Unlocking Employee Potential by "Closing the Engagement Gap" is Now More Critical Than Ever

STAMFORD, CT, January 5, 2009 — With virtually all businesses facing significant economic challenge today, pressure is mounting to reduce costs and improve financial results while maintaining or increasing productivity across the board.  So how do leaders keep employees focused and productive in these uncertain times?  According to a new book released today by Towers Perrin executives Julie Gebauer and Don Lowman, the answer lies in building and sustaining an "engaging" work environment that consistently inspires people to devote the time, skill and effort necessary to keep their organization delivering bottom-line results.

In Closing the Engagement Gap — How Great Companies Unlock Employee Potential for Superior Results, authors Gebauer and Lowman highlight the "Engaging Eight" — eight companies that have developed the right combination of leadership focus, management style and culture to drive high engagement.  While the Eight differ in many respects, they are united by their recognition that engagement is a way of life and operating style, not a program or "initiative du jour."  And through the stories and examples they share with the book's authors, the qualities of an engaging environment come clearly into focus.  The companies featured include Campbell Soup Company, EMC Corporation, Honeywell International, McKesson Corporation, MGM Grand Hotel and Casino, North Shore-Long Island Jewish Health System, Novartis AG and Recreational Equipment Inc. (REI). 

"We consistently found that organizations and managers get the best from employees when they do five things well: know them, grow them, inspire them, involve them and reward them," said Gebauer. "When these five principles are at the core of the work experience, there's no doubt that employees consistently give value-adding discretionary effort — and that directly impacts the organization's financial results."

Several Towers Perrin studies have highlighted the correlation between employee engagement and business outcomes.  In a study of 50 companies over a one-year period, those organizations with high employee engagement had a 19% increase in operating income and an almost 28% growth in earnings per share.  Conversely, companies with low levels of engagement saw operating income drop more than 32% and earnings per share decline 11%.  In a similar study of 40 global organizations over a longer time frame, there was a spread of more than five percentage points in operating margin and more than three percentage points in net profit margin between those companies with high engagement and those with low engagement.

In addition to identifying best practices at some of the most engaging companies around the world, the book also calls out serious missteps leaders and managers should avoid.

"When considering the factors critical to profitability and success, particularly in the current economic climate, organizations often make employees the 'forgotten stakeholder,'" said Lowman. "To capitalize effectively on the potential innovation and productivity of a workforce, organizations must put their employees under the same microscope and hold them in the same esteem as they do their customers. Leaders must take the time to learn what unlocks their employees’ discretionary effort and desire to contribute.  This requires a level of insight into the workforce that is deeper and more comprehensive than is common today.  And it requires a consistent focus on helping people expand and hone their skills, stretch into new areas, have the freedom to make their own decisions and forge an emotional connection to their employer and their work.  In the words of one of the Engaging Eight’s top executives: 'Give people a place to make a difference, and it’s amazing what they can get done.'"

The newly released book, Closing the Engagement Gap, is available online and at major bookstores for a suggested price of $25.95.  Additional information about Closing the Engagement Gap is available at http://www.ClosingTheEngagementGap.com.  To join ongoing discussion about topics from the book, please visit the Towers Perrin blog http://engagementgapblog.com.

About the Authors

Julie Gebauer leads Towers Perrin's global Workforce Effectiveness practice and the global Towers Perrin-ISR research practice.  She is a member of the firm's Human Capital Group (HCG) Operations Council, the leadership body for the HCG business segment.  She consults on a broad range of HR issues, including workforce analytics, HR strategy, talent management and total rewards.  Ms. Gebauer received a B.S. in mathematics from the University of Nebraska.  She is an Enrolled Actuary and a Fellow of the Society of Actuaries.  She was inducted into the YWCA’s Academy of Women Achievers in 1998. 

Don Lowman is Managing Director of Strategic Growth for HR Services and is located in the Stamford, Connecticut office.  He is a member of the Firm's Executive Council and Board of Directors.  In addition to his leadership role, he consults with large multinational companies in the areas of executive compensation, total rewards strategy and performance management.  Mr. Lowman received a B.A. in English from Randolph-Macon College and an M.B.A. in Finance from the College of William and Mary in Virginia.

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 and New Zealand.