2. CONTENTS
INTRODUCTION >3
KEY FINDINGS >4
ENGAGEMENT CAPABILITY EXPLAINED >5
REPORT FINDINGS IN DETAIL >6
• Employee Engagement – Measured Up >6
• What do highly capable and highly engaged organisations have in common? >7
• The more capable the better >8
• Where are the skills gaps in capability? >9
• The most popular activities for driving engagement > 10
• Employee Engagement Spend > 11
• What do organisations with 80%+ engagement scores do differently? > 11
• Invest in developing people > 12
• Measuring the ROI on employee engagement spend > 12
• What do companies that don’t measure engagement do? > 13
CONCLUSION > 14
APPENDIX > 16
• The 20 Core Capabilities Descriptions > 16
• About Us > 17
• Research Methodology > 17
• Contact Us > 18
Employee Engagement Capability Report 2011 2
4. KEY FINDINGS
• Get back to basics with culture and a purpose
Organisations with a highly engaged workforce have the
highest capability scores around Culture and Purpose.
Employees are seeking more meaning in their work and a
greater sense of purpose. This is the number one area
where the greatest capability skills gap exists for
organisations with an average engagement score.
• Capture their hearts and minds
Highly engaged companies strike a balance between
commercial and cultural aspects of business as
demonstrated by the top 5 capabilities that those
companies are most committed to – Culture, KPI’s,
Commercial Vision, Purpose, Reward & Recognition.
They include Purpose and Culture on the one side and
Commercial Vision and KPIs on the other hand with a
Reward and Recognition Program to support both. When
both the culture and the commercial aspects are aligned
it’s a lot more compelling for an employee to stay with the
organisation for longer and to deliver high levels of discretionary effort.
• The more capable the better
Organisations with an engagement score of more than 80% are 30% more capable than those with
average levels of engagement. So the higher the capability the greater cut through, meaning and
effectiveness the engagement activity has.
• Align Reward and Recognition to the organisation’s purpose
Organisations with Reward and Recognition programs that acknowledge their people around Purpose and
other cultural behaviours are 3 times more effective in increasing employee engagement.
• The capability multiplier
If an organisation can increase its capability from below 50% to above 70%, the chances of achieving of an
80%+ Engagement score increases by a factor of 11.
• Developing people
Highly engaged organisations are twice as likely to use a coaching program in their employee engagement
spend than companies with low engagement levels. When combined with other Training and
Development activity it results in delivering 22% higher capability and a significant positive shift in
employee engagement.
• The most effective engagement activities are…
In order they are Training & Development, Non-cash Rewards & Incentives, Internal Communications
and Flexible Working arrangements.
• Everyone wants a buddy
Don’t forget the social personal touch. Buddy Programs to support induction processes along with social
clubs are twice as likely to be in organisations with an Engagement score of 80%+ as they are in the group
scoring 40-60%.
• It’s not just about how much you spend
Whilst some spend $3,000 and more per head, most highly engaged companies spend less than $1000 per
head on engaging their staff.
Employee Engagement Capability Report 2011 4
6. THE 20 CORE ORGANISATIONAL CAPABILITIES
Managing Capacity and
Purpose, Intent, Cause Coaching On Boarding
Workload
Functional Structure/ Performance
Culture Managing Expectations
Resource Allocation Management
Commercial Vision KPI Work Life Balance Developing People
Rewards and Compensation and
Innovation Decision Making
Recognition Program Benefits
Brand Energy Communication Recruitment Effective Meetings
SEE APPENDIX FOR FULL DESCRIPTIONS
Therefore, organisations with a low score rate themselves as least capable and those with a high score rate
themselves as most capable. If an organisation scores themselves a 5 out of 5 on all 20 capabilities, they have
reached the maximum of 100 points which means they have absolute mastery of each of the 20 capabilities.
Mastery of a certain skill or capability requires high levels of commitment and according to the Corporate
Leadership Council employees try harder when they believe the senior executive team has committed to them.
We believe that engagement capability is at the source of what drives engagement.
Understanding the specific capabilities and the level of depth that drive the highest levels of engagement will allow
all organisations regardless of score or indeed those that do not yet measure engagement the opportunity to
improve their reality, proactively.
REPORT FINDINGS IN DETAIL
Employee Engagement – Measured Up
Of the 327 organisations in the study only 48% measure Engagement and
of this group nine out of ten have a formal process in place. When using a
It’s one thing to measure
formal process 50% of organisations engage external consultants, with
Hewitt, Gallup and Towers Watson being the most commonly used. Of engagement, but it’s crucial
those organisations that measure Engagement 65% do so at least annually. that the weak points are
acted on to show
Many of our respondents cited informal measures of engagement as
employees they are heard.
important in driving their overall understanding and awareness on the
issue. These included team meetings, monthly checklists, reviews, out-of-
office functions, retention statistics and ‘catch-ups’ or huddles.
Out of the organisations who currently don’t measure 61% say they will measure it in the next 12 months.
The bigger the company, the more likely to measure engagement.
Employee Engagement is currently measured by 57% of all organisations with 1000+ employees, 42% of all
organisations with 51-250 staff and 35% of organisations with 250-1000 staff. Companies with less than 50 staff
are less likely to measure employee engagement with only 10% with less than 10 staff currently measuring it.
This is reflected in the reasons given as to why they don’t measure. 22% say they feel that they are too small to
measure it. Only 5% of organisations don’t know why it would be useful to measure it. 21% say they don’t know
how to measure it or they are not aware of the right tools to do it. 10% say either they don’t have enough time or
money or resources to do it. Whilst for others it seems to be a lack of priority or support by management that
stops employee engagement being measured.
Employee Engagement Capability Report 2011 6
8. There are a couple of different ways to look at what sets highly engaged companies apart. One is to look at what
capabilities they have invested most in and have built the most depth around, the second is to look at where there
are the biggest skill gaps that differentiate them. But first let’s look at the depth of capability they have built.
There are 7 Capabilities that stand out as they all scored an average close to or above 4 out of 5. This means that
for each one of these capabilities highly engaged companies have actively engaged managers who have
implemented, live and breathe these capabilities and mentor others to skill them up.
A lot of the big picture capabilities rank very highly for 80%+ companies. Culture for instance is the capability they
have focussed on the most with Commercial Vision and Purpose ranking 3 and 4. Culture in those companies is
not just a few words on a piece of paper, the values are not just pictures in the foyer and can not only be
expressed they are actively lived and managed in the organisation.
The Corporate Leadership Council suggests that emotional commitment is four times as effective in driving
discretionary effort and it is therefore not surprising that Culture features so highly.
Highly engaged companies also have clear Key Performance Indicators in place. The fact that they attract an
average score of 4 would mean that the KPIs are implemented and actively managed, which would indicate a high
level of accountability in the organisation.
Reward and Recognition also scores close to a 4 on average. We know that a highly evolved and effective Reward
and Recognition program acknowledges values driven behaviour, not just outcomes and performance. To achieve
a score of 4 for Reward and Recognition we would also expect to see the autonomy for acknowledgment devolved
to at least a Team Leader level and peer nomination featuring heavily in the mix. The program activity would be
regularly communicated and there would be evidence of informal acknowledgement at all levels in the
organisation.
The more capable the better
In 2009 AON Hewitt found the average engagement score in Australian organisations was 55% with the average
amongst the AON Hewitt Best Employer group being 80%. Our research clearly shows that there is a direct
relationship between the Capabilities defined by our survey and Engagement, and the higher the Capability the
higher Employee Engagement score.
AVERAGE ENGAGEMENT SCORE AVERAGE CAPABILITY SCORE
80%+ 72%
61-80% 64%
41-60% 56%
<40% 55%
Don’t measure 55%
Organisations with 80%+ Engagement scores have a 15% higher capability than companies with engagement
scores of 60-80% and a 30% better capability than organisations with engagement scores of between 40-60%.
Having a 30% higher capability essentially indicates that highly engaged organisations have driven each capability
one or two layers deeper to a point where the capability is fully implemented and where the manager is now
mentoring and influencing others in the business in regards to the capability when other companies haven’t
started the implementation yet.
For those that do not measure engagement it is useful to know where they stand in comparison against the 80%+
organisations. What we are able to determine is that their Engagement score will with a very high likelihood be in
the 40-60% range as they have similar levels of capability.
Employee Engagement Capability Report 2011 8
10. Managing Capacity and Workload is the second Percentage of organisations achieving
biggest difference with three times as many capability scores of 4 or 5:
highly engaged companies driving this capability
to 4 or 5, even though only 44% of highly
CAPABILITIES 80%+ 60-80% DIFFERENCE
engaged companies actually fall into this
category themselves. Purpose, Intent & Cause 76% 18% 322%
Managing Capacity &
44% 14% 214%
Reward and Recognition features high on the list Workload
of differentiated capabilities between the highly Reward and Recognition 72% 29% 148%
engaged and average organisations too. Whilst a Effective Meetings 59% 25% 136%
program of some description is matter of fact Culture 83% 36% 131%
for most organisations the depth and Communication 66% 29% 128%
sophistication of the program and its success or
Functional Structure 45% 21% 114%
otherwise is, from the data, a deciding factor for
Decision Making 72% 36% 100%
engagement.
The most popular activities for driving engagement
We are able to conclude from the results that the most common Engagement activities for any organisation are as
follows:
1. Training & Development Program
2. Non-cash Rewards & Incentives
3. Flexible Working arrangements and associated resources
4. Recognition Programs
5. Internal Communications
But again it seems that some of the most popular items to spend on are not necessarily the ones that make the
biggest difference from an engagement score point of view. Training programs for instance are used by 89% of
companies with 80%+ engagement scores and by 91% of companies with engagement scores of 40-60%.
DON’T
ENGAGEMENT ACTIVITES USED 80%+ 60-80% 40-60%
MEASURE
Training & Development Program 89% 83% 91% 78%
Non-cash Rewards & Incentives 86% 79% 62% 59%
Flexible Working arrangements and associated resources 83% 74% 71% 56%
Recognition Programs 80% 72% 79% 56%
Internal Communication 80% 79% 68% 52%
Company lunches, Nights out etc… 71% 66% 47% 58%
Health and Welfare Program 63% 49% 55% 31%
Coaching Programs 60% 30% 26% 37%
Social Club 57% 45% 32% 25%
Buddy Program 40% 17% 24% 17%
Time off for Volunteering 37% 34% 32% 27%
Leadership Roadshows or information sessions 34% 43% 41% 20%
Employee Engagement Capability Report 2011 10
12. Even when comparing what highly engaged organisations spend with companies who don’t measure engagement
we can see a similar trend. Buddy Programs, Social Clubs and Health and Welfare programs are used by more than
twice as many times by highly engaged organisations.
Invest in developing people
Interestingly companies that include a coaching program in their mix
have 18% higher engagement scores than those that do not. Couple a
coaching program to company lunches and nights out and the average Highly engaged organisations
capability increases by 31%. are twice as likely to use a
coaching program
The survey results reveal that once an organisation has defined its
Engagement activities, it can, by increasing capability and channelling
budget and effort into particular areas where the best score highly,
achieve significant increases in levels of engagement in the medium term.
For example, Training & Development is consistently used by close to 90% of respondents yet there does not seem
to be a big impact on what the engagement level is, they are spread evenly across the different engagement score
groups.
There is an impact on the engagement capability when we add a Coaching Program to the Training & Development
program. Companies who invest in both of these initiatives achieve a capability score of 70%+ which is a 22%
higher capability than companies who only have Training & Development in their mix.
When analysing the impact on the engagement scores we can see that 80% of response shifts a whole category up
in terms of engagement scores when coaching is added to a training program. In other words when training only is
in the mix 80% of respondents have an engagement score of 40-80%. When we add a coaching program 80% of
respondents score 60-100% engagement scores.
ENGAGEMENT ACTIVITY 80%+ 60-80% 40-60%
Training only 18% 43% 37%
Training plus Coaching 48% 31% 21%
Apart from the positive impact on the Engagement Scores this combination also lifts capability by 22%, and all
companies who had both training & development and coaching programs in their spend mix had an average
overall capability score of 70%. This is not unsurprising as Training typically focuses on educating which relates to
layers of depth 1 and 2, whereas coaching and then mentoring drives further depth by going up to 5 if required.
Measuring the ROI on employee engagement spend
Only 65% of our respondents measure the ROI that they get
from their investment in Engagement. METHOD %
Survey Results 34%
34% of respondents use surveys to measure their ROI
capturing a likely increase in the engagement score. What is Attrition 22%
interesting to note is that in terms of our understanding of a Retention 19%
highly engaged employee as being someone that applies high
levels of discretionary effort and has a high intent to stay with Productivity 18%
their existing employer not one of the respondents uses their
Turnover 15%
employees’ ‘intention to stay measure’ as means to
demonstrate a return on their engagement spend. Employee Engagement Scores 14%
Profitability 14%
The second observation is that only 1 in 10 organisation who
invest in employee engagement have a commercial measure
such as profitability, increase of turnover, or productivity in
place to track the success of their spend.
Employee Engagement Capability Report 2011 12
14. CONCLUSION
Employee Engagement is becoming more of a priority for businesses. A full recovery in the
economy will create more jobs and opportunities for capable employees. The more engaged
employees are the less likely they are to switch. If they don’t switch they are able to retain
capability, they have spent years building in the business, which is a competitive advantage that
will allow those businesses with highly engaged employees to pick up significant market share
in the years to come.
For SME’s there is the additional challenge of Succession. A large number of business owners want to exit their
businesses in the next five years and they need engaged employees and successors capable to continue to engage
them to be able to do that successfully. For larger organisations where a merger, floatation or sale may be on the
horizon a highly engaged workforce will be a significant contributor to overall value.
More than half of the organisations currently not measuring will do so in the next 12 months. The fact that
companies who don’t measure have the same capability as companies with average to low engagement scores
needs to be a wake-up call for any business currently not measuring.
All organisations, regardless of Engagement score, share some similarities in the
nature of the activities they undertake to drive it. If we conclude that these
commonalties have become the expectation of most employees and therefore will The deeper the skills
have limited application to shift upwards to the ‘best employer’ territory of 80%
the higher the
and above, we are then able to start looking at what it is that the ‘best’ do different.
commitment and the
What we find is that organisations achieving an 80%+ Engagement score are higher the commitment
investing in the softer activities that create opportunities for the development of of the leadership group,
social connection and informal learning.
the more engaged and
Employee Engagement is a complex topic – no one measure is more effective than committed employees
another in isolation. It is always a combination of different initiatives that lead to a are.
result. But what is clear is that the same mix can be a lot more effective when
supported by the right level of commitment and depth of capability.
Reward and Recognition programs for instance achieve a lot better results if the organisation is highly capable and
committed to purpose and culture. The deeper the skills the higher the commitment and the higher the
commitment of the leadership group, the more engaged and committed employees are.
Highly engaged companies strike a great balance between commercial and cultural aspects of business as
demonstrated by the top 5 capabilities that those companies are most committed to. They include Purpose and
Culture on the one side and Commercial Vision and KPIs on the other hand with a Reward and Recognition
Program to support both. This finding seems to confirm what the Corporate Leadership Council reports in regards
to actively engaged employees being emotionally and rationally committed to an organisation. When both the
culture and the commercial aspects are aligned, it’s a lot more compelling for an employee to stay with the
organisation for longer and to deliver high levels of discretionary effort.
Once the Capability has been assessed a strategy and implementation plan needs to be designed that outlines,
which areas the organisation needs to get more committed to and build more depth in, and how it is going to
deliver this. Highly engaged companies use a combination of training & development and coaching programs to
drive depth as this mix is more effective than using a training & development on its own.
Like any strategic change it will take some time for those changes or the increased capability to take effect, be felt
in the organisation and show the commercial result. If a survey is completed simply to say “we’ve done it” but
management doesn’t care about the result and no implementation plan follows, then results won’t change and
employee engagement as a topic will lose its relevance and priority.
Employee Engagement Capability Report 2011 14
16. APPENDIX
The 20 Core Capabilities Descriptions
Why we do what we do – the business has a clear purpose beyond making
Purpose, Intent, Cause
money that all employees can engage with.
What is important to the people in the business and what guides their
Culture
behaviour - capability to express the culture, manage it and bring it alive
Describes the 3-5 year vision of the organisation. Understanding the key
Commercial Vision
drivers that build equity value of the business
Innovation Ability of the organisation to innovate
The perception and reputation of the organisation and the people in it
Brand Energy
that attracts clients and staff alike
Planning and managing workload and growth of the capacity of the team,
Managing Capacity and Workload
the division, the organisation in accordance with the risk profile
Organisational structure that is functional, provides clear roles and
responsibilities and leverages the current resources for maximum
Functional Structure/ Resource Allocation
profitability. The business has the right resources and right systems and
processes.
Defining and managing meaningful KPIs that help drive the vision and
KPI
strategy of the organisation - clear accountability
A program that reinforces chosen values and behaviours as well as
Rewards and Recognition Program
commercial KPIs
Ability to communicate effectively with anyone in the business, effective
Communication
meetings and communication structures
Ability to deliver learning’s through coaching to bring out the best in
Coaching
people
Setting, managing and resetting expectations proactively to maintain high
Managing Expectations
standards
Understanding what work life balance means in the organisation and how
Work Life Balance
it can be achieved
Compensation and Benefits Fair, transparent remuneration packages
Based on values, attitudes and behaviour first and skills and experience
Recruitment
second to create an aligned culture
Providing clarity and connection for new employees and raise awareness
On Boarding
re the importance of their role in relation to the vision
Proactive performance management and ability to have hard
Performance Management
conversations
Growth Opportunities for staff, Personalised Development plans and
Developing People
managers giving opportunities to staff
Effective and timely decision making in alignment with the agreed
Decision Making
direction of the business
Ability to run effective, time efficient and relevant meetings where
Effective Meetings
everyone has their agenda addressed and clear actions are driven
Employee Engagement Capability Report 2011 16
