ISR Briefing
The ISR Employee Engagement Report
• This study is one of the most extensive of its kind and includes opinion survey data gathered from over 664,000 employees from over 50 companies around the world. • The findings represent employee opinion across industries, countries and company size. • ISR has found clear links between employee engagement and business performance.
ISR study reveals the bottom line impact of employee engagement
Many business leaders already believe that employee engagement makes a crucial contribution to good business performance. Previous ISR research found that companies with highly engaged employees have lower staff turnover rates, lower absenteeism, higher customer satisfaction and loyalty, fewer safety incidents, higher quality and more efficient production, as well as enhanced sales performance. ISR’s latest research reveals the difference an engaged workforce can make to the financial performance of an organization. ISR compared the financial performance of organizations with a highly engaged workforce to their peers with a less engaged workforce, over a 12 month period.
Some of the research findings are striking:
40
Impact of Employee Engagement on Financial Performance
30 20
• The most dramatic result is seen when evaluating changes in operating
27.8 19.2 13.7
Percent
income. In the group of companies with high levels of employee income
10 0 -10 -20
-3.8 -11.2
engagement,
operating
improved by 19.2 percent over 12 months, while in companies with low levels of engagement it declined by 32.7 percent.
-30 -40
-32.7 12-Month Net 12-Month Change in Income Growth Rate Operating Income 12-Month EPS Growth Rate
High Employee Engagement
Low Employee Engagement
ISR Research, 2006
• Over the same period, the group of
companies with highly engaged employees saw a 13.7 percent improvement in net income growth rate and those with less engaged employees saw a 3.8 percent decline.
• The group of companies with highly engaged employees saw EPS (earnings per share) rise by 27.8 percent and companies with low levels of employee engagement saw EPS decline by 11.2 percent.
What is employee engagement?
Employee engagement is the extent to which employees are committed to, believe in and support the company’s values, feel pride in working for their employer, and are motivated to go the extra mile. In other words, how do they “think”, “feel” and “act” with regard to their employer? ISR’s engagement model, has been widely adopted by many of the world’s high performing organizations to help them understand and communicate the importance of employee engagement.
Think Engagement
Feel
Act
The ISR employee engagement model
ISR’s engagement model has three components – Think, Feel and Act - and the research investigated the links between each of these components and financial performance. ISR found significant correlations between each of the components of engagement and financial performance. Yet, the research suggests, the ‘Think’ component has the strongest relationship to the financial performance metrics. In fact, the study found two interlinked factors most frequently influenced improvements in financial metrics; one is the degree to which employees support their company’s goals and the other is how closely aligned employees’ personal goals are to their company's values. Both factors together form the ‘Think’ aspect of engagement. This finding underlines the need to appeal to the head as well as the heart when seeking to engage employees. Moreover, it has important implications for how organizations formulate and implement strategies aimed at improving engagement.
What you can do to improve employee engagement
• Define employee engagement. Ensure managers have a clear and consistent understanding of what engagement means and use this as the basis for measuring engagement. • Build Networks. Draw on resources and expertise from a variety of internal sources to enhance engagement. Internal communications teams need to work alongside HR to win the hearts and minds of employees. All initiatives to improve engagement need to be reinforced by the words and behaviors of your senior management. • Review recruitment criteria. Judge the degree to which your organization actively assesses support for the company’s vision, values and strategy among its potential new hires. • See supervisors as ambassadors. Don’t underestimate the role of immediate supervisors in enhancing employee engagement. However, this is not only about how supervisors manage, motivate and develop their teams, but also about how they relay ‘corporate’ messages and whether they align their own objectives and actions with the overall vision and goals of the organization. • Measure and hold accountable. Regularly measure employee engagement through your employee survey; report the results to management and staff, develop and implement action plans. ISR is a global employee research and consulting firm. Founded in 1974, ISR designs and implements employee and management surveys. ISR has surveyed over 35 million employees for more than 3,000 companies in 106 countries. For more information, contact ISR at www.isrinsight.com
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