State of the Global Workplace Report 2013.pdf

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EMPLOYEE ENGAGEMENT INSIGHTS FOR BUSINESS LEADERS WORLDWIDE

STATE OFTHE GLOBALWORKPLACE


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To win customers and a bigger share of the marketplace companies must rst

win the hearts and minds of their employees. If you are a business leader serious about

implementing proven engagement strategies for growth at your organization, contact

Stephanie Holgado at +1-202-715-3101 or [email protected].

COPYRIGHT AND TRADEMARK STANDARDS Tis document contains proprietary research, copyrighted materials, and literary property of Gallup, Inc. It is for yourguidance only and is not to be copied, quoted, published, or divulged to others. All of Gallup, Inc.s content, unlessotherwise noted, is protected by copyright 2013. All rights reserved. Tis document is of great value to Gallup, Inc. Accordingly, international and domestic laws and penalties guaranteeing patent, copyright, trademark, and trade secretprotection safeguard the ideas, concepts, and recommendations related within this document.

No changes may be made to this document without the express written permission of Gallup, Inc.

Gallup, Q 12, Clifton StrengthsFinder, StrengthsFinder, Engagement Creation Index, HumanSigma, GallupPanel, Gallup-Healthways Well-Being Index, Business Impact Analysis, and CE11are trademarks of Gallup,Inc. All rights reserved. All other trademarks and copyrights are the property of their respective owners.

Te Q 12 items are protected by copyright of Gallup, Inc., 1993-1998. All rights reserved.


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ABOUTTHIS

REPORT

The State of the Global Workplace: Employee

Engagement Insights for Business Leaders

Worldwide report highlights ndings from Gallups

ongoing study of workplaces in more than 140

countries from 2011 through 2012. This is a

continuation of Gallups previous report on employe

engagement worldwide, which covered data from

2009 through 2010. This latest report provides

insights into what leaders can do to improve employ

engagement and performance in their companies. It

includes regional analyses of employee engagement

data, country-level insights from Gallup consultants

around the globe, a look at the impact of engagemen

on organizational and individual performance, and

information about how companies can accelerate

employee engagement.


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Leaders,

Te world economy isnt growing fast enough, and this is starting to cause some serious problems.One issue in particular that comes to mind is revolution. Any number of countries suffering from loweconomic growth and high unemployment could explode in the next few years.

So how can a business leader help save the world or at least his or her country? Te answer startsright in his or her own workplace. Business leaders can save their countries by building strongercompanies. Tat means helping their businesses get new customers or building out the current

ones they have.

And there will be plenty of new potential customers in the coming decades. Right now, the worldsGDP is US$60 trillion, and that gure will grow to US$200 trillion in the next 30 years. Simplyput, the global economy will have US$140 trillion worth of new customers. Competing for thosecustomers will be the World Cup for world economic dominance. Te winners will enjoy thrivingeconomies and workplaces. Te losers will face unrest and revolution.

Countries that double the number of engaged employees in every company will be best positioned to win the lions share of the US$140 trillion in new customers.

Doing so starts with you in your company. And it spreads around the country from there. When andif your company, and then country, doubles its workforce engagement, only great things will follow:an economic boom, an explosion of innovative ideas, and a surge in entrepreneurship. No country canramp up ideas and entrepreneurship high enough right now. Tere are literally trillions in customerrevenue waiting to be won.

Hiring and developing great managers and building up and leveraging the strengths of everyemployee are the two keys to doubling employee engagement. How employees feel about their jobs starts and ends with their direct supervisor. If employees feel, among other things, that their

FROM THE CEO

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supervisor takes a real interest in their development, or offers frequent praise and recognition, theyare very likely to be engaged. Hiring the right managers is absolutely essential to building an engaged workforce. If companies throughout your country hire the right people to lead and actively encouragethe engagement of their workforces, economic dominance will be sure to follow.

And great managers already know what decades of Gallup research has revealed: rying to getemployees to x their weaknesses doesnt work. Weaknesses cant be developed much at all but

employees strengths can be developed innitely. Te problem is, too many companies focus on xing weaknesses, and this only breeds non-engagement or, worse, active disengagement. No company orcountry will win the economic World Cup with this approach.

Great managers build development plans around every employees strengths. When employees workfrom strengths, nothing motivates them to achieve more not money, not love, not vacations, notgood benets, not company volleyball games, not motivational speakers. And employees workingfrom their strengths do win new customers.

Only great business leaders can hardwire strengths-based thinking throughout the organization toensure that their business hires the right people to be managers. Do your job right, and youll save

not only your company, but also help your country to thrive and win the competition for US$140trillion in new customers.

Jim Clifton

Chairman and CEOJim CliftonChairman and CEO


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THREE WAYS TO ACCELERATE EMPLOYEE ENGAGEMENTGallup helps organizations boost engagement levels with strategies to hire the right employees, develop theirstrengths, and enhance their well-being.

1. Select the Right People2. Develop Employees Strengths3. Enhance Employees Well-Being

LINKING EMPLOYEE ENGAGEMENT TO CUSTOMER GROWTHEmployee engagement is not an end in itself. The moment an employee connects with a customer is a source ofuntapped power that has profound implications for a companys protability.

EMPLOYEE ENGAGEMENT VARIES GREATLY BY REGION AND COUNTRYGallups worldwide employee engagement study shows there is a considerable variation in engagement levelsacross different regions and countries of the world.

Sub-Saharan Africa South Africa

Middle East and North Africa United Arab Emirates

East Asia South Korea

South Asia India

Southeast Asia Indonesia

Australia and New Zealand Australia New Zealand

WHAT THE BEST DO DIFFERENTLYDespite ongoing economic challenges and low levels of employee engagement among populations worldwide,many organizations are nding success by making engagement the focus of their growth strategies.

38

49

54

107

United States and Canada Canada

Latin America Regional Highlight

Western Europe Germany United Kingdom

Commonwealth of Independent States and Nearby Countries Russia

Central and Eastern Europe Poland


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Currently, 13% of employees across 142 countries worldwide are engaged in their jobs that is, they are

emotionally invested in and focused on creating value for their organizations every day. As in Gallups 2009-

2010 global study of employee engagement, actively disengaged workers i.e., those who are negative and

potentially hostile to their organizations continue to outnumber engaged employees at a rate of nearly 2-1.

Employee engagement will become an increasingly important concern for countries and organizations seeking

to boost labor productivity as the global economy continues its rapid pace of change. Even as unemployment

rates remain high in many developed-world countries ve years after the onset of the global economic crisis,

growth rates in China and other large developing countries have been falling. Around the world, demographic

trends are having substantial economic consequences. In several regions including southern Europe, South

Asia, and the Middle East a youth bulge continues to produce record unemployment among young people.

Meanwhile, many large economies including China, Japan, and the U.S. face talent shortages as their

workforces age and shrink.

One common factor among organizations worldwide is the need to more effectively understand and use their

peoples talents, skills, and energy. In many countries, raising workers productivity levels is critical to business

growth and badly needed job creation. In countries that face talent shortages, companies that meet their

employees needs are most likely to win in the competition for top talent. In each case, companies around the

world will need to improve their ability to ensure that workers are in the right roles and are emotionally invested

their jobs.

In other words, the need to build highly engaged workplaces will become more important than ever. Through

decades of research with hundreds of organizations and more than 25 million employees, Gallup has developed

an unparalleled understanding of what the worlds strongest organizations do differently and how engagement

affects productivity and employee well-being in any workplace.

EXECUTIVE SUMMARY

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SOME OF GALLUPS MOST IMPORTANT FINDINGS INCLUDE:

Engagement Makes a Difference to theBottom Line

Engaged workers are the lifeblood of theirorganizations. Work units in the top 25% of GallupsQ 12 Client Database have signicantly higherproductivity, protability, and customer ratings, lessturnover and absenteeism, and fewer safety incidentsthan those in the bottom 25%.

Organizations in Gallups Q 12 Client Database withan average of 9.3 engaged employees for every activelydisengaged employee in 2010-2011 experienced 147%

higher earnings per share (EPS) compared with theircompetition in 2011-2012. In contrast, those with anaverage of 2.6 engaged employees for every activelydisengaged employee experienced 2% lower EPScompared with their competition during that sametime period.

Active disengagement is an immense drain oneconomies throughout the world. Gallup estimates,for example, that for the U.S., active disengagementcosts US$450 billion to $550 billion per year. InGermany, that gure ranges from 112 billion to 138billion per year (US$151 billion to $186 billion). Inthe United Kingdom, actively disengaged employeescost the country between 52 billion and 70 billion(US$83 billion and $112 billion) per year.

Engagement Levels Vary Widely From Regionto Region

Overall, among the 142 countries included in the

current Gallup study, 13% of employees are engagedin their jobs, while 63% are not engaged and 24%are actively disengaged. However, these results varysubstantially among different global regions.

East Asia has the lowest proportion of engagedemployees in the world, at 6%, which is less than half ofthe global mean of 13%. Te regional nding is drivenpredominantly by results from China, where 6% ofemployees are engaged in their jobs one of the lowest

gures worldwide. Chinas low engagement level mayincreasingly pose a barrier to its continued growth asthe country makes the transition to a more consumer-based economy and businesses come to rely more onfront-line employees to attract and retain customers.

In Australia and New Zealand, 24% of employeesare engaged, while 60% are not engaged and 16% areactively disengaged. Te resulting ratio of engaged toactively disengaged employees 1.5-to-1 is oneof the highest among all global regions and similar toresults from the U.S. and Canada (1.6-to-1).

Gallup found the highest levels of active disengagementin the world in the Middle East and North Africa(MENA) region, particularly in unisia (54%),

Algeria (53%), and Syria (45%). Te regions highunemployment rates may be a factor in these results,causing many disengaged workers to remain in their

jobs despite their unhappiness at work.

Despite the countrys strong economic growth, only8% of Indonesian employees are engaged in their

jobs, while 15% are actively disengaged. By contrast,employees in the Philippines another fast-growingeconomy in Southeast Asia had the highest levelof engagement in the region at 29%, with only 8%actively disengaged.

In the Wake of the Global Recession, EngagedEmployees Are More Likely to Report JobGrowth in Their Organizations

Organizations worldwide that maximize employees

motivation and enthusiasm for their work are in turnhelping to stimulate job creation. Globally, 44% ofengaged employees say their employers are hiringpeople and expanding the size of their workforces

vs. 34% of those who are not engaged and 25% ofactively disengaged employees who say the same. Tisrelationship is consistent across all global regions.

Perceptions of job creation are lowest globally amongemployees living in the Commonwealth of Independent

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States and neighboring countries. Overall, 24%of employees living in this group report that theiremployers are hiring new people, the lowest gureamong all regional groups. Nearly four in 10 engaged

workers say their employers are expanding the size oftheir workforces, compared with about two in 10 notengaged or actively disengaged employees.

One-third of employees in the MENA region (33%)say their employers are hiring new people a gurethat will need to rise in the coming years to meet theregions increasing need for new jobs to accommodateits burgeoning youth population. Across the MENAregion, about half of engaged employees say theirorganizations are hiring vs. slightly more than one-fourth of actively disengaged employees who say thesame.

Job creation is nowhere more important than in South Asia, where it is estimated that more than a millionpeople will enter the labor force every month in coming years. Currently, employees working in South Asia areabout as likely to say their organizations are lettingpeople go (25%) as they are to say their employers arehiring (28%). Among engaged employees, however,

more than four in 10 (42%) say their companies arehiring, while 12% say they are letting people go.

Many countries in Western Europe, including France,Ireland, Italy, and Spain, continue to suffer from severeemployment crises. Residents in these countries areamong the least likely in the world to say it is a goodtime to nd a job in their communities. However,engaged employees are twice as likely to report their workplaces are hiring (34%) as they are to say they areletting people go (16%). Among actively disengagedemployees, these gures are reversed, with 34% sayingtheir organizations are letting people go, while 18% saythey are hiring.

Poor Hiring and Management Practices HinderCompanies Growth and Engagement Levels

In the MENA region, the concept of wasta (similar tothe Western concept of who you know) can be usedto gain employment and advantage in the workplace,

as a result of personal relationships, and potentiallyundermine workplace engagement. Not only does thissystem create poor t for roles among improperly hiredemployees, but it also spreads negative perceptions

among otherwise engaged colleagues.

In fast-growing Southeast Asian economies likeIndonesia and the Philippines, where demand for laboris high, companies will need a strong talent strategyto thwart talent poaching. Important to the success ofsuch strategies will be managers willingness to eschewthe old command-and-control mentality in favor of amore collaborative approach, particularly with younger

workers.

In East Asian societies, the cultural value of deferenceto authority may make businesses less likely to focuson management structures that allow employees tofeel capable of taking initiative. Only about one in sixemployees in East Asia strongly agree that their opinionscount, the lowest proportion of any global region.

Te positive momentum in the Latin American job market has heightened the competition fortalented workers among businesses in the region.

Te momentum has also increased the importance ofbuilding loyalty among employees by ensuring that theyhave what they need to be fully engaged in their jobs.

In Australia and New Zealand, only 19% of employeesin leadership positions are engaged in their jobs.Low engagement among managers is troubling forbusinesses, as Gallup has found that they play the mostsignicant role in inuencing engagement among theirdirect reports.

Worldwide, Engaged Employees RegardTheir Lives More Highly and Experience MorePositive Emotions

Around the globe, engaged employees are more likelyto be thriving i.e., to rate their overall liveshighly on a zero-to-10 scale than those who arenot engaged or actively disengaged. Among all globalregions, engaged workers are at least 1.6 times as likelyas actively disengaged workers to be thriving. Te ratio

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is highest in South Asia, where engaged employeesare 5.5 times as likely to be thriving as those who areactively disengaged.

In East Asia, engaged workers are about half as likely tohave experienced stress the previous day as their activelydisengaged peers. Prior research offers some evidencethat those in East Asian societies are less likely to drawon social support in stressful situations. Consequently, workplace factors and good managers in particular may make more of a difference in helping to ensurethat employees feel free to ask for help to manage stressmore effectively.

Latin America has the highest percentage (55%) of

thriving employees in any developing region. Terelationship with workplace engagement is alsoparticularly strong there: wo-thirds of engagedemployees (66%) are thriving, compared with less thanhalf (42%) of actively disengaged workers.

About one-third of MENA residents (34%) say theyexperienced anger for much of the day before thesurvey, easily the highest proportion among any globalregion. However, this number falls to 19% for engagedemployees in the region, compared with 35% of theiractively disengaged counterparts. Likewise, 75% ofengaged employees versus 48% of actively disengagedemployees experienced enjoyment yesterday.

Similarly, in sub-Saharan Africa, engaged employeesare signicantly more likely than actively disengagedemployees to say they experienced enjoyment for muchof the day yesterday and about half as likely to haveexperienced anger.

Te severity of Western Europes debt crisis and theaccompanying austerity measures in many countriesmay help explain why life evaluations in most of theregion tend to be lower than those in other developedregions. Half of employees in Western Europe (50%)are thriving in their overall lives, compared with 59%in the U.S. and Canada and 66% in Australia andNew Zealand. Among engaged employees in WesternEurope, the thriving percentage rises somewhat to 59%.

Education Is Often Associated With HigherEngagement Levels If Employees Can FindJobs That Make Use of Their Knowledge andTalents

In many developing and transitional economies wherethe demand for high-skilled labor exceeds the supplyof more highly educated residents, better-educatedemployees are more likely to be engaged at work.However, this is not necessarily true in developedeconomies, many of which are suffering an extendedperiod of high unemployment. In the U.S. and Canada,for example, engagement trends downward slightly withemployees education level. College-educated workersin both countries are less likely than those with onlya high school education to strongly agree that theyhave the opportunity to do what they do best at workeach day.

Likely reecting the mismatch between educationalcurricula and the needs of employers in the region,one in four MENA employees with a college-leveleducation (25%) are actively disengaged. Tis is thehighest proportion among highly educated workers inany global region.

Among employees in Southeast Asia, there is aparticularly strong relationship between employeeseducational attainment and their engagement levels:

Tose with an elementary education or less are almostfour times as likely as those with a college educationto be actively disengaged at work. Tose in jobs lesslikely to require higher levels of formal education arealso least likely to be engaged at work, demonstratinga need for businesses in industrial sectors to improvecommunication and recognition systems that help

motivate and empower individual workers.

Similarly, engagement rates increase with Latin American employees educational attainment levels. Teengaged-actively disengaged ratio is most favorable in

job types that tend to require higher levels of educationand provide a more autonomous working environmentsuch as professional workers and those in managementor leadership roles.

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WHAT COMPANIES CAN DO TO IMPROVE ENGAGEMENT:Bring engagement into thecompanys everyday language. Te companies most successful atengaging their employees bring theconversation of engagement into the workplaceevery day . It is importantbefore organizations begin measuringengagement to communicate thereasons behind this strategic goal andthe advantages for the companyand the employees themselves. Regularcommunication from the companysleaders and informal communicationbetween employees will begin tobreed a culture of engagement,leading participation rates of employeeengagement metrics and otherinterventions to be more successful.

Use the right employee engagementsurvey. Te employee engagementmetrics companies use can affecttheir ability to create changes in

performance. Often, organizationsmake the mistake of using employeesurveys to collect data that areirrelevant or impossible to act on. When a company asks its employeesfor their opinions, they expect actionto follow. Gallups Q 12 employeeengagement metric was designed with this expectation in mind the data the Q 12 survey collects are

specic, relevant, and actionable forany team at any organizational level,and they are proven to affect keyperformance metrics. Why? Becausethe Q 12 measures employeesemotionalengagement, which ties directly totheir level of discretionary effort their willingness to go the extra milefor their company.

Focus on engagement at theenterprise and local levels. ransformation occurs at the locallevel, but it only happens whenthe tone is set from the top down.Companies realize the most benetfrom engagement initiatives whenleaders weave employee engagementinto performance expectationsfor managers and enable them toexecute on those expectations.Managers and employees must feelempowered by leadership to makea signicant difference in theirimmediate environment.

Select the right managers. Whetherhiring from the outside or promotingfrom within, organizations thatscientically select managers for theunique talents it takes to effectivelymanage people greatly increase theodds of engaging their employees.

Instead of using management jobs aspromotional prizes for all career paths,companies should treat these rolesas unique, with distinct functionaldemands that require a specic talentset. Tey should select managers with the right talents for supporting,positioning, empowering, andengaging their staff.

Coach managers and hold themaccountable for their employeesengagement. Gallups research hasfound that managers are primarilyresponsible for their employeesengagement levels. Organizationsshould coach managers to take anactive role in building engagementplans with their employees, holdmanagers accountable, track

their progress, and ensure theycontinuously focus on emotionallyengaging their employees. Tetop performers in Gallups Q 12 Client Database consistently makeemployee engagement part of theirformal review process, and most usethese improvements as a criterionfor promotions.

Dene engagement goals inrealistic, everyday terms. While theoverall organization may set lofty

goals for engagement, leaders mustmake these objectives meaningful toemployees day-to-day experiencesto bring engagement to life. Ensurethat managers discuss employeeengagement elements at weeklymeetings and in one-on-one sessions

with employees to weave engagementinto daily interactions and activitiesrelated to their performance objectives.

Find ways to meet employees wherethey are. As this report demonstrates,employees worldwide have differentneeds and expectations that inuencetheir engagement levels. Local culturalinuences and economic conditions,as well as more specic variables suchas respondents job type and educationlevel, all play roles in shaping their

workplace experience. Managersshould be aware of the factors mostrelevant to engagement among their

workers. Tey should also understandthat every interaction with anemployee has the potential to inuencehis or her engagement and inspirediscretionary effort.

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WORLDWIDE, ONLY 13% OFEMPLOYEES ARE ENGAGED

AT WORK

The current global economic environment presents unprecedented

challenges and unique opportunities for business leaders. Most of the

developed world continues a slow, arduous recovery from the global

recession. Developed- and emerging-market countries, however, are

recovering faster from the crisis, many beneting from free market reforms

that have attracted foreign investment and unlocked entrepreneurial

potential among their populations. Still, as organizations from multinationa

corporations to small-business startups seek to benet from ongoing

development in these rapidly changing markets, they must learn how to

maintain adaptive, high-productivity workplaces and grow their customer

bases in widely varying social, cultural, and economic environments.


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Vital to maintaining high-productivity workplaces isorganizations ability to engage their employees. Gallupsextensive research shows that employee engagementis strongly connected to business outcomes such asproductivity, protability, and customer satisfaction thatare essential to an organizations nancial success.

o provide an outlook on employee engagement and whyit matters for global organizations, for the rst time in2009 and 2010, Gallup gathered engagement results fromemployed workers worldwide for its 2010State of the GlobalWorkplace report. Tis current report provides an update ofthe previous results using data gathered in 2011 and 2012

from nearly 230,000 full-time and part-time employeesin 142 countries. Gallup nds that the proportion ofemployees worldwide who are engaged in their jobs hasticked upward from 11% to 13%, while the proportion whoare actively disengaged has fallen slightly from 27% to24%. Tis slight improvement notwithstanding, low levelsof engagement among global workers continue to hindergains in economic productivity and life quality in much ofthe world.

Engaged employees are those who are involved in,enthusiastic about, and committed to their work and whocontribute to their organization in a positive manner.Engaged employees are the ones who are most likely todrive innovation, growth, and revenue that their companiesdesperately need. Tese engaged workers build new productsand services, generate new ideas, create new customers,and ultimately help spur the economy generating moregood jobs.

According to Gal lups latest ndings, 87% of workers arenot engaged or actively disengaged and are emotionallydisconnected from their workplaces and less likely to be

productive. Te proportion of actively disengaged employeeshas decreased from 27% to 24%. But, actively disengagedemployees continue to outnumber engaged employees bynearly 2-to-1 implying that at the global level, work ismore often a source of frustration than one of fulllment.It also means countless workplaces worldwide are lessproductive and less safe than they could be and are lesslikely to create badly needed new jobs.

ACTIVELY DISENGAGED NOT ENGAGED ENGAGED

20% 40% 60% 80% 100%

13

11

63

62

24

272008-2009

2011-2012

OVERALL ENGAGEMENT AMONGTHE EMPLOYED POPULATION IN142 COUNTRIES WORLDWIDE ONLY 13% ARE ENGAGED

12 W O R L D W I D E , O N LY 1 3 % O F E M P L O Y E E S A R E E N G A G E D AT W O R K


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Raise the Bar on Employee Engagement

As in 2009 and 2010, the current results point to substantial variation in engagement levels among employees in different

global regions and among countries within those regions. Te ndings also reveal differences among employees withdifferent job types and at different education levels withincountries. Recognizing these differences can help managersunderstand how societal factors could affect workplacecharacteristics and help them identify specic barriers theymust overcome to build more engaged workforces.

Te good news for global business leaders is that decadesof Gallup research has established certain basic workplaceconditions that managers worldwide can focus on to

help employees feel emotionally connected to their workplaces. Te criteria on which Gallup based its employeeengagement (Q 12) measure are universally applicable becausethey address fundamentallyhuman emotional needs such asthe need for respect, positive relationships, and a sense ofpersonal development.

People spend a substantial part of their lives making aliving, whether in a high-tech startup in Singapore, anancial institution in Australia, or a garment factoryin the Dominican Republic. As a result, the quality of

their workplace experience inevitably reects the qualityof their lives. With the vast majority of employees

worldwide reporting an overal l negative experience at work and slightly more than one in 10 indicating thatthey are involved in and enthusiastic about their jobs andcommitted to their organizations success it is no wonderthat the global recovery remains sluggish, while socialunrest abounds.

Business leaders worldwide must raise the bar on employeeengagement. Increasing workplace engagement is vital toachieving sustainable growth for companies, communities,and countries and for putting the global economy backon track to a more prosperous and peaceful future.

ACTIVELY DISENGAGEDEMPLOYEES CONTINUEOUTNUMBER ENGAGED

EMPLOYEES BY NEARLY2-TO-1.

W O R L D W I D E , O N LY 1 3 % O F E M P L O Y E E S A R E E N G A G E D AT W O R


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HOW GALLUP MEASURESEMPLOYEE ENGAGEMENT

Gallup measures employee engagement based on workers responses to

its Q12 survey, which consists of 12 actionable workplace elements with

proven links to performance outcomes. To identify these elements, Gallup

spent years conducting thousands of interviews at every level of various

organizations, in most industries, and in several countries. Since Gallup

nalized the Q12 question wording in the late 1990s, the survey has been

administered to more than 25 million employees in 195 different countries

and 70 languages. The following items are the ones that emerged from

Gallups pioneering research as the best predictors of employee and

workgroup performance.

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01I know what isexpected of meat work.

07 At work, my opinions seem to count.

02I have the materialsand equipment I needto do my work right.

08The mission or purposeof my company makesme feel my jobis important.

03 At work, I have theopportunity to do whatI do best every day.

09My associates orfellow employees arecommitted to doingquality work.

04In the last sevendays, I have receivedrecognition or praisefor doing good work.

10I have a best friendat work.

05My supervisor, or

someone at work, seems to care aboutme as a person.

11In the last six months,

someone at work hastalked to me aboutmy progress.

06There is someone atwork who encouragesmy development.

12This last year, I havehad opportunitiesat work to learn andgrow.

GALLUPS Q12

H O W G A L LU P M E A S U R E S E M P L O YE E E N G A G E M E N T


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Four Stages of Employee Engagement

In addition to discovering the 12 items, Gallup also found that the order of the items isimportant. Te 12 items represent the four stages of a hierarchy that an employee goesthrough on the path to complete engagement. Items 1 and 2 represent employees primaryneeds. When employees start a new role, their needs are basic. Tey ask, What do I getfrom this role?

In the second stage, encompassing items 3 through 6, employees think about their ownindividual contributions and consider how others view and value their efforts. Manager

support is most important here because managers typically dene perceptions of value.

Once employees advance through the rst two stages of the hierarchy, their perspectivebegins to widen and they evaluate their connection to the team and the organization. In thethird stage, encompassing items 7 through 10, employees ask themselves, Do I belong?

Ten, during the fourth and most advanced stage, composed of items 11 and 12, employees want to make improvements, learn, grow, innovate, and apply their new ideas.

Te four stages help managers evaluate workgroup performance and concentrate their effortson areas most relevant to where their team is on the journey to complete engagement.

25 MILLIONEMPLOYEES195DIFFERENTCOUNTRIES 70LANGUAGES

SINCE THE LATE 1990s, GALLUP HAS

ADMINISTERED THE Q12 SURVEY TO MORE THAN

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GALLUP EMPLOYEE ENGAGEMENTCATEGORIES

1Engaged employees work with

passion and feel a profound

connection to their company.

They drive innovation and move the

organization forward.

2Not Engaged employees are

essentially checked out. Theyre

sleepwalking through their workday,

putting time but not energy or passion

into their work.

3 Actively Disengaged employees

arent just unhappy at work; theyre

busy acting out their unhappiness.

Every day, these workers undermine what

their engaged coworkers accomplish.

Three Types of Employees

Based on employees responses to the 12 items, Gallupgroups them into one of three categories: engaged, notengaged, and actively disengaged.

Not engaged workers can be difficult to spot: Tey arenot hostile or disruptive. Tey show up and kill time with little or no concern about customers, productivity,protability, waste, safety, mission and purpose of theteams, or developing customers. Tey are thinking aboutlunch or their next break. Tey are essentially checkedout. Surprisingly, these people are not only a part of yoursupport staff or sales team, but they are also sitting on your

executive committee.

Actively disengaged employees are more or less out todamage their company. Tey monopolize managers time;have more on-the-job accidents; account for more qualitydefects; contribute to shrinkage, as theft is called; aresicker; miss more days; and quit at a higher rate thanengaged employees do. Whatever the engaged do such assolving problems, innovating, and creating new customers the actively disengaged try to undo.

On the other hand, engaged employees are the bestcolleagues. Tey cooperate to build an organization,institution, or agency, and they are behind everythinggood that happens there. Tese employees are involvedin, enthusiastic about, and committed to their work. Teyknow the scope of their jobs and look for new and better ways to achieve outcomes. Tey are 100% psychologicallycommitted to their work. And, they are the only people inan organization who create new customers.



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Taking Employee Engagement to the Next Level

After a baseline reading of an organizations employee engagement level following therst companywide Q 12 administration, Gallup provides customized tools and analysis tohelp leaders take the necessary next steps. After all, measurement without targeted actionis useless. Moreover, if employers do not follow up on engagement results, employeesdisengagement may actually increase. By consistently tracking Q 12 results from year to yearand developing the right data-based interventions to promote growth, employers will ensurethat their workforce is meeting its potential and maximizing its performance outcomes.

Additionally, Gallup developed empirical indexes to help companies strategically pinpointand improve specic focus areas relevant to their current situation. For example, Galluphas found that the companies that increase employee engagement the most are thosethat hold all employees accountable for taking action on their Q 12 results. By adding the

Accountability Index to the Q 12

survey, companies can track each workgroups effortstoward making progress on engagement goals.

Te Brand Ambassador Index offers a valuable opportunity to measure the strength ofemployees connection to their organizations brand. Gallups research shows that employees who know what their organization stands for and what differentiates it from its competitorstend to be more engaged, and they more actively support and endorse their companysproducts and services.

By using one or more of these 18 indexes in conjunction with the Q 12 metric, leadershave another tool with which to capture more of their organizations story. Gallups

empirical indexes offer companies actionable insights on a range of important topics,including change management, communication, customer orientation, innovation, andsupervisor effectiveness.

By consistently tracking Q12 results from year to year anddeveloping the right data-based interventions to promote

growth, employers will ensure that their workforce is meetingits potential and maximizing its performance outcomes.

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The Power of Engagement

Leaders often say that their organizations greatest asset is its people but in reality, this isonly true when those employees are fully engaged in their jobs. Engaged workers stand apartfrom their not engaged and actively disengaged counterparts because of the discretionaryeffort they consistently bring to their roles day after day. Tese employees willingly go theextra mile because of their strong emotional connection to their organization. Reaching thisunique state goes beyond having a merely satisfactory experience at work to one of 100%psychological commitment. Any employee can achieve this state in an engaging workplace,

but leaders can be sure they are creating and maintaining this type of environment onlyif they actively measure and manage the true drivers of engagement. Gallup createdand continues to test the Q 12 metric to help organizations harness the power of engagedemployees in the most efficient and actionable way possible.

MEASUREMENTWITHOUT TARGETEACTION IS USELES



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HOW EMPLOYEEENGAGEMENT DRIVESGROWTH

Although measuring employee engagement is an increasingly common

practice in the business world, Gallups Q12 employee engagement metric

is distinct in that it is backed by rigorous science linking it to nine integral

performance outcomes. Gallup administers the Q12 to workers in various

companies, nonprots, and other organizations worldwide in an effort to

help its clients improve their employee engagement. Meanwhile, Gallup

researchers continually study ndings from research on the Q12 to learnmore about employee engagements impact on organizational and

team performance.

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The 2012 meta-analysis once again veried that employeeengagement relates to each of the nine performance outcomesstudied. Additionally, Gallup continues to nd that the strong

correlations between engagement and the nine outcomesstudied are highly consistent across different organizationsfrom diverse industries and regions of the world.

The Q 12 Predicts Key Performance Outcomes

Every two to four years Gallup completes meta-analysisresearch a statistical technique that pools multiplestudies on the Q 12. By conducting this research regularlyover time and increasing the number of business unitsanalyzed, Gallup stays on the cutting edge of how wellemployee engagement predicts key performance outcomes. When sample sizes allow, Gallup establishes links to newoutcomes that companies can measure and manage to driveorganizational performance through employee engagement.Gallup knows of no other company that backs its employee

engagement survey with such extensive research.In 2012, Gallup conducted its eighth meta-analysis on theQ 12 using 263 research studies across 192 organizationsin 49 industries and 34 countries. Within each study,Gallup researchers statistically calculated the business/ work-unit-level relationship between employee engagementand performance outcomes that the organization supplied.Researchers studied 49,928 business/work units, includingnearly 1.4 million employees. Tis eighth iteration of themeta-analysis further conrmed the well-established

connection between employee engagement and nineperformance outcomes:

customer ratings protability productivity turnover (for high-and low-turnoverorganizations)

safety incidents shrinkage (theft) absenteeism patient safety incidents quality (defects)

Given the timing of the eighth iteration of this study, italso conrmed that employee engagement continues to bean important predictor of organizational performance evenin a challenging economy. Gallup researchers studied thedifferences in performance between engaged and activelydisengaged business/work units and found that thosescoring in the top half on employee engagement nearlydoubled their odds of success compared with those in thebottom half. Tose at the 99 th percentile had four times thesuccess rate of those at the rst percentile.

Median differences between top-quartile and bottom-quartile units were 10% in customer ratings, 22% inprotability, 21% in productivity, 25% in turnover (high-turnover organizations), 65% in turnover (low-turnoverorganizations), 48% in safety incidents, 28% in shrinkage,37% in absenteeism, 41% in patient safety incidents, and41% in quality (defects).

In short, the 2012 meta-analysis once again veriedthat employee engagement relates to each of the nine

performance outcomes studied. Additionally, Gallupcontinues to nd that the strong correlations betweenengagement and the nine outcomes studied are highlyconsistent across different organizations from diverseindustries and regions of the world.

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INCREASED ENGAGEMENT LEADS TO HIGHEREARNINGS PER SHARE

Gallups research also shows that companies with engaged workforces have higher earnings per share (EPS) and seemto have recovered from the recession at a faster rate. In arecent study, Gallup examined 49 publicly traded companies with EPS data available from 2008-2012 and Q 12 dataavailable from 2010 and/or 2011 in its database and foundthat organizations with a critical mass of engaged employees

outperformed their competition, compared with those thatdid not maximize their employees potential.

In fact, researchers discovered that as the economy began torebound after 2009, having an engaged workforce becamea strong differentiator in EPS. Companies with engaged workforces seemed to have an advantage in regaining andgrowing EPS at a faster rate than their industry equivalents.Conversely, those organizations with average engagementlevels saw no increased advantage over their competitors inthe economic recovery.

Organizations with an average of 9.3 engaged employeesfor every actively disengaged employee in 2010-2011experienced 147% higher EPS compared with theircompetition in 2011-2012. In contrast, those with anaverage of 2.6 engaged employees for every activelydisengaged employee experienced 2% lower EPS compared with their competition during that same time period.

MEASURING WHAT MATTERS

Joseph Juran, a noted management expert, said, Withouta standard there is no logical basis for making a decision ortaking action. Most organizations understand this to somedegree; however, many persist in measuring performance bythe wrong standard using unsubstantiated or ineffectivemetrics that ultimately lead nowhere. When leaders work with Gallup to measure and manage employee engagementat their companies, they can be condent that the Q 12 is

backed by years of empirical research and used by some ofthe worlds leading organizations.

Factors such as EPS, protability, productivity, andcustomer ratings are all key indicators in determining anorganizations health and its potential for growth. Forleaders who are responsible for these outcomes, the researchplainly shows that the Q 12 is more than just anotherhuman resources initiative; it is the best measurementtool for initiating companywide transformation to createsustainable growth. By intentionally focusing on measuringand managing employee engagement using Gallups Q 12 metric, companies gain a competitive advantage that keepsthem moving forward. Research shows concentrating onemployee engagement can help them withstand andpossibly even thrive in challenging economic times.

-80% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30%

-37

-25

-65

-28

-48

-41

- 41

10

21

22Protability

Productivity

Customer

Quality (Defects)

Patient Safety Incidents

Safety Incidents

Shrinkage

Low-Turnover Orgs.

High-Turnover Orgs.

Absenteeism

TURNOVER

ENGAGEMENTS EFFECT ON KEY PERFORMANCE INDICATORSMedian differences between top- and bottom-quartile teams

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WHAT THE WORLD WANTSIS A GOOD JOB

Gallup research nds that good jobs are what the world needs most. Global

surveys consistently demonstrate that people with good jobs dened

as those that offer steady work averaging 30 or more hours per week

and a paycheck from an employer are more likely than those in other

employment categories to rate their present and future lives positively. Thus,

job creation is essential to a communitys capacity to meet its residents

needs, and leaders worldwide must learn how to attract or retain talented

people who can create new businesses or help existing ones expand.

Communities striving to nd sources of sustainable growth need a critical

mass of high-energy businesses and organizations that bolster job creation

and economic opportunity. That energy is more likely to be found in

workplaces where employees are engaged in their jobs. Engaged employees

are almost two times as likely as those who are actively disengaged to report

that their companies are hiring new people or expanding. By contrast, actively

disengaged employees report that their companies are reducing workforces

at rates almost three times that of the engaged population.


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Engaged Employees Rate Their Lives Better

When employees feel engaged and productive at work, itpositively affects their lives at work and beyond the workplaceas well. Engaged employees assess their overall lives morehighly than not engaged or actively disengaged employees. Tey also report more positive day-to-day emotional statesand interactions with others than their less engaged peers.

Each year in more than 140 countries and territories,Gallups World Poll tracks two types of measures importantfor assessing the subjective quality of peoples lives: 1) theiroverall life evaluations, which are used to categorize them asthriving, struggling, or suffering, and 2) their specic

emotional states, measured by asking whether or not theyexperienced a series of positive and negative emotions including enjoyment, stress, and anger the day beforethe survey.

Life evaluations are based on the Cantril Self-AnchoringStriving Scale, with steps numbered from zero to 10. Triving respondents rate their present lives at 7 or higher, and predicttheir lives in ve years will be at 8 or higher. Suffering respondents rate both their present and future lives at 4 or lower. Teremainder those with midlevel ratings are classied as struggling.

Engaged Employees Are More Optimistic About the Economy

Gallup data suggest that engaged employees help foster

entrepreneurship in their communities. Job creationdepends on the condence of a citys inhabitants to start upnew ventures. Engaged employees are more likely than theirless engaged peers to have condence in their communitiesbusiness environment: 71% of engaged employees reportthat their city is a good place to start a business, compared with 53% of those who are actively disengaged. Engagedemployees are also more likely to agree that hard work gets you ahead.

BASED ON WHAT YOU KNOW OR HAVE SEEN,WOULD YOU SAY THAT, IN GENERAL, YOURCOMPANY OR EMPLOYER IS ... ?

ENGAGED NOT ENGAGED ACTIVELY DISENGAGED

0% 10% 20% 30% 40% 50% 60%

25

48

27

34

52

14

44

46

10Letting people goand reducing the size

of its workforce

Not changing the sizeof its workforce

Hiring new peopleand expanding the size

of its workforce

OPTIMISM ABOUT THE LOCAL ECONOMYRISES WITH ENGAGEMENT LEVEL


0% 20% 40% 60% 80% 100%

53

69

65

81

71

87

Believe hard workcan get you ahead

Believe city or areais a good place for people

starting new business

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Worldwide in 2012, 31% of employees rated their liveshighly enough to be considered thriving, while the majority,59%, were struggling and 10% were suffering. But theseresults varied dramatically according to whether or not those

employees were engaged in their jobs. Engaged employees were more than three times as likely to be thriving in theiroverall lives as those who were actively disengaged. Tisrelationship is meaningful because employees who are bothengaged in their jobs and thriving in their overall lives areless likely to be thrown off course by organizational changesor disruptions in their personal lives.

Engaged employees also exhibit more positive day-to-dayemotions and experiences than not engaged or activelydisengaged employees. Almost all engaged employees (95%)report being treated with respect the previous day. Engagedemployees also experience higher rates of enjoyment andlower rates of anger and stress than their not engaged oractively disengaged counterparts. Perhaps most tellingly,engaged employees are four times as likely as those who areactively disengaged to say they like what they do each day.

As the pressure increases for community leaders toprovide good jobs and increase economic opportunities,engaging employees has never been more relevant. Engaged workforces create external benets to the entire community

through increased economic optimism among residentsand improved performance outcomes among businesses. As Gallup CEO Jim Clifton notes in his 2011 book, TeComing Jobs War , Successful local companies are not justengines for job creation but also engines for local social andcommunity improvement. Trough their effect on businessoutcomes, efforts to improve employee engagement have thepotential to create the economic energy necessary to buildstronger communities.

ENGAGED EMPLOYEES ARE FOUR TIMES

AS LIKELY AS THOSE WHO ARE ACTIVELYDISENGAGED TO SAY THEY LIKE WHAT THEY

DO EACH DAY.

ENGAGED EMPLOYEES ARE MORE THANTHREE TIMES AS LIKELY TO BE THRIVINGAS ACTIVELY DISENGAGED EMPLOYEES


0% 10% 20% 30% 40% 50% 60% 70%

15

63

22

33

60

7

49

46

5

Suffering

Struggling

Thriving

ENGAGED EMPLOYEES HAVE MORE POSITIVEDAILY INTERACTIONS


0% 20% 40% 60% 80% 100%

79

64

44

26

89

81

35

18

95

86

27

13

Experienced angerthe previous day

Experienced stressthe previous day

Experienced enjoymentthe previous day

Treated with respectthe previous day

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PAYROLL TO POPULATION: A NEW MEASURE OFECONOMIC ENERGY

Traditional employment metrics are imperfect indicators of a countrys true

economic situation. As it is generally dened, a countrys unemployment rate

the measure tracked most often worldwide is not affected by changes in

the workforce participation rate. When jobs are scarce, people may drop out

of the workforce or become self-employed in menial labor or subsistence-

level work such as small-scale farming. Such changes can actually lead

to an improvement in unemployment rates, even though fewer people are

contributing signicantly to a countrys economic output.

In 2012, Gallup developed a new employment indicator intended to gauge the prevalenceof good jobs in a countrys economy. Tis metric, called Payroll to Population (P2P),estimates the percentage of the entire adult population aged 15 and older not just thosecurrently in the workforce who are employed full time for an employer for at least 30hours per week. Unlike the traditional unemployment rate, P2P decreases when fewerpeople are working and increases when more people nd full-time work.

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Gallup nds this new measure of employment to bemore strongly related to GDP per capita than any otheremployment metric including unemployment, whichshows little correlation with GDP. Te strength of the

relationship between P2P and GDP per capita demonstrateshow P2P provides a more accurate measure of thepercentage of people who are contributing to a countryseconomic energy.

Gallup does not count adults who are self-employed, workingpart time, unemployed, or out of the workforce as payroll-employed in the P2P metric. Te exclusion of self-employed workers may seem counterintuitive given the importanceplaced on entrepreneurship for creating jobs. However, while self-employment is typically thought of as providingeconomic energy and fueling growth in the developed world,in developing countries, it tends to consist of subsistence work that contributes little to a countrys economic well-being. On a global basis, self-employment has a negativerelationship with GDP per capita.

P2P Rate at26% in 2012

In 2012, the global P2Pgure was at 26%, downslightly from 27% in 2011.

Tis decline reverses theupward trend in P2P sincethe height of the globalrecession in 2009.

On a regional basis,Northern America,

consisting of the U.S. andCanada, has the highestP2P rate (42%) of allregions in 2012, followed by

the group of European countries and areas not in the European Union (40%), which includes Switzerland, Norway, Iceland,and North Cyprus. At the other end of the spectrum, sub-Saharan Africa has the lowest P2P rate (11%) followed by theMiddle East and North Africa region (MENA) at 18%, which was the only other region to have a P2P rate below 20%.

2012 P2P RATE VS. 2012 GDP PER CAPITA,WORLDWIDE

0 10 20 30 40 50 604

6

8

10

12

L O G

O F 2 0 1 2

P E R

- C A P I T A G D P

PERCENTAGE OF POPULATION WORKING FULL TIM

EMPLOYED FULL TIME FOR AN EMPLOYER

2012201120102009

24%

26%

27%

26%

2012 based on surveys in 140 countries

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Te small and medium-sized enterprises(SMEs) that provide the bulk of employmentin most of the developed world are far lesscommon in developing economies. Tis helpsexplain why the percentage working for anemployer is so low in regions like sub-Saharan Africa and South Asia. MENAs relativelylow P2P rate is largely attributable to the highproportion of residents (56% in 2012) who donot participate in the workforce. Many peoplein the MENA region, especially women, voluntarily choose not to work. Youngpeople also tend to be more likely to be outof the workforce than their counterparts inother regions, underscoring the job creationchallenge facing many MENA leaders.

Tough a countys P2P employment rate bearsa strong relationship to its overall economic

output (GDP), P2P is far less predictive of workers life quality ratings, particularly indeveloping regions. Among sub-Saharan Africans participating in their countries laborforce, for example, 15% of those who workfull time for an employer give life ratings high enough to consider them thriving, vs. 11% of those who do not work fulltime for an employer. Employees engagement levels are much more highly related to life evaluations and other indicators oflife quality; across sub-Saharan Africa, 29% of engaged workers are thriving vs. 8% of actively disengaged workers.

Bottom Line

As many countries are still struggling to recover from the global recession, the decline in P2P in 2012 is an unfortunatereversal of the growth seen in 2010 and 2011. Developing countries must strive to create formal job opportunities withdesirable working conditions, which will in turn reduce the need for informal subsistence jobs. Developed countriesmust maintain or grow P2P rates to guarantee residents decent work opportunities and continued economic prosperityand social programs. Further, as more residents come to work full time for employers, an understanding of workplaceconditions that promote their productivity and well-being i.e., that engage them in their jobs will becomeincreasingly important to economic development.

In 2012, the global P2P gure was at 26%, down slightlyfrom 27% in 2011. This decline reverses the upward trend

in P2P since the height of the global recession in 2009.

GLOBAL PAYROLL TO POPULATION EMPLOYMENTRATES, BY REGION

% OF THE POPULATION EMPLOYED FULL TIME FOR A2012

GLOBAL 26%

Northern America 42%

Europe Other 40%

Commonwealth of Independent States 38%

European Union 33%

Latin America and the Caribbean 31%

Balkans 29%

East Asia 28%

South Asia 23%

Southeast Asia 21%

Middle East and North Africa 18%

Sub-Saharan Africa 11%Among adults aged 15 and older; non-Arab expats were excluded from thesample in Arab Gulf countries

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EMERGING MARKETS NEEDENGAGED EMPLOYEES TOGROW

Rapid growth and development in emerging-market countries has dramatically

changed the worlds economic landscape over the past decade. The term

emerging market has long been applied to the so-called BRIC countries

of Brazil, Russia, India, and China. However, economists have more recently

highlighted emerging-market conditions in numerous other countries, including

Mexico, Indonesia, Turkey, and South Africa.

In many cases, fast-paced changes have come with growing pains for these emerging-marketcountries. For instance, some social sectors benet more than others do from economic growthin these countries, resulting in widening income inequality. Gallups surveys from severalemerging-market countries highlight another factor that could be just as threatening to thepace of growth: low levels of employee engagement. Aggregated results for employees in 23emerging markets reveal that about one in 10 employees are engaged at work nearly half theproportion found across 23 developed-market countries. (Countries are classied as emergingmarkets and developed markets according to their current placement in the MSCI Developed-Market and Emerging-Market indices.)

A lack of employee engagement among businesses in emerging-market countries is likely tobecome an increasingly signicant problem. o sustain their growth levels, these countriesmust rely less on commodity production and exports, and focus more on developing theirdomestic consumer markets. Economists have noted that the slowing pace of growth in manyemerging markets is a testament to this need to rebalance their economies.

Growing consumer markets means that businesses must know how to attract and retaincustomers to maintain a competitive edge in the marketplace. Inevitably, these organizations will be those that understand and operate according to a basic principle supported by decades ofGallup research: Engaged employees are the only ones who create engaged, loyal customers.


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INDIA: Labor Unrest Reects Widespread Disengagement

Engaged employees are relatively rare in one of the worldsmost populous emerging markets, India. Gallups 2012 dataindicate that among Indians who work for an employer, 9%are engaged, while 31% are actively disengaged.

However, there is considerable variation in engagementlevels in India by education level and job type. Amongprofessional, managerial, sales, service, and administrative job types, engagement rates were all above 10%, while

they fell below that threshold among job types that moreoften involve physical work such as installation/repair,construction/mining, and manufacturing/production.

Te last two of these job types contain extremely highproportions of actively disengaged employees in India: 44%of construction and mining workers are actively disengaged,

as are 32% of manufacturing and production workers.Employee engagement tends to be somewhat lower acrosscountries among these industries because the traditionalmanagement mentality tends to put process ahead of people.However, the differences appear to be particularly sharp inIndia, a country that has long struggled with entrenchedsocial divisions.

Recent labor unrest in India reects the widespread

frustration in these job sectors. Such incidents have led toconcerns about the social instability and lost productivitycreated by resentment and unhappiness among workers. As Gallup data show, disengaged Indian workers aremore likely to have experienced anger and stress the daybefore the survey and less l ikely to say they were treated with respect.

ENGAGEMENT MORE COMMON IN DEVELOPED-MARKET COUNTRIES THAN INEMERGING-MARKET COUNTRIES


0%10%20%30%40%50%60%70%80%

2 5

2 0

6 5

6 1

1 0

1 9

Developed-marketcountries

Emerging-marketcountries


Elementary education or less 7% 58% 35%Secondary education 12% 69% 19%Tertiary education 22% 70% 8%

Managers/Executives/Ofcials 18% 72% 10%Professional workers 17% 71% 12%Sales workers 15% 62% 23%Clerical/Ofce workers 14% 74% 12%Service workers 11% 62% 27%Construction/Mining workers 7% 49% 44%Transportation workers 7% 63% 30%Farming/Fishing/Forestry workers 7% 56% 37%Manufacturing/Production workers 4% 64% 32%Installation/Repair workers 4% 74% 22%

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Improving industrial workers outlook is critical for Indiaseconomic future. Economists note that the countrysmanufacturing base must grow for India to experiencemore broad-based development and provide enough jobsfor the 250 million young people who will soon enterthe workforce.

Expanding its manufacturing base means making Indiasregulatory environment more hospitable to manufacturersand tackling structural problems such as discrepanciesbetween the salaries of permanent workers and the largenumber of temporary contract workers in these industries.Further, though the U.S. Bureau of Labor Statisticsestimates that two-thirds of Indias manufacturing outputis produced in the formal economic sector, most of themanufacturing jobs are in the informal sector i.e., small-

scale enterprises primarily operated by family members andunregulated by any agency or state government. One of thechallenges facing Indias manufacturing sector is to movemore informal-sector employees to larger formal-sector

businesses, which tend to be more efficient because theyreap economies of scale and have greater access to creditfrom formal nancial institutions.

Larger manufacturing rms to seek to retain the dynamismand entrepreneurial spirit of employees in smaller businessesduring this transition. Tat means helping employees inthese workplaces feel respected by their managers andengaged in their jobs. In this sense, Gallups employeeengagement research offers good news, showing thatthe same management and workplace factors that deneengagement predict improved performance outcomes acrossindustries and job types. Managers in these manufacturingcompanies can do a lot to close the communication gap withemployees and give them a greater sense of psychologicalcommitment to their work.

ENGAGING IND USTRIAL EMPLOYEES

Considering the high degree of routine that typicallycharacterizes jobs in manufacturing and construction,

managers in India may need to work hard to establishindividualized feedback and recognition practices among

workers. Managers in Indias industrial sectors may alsoneed to go to greater lengths to guarantee that all employeeshave regular opportunities to express their opinions about

working conditions and their ideas for improvement. Inmanufacturing and construction workplaces, where safetyissues are often a concern, such communication is essentialnot only for helping employees feel respected, but also forreducing their risk of injury on the job. As noted in Gallups

2012 Q 12

meta-analysis of 192 organizations in 34 countries, workgroups in the top quartile of employee engagementscores had 48% fewer safety incidents than workgroups inthe bottom quartile.

Improving communication among managers and workersmay help improve the desirability of manufacturing

jobs among Indian youth. Experts note that to sustainits economic development, India must expand jobopportunities in all economic sectors. Realizing the

MORE THAN ONE-THIRD OF INDIASACTIVELY DISENGAGED EMPLOYEESEXPERIENCED ANGER AND STRESS THEPREVIOUS DAY


0% 20% 40% 60% 80% 100%

68

35

39

73

30

38

90

19

18

Experienced stressyesterday

Experienced angeryesterday

Treated with respectyesterday

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countrys manufacturing potential will be particularlyimportant in this respect. Leading the way will be thosecompanies that have learned to promote workplace harmonyand boost productivity by harnessing the energy and

initiative of engaged employees.

BRAZIL: High Engagement at Risk

Not all emerging-market countries workforces postemployee engagement results as low as those in India. InBrazil, another of the worlds largest emerging economies,Gallups 2011-2012 study nds that engaged employeesoutnumber those who are actively disengaged by more than2-to-1 27% vs. 12%, respectively. Tough these resultsleave room for improvement, this ratio is one of the mostfavorable among 19 Latin American countries for whichindividual results are available.

For most of the past decade, Brazils economy sawremarkable growth. ens of millions of Brazilians escapedpoverty during that time as the countrys middle classexpanded. Gallups surveys indicate that the proportion ofBrazilians satised with their standard of living climbed

from 66% in 2006 to 77% in 2010 before leveling off.Brazilians overall life evaluations reect their economicoptimism; in 2012, 59% gave life ratings high enough toclassify them as thriving, among the highest gures in

the region.

FUTURE LESS CERTAIN FOR BRAZILS WORKFORCE

Whether Brazilians positive views are sustainable overthe next decade, however, remains to be seen. Brazilseconomic boom has stalled since 2011, and the countrysunemployment rate has begun to rise. More Brazilians arelooking for jobs, and the quality of the jobs they can nd will relate to how they view their lives. Gallups 2011-2012employee study reveals that among employed Brazilians,48% of those who are actively disengaged at work arethriving in their overall l ives vs. 77% of those who areengaged in their jobs. In fact, actively disengaged employeesare somewhat less likely to be thriving than Brazilians whoare unemployed (54%).

Te economic slowdown has been accompanied byfrustration among Brazilians who feel the governmenthas failed to increase access to economic opportunities. In2013, widespread protests erupted over various grievances,

including lack of improvements to infrastructure and publicservices. Gallups tracking polls suggest the protests reectbroader public sentiment; Brazilians satisfaction witheducation and healthcare services in the city or area wherethey live has declined signicantly in recent years.

Protestors have pointed to the money being spent onpreparations to host the FIFA World Cup in 2014 andthe 2016 Summer Olympics as examples of misspentresources. However, the events are centerpieces of theBrazilian governments effort to promote the country as aninternational tourist destination. Te contribution of Brazilstravel and tourism industry to the countrys GDP grew by7.8% in 2012, and the industry currently supports about 7.7million jobs in the country.

Te hope is that dynamism in the labor-intensive tourismindustry will lead to signicant long-term job growthin Brazils service sector. Te countrys relatively strongemployee engagement results bode well for the success

LIFE EVALUATIONS AMONG LATIN

AMERICAN POPULATIONSPERCENTAGE THRIVING IN 2012

0% 10% 20% 30% 40% 50% 60% 70% 80%

63

59

58

57

49

48

46

45

45

41

37

37

32

31

26

26

22

22

14

4HaitiHondurasNicaragua

Dominican RepublicEl SalvadorParaguay

PeruGuatemala

BoliviaEcuadorPanama

ChileSurinameArgentinaUruguay

ColombiaVenezuela

MexicoBrazil

Costa Rica

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of such a strategy, which will rely largely on front-lineemployees ability to satisfy customers a key performanceoutcome of engaged workplaces.

Among Brazilian workers in service-oriented jobs, 28% areengaged, while 13% are actively disengaged. Te resultingratio of 2.2-to-1 is similar to the results among the countrys

workforce overall. However, there is much room forimprovement.

As an example of improvement, one Brazilian servicecompany has embraced employee engagement as animportant part of its business strategy, expandinggeographically and moving to the leadership position in

its market. Measuring engagement every six months andtraining managers on how to devise and implement actionplans based on the results, the company has seen its ratio ofengaged to actively disengaged employees rise from 2.8-1 in2009 to 11.8-1 in 2013. More importantly, the companysemployee-focused management strategy has laid thegroundwork for high productivity and service excellence.

As Brazil grapples with growth challenges over the coming years, it will be important for all businesses operating inBrazil from multinational corporations to small-businessstartups to focus on management practices that helpemployees stay engaged in their work and condent in theireconomic future.

Emerging Markets: Bottom Line

Gallups 2011-2012 data indicate that employee engagement results vary signicantly at the national level amongemerging economies and within countries among different social sectors and job types. However, employeeengagement is fundamentally a local phenomenon driven by managerial talent and other conditions unique toeach workplace.

Tat said, in many countries undergoing rapid growth and development, most workplaces are failing to realizethe productivity and well-being gains associated with high levels of employee engagement. Actively disengagedemployees signicantly outnumber engaged employees in Mexico, South Africa, Hungary, and urkey, to name afew. An important part of the ongoing development of these countries will be a shift toward workplace conditionsthat use employees individual strengths to empower them to make positive change in their organizations. Tis inturn will help employees provide better services to their customers.

IN THE CITY OR AREA WHERE YOU LIVE, ARE YOU SATISFIED OR DISSATISFIED WITH TAMONG BRAZILIANS AGED 15 AND OLDER

EDUCATIONAL SYSTEM OR SCHOOLS AVAILABI LITY OF QUALITY HEALTHCARE

20%

30%

40%

50%

60%

201220112010200920082007

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SPOTLIGHT: CHINA

Economists and policymakers have said for years that Chinas investment-

and export-driven growth is increasingly unsustainable and that Chinese

consumers need to spend more money to support the countrys expanding

economy. In recent years, the Chinese government has implemented stimulus

programs that offer, for example, rebates for rural Chinese who buy home

appliances and subsidies for upgrading their vehicles.

Ultimately, however, the task of engaging Chinese consumers is in the hands of thousandsof businesses working to build strong brand reputations and harnessing the energy andinitiative of highly motivated employees to better fulll customers needs. Tose efforts willlargely come from engaged workers who are more likely than those who are not engaged oractively disengaged to say they are extremely productive in their current jobs.

IN YOUR CURRENT JOB,DO YOU FEEL YOU AREEXTREMELY PRODUCTIVE,OR NOT?ASKED OF CHINESE ADULTS,AGED 18 AND OLDER,WHO WORK FOR AN EMPLOYER

Percentage "yes, extremely productive"

67

7 9

6 7

5 3

Actively disengagedNot engagedEngaged

34


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Engagement Low Across Education Levels, Job Types

Unfortunately, however, China still has one of the lowest rates of employee engagementin the world. Just 6% of Chinese workers overall are engaged in their jobs, while 68% arebiding their time in the not engaged category and 26% are actively disengaged and likelyto be disrupting the efforts of their coworkers.

Whats more, low engagement is pervasive across Chinese workers with different job typesand education levels. Te 7% engagement rate among college-educated workers is notmeaningfully different from the 5% rate among those with an elementary education or less. And even among professional workers and managers, job types often characterized by highlevels of status and autonomy, engagement is relatively rare at 8%. More worryingly, 4% ofsales and service workers on which Chinese companies will rely to attract new customersin an increasingly consumer-based economy are engaged.

ENGAGED NOT ENGAGED

ACTIVELY

DISENGAGED

Elementary education or less 5% 64% 30%Secondary education 5% 71% 24%

ertiary education 7% 72% 21%

Professional workers and managers/executives/officials

8% 71% 20%

Construction/mining workers andmanufacturing/production workers

6% 67% 26%

Sales workers and service workers 4% 69% 27%Clerical/office workers 3% 68% 29%

Chinese Employees Dont Feel They Have a Voice at Work

What will it take to engage more Chinese workers in their jobs? In many cases, employersneed to examine their management practices and criteria for selecting managers. GallupCEO Jim Clifton has noted that Chinese workplaces are often characterized by command-and-control hierarchical structures, and in many cases, people are not selected as managersfor their ability to engage and develop employees.

LOW ENGAGEMENT

LEVELS ARE

PERVASIVE ACROSS

CHINESE WORKERS

WITH DIFFERENT

JOB TYPES AND

EDUCATION LEVELS.

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Tis practice is particularly troubling as Gallupsresearch shows that managers have a critical impact ontheir employees engagement levels. Chinas results areparticularly low on item 7 (At work, my opinions seem to

count.) of Gallups 12-item employee engagement (Q 12)survey. Only about one in eight Chinese employees stronglyagree with this statement, compared with a median ofmore than one in four employees among all 142 countriesincluded in the current study.

At the macroeconomic level, Chinese leaders seek to reformthe countrys economy from one based predominantlyon manufacturing and dominated by large state-ownedenterprises to one that better promotes innovation andentrepreneurship as key sources of indigenous growth.

Tis diversication will require a greater focus on anothercritical aspect of employee engagement: ensuring that

workers are in roles that best use their talents. Gallups 2012surveys reveal that 57% of Chinese workers say their jobis ideal for them among the lowest gures in East and

Southeast Asia.

DESPITE CHINAS REMA

ECONOMIC GROWTH, IT

RESIDENTS LIFE RATIN

HAVE RISEN ONLY MOD

RECENT YEARS.

WOULD YOU SAY THAT YOUR JOB IS THEIDEAL JOB FOR YOU, OR NOT?

PERCENTAGE SAYING YES, IT IS IDEAL

0% 20% 40% 60% 80% 100%

86

80

79

78

73

72

71

67

65

58

57

57

55South Korea

China/Hong Kong

Taiwan

Myanmar

Japan

Vietnam

Singapore

Thailand

Indonesia

Cambodia

Malaysia

Laos

Philippines

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Workplace conditions are also important for improvingthe Chinese peoples quality of life. Despite Chinasremarkable economic growth, its residents life ratingshave risen only modestly in recent years. In 2006, 13%

of Chinese evaluated their present and future liveshighly enough to be considered thriving; in 2012, thatgure was at 20%. Among Chinese employees, however,perceptions of life overall are strongly linked to their levelof engagement at work. Engaged workers are four times aslikely as actively disengaged workers to be thriving 32% vs. 8%, respectively.

Further, engaged workers in China are more positive abouttheir day-to-day experiences on a broad range of measures.For example, they are more likely than actively disengaged workers to say that they smiled or laughed a lot the previousday. Engaged workers in China are also more likely to saythey learned or did something interesting that day and lesslikely to have experienced stress or anger.

Te powerful relationship between Chinese employees workplace experience and their overall outlook on lifehas important implications for stability in a country whose leaders have made social harmony a top priority. As more Chinese organizations come to adopt modern,

employee-focused management styles, those that retainrestrictive, controlling management structures reminiscentof the countrys once-dominant danwei work unitsare increasingly likely to become breeding grounds for worker dissatisfaction.

Te next 20 years will be a time of rapid change for the Chinese economy as government and business leaders focus on thetransition to more sustainable sources of development and job growth. Along the way, policymakers will be concerned withimproving the way Chinese people view their lives and avoiding social instability. Changing workplace conditions so thatChinese employees are more likely to feel motivated and empowered will speed the countrys transition to a more consumer-focused economy, as well as boost their quality of life.

ENGAGED EMPLOYEES IN CHINA REPORTMORE POSITIVE DAILY EXPERIENCES

ENGAGED NOT ENGAGED ACTIVELY DIS ENGAGE D

0% 20% 40% 60% 80% 100

68

34

49

20

81

50

39

15

89

62

29

11

Experienced angeryesterday

Experienced stressyesterday

Learned or didsomething interesting

yesterday

Smiled or laugheda lot yesterday

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After decades of research into human behavior in the workplace, Gallupdiscovered unique insights and strategies to help companies worldwide transformthe way they do business. o accelerate engagement and optimize growth within organizations, Gallup established important approaches that leaders inany country or region can adopt to maximize the role human behavior plays inthe workplace.

Finding the right employees and managers is essential to an organizationsnancial outcomes. Gallup helps companies scientically select people whohave the potential to be top performers and supports organizations in hiring andpromoting employees with the talent to boost employee engagement.

It is not enough to put the right people in the r ight jobs. Companies mustinvest in their employees greatest talents to optimize their performance.Gallup helps organizations discover what is naturally right with theiremployees by identifying employees unique strengths and then building onthem to help employees achieve their full potential.

When used with an employee engagement initiative, Gallups research has proventhat investing in employee selection, strengths, and well-being has the power toboost the results companies would receive from increasing engagement alone.

WAYS TO ACCELERATE

EMPLOYEEENGAGEMENT3INVESTING IN EMPLOYEE

SELECTION, STRENGTHS,

AND WELL-BEING

CAN BOOST

ENGAGEMENT RESULTS.

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SELECT THE RIGHT PEOPLE

Though many organizations focus on strengthening their current employees engagement, few have

realized the potential effect the selection of managers and leaders can have on engagement and

organizational performance. Ultimately, people engage people. Gallup helps organizations ensure they

select the right people to increase their overall engagement.

Boosting Engagement Through ManagerSelection

Whom companies name as manager is one of the mostimportant decisions they make, given that managers playa critical role in driving engagement in any organization. Whether hiring from the outside or promoting from within,organizations that scientically select managers for theunique talents it takes to effectively manage people greatlyincrease the odds of employee engagement. Instead of usingmanagement jobs as promotional prizes for all career paths,companies should treat them as unique roles with distinctfunctional demands that require a specic talent set. Tereality is that many people who are the best performersin their current roles do not have the talents necessary toeffectively manage people.

Gallup researchers have spent decades studying greatmanagers talents naturally recurring patterns of thought,feeling, and behavior that are productively applied inthe role and have discovered that talents are powerfulpredictors of organizational engagement and performance. While there are many factors to consider when hiring or

promoting, the most fundamental is how a person is likelyto behave in the role and whether he or she can fulll theroles responsibilities to excel.

Great managers engage their teams on several levels. First,they display genuine care and concern for their people.By building strong, trusting relationships with their staff,they can engender an open and positive work atmospherein which employees feel supported and engaged. Second,

8/11/2019 State of the Global Workpl

State of the Global Workplace Report 2013.pdf

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Transcript of State of the Global Workplace Report 2013.pdf