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					                                                                                                   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
                                                                      Impact of Employee Engagement
findings are striking:                                                   on Financial Performance
                                                              40
• The most dramatic result is seen when                       30                                            27.8
                                                                       19.2
  evaluating    changes    in   operating                     20                          13.7
  income. In the group of companies                           10
                                                    Percent




                                                               0
  with   high     levels   of   employee
                                                              -10                                -3.8
  engagement,       operating    income                                                                            -11.2
                                                              -20
  improved by 19.2 percent over 12
                                                              -30
  months, while in companies with low                                         -32.7
                                                              -40
                                                                    12-Month Change in    12-Month Net      12-Month EPS
  levels of engagement it declined by                                Operating Income  Income Growth Rate    Growth Rate
  32.7 percent.
                                                                    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
                                                                                        Think                         Feel
          values, feel pride in working for their employer, and are
          motivated to go the extra mile. In other words, how do                                  Engagement
          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
                                                                                                        Act
          organizations to help them understand and communicate
          the importance of employee engagement.




      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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