Despite the experts’ claim that the economy is on the rebound, employees’ engagement and morale is not on the upswing. Rather, the percentage of organizations with falling engagement scores tripled in two years, with the most significant dips occurring this year, finds a new survey.

According to Hewitt Associates, at the end of June 2010 quarter, almost half of organizations around the world experienced the largest decline in employee engagement since the consulting firm began conducting such research 15 years ago.

The studies enlisted 900 organizations globally that conducted annual engagement studies, covering such topics as employee morale, confidence in the organization, career opportunities, rewards and recognition programs, and trust in leadership.

Over the years, Hewitt observed that about half of companies improved their engagement levels in a one-to-two year period, while only 15% had experienced a decline.

However, in the past two years, the percentage of organizations with declining engagement has been steadily increasing. In the quarter ending June 2010, 46% of organizations saw a decline in engagement levels, while just 30% saw an improvement.

Understandably, Hewitt’s analysis suggests a solid link between employee engagement levels and financial performance. Organizations with high levels of engagement (where 65% or more employees are engaged) outperformed the total stock market index even in disruptive economic conditions.

During 2009, total shareholder return for these companies was 19% higher than the average total shareholder return. On the other hand, companies with low engagement (where less than 40% of employees are engaged) had a total shareholder return that was 44% lower than the average.

How to improve employee engagement

Hewitt has compiled the following steps on how to strengthen employee engagement scores and uplift morale.

• Focus on the long term. Even though organizations who had high engagement levels struggled through the recession by cutting costs, benefits, and staff, they made changes consistent with their principles and values and without losing sight of their overall goals.
• Obtain buy-in from leadership. In companies with successful engagement, leaders perceive employee engagement as a top priority. Leaders are visible and transparent by providing updates to reduce employee uncertainty and stress. They also create excitement among workers about the future of the organization (82% compared to 51% at other companies).
• Implement measureable actions. Organizations that use employee information as a call to action rather than an assessment succeed. They define specific and measureable actions and take steps in areas where the organization will see a clear impact.
• Involve all stakeholders. The organization (leadership, policies, and program), managers, and employees all are integral parts to a “high engagement” environment. Communication is omnipresent in order to ensure that everyone is on the same page as to what their role is in the process and on the employment proposition.
• Understand key employee segments. Employers who focus on key segments and critical talent are able to engage or re-engage them once the job market improves.
• Utilize a broader array of information and analytics. Hewitt’s analysis shows that 34% of organizations help employees through the on-boarding process to minimize the dip in engagement most organizations witness in the first year of employment. In addition, almost three quarters conduct exit surveys to understand why employees are leaving and proactively identify potential hot spots.

“Understanding what drives employee behavior—in good times and in bad—is critical to business success,” says Ted Marusarz, leader of global engagement and culture at Hewitt. “All organizations face similar pressures. Companies that are successful at improving engagement in spite of these pressures are the ones that create an environment focused on key human capital elements. They may make adjustments to their engagement strategies, but they don’t lose sight of their overall goals,” he adds.  

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