li></ul><ul><li>are increasingly taking their educations back home. </li></ul><ul><li>As other nations multiply their science and engineering </li></ul><ul><li>graduates – building the foundation for economic </li></ul><ul><li>progress – ours are declining, in part because those </li></ul><ul><li>fields are seen as nerdish and simply uncool. And our </li></ul><ul><li>culture prizes cool.” </li></ul><ul><li> - Geoffrey Colvin, Fortune Magazine </li></ul>