New Towers Perrin Data Show Mixed Results on Key Workforce Indicators that Can Impact Performance Over Time

TORONTO, ON, June 2, 2009 -- As the global recession wears on, employees are feeling increasing stress in the workplace that, if left unchecked, could impact business performance, according to Towers Perrin’s Workplace Watch, a newly launched quarterly look at employee opinions across a set of large global organizations. Based on opinions of more than 650,000 employees, Towers Perrin found that only 55% of workers agree they can balance work and personal responsibilities, down from 62% just one quarter earlier. On the other hand, employee engagement -- a key indicator of organization performance -- has held steady through the first quarter of this year.

While the global engagement gap that Towers Perrin has measured and tracked for more than a decade remains, the current crisis has not, surprisingly, widened that gap. Contributing to this outcome is the fact that employees are actually clearer about their job responsibilities and have more confidence in their long-term career opportunities now than a year ago.

But the data also confirm a drop in employees’ understanding of their company’s goals and long-term direction, as well as in their positive perceptions of leadership’s overall effectiveness -- both of which could signal the beginning of a downturn in engagement levels as this year progresses.

The inaugural Workplace Watch compares updated data for the first quarter of 2009 with the five preceding quarters to evaluate how the economic downturn is affecting employees’ attitudes about work and levels of engagement. The first quarter 2009 data cover more than 650,000 employees working in a variety of organizations worldwide.

During the first quarter of 2009, favourable scores rose slightly on a range of items relating to organizational efficiency, communication, company reputation and frontline supervisors, all of which contribute to positive engagement. Almost three-quarters (74%) of employees agree their company’s structure facilitates efficient operations, up from 66% in the last quarter of 2008 and 58% in the first quarter of 2008, suggesting the latest rounds of restructuring have been done thoughtfully and in a manner that doesn’t automatically demand doing more with less. At the same time, 91% understand how their work helps the company achieve its immediate objectives, a view that has held fairly steady over the six quarters studied. Over two-thirds (68%) feel their company offers long-term career opportunities for them, up from 60% at the beginning of 2008. And 77% agree their company is highly regarded by customers, up from 73% the prior year as well, suggesting employees recognize the efforts their companies are making to connect with the marketplace in this tough economy.

“These results show that many employees ‘get it’ in terms of what the company has to do in the short term to weather the economic downturn,” said Dan McCauley, Principal, Towers Perrin. “They understand that the recession has required sacrifices, and they’re willing to do what’s needed to help their employer succeed -- in part because they want to ensure their own continued employment. The fact that companies don’t yet face a growing gap in engagement is welcome news, particularly given the strong relationship between high engagement and high performance.

“That said, even the existing gap remains troubling since an ‘all hands on deck’ mindset is essential right now,” McCauley continued. “Complacency about current engagement levels opens a company to significant risk that it will fall behind competitors, both in performance and talent retention, as the economy starts to rebound and it shifts to more of a growth mode.”

Not surprisingly, the data also confirm that fewer people are looking to change jobs right now. Seventy-one percent agree they’re not seriously considering leaving their current job, up from 64% in the last quarter of 2007.

“While our data confirm people are less inclined to switch jobs right now, it’s important to turn those statistics around and remember that 29% of employees are still open to moving elsewhere,” McCauley noted. “If engagement doesn’t improve before the upturn begins and the job market opens up again, these individuals could be the first ones out the door. With almost one in three people contributing to ‘latent turnover,’ this is another serious risk to rapid financial recovery and growth -- especially if future attrition includes ‘A’ players and people in critical strategic roles. Smart employers will want to get ahead of the upswing in the employment trend, so when it comes back fully, they’re not watching a revolving door of talent.”

Engagement Warning Signs

In other critical areas linked to engagement and performance, a less positive picture also sounds some warning bells. Favourable views about leadership -- the top driver of employee engagement -- are down in some key areas. Most notably, the percentage of employees agreeing top management provides a clear sense of direction dropped significantly, to 63% from 71% in the fourth quarter of 2008. The percentage of employees agreeing that top management provides effective leadership also declined this quarter -- to 50% from 56% at the end of 2008. In addition, only 69% of employees agree that they clearly understand their company’s broad goals, down a striking 10 percentage points from 79% in the fourth quarter of 2008.

“These trends are disconcerting and represent a wake-up call for leaders,” said Michel Tougas, Managing Principal, “especially since we didn’t start out with stellar marks on leadership in the first place. Positive perceptions of overall leadership effectiveness -- a critical driver of engagement -- are down. People need more from their senior leaders in terms of painting a clear picture of where the company is going and where they need to put their focus. While the results of our analysis indicate that leaders have stepped up to the challenge of communicating more and being more visible during this period of crisis, our findings also suggest leaders could be losing sight of the long-term vision and purpose that remains essential in encouraging and energizing the workforce.”

A Prescription for Sustaining Engagement

Insights from Workplace Watch data point to actions companies can take to ensure employees stay engaged and connected, particularly in the current environment. Tougas summed it up: “Companies need to focus on five things. One, getting leaders out front to talk with employees about the business environment and how the organization is responding as well as the long-term vision and what the organization stands for. Two, involving employees in efforts to manage costs to help them feel like active contributors. Three, communicating consistently and candidly about both short- and long-term objectives. Four, listening and gathering input from employees. And finally, promoting development opportunities so people can see a future for themselves worth working toward.”

About Towers Perrin

Towers Perrin is a global professional services firm that helps organizations improve performance through effective people, risk and financial management. The firm provides innovative solutions in the areas of human capital strategy, program design and management, and in the areas of risk and capital management, insurance and reinsurance intermediary services, and actuarial consulting. Towers Perrin has offices and alliance partners in the United States, Canada, Europe, Asia, Latin America, South Africa, Australia, New Zealand and the Middle East. More information about Towers Perrin is available at www.towersperrin.com.