Quantum Workplace - 2012 Employee Engagement Trends Report

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2012 Employee EngagementTrends Report

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22012 Employee Engagement Trends Report

WHAT DOES IT MEAN TO MAKE WORK AWESOME?An awesome workplace is one where people want to join, they want to perform well, and they want to tell everyone just how awesome their work is. As the ratio of people who fit this description increases, so too does the degree of awesomeness.

The desire to be awesome is universal. Both employers and employees share it. The human brain is wired with the desire to master tasks and to win. Awesome workplaces maintain environments where those inherent ambitions are unleashed. Awesomeness builds brands. It sustains success. It fuels the virtuous cycle between internal magnetism and external loyalty. The more magnetic your culture, the more clients love working with you. The more clients love working with you, the more magnetic your culture becomes.

CONTENTSWhat Does It Mean to Make Work Awesome?An Overview of the Best Places to Work Survey

Are Organizations Making Work Awesome?Today’s Workforce: Hostile or Engaged? The Link Between Business Performance and Employee EngagementIndustry Trends to Watch

What Does It Take to Make Work Awesome?Analysis of the Ten Areas of Engagement Analysis of the 37 Survey ItemsRecognition: What Do Employees Want?

Go Make Work Awesome

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Most important, making work awesome is the responsibility of every player on every team at every company, and it is critical to your success. The data consolidated in this trends report sheds light on two major themes, 1) Are organizations making work awesome? and 2) What does it take to make work awesome?

According to the findings of our recently completed survey of employees from nearly 5,000 organizations across the U.S., employee engagement trended up in 2011, but it is still below pre-recession numbers. In 2012, organizations need to stay focused on key areas to ensure engagement doesn’t slip back down.

This whitepaper will:

• Give an overview of how engaged today’s workforce is• Examine the economic recovery and its effect on engagement • Identify industries that need to pay careful attention to employee perceptions• Highlight where organizations are excelling and failing • Pinpoint specific areas that can make a big impact in 2012• Provide fresh research and insight on employee recognition



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Developed in 2003, the Best Places to Work survey contains 37 standard items that fall into ten areas of engagement. These 37 items were tested among 75 pilot items on one million employees. The 37 items making up today’s survey account for 99 percent of the variation in overall engagement found in the test group. Quantum Workplace validates the survey annually through Best Places to Work, gathering responses annually from nearly 5,000 organizations.

When evaluating what makes the most impact on engagement, we analyze two different levels:

An Overview of the Best Places to Work Survey

TeamworkManager effectivenessTrust in senior leadersTrust with coworkersRetentionAlignment with goalsFeeling valuedIndividual contributionJob satisfactionBenefits

Ten areas of engagement

37 individual survey items

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David is the brain behind Quantum Workplace’s trend report data. Our resident analyst, David is responsible for evaluating and presenting survey data to help clients make data-driven decisions. In addition, David leads discovery-based research projects, aggregating total client and Best Places to Work data to deliver reports on workplace trends. David holds a degree in political science from Nebraska Wesleyan University and a master’s in survey research from University of Nebraska. He formally worked for Nebraska Health and Human Services, the University of Nebraska, and the Department of Labor, followed by nearly ten years at Kenexa.

Meet David WeisserDirector of Research and Analytics



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Among the 37 survey items, six are what we call engagement anchors, and the other 31 are what we call engagement drivers. Engagement anchors are diagnostic. They measure what an organization’s employee engagement level is, but they do not provide insight on what action can be taken to improve engagement. These anchors are further divided into three categories: advocacy, discretionary effort, and intent to stay. This is Quantum Workplace’s model for successful employee engagement.

• Advocacy: Identifies the level at which employees serve as advocates for the organization

• Discretionary Effort: Identifies the level at which employees report spending their time to put forth extra effort to enhance the organization

• Intent to Stay: Identifies employees’ reported interest in staying at the organization

About Best Places to WorkBest Places to Work gives organizations the opportunity to compete to be recognized as a place where people simply love to work. Founded in 2004, Best Places to Work is the original contest created to honor companies where talent is valued and engaged. The contest is held annually in nearly 40 cities and garners participation from nearly 5,000 organizations.

Participation in Best Places to Work is free. Through the contest, organizations have the opportunity to purchase a customized survey, as well as detailed reporting on their employees’ feedback.

Interested in participating?Contact your local business journal or Quantum Workplace at [email protected] to find out if there’s a contest in your city.

DiscretionaryEffort

AdvocacyIntent to

StayEngagement

Unlike engagement anchors, engagement drivers are actionable. While all engagement drivers impact engagement anchors, and therefore the level of overall engagement, some drivers have more of an impact than others.

This analysis examines the data collected through Best Places to Work over the course of the past five years to provide insight on trends and what they mean for 2012. The report provides an overview of how engagement is trending in general, as well as an in-depth look at the individual areas and items examined in the survey. Armed with this information, you should be able to determine where to place your greatest efforts to improve engagement in 2012.



ARE ORGANIZATIONS MAKING WORK AWESOME?Today’s Workforce: Hostile or Engaged? In the past five years, employee engagement hit its lowest point in 2010 with only 66.7 percent of employees ranking as engaged. This increased to 67.1 percent in 2011, but is still significantly below the level of engagement found prior to the late-2008 recession. 2012 is a year to watch and a year for organizations to stay focused to ensure engagement continues to climb.

Is Engagement Really This High Nationwide? Maybe Not. Keep in mind this data is collected from employees whose organizations voluntarily participate in Quantum Workplace’s Best Places to Work survey. What kind of organization participates in Best Places to Work? Likely, an organization committed to employee engagement. Lucky for you, that means this analysis will give you insight to the best of the best. But keep in mind, organizations with incredibly low employee engagement probably do not opt to participate in an employee engagement survey, let alone an employer of choice contest. Since you’re reading this report, chances are your organization is committed to employee engagement, and this report gives you the opportunity to see how other like-minded organizations are trending as a whole.

67.1%

of employees ranked as engaged in 2011.

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In our analysis, employees responded to an engagement survey using a 6-point Likert scale. Based on an average of their answers, without factoring in skipped questions, they placed in one of four groups: Engaged, Contributing, Disengaged, and Hostile.

ENGAGEDAverage Score: 5-6Highly favorableAdvocatesIntend to stayLead with discretionary effort

CONTRIBUTINGAverage Score: 4-4.9Moderately favorableSomething holds them backOpportunity for increased performance

DISENGAGEDAverage Score: 3-3.9Indifferent Lack motivationAt-risk for retention

HOSTILEAverage Score: 1-2.9Negative Lack commitmentImpact productivity of others

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The chart on the right illustrates the distribution among the four employee profiles over the last five years.

Looking at how these engagement profiles have fluctuated, it is apparent that as you move from hostile to engaged, the amount of variance increases. For example, over the past five years, the highest level of hostile employees was 3.5 percent in 2010, and the lowest was 2.8 percent in 2009. This represents a .7 percentage point change, whereas the engaged profile experienced a 3.9 percentage point change during the past five years. Combining the middle profiles, contributing and disengaged, delivers a 3.5 percentage point change.

So what does this mean? An extremely negative perception is not likely to change. It is very difficult to change the minds of people whose minds are already made up. Also, keep in mind that perception of excellence is more likely to shift to the middle, even over something small or based on how someone is feeling that specific day. Organizations should spend their efforts on those who are still in the middle and haven’t made up their minds. This is where engagement strategies can have the most impact. Once you shift your middle-ground employees to engaged employees, it’ll be easier to bring those hostile employees around because you’ll have the rest of your employees on board to influence perception.

2.8%2.9%3.1% 3.5% 3.3%7.1%

22.5%

7.34%

22.44%

66.72%68.8%

22.0%

68.1%

22.4%

6.1%

20.2%

70.6%

2007 2008 2009 2010 2011

6.6% 6.4%

67.1%

ENGAGED

CONTRIBUTING

DISENGAGED

HOSTILE



Research has long shown that engaged employees lead to more successful companies. Engaged employees are more productive and deliver higher customer service, which results in greater financial success for their employers. As successful organizations grow, their employees enjoy new opportunities, and this, in turn, leads to even higher levels of engagement.

Economic Recovery and the Engagement Effect Looking back over the past five years, we can examine the impact that the recession had on employee engagement and what it means for 2012. In September of 2007, engagement became erratic and started to decline. In the next month, the Dow experienced a major sell-off. According to the U.S. National Bureau of Economic Research, December 2007 marked the beginning of the recession.

The Link Between Business Performance and Employee Engagement

Employee engagement continued to be somewhat erratic through the beginning of 2008 and experienced a steady rise between June and September, despite poor market performance and rising reports of layoffs. It is almost as though employees were holding out hope and remaining resilient despite obvious and significant market pressure on their organizations.

Then, starting in October of 2008, engagement began to decline, following the fall in the Dow, and reached its lowest point just after the Dow hit its recession low and reported layoffs were at their highest.

The erratic behavior of employee perceptions, leading up to the fall of the Dow, seemed to be prophetic, a sign of the incoming financial

crisis. As the Dow began to rise slowly in March of 2009 and reported layoffs began to decline, employee engagement shot up dramatically. Perhaps, as employees believed that the worst was behind them, they were quick to rebound and devote themselves to their companies.

Interestingly, since the low point of the recession, the correlation between DJIA performance and employee engagement has been more closely attuned than it was during the earlier part of the recession. This suggests that the workforce has a heightened awareness of changes in the market and how they impact their workplace. In 2011, both employee engagement and the DJIA rose. If past performance is any indicator, 2012 should be a great year.

2007

Engagement DJIA Mass Layoffs

2008 2009 2010 2011

71% Avg. Engagement Score

7,608.92 DJIA Close

2,913 Mass Layoffs



What Areas of Engagement Are Strongly Related to Stock Market Performance?While overall employee engagement has had a close correlation to market performance, not all areas measured in the Best Places to Work survey had a significant correlation over the past five years. As mentioned previously, the Best Places to Work survey items link back to ten areas of engagement:


areas of engagement

When analyzing how these areas track with market performance, trust in senior leaders, job satisfaction, and teamwork have the highest correlation. This means that employee perceptions in these three areas are highly likely to become more positive or negative as financial performance fluctuates. Conversely, employee perceptions on benefits are highly unlikely to change as stock market performance shifts.

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Industry Trends to Watch

The diverse industries surveyed in 2011 demonstrated great variance in employee engagement. A distinctive difference exists between the most highly engaged industries and the lowest. Organizations in industries experiencing low levels of engagement would be wise to look outside their industry peers and instead gain ideas from organizations in high-performing industries.

The following industries were represented in Best Places to Work:

The top performing industries had an average of 75 percent engaged employees, which is eight percentage points higher than the national average. The top performing industries were:

• Accommodation and Food Services• Construction• Real estate, rental, and leasing

Unfortunately, not all industries experience such a high level of engagement. On average, among the lowest performing industries, only half of surveyed employees ranked as engaged, and nearly one in five were disengaged or hostile. The lowest performing industries were:

• Educational services • Manufacturing• Arts, entertainment, and recreation

Accommodation and food servicesArts, entertainment, and recreationConstructionEducational services Finance and insuranceHealthcare and social assistanceManufacturingNonprofit

Other servicesReal estate, rental, and leasingProfessional servicesRetail tradeSoftware and information technologyUtilitiesWholesale trade

75% of employees were engaged in top performing industries.

Want to dig deeper into your industry’s engagement trends? Contact us for a free [email protected]



Looking at each engagement profile, we can examine the amount of differentiation among industries.

The amount of engaged employees ranged from as low as 52.5 percent in educational services to as high as 76.4 percent in accommodation and food services. This represents a 23.9 percent variance.

Contributing employees ranged from 16.1 percent in accommodation and food services to 30.5 percent in manufacturing, a 14.4 percent variance.

The amount of disengaged employees ranged from 3.8 percent in construction to 12.5 percent in educational services, an 8.7 percent variance.

Hostile employees ranged from 1.1 percent in construction to 7 percent in arts, entertainment and recreation, a 5.9 percent variance.

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ENGAGED EMPLOYEES76.4%

30.5%

12.5%

7%

52.5%

16.1%

3.8%

1.1%

CONTRIBUTING EMPLOYEES

DISENGAGED EMPLOYEES

HOSTILE EMPLOYEES

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Educational services

Accommodation and food services

Construction

Construction


Manufacturing


Arts, entertainment, and recreation



Our analysis also evaluated how perceptions changed in industries from 2010 to 2011. Some industries remained constant, while others became drastically more positive or negative. The chart below displays the findings. The outlook in industries on the left became drastically more positive. Industries in the middle remained constant, and outlook in industries on the right became drastically more negative.

Construction

Finance and Insurance

Other Services

Utilities

Not-for-profit

Real estate, rental, and leasing

Manufacturing

Wholesale trade

Retail trade

Arts, entertainment, and recreation

Agricultural, forestry, fishing, hunting



Management of companies and enterprises Professional, scientific, and technical services Healthcare and social assistance

Software and information technology

Public administration

Transportation and warehousing



WHAT DOES IT TAKE TO MAKE WORK AWESOME?Now that we’ve looked at how engagement is trending at a high level, let’s take a look at the individual areas contributing to engagement and discover where you can make the most impact.

Analysis of the Ten Areas of Engagement Employee perceptions in all ten areas have an impact on the level of their overall engagement. Naturally, some organizations rate higher in certain areas than in other areas. Our research shows that while all areas contribute to overall engagement, success in some areas may be a better indicator of a high level of success overall.


areas of engagement10Of the companies surveyed, 50 percent scored the highest on items related to trust with coworkers. However, this group of companies that did best in the area of trust in coworkers, did not necessarily do best overall. This group’s average engagement score was the lowest compared to other groups that succeeded in one of the other nine areas of engagement. Therefore, it can be concluded that trust with coworkers doesn’t have the strongest association with overall engagement.

The areas of engagement that had the strongest association with overall engagement were feeling valued,

teamwork, and trust in senior leaders. Yet, less than one percent of companies surveyed actually performed best in the areas of feeling valued and team effectiveness, and only one in five companies performed best in the area of trust in senior leaders. It is very likely that organizations performing well in the areas of feeling valued, team effectiveness, and trust in senior leaders will have a very high level of overall engagement.



Analysis of the 37 Survey ItemsWhen analyzing each of the 37 survey items, we examined which items rated the highest, how stable or volatile the items were from year to year across industries, and which engagement drivers had the biggest affect on overall engagement.

I am always thinking about ways to do my job better.

I know how I fit into the organization’s future plans.

I understand how my job helps the organization achieve success.

Considering the value I bring to the organization, I feel I am paid fairly.

I feel loyal to my immediate team or work group.

We have benefits not typically available at other organizations.

TOP THREE RATED ITEMS LOWEST RATED ITEMS

1 35

2 36

3 37



Stable vs. Volatile: Where You Can Affect ChangeComparing how these items were rated among industries in 2011 to 2010, it is apparent that some items are more stable than others. The least favorable items tend to have the least consistency in favorability at the industry level, meaning that they are more likely to change from year to year. Though an item may be rated highly, it could shift quickly, depending on your industry. The chart to the right illustrates which items, rated high and low, were the most stable and the most volatile from 2010 to 2011.

Organizations are less likely to be able to change perception of the items that have the most stability. Efforts to improve employee engagement should be placed on items that are more volatile. Perceptions of these items are more susceptible to change.

I am always thinking about ways to do my job better.

I understand how my job helps the organization achieve success.

I feel loyal to my immediate team or work group.

I have a close and trusting relationship with one or more coworkers.

Volatile Stable

Highly Rated

Lowly Rated

I believe this organization will be successful in the future.

My team effectively collaborates leveraging individual strengths.

My benefits meet my (and my family’s) needs well.

We have benefits not typically available at other organizations.

Considering the value I bring to the organization, I feel I am paid fairly.

I know how I fit into the organization’s future plans.

There is open and honest communication between employees and managers.



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What’s Driving Engagement?As mentioned earlier, the survey contained six engagement anchors that measure what an organization’s employee engagement level is based on employees’ advocacy, discretionary effort, and intent to stay. The other 31 items in the survey are called engagement drivers. Employees’ perceptions on these items affect, or drive, their overall engagement level. While all items have an impact on the overall level of engagement in organizations, as stated before, some have a greater effect than others.

The top three engagement drivers have been constant for the past five years.

Over the past five years, the same three items have risen to the top as having the greatest impact on the six anchors of engagement. These top three drivers are:

1. The leaders of this organization are committed to making it a great place to work.

2. I trust the leaders of this organization to set the right course.

3. I believe this organization will be successful in the future.

DiscretionaryEffort

Advocacy Intent to Stay Engagement



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Universally, the above three items drive engagement in all organizations. If you’re performing well on these three items, it is highly likely you have a high level of overall engagement. The good thing about these three items is that from 2010 to 2011 they were among the more volatile items, which means that what you do has an impact on how they rate. Simply put, they are actionable, and you can count on them being changeable. Focusing on tactics to improve perception of these top three engagement drivers will be a successful strategy for 2012.

In 2011, the next three items driving overall engagement were:

4. I know how I fit into the organization’s future plans.

5. The leaders of the organization value people as their most important resource.

6. The organization makes investments to make me more successful.

These items have varied from year to year. The fourth and sixth drivers increased in importance in 2011, while the fifth driver dropped one position. Similar to the top three drivers, these also experienced a wide range of change among industries between 2010 and 2011, which means perceptions on these items are highly likely to change. Your 2012 strategies can affect change on these items, positive or negative.



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Recognition: What Do Employees Want? After nearly ten years of researching employee engagement, it is clear that feeling valued and being recognized for good work are key ingredients to an engaged workforce. So in 2011, two questions were added to the Best Places to Work survey to find out more. This year’s research sought to discover what types of recognition employees value the most and their perception of its frequency (was it too much or not enough?). The survey examined 11 types of recognition:

• Granted time off

• Granted more flexibility/autonomy

• Additional job responsibility

• A personalized gift (plaque or company merchandise)

• Access to new learning/training opportunities

• Team celebration

• Praise from direct manager

• Praise from senior leadership

• A promotion

• Pay increase

• Spontaneous cash bonus



Rather than look at overall perception, let’s look at how perceptions varied among the engagement profiles discussed earlier. The diagram below shows how each engagement profile ranked their top five preferred forms of recognition.

Not very surprising, a pay increase ranked first across all engagement profiles. What’s interesting though is that a spontaneous cash bonus ranked second among every engagement profile except engaged employees, who preferred having access to new learning or training opportunities. In fact, as engagement rose, the importance of having access to learning or training opportunities increased.

As hostility rose, the desire for a promotion and more time off became increasingly important. Employees with an engaged profile ranked a promotion ninth and more time off seventh in importance out of the 11 types of recognition.

ENGAGED1. Pay increase2. Access to new learning/

training opportunities3. Spontaneous cash bonuses4. Granted more flexibility/

autonomy 5. Praise from senior leadership

CONTRIBUTING1. Pay increase2. Spontaneous cash

bonuses3. Granted time off4. Access to new learning/

training opportunities 5. A promotion

DISENGAGED1. Pay increase2. Spontaneous cash

bonuses3. A promotion4. Granted time off5. Granted more flexibility/

autonomy

HOSTILE1. Pay increase2. Spontaneous cash

bonuses3. A promotion4. Granted time off5. Granted more flexibility/

autonomy

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5’sRecognize Us! Employees’ Top



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Whether engaged or not, all employees ranked a personalized gift as the least important. All employees also consistently reported the desire for more flexibility and autonomy, regardless of the engagement profile. Employees’ perceptions varied the greatest on the topic of team celebration; however, as employees became more engaged, desire for a team celebration increased.

When asked about the frequency of these types of recognition, all employees reported being rewarded with additional job responsibilities too often and with promotions not often enough. However, for the hostile employees, a promotion was even more likely to be reported as too infrequent. Second to promotions, the form of recognition too infrequently awarded for each profile was praise from senior leadership.

Moving forward into 2012, organizations shouldn’t ignore the importance of recognizing employees with more flexibility and autonomy, access to learning and training opportunities, and praise from senior leadership. As we continue to study recognition in 2012, it will be interesting to discover how much employees’ perceptions on recognition change or stay the same.

Praise from senior leadership is too infrequently awarded.



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GO MAKE WORK AWESOME!You’ve taken the first step. By reading this report, you’ve already demonstrated your commitment to creating an awesome workplace with engaged employees. So what’s next?

Analyze.

Act.

This report gave you insight to how organizations are doing as a whole, but what’s the level of engagement in your organization? Understanding where you stand is essential to understanding where you need to go. Start by listening to your employees. Discover what aspects of your culture promote or detract from their engagement.

Administering an engagement survey will allow you to examine where you’re succeeding and where you’re struggling. What sort of story does the data tell? How are you comparing to organizations similar to yours? Are some areas of your organization more engaged than others? What are they doing right?

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...........................................................................................................Now that you analyzed your organization’s engagement data, prioritize where you’re going to focus your efforts to make the biggest impact and then create a plan. Empower your managers with the data on their departments, so they can make an impact as well. Is it time to implement new strategies? Do you need to put an end to practices that aren’t working? What needs to be enhanced?

Survey.About Quantum WorkplaceQuantum Workplace delivers smart tools for achieving and recognizing workplace awesomeness. When work is awesome, employees are engaged, clients are loyal, and business is good. Founded in 2002, Quantum Workplace makes complex data understandable, so it’s easy for organizations to take action. Quantum Workplace serves more than 5,000 organizations annually through employee engagement surveys, action-planning tools, leadership assessment, and employer of choice recognition.

For more information:www.quantumworkplace.com [email protected]



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You may have a lot to work on, maybe not. But you’ve taken the appropriate steps to ensure you have an engaged workforce. You have a strategic action plan based on your findings, so you can rest at ease knowing you are doing the right thing.

Repeat.

Need Help?

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Relax.

Are your new strategies working? Did you take the right course of action? Only time will tell. The most successful companies repeat this process annually to ensure they’re on the right track and continuing an ongoing conversation with their employees.

Quantum Workplace offers TeamPulse, Best Places to Work, and LeaderGrade to help organizations nationwide achieve high levels of employee engagement by following the process outlined above. It’s our mission to help you make work awesome. Give us a buzz.

© 2012, Quantum WorkplaceThis paper is for informational purposes only. The contents express the views of Quantum Workplace on the items discussed as of the date of the publication.

All Quantum Workplace product names are trademarks of Quantum Workplace. Other marks are property of their respective owners and are used for informational purposes only.

Quantum Workplace - 2012 Employee Engagement Trends Report

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