Leadership Opportunities

Increased Bottom Line Results

Through Improved Staff
Engagement








Slide 1
Theme


Kiss Goodbye to Commodity
Engineering?

Kiss goodbye to Commodity
Staffing!

Slide 2
Improving Staff Engagement is a Business
and Leadership
Opportunity:
To attract, motivate and retain talented staff
To build and sustain business performance through people

Challenge:
To understand how to measure and build Engagement
To provide the leadership and perseverance required to engage
staff

Imperative:
Because of the changing dynamics of the labour markets
Because people are increasingly the source of competitive
advantage (especially in knowledge worker sectors)

Slide 3
Defining Employee Engagement
Engagement is the energy, passion, or fire in the belly
employees have for their employer

StayDesire to be
a member of the
organisation

SaySpeak
positively about the
organisation

StriveGo beyond
what is minimally
required
Defining
Engagement

Slide 4
The 21st Century Workforce
The New Dynamics:

Globalisation

Movement of workers across national boundaries

Working virtually (place and time less relevant)

Different attitudes; generation X/Y verses baby boomers

Strong desire for autonomy and empowerment

Shift to knowledge economy/workplace



Slide 5
The 21st Century Workforce
The New Demographics:

The workforce is aging.

The number of younger workers overall is declining

The overall size of the workforce is shrinking

The workforce is more educated

The workforce is more diverse:
More ethnic groups
More migrant workers
More females


Slide 6
The 21
st
Century Workforce
The New Demographics in New Zealand

The workforce is aging. The median age will rise from 36 in 1991 to
42 by 2020
- Workers aged 65+ expected to increase from 25k in 1991
100k by 2021

The growth of the workforce slows after 2011 and declines after
2020.

An increasing proportion of Maori, Pacific Islanders and
Asians
- 25% of workforce currently born outside NZ

















Slide 7
21st Century Workforce
Some Implications:
More jobs than workers available. Especially in knowledge
worker sector
Power in the employment relationship shifting to workers
Challenges of managing a diverse workforce greater and more
complex than previously
20th Century strategies for managing people increasingly
redundant:
Think differently and strategically about longterm worker
requirements
One size fits all approach less and less relevant
Employment branding increasingly important
Greater and better use of people metrics and data

Slide 8
And Yet..
We follow the old patterns.
- CEOs ranked engaging ees 6
th
and leveraging diversity 17
th
as
top management concerns for the future. (Conference Board Survey)
- 60% of organisations dont account for workforce aging (SHRM)
- HR spends less than 25% of its time thinking about and
preparing for the 21
st
Century workforce. (Hewitt)

And, employees are giving us signals
- Only 1 out of 2 workers in NZ are engaged
- 28% of workers say they are actively in the job market
- 40% would like to work elsewhere within 1 year




Slide 9
Theyre Just Employees
Veterans
Baby
boomers
Gen X Gen Y
Core Values:
Diversity
Thinking globally
Balance
Techno literacy
Fun
Informality
Self Reliance
Pragmatism
Core Values:
Optimism
Civic duty
Confidence
Achievement
Sociability
Morality
Street smarts
Diversity
Core Values:
Hard work
Duty before pleasure
Honour
Delayed reward
Patience
Law and order

Core Values:
Optimism
Team orientation
Health & wellness
Personal gratification
Involvement
Work
Youth
Job security
Rewards
Recognition
Autonomy
Meaningful
work

Slide 10
21st Century Workforce
The Imperative:
The competition for talent will intensify
The competition for talent will be a constant for years to come
We will need to be very good at attracting, motivating and
retaining talent to sustain and grow our businesses, especially
in the knowledge sector.


In the context of the 21
st
Century Workforce
understanding how engaged our staff are in our
business and how to build Engagement becomes
a key business and leadership strategy.

Slide 11
Human Capital
Human Capital
Our workforce is our human capital;
70% of organisational spending is human capital related
Use it wellwe generate value and gain competitive advantage
Use it poorlywe undermine value and lose competitive advantage
Human capital is a companys biggest asset and its largest liability

Human Capital is the experience, knowledge, relationships
and energy people bring to work:

An increasing imperative to measure and report on human
capital
Measuring Engagement is one of the new human capital
metrics on the block

Slide 12
Human Capital Measurement
How:
Efficiency measures traditional, most prevalent, operational,
lag indicators, cost focussed, e.g:
Employee headcounts, turnover rates, training costs by employee,
etc.
Effectiveness Measures new, less prevalent, focussed on
HRs impact on staff, shift to value creation (not just costs), e.g:
Percentage of new staff performing well after 6 months, revenue
per employee; retention of high performers, percentage of engaged
employees, etc.
Impact Measures the Holy Grail, strategichow people
directly impact financial and other business results, e.g:
Measures that show relationship and causation between human
capital and profitability


Slide 13
Human Capital Link to Building Engagement
Engagement is a fundamental Human Capital value added
metric

But its more than that.

Engagement methodology also provides a roadmap for how
to build Engagement amongst your employees.

If you want to take the journey.

Those that do will gain competitive advantage through their
people
The best companies now know, without a doubt,
where productivityreal and limitless productivity
comes from. It comes from challenged, empowered,
excited, rewarded teams of people. It comes from
engaging every single mind in the organization,
making everyone part of the action, and allowing
everyone to have a voicea rolein the success of
the enterprise. Doing so raises productivity not
incrementally, but by multiples .
Jack Welch
Former Chairman and CEO of General Electric
Human Resources, 10 September 2003


Slide 15
Defining Employee Engagement
Engagement is the energy, passion, or fire in the belly
employees have for their employer

StayDesire to be
a member of the
organisation

SaySpeak
positively about the
organisation

StriveGo beyond
what is minimally
required
Defining
Engagement

Slide 16
STRIVE
3
STAY
2
SAY
1
Engaged
or
Not
Engaged
Respondent 1
Measuring Current Levels of Engagement
Engagement is measured at the individual levelby taking
the average rank (on a sixpoint scale) of an individuals
responses to the Engagement items around Say, Stay and
Strive we can determine whether they are engaged or not
engaged


Slide 17
Distribution of Engagement
It is possible to categorise employees by the extent of their
Engagement which helps us to understand how large the
task is of engaging more employees
12%
32%
25%
32%
0%
20%
40%
60%
80%
100%
Disengaged Not Engaged Nearly Engaged Engaged
There is strong opportunity
to move employees from
Nearly Engaged to
Engaged

Slide 18
Defining Employee EngagementThe
Drivers
Company Practices
People Practices
Policies
Diversity
Performance Assessment
Company Reputation
Total Rewards
Pay
Benefits
Recognition
People
Senior Leadership
Immediate Manager
Coworkers
Customers
Engagement
Opportunities
Career Opportunities
Learning/Development

Quality of Life
Work/Life Balance
Physical Work Environment
Work
Work Activities
Resources
Processes

Slide 19
Satisfaction
Commitment
Engagement
Employee Research Over Time
P
o
s
i
t
i
v
e

C
o
r
r
e
l
a
t
i
o
n

W
i
t
h

B
u
s
i
n
e
s
s

P
e
r
f
o
r
m
a
n
c
e

Lower
Higher
How much people
like it here
How much people want to
improve business results
How much people
wantand actually
doimprove
business results
Engagement The Evolutionary Journey

Slide 20
Engagement Research
Hewitt Proprietary Research:
Hewitts Engagement and Best Employer studies around the
world covers more than 2,000 companies and over four million
employees
Comparison of Engagement Scores with actual business results
(Total Shareholder Return [TSR] and sales growth) over the last
decade
DoubleDigit Growth (DDG) Research:
Hewitt examines the characteristics that contribute to the
consistent success of DDG companies
Academic Research:
Australian Graduate School of Management works with Hewitt
to analyse and understand Hewitt Best Employer results

Slide 21
Source: Best Employers to Work for in Australia 2001 and 2003 studies
19982000
18%
62%
25%
48%
0%
10%
20%
30%
40%
50%
60%
70%
Other
Organisations
Other
Organisations
Best
Employers
Best
Employers
Average Revenue Growth
Average Profit
Growth
20002002
13%
7%
21%
-12%
-20%
-10%
0%
10%
20%
30%
Best
Employers
Best
Employers
Average Revenue Growth
Average Profit
Growth
Other
Organisations
Other
Organisations
Engagement and the Link to Business
Performance
Hewitt Best Employers have stronger three and fiveyear
growth in revenues and profits than Other Organisations in
the study and typically outperform Other Organisations in
their industry sector


Slide 22
Hewitt Best Employers and Financial
Performance
Country/Region Financial Measure The Best The Rest

Asia Average annual growth rate, 19992001

14.9% 10.1%
Australia Average revenue growth rate, 20002002 13% 7%
Australia Average profit growth rate, 20002002

21% -12%
Canada Fiveyear annualised TSR, 19972001

4.6% 1.5%
Canada Fiveyear annualised TSR in excess of
industry subindex
11.2% 9.3%

Slide 23
DoubleDigit Growth Companies
Employee Engagement at DDG companies exceeds
employee Engagement at singledigit growth companies by
over 20%
Commitment to Engagement by DDG companies is reflected
in:
Analysing metrics such as Engagement data to understand
markets, business and talent
Focusing on a multifaceted set of elements that contribute to
growth, including employee Engagement
Fostering a collective will, a passion, determination and
emotional energy to overcome obstacles and meet goals
Building the Engagement of key employees, especially high
potentials
Engagement does drive resultsdata suggests that Engagement levels need to be at 60% or higher
to drive results

Slide 24
Benchmarking Employee Engagement
Employees are indifferent to their employers
and more apt to switch for slightly better
offers. Employees may stay but not
contribute
Characterised by higher
levels of uncertainty, often
due to reorganisation or
mergers
Most employees are
engaged and
contribute to the
achievement of the
company goals
Three quarters
of employees
are not engaged
Destructive
Zone
Serious
Zone
Indifferent
Zone
High
Performance/
Hewitt
Best Employer
Zone
25%
100% 0%
60%
40%
Average TSR = 20.2%
Average TSR = 5.6%
Average TSR = 9.6%

Slide 25
A Few Examples of Other Insights From the
Engagement Data







Average Engagement Scores across Other Organisations
is 52%
Average Engagement Scores of Hewitt Best Employers
is 77%
Around the world, one out of every two
employees is engaged at work

Slide 26
Common Engagement Drivers Across
Companies
Percentages of Companies with driver as one of top three in
potential positive impact
83%
64%
61%
60%
59%
47%
30%
Career
Opportunities
Company
Practices
Senior
Leadership
Work
Resources
Recognition Business Unit
Leadership
Pay

Slide 27
Engagement by Age
61%
55%
51%
48%
51%
0% 20% 40% 60%
55 years and over
45 to 54 years
35 to 44 years
25 to 34 years
20 to 24 years
Based on data from 25,459 Australia and NZ employees
8

Slide 28
Less Engaged
Resistant to Change
Increased Absenteeism
Less Enthusiasm
for Technology
Cynical
Less Energy
Prejudices Against Older Workers?
Shorter Payback
from Training
7

Slide 29
Engagement by Level
52%
50%
70%
0% 20% 40% 60% 80% 100%
Team Member
Manager/Professional/Senior
Specialist
Senior Management

Slide 30
Engagement by Organisational Change (Case
Study)
59%
50%
0% 20% 40% 60% 80% 100%
After
Before

Slide 31
Leadership
commitment
Compelling
promise to
employees
Aligned
people
practices
Connection
to
the company
and strategy
Engaged
employees
Differentiated
high
performance
culture
Measure the
impact on
strategy
What the Best Have in Common

Slide 32
Conclusion
The competition for talent means that we have to be very
good at attracting, motivating and retaining talent
Our talented human capital is our biggest asset and liability
and we need to measure how well its adding value
Engagement is an increasingly important human capital
metric because:
Engagement levels correlate with business performance
Measuring Engagement tells us how well we are doing in the
competition for talent
Driving Engagement levels higher improves our ability to attract,
motivate and retain talent and so generate value from our
human capital investment.



Slide 33
Conclusion
Final Point



Building an Engaged Workforce means
kissing goodbye to Commodity Staff