What drives employee satisfaction and engagement

Understanding What Drives Employee Satisfaction and Engagement 80 South Lake Ave., Suite 680  Pasadena, California 91101 USA T: 866-802-8095  F: 877-866-8301  info@insightlink.com  www.insightlink.com

Overall Job Satisfaction In The U.S. Recommended Minimum Target for Employee Satisfaction 65%

Recent Trends in Employee Satisfaction and Retention Positive employee satisfaction (defined as those who are either extremely or very satisfied) tends to range between 55% and 60% on a national level in the U.S. Overall job satisfaction dipped a little in 2009, when the recent recession was profoundly affecting employment and public sentiment, then returned to a more typical level in 2010 Similarly, the tenure that employees currently have and expect to have at organizations have both increased, as high unemployment rates dampen interest in leaving

Employee Engagement Employee engagement can best be summarized as a dynamic partnership in which employees bond with their organization and with one another through shared understanding and common purpose Engagement is a state in which employees are fully involved in their work – physically, cognitively, and emotionally In a highly engaged workplace, employees understand and agree with the company’s strategic goals, are clear about how their work fits into making those goals a reality, are motivated to go beyond narrow job definitions to meet those goals and are confident that their efforts will be recognized and rewarded by their peers, managers and the organization as a whole At Insightlink, we see “engagement” as an aggregate measure that is distinct from “job satisfaction”

Current Employee Engagement in the U.S. NOTE: Based on an average of 15 attribute ratings (not including Job Satisfaction)

Key Results Linked to High Engagement Employees have a strong emotional connection with the organization Engagement leads to higher levels of innovation and creativity Employees develop better relationships with work colleagues Organizations with high engagement also see improvements in customer satisfaction – engaged employees deliver higher quality service as their commitment comes across to customers As employee engagement increases, so does an organization’s bottom-line success Between 1998 and 2005, the share value of the “100 Best Companies to Work for in America” increased by 14%, as compared to 6% for the overall market, even after controlling for numerous external variables

Additional Supporting Research According to Gallup’s calculations, actively disengaged employees – the least productive – cost the American economy up to $350 billion per year in lost productivity. Gallup has also shown that engaged employees are more productive, profitable, safer, create stronger customer relationships, and stay longer with their company than less engaged employees. As well, workplace engagement can catalyze “outside-the-box” thinking to improve management and business processes. Gallup US Survey By a two-to-one margin, companies surveyed in a Taleo Research study reported the largest risk to their company’s bottom line and brand is low employee engagement and productivity. Alignment Drives Employee Engagement Productivity and Retention Employee engagement and employee performance management truly go hand in hand. The goal for both is to create alignment between the needs, desires, skills and activities of individuals and what the business requires to achieve results. But in today’s intense business environment, what managers and employees need to achieve this balance can be difficult to discern. The Engagement/Performance Equation by Mollie Lombardi, Aberdeen Group

Key Questions For Today How should you think about employee engagement within your own organization? What types of action could help improve employee engagement in general?

Employee Loyalty in the U.S. CLASSIFICATIONS DEFINITIONS Committed Loyalists: Extremely/very satisfied and plan to stay 2+ years Satisfied Opportunists: Extremely/very satisfied and plan to stay < 2 years Dissatisfied Compromisers: Somewhat/not very/not at all satisfied and plan to stay 2+ years Change Seekers: Somewhat/not very/not at all satisfied and plan to stay < 2 years

These are the employees who are highly satisfied with their jobs and have a long-term intention to stay with their organization They are the foundation of their organizations’ human capital, through the positive contributions they make to productivity, customer satisfaction, the morale of their co-workers and ultimately, to their organizations’ financial performance and overall success Only 50% of employees in the U.S. can currently be characterized as Committed Loyalists – organizations should deliberately seek strategies to maximize the size of this group Committed Loyalists

These employees are satisfied with their jobs but are not deeply committed to the organization in the long-run As a result, they are both assets and liabilities – they are assets in the sense that they are happy and productive workers, while also being liabilities in that they represent a risk of employee turnover Their lack of commitment to their organizations means that they can be lured away by other employers In an improving job market or when there is competition between employers for scarce talent, these employees may leave just when your organization can least afford it Just 6% of employees in the U.S. are Satisfied Opportunists Satisfied Opportunists

These employees are actively on their way out of their organizations, lacking both commitment and intention to stay They are apt to be less productive than their more committed colleagues and may also be a drag on the morale of those around them An organization with a large percentage of Change Seekers is almost certain to experience higher-than-necessary turnover costs that will negatively impact their bottom line As the economy shows signs of improvement, thereby opening up new job possibilities, Change Seekers are likely to actively seek their exit opportunities Change Seekers account of 17% of the U.S. workforce Change Seekers

These are the employees who are unhappy with their jobs, but have no intention to leave While they don’t directly contribute to turnover costs, they may still drag down their organizations’ financial performance through lower productivity and, in many cases, by lowering the morale of others More than one-in-four employees in the U.S. (26%) fall into the category of Dissatisfied Compromisers and they likely make a major contribution to the estimated loss of $350 billion dollars a year on employee disengagement Dissatisfied Compromisers

Increasing your proportion of Committed Loyalists is central to connecting your HR efforts to your organization’s bottom line It may be difficult to convert Satisfied Opportunists into Committed Loyalists because these employees are “hardwired” to be on the lookout for new opportunities Organizations should have a plan in place to deal with the turnover that Satisfied Opportunists can cause Keeping Change Seekers to an organizational minimum is key to controlling turnover costs This requires building a meaningful and enjoyable work environment that prevents employees from being disenchanted and, in turn, looking for the chance to leave From An HR Perspective…

Decreasing the impact of Dissatisfied Compromisers on the organization – either by improving their satisfaction with their jobs, or reducing their negative effects on their work and those around them – can protect the organization’s bottom line Our experience suggests that the proportion of Dissatisfied Compromisers is not “set in stone” and will vary in response to organizational changes, both positive and negative A careful evaluation of your work environment can lead to worthwhile action planning that will shift at least some Dissatisfied Compromisers into becoming Committed Loyalists From an HR Perspective…

Includes job “fit,” sense of accomplishment, willingness to go “above and beyond” Commitment both “to” and “from” the organization How Should You Decide What Action To Take? Commitment Culture Communications Compensation Work environment, effectiveness of vision/values, application of company policies, understanding of employee issues, job security and work/life balance Effectiveness of interactions with supervisors, management and coworkers Basic condition of satisfaction and productivity Perceived fairness in distribution can be more influential than the absolute level of pay

The Largest Importance/Performance “Gaps”

Commitment To Your Organization

Commitment From Your Organization

Fulfillment of Mission/Vision/Values Recommended Minimum Target for Fulfillment of Mission 75%

Satisfaction with Overall Communications

Satisfaction with Compensation

Having enjoyable work Satisfaction with the level of reward and recognition The opportunity to learn new skills and to grow The opportunity to make suggestions and be involved in your work The degree to which the work done is respected Satisfaction with your organization’s operating systems and standards Satisfaction with the resources available to you How fairly the work is divided in your department/organization Having work that makes good use of your abilities and skills Satisfaction with the effectiveness of communications Satisfaction with your ongoing training and development Satisfaction with your opportunities for advancement The Main Drivers of U.S. Job Satisfaction

How well are U.S. organizations fulfilling these fundamental expectations of their employees? Each driver is classified into one of three groups: Equities (High contribution and high performance) Opportunities (High contribution and moderate performance) Weaknesses (High contribution and weak performance) There is much room for improvement on many of the fundamental drivers of job satisfaction Organizational Performance On The Key Drivers

EQUITIES (High contribution and high performance) Work is enjoyable Makes good use of abilities and skills Organizational Performance On The Key Drivers OPPORTUNITIES (High contribution and moderate performance) Work is respected Learning new skills Making suggestions/being involved Operating systems WEAKNESSES (High contribution and low performance) Communications Reward and recognition Division of work Resources available Ongoing training Opportunities for advancement

Summary Highlights Where do I start? Review key indicators: survey scores, performance reviews, retention data, exit interviews Talk to your employees – ask them what they like most about working for your organization and what they like least about working there Consider your organization’s equities, opportunities and weaknesses Look at what other organizations do well

Summary Highlights What weaknesses or gaps exist in your organization? Consider: Advancement opportunities Training and development Transparency around promotions Requirements for success Connection with senior management Trust in senior management Pay for performance Communications Reward and recognition Division of work

Summary Highlights Positive momentum Fulfillment of mission/vision/values Levels of stress Job definition Choose one or two and develop an action plan. For example, Unclear job definitions: update job descriptions and ensure all employees are aware of their roles and responsibilities Lack of fulfillment of mission/vision/values: communicate to all employees; clarify organizational objectives; ensure employees can connect their work to the objectives

Final Thoughts Direct action to improve communications, to increase employee recognition in meaningful ways, to manage how much is expected of employees, to address perceived inequities in compensation and to reinforce the organization’s mission/vision/values will help raise overall job satisfaction and reduce turnover, leading to a more engaged and committed workforce within organizations in the U.S.

What drives employee satisfaction and engagement

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What drives employee satisfaction and engagement