A totally rewarded and engaged workforce? By Duncan Brown, Aon Hewitt

'Pensions' strikes'; 'National strike involving quarter of workforce'; 'Industrial action threat': last week's headlines made gloomy reading for those of us in HR. The final dinosaur flourish of a bygone era of union-dominated industry, or the start of a decade of low growth, employee relations conflict and staff dis-engagement?

I have spent the week deep in data from the annual review which Aon Hewitt carries out of all the employee engagement survey information we hold for clients (Trends in Global Employee Engagement, 2011). This covers around 5,000 employers encompassing more than six million employees globally, so it provides a pretty good snapshot of just how engaged employees are at the moment.

And you will not be surprised that, overall, the data is not pretty. Just as employers are facing a 'cost/talent' crunch of rising pay costs which they can't pass onto their customers, amidst growing concerns about retaining their best people; so employees are being squeezed by prices outpacing wage inflation and reductions in the value of their benefits.

As a result, globally in the first six months of this year average levels of engagement in these organisations fell by 7% on the prior year, with the biggest decline of 10% evident amongst employees in Europe. This was evident at all levels or the workforce and fell most significantly at executive/senior manager level. In respect of the factors driving engagement levels, pay has moved up the league table as living standards have been falling, to fourth place in Europe, but the most important factors driving engagement scores remain career opportunities, recognition and a positive employer brand.

Given that our employers with high engagement scores have achieved total shareholder returns 22% higher than the average over the past 12 months, company boards need to be reviewing and reacting to this data. Some of the most important actions emerging from our research are as follows:

• get into your own data to identify what is driving engagement in your firm. A third of our clients actually managed to improve engagement over the last 12 months, so improvement is possible, however bad the economic climate;
• segment your data to look at variations across your employee population which will allow you to really focus your actions. We have found in a number of clients for example that their top talent population have a different engagement profile to other employees and so you need to have the reward tools and flexibility to address varied needs;
• making a reality of the total rewards rhetoric and really creating and communicating a joined-up message on the financial and non-financial rewards that your organisation offers and explaining why people have a future and should want to commit to high performance with you;
• engaging line managers much more actively in the process of building that rewarding workplace for far more of your employees.

It’s tough out there, with increasing economic pressures on employers and employees in many cases. But there are enough examples of firms making the high engagement/high performance connection to demonstrate that the reward manager's job is not just about designing pay and benefits programmes, but building high performance through employee engagement.

View the latest Employee Outlook survey report