Co

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Corporate Leadership Council

Driving Performance and Retention

Through Employee Engagement
A Quantitative Analysis of Effective Engagement Strategies

cil

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le

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re

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e

Road Map for the Discussion

A Unique Point in Time

Sizing the Opportunity

The Voice of the Workforce

Reframing the Organizations Response

The Evolving Employment Contract

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

What Is Employee Engagement?

Competing frameworks
and definitions

...contradicting advice

and widely differing

claims for ROI

Sample Engagement Definitions

Sample Engagement Advice

Claimed Benefits of Engagements

Engagement is a positive emotional

connection to an employees work
Engagement is affective, normative, and
continuance commitment
Engaged employees are inspired to go
above and beyond the call of duty to
help meet business goals

Become a great place to work

through building trust in colleagues and
ensuring employee pride and enjoyment

Increase total shareholder return by up

to 47 percent

Segmentation is the key to managing

employee commitment and productivity

Better customer feedback

Great managers are key to achieving an

engaged workforce

Higher sales

Reduce absenteeism
Less shrinkage of inventory

To achieve motivation, give the

employee a kick in the pants

lead to conceptual confusion and no clear road map for action

And Were Supposed to Do What?

Frankly, we dont even agree on what it is were attempting to change, much less how to go
about changing it.
SVP of Administration
Financial Services Company

Source: Allen, Natalie, and John Meyer, Affective, Continuance, and Normative Commitment to the Organization: An Examination of Construct Validity, Journal of Vocational Behavior, 1996; Herzberg, Frederick. One
More Time: How do You Motivate Employees? Harvard Business Review (Classic), January 2003; Coffman, Curt and Gabriel Gonzales-Molina, Follow This Path: How the Worlds Greatest Organizations Drive Growth
by Unleashing High Potential, New York: Warner Books, 2002; Towers, Perrin, Understanding What Drives Employee Engagement, 2003; Age Wave and Harris Interactive, The New Employee/Employer Equation, 2003;
Watson Wyatt, WorkUSA2000: Employee Commitment and the Bottom Line, 2000; Hay Group, The Retention Dilemma: Why Productive Workers LeaveSeven Drivers for Keeping Them ; Hewitt Associates, LLC, Best
Employers in Canada, 2003, http://www.greatplace towork.com/; Corporate Leadership Council research.
2004 Corporate Executive Board

Bringing It All Together

Engagement is the extent to which employees commit to something or someone in their
organization and how hard they work and how long they stay as a result of that commitment

Two Commitment
Types

Rational Commitment
The extent to which employees believe that
managers, teams, or organizations are in their
self-interest (financial, developmental,
or professional).
Emotional Commitment
The extent to which employees value, enjoy
and believe in their jobs, managers, teams, or
organizations.

Four Focal Points

of Commitment

Day-to-Day Work

Team

Direct Manager

Organization

The Outputs of Commitment:

Discretionary Effort and Intent to Leave
Discretionary Effort
An employees willingness to go above and
beyond the call of duty, such as helping
others with heavy workloads, volunteering
for additional duties, and looking for ways to
perform their jobs more effectively.

Performance

Intent to Stay
An employees desire to stay with the
organization, based on whether they intend
to look for a new job within a year, whether
they frequently think of quitting, whether they
are actively looking for a job or have begun to
take tangible steps like placing phone calls or
sending out rsums.

Attrition

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

The 2004 Employee Engagement Survey

Measuring Employee Engagement

Assessment Methodology
The Council assessed the engagement level of employees through 47 questions that measured the strength of rational and emotional
commitment to day-to-day work, direct manager, team, and organization, along with the level of discretionary effort and intent to stay.

Sample Emotional Commitment

Questions
I believe in what I do every day at work
Strongly
Disagree

Strongly
Agree

I enjoy working with my team

Strongly
Disagree

Strongly
Agree

When speaking to others, I speak highly

of my supervisor
Strongly
Disagree

Strongly
Agree

I am proud to work for my organization

Strongly
Disagree

Strongly
Agree

Sample Rational Commitment

Questions*
The best way for me to develop my skills
in my organization right now is to stay
with my current team
Strongly
Disagree

Strongly
Agree

The best way for me to advance in this

organization is to stay with my current
supervisor

Sample Discretionary Effort

Questions
I frequently try to help others who have
heavy workloads
Strongly
Disagree

There are days when I dont put much

effort into my job
Strongly
Disagree

Strongly
Disagree

Strongly
Agree

The best way for me to advance my

career is to stay with my current
organization
Strongly
Disagree

Strongly
Agree

My performance would suffer if I worked

with any other team in my organization

Strongly
Disagree

Strongly
Agree

When needed, I am willing to put in the

extra effort to get a job done
Strongly
Agree

I intend to look for a new job with

another organization within the next year
Strongly
Disagree

Strongly
Agree

I frequently think about quitting my job

and leaving this organization
Strongly
Disagree

Strongly
Agree

I am actively looking for a job with

another organization
Strongly
Disagree

Strongly
Agree

I have recently made phone calls or sent

out my rsum in order to find a job with
another organization
Strongly
Disagree

Strongly
Agree

Strongly
Agree

* Rational commitment to day-to-day work was not measured due to its similarity to rational commitment
to the team, direct manager, and organization.
2004 Corporate Executive Board

Strongly
Agree

I am constantly looking for ways to do my

job better

Strongly
Disagree
Strongly
Disagree

Strongly
Agree

Sample Intent to Stay

Questions

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

With Sincere Thanks

More than 50,000 employees from 59 organizations, 30 countries, and 14 industries participated in the 2004 survey

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

Survey Demographics
Organizational Level, Function, and Geography of the Survey Participants
Management Level

Work Function

Division
Senior Executive
Head/VP

Department/
Unit Manager/
Director

< 1%

2%

Sales 6%

Geography

Corporate Admin

4%

17%
Other1

13%

15%

9%

South
Africa

Other2

2%
5% 4%

14%
75%

Finance/Accounting

9%

North
America

5%

Operations
Non-Management

Customer
Services

6% Engineering
and Design
8%

31%

68%

Supervisor/
Administrator

Australia/ Europe
New Zealand

IT

Human Resources

4% 3%

Marketing

Manufacturing

Age, Gender, and Tenure of Survey Participants

Age

Gender

Tenure with Company

31 Years or More

61 Years or Older

2%

5160
Years Old

19%

3%

1830 Years Old

2130 Years

14%

16%
Female

32%

31%

3140
Years Old

46%

54%

Male

1120
Years

22%

10 Years
or Less

61%

4150
Years Old

Retail (2%), Strategy/Planning (2%), Research and Development (1%), Quality Control (3%), Purchasing
(2%), Legal (2%), Communications (3%), Actuaries (3%), Pharmacists (1%), and Miscellaneous (12%).
2
Includes Asia (1%), South America (1%), and Pacific Rim (<1%).
Note: Percentage totals may not equal 100 percent due to rounding.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

State of Workforce Engagement

Good News, Bad News

Approximately 13 percent of the overall
workforce is highly uncommitted

76 percent are up for grabs, neither

fully committed or uncommitted

and the remaining 11 percent

are highly committed

The Disaffected

The Agnostics

The True Believers

20%

29%

27%
11%

13%

Strongly
Disagree

Strongly
Agree

Characteristics
Exhibit very strong emotional and rational noncommitment to day-to-day work, the manager, the
team, and the organization

Strongly
Disagree

Strongly
Agree

Characteristics
Exhibit strong emotional or rational commitment
to one focus, but only moderate commitment to
remaining foci

Strongly
Disagree

Strongly
Agree

Characteristics
Exhibit very strong emotional and rational
commitment to day-to-day work, the manager, the
team, and the organization

Twenty percent lean toward non-commitment,

twenty-seven percent lean toward strong
commitment, while twenty-nine percent are truly
ambivalent
Poorer performers who frequently put in minimal
effort

Employees neither go to great lengths in their jobs,

nor do they shirk their work

Four times more likely to leave the organization than

the average employee

Significant variation in intent to stay

Nine times more likely to leave the organization than

the true believers

Higher performers who frequently help others with

heavy workloads, volunteer for other duties, and are
constantly looking for ways to do their jobs better
Half as likely to leave the organization as the average
employee
Nine times more likely to stay with the organization
as the disaffected
Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

Engagement Is Not Segment-Specific

No Easy Litmus Tests

Quick rules of thumb will prove inadequate as a means
of identifying the committed and uncommitted
Generation X Slackers?
12.0%

Overworked Managers?

Single Parents with Children?

11.7%

12.0%

10.6%

Percentage
of Employees
with Highest 6.0%
Commitment
Levels

Percentage
of Employees
with Highest
Commitment
Levels

0.0%

11.4%

10.8%

12.0%

Percentage
of Employees
with Lowest
Commitment
Levels

6.0%

Employees
Under 40

6.0%

0.0%

0.0%
Employees
Over 40

10.8%
9.9%

Single
Parents
with Three
Children

Managers
Managers
Working
Working
Fewer Than
More Than
60 Hours per 60 Hours per
Week
Week

Single
People
with No
Children

Percentage of Highly Committed and Uncommitted

by Employee Demographic Group
Demographic/Group

Highly Committed

Highly Uncommitted

Married
Single

10.8%
11.7%

12.2%
13.0%

Three Years of Tenure

Ten Years of Tenure

11.5%
10.5%

12.9%
13.7%

Sales Function
Corporate Administration

13.4%
12.8%

10.8%
10.6%

Telecommunications Industry
Financial Services Industry

10.7%
11.5%

13.3%
12.1%

Management
Non-Management

11.1%
11.2%

10.7%
12.5%
Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

Engagement Is Company-Specific

The Real Litmus Test: Companies

While minimal differences in engagement exist among demographic
segments, dramatic differences exist across organizations
Percentage of Company Workforce in True Believer Category*

23.8%

2.9%

Highest Scoring
Company

* The analysis above is based on the percentage of each organizations workforce that demonstrates the
highest level of both emotional and rational commitment to day-to-day work, the manager, the team, and
the organization (termed True Believers on page 14b).
2004 Corporate Executive Board

Lowest Scoring
Company

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

Engagement Is Company-Specific

Some Work (Much) Harder

Organizations exhibit drastic differences in the discretionary effort of their employees
Percentage of Workforce Exhibiting Highest Effort Levels, by Company

25.0%

Nearly 25 percent of the

workforce in this organization
exert maximum effort
while in this organization,
less than three percent of
the workforce is willing to
do the same.

Percentage
of Company
Workforce
12.5%
Exhibiting
Highest Level of
Discretionary Effort

0.0%

Company

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

10

The Corporate Leadership Councils Model of Engagement

Commitment

Rational Commitment
Team
Manager
Organization

Emotional Commitment
Job
Team
Manager
Organization

drives effort and

intent to stay

Discretionary Effort

Performance

Intent to Stay

Retention

* Rational commitment to day-to-day work was not measured due to its similarity to rational commitment
to the team, direct manager, and organization.
2004 Corporate Executive Board

resulting in improved
performance and retention

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

11

A Note of Caution: Engagement Is Not a Cure-All

A high- performing workforce first depends
on the recruitment of high-quality talent

once in place, engagement accounts for roughly

40 percent of observed performance improvements

Recruiting High Quality Talent

Percentage of Observable Performance

Improvement by Category1

100%

e
hir
43%

Recruiting for High Performance

Intelligence
Right Skill Set

Total
Percentage 50%
Improvement

Understanding Direct
Performance Inflectors
Direct performance inflectors include
Job-relevant information (e.g.,
training)
Experiences (e.g., on-the-job
development)
Resources (e.g., a better computer).2
o
s to D
u rce
Reso our Job
Y

Strong Work Ethic

1.
2.
3.

57%

0%
Performance Improvement Through
Employee Commitment and Effort
Performance Improvement Through
Direct Performance Inflectors
1

Using structural equation models, the total effect of more than 100 levers for increasing performance was
decomposed into two components: the direct effect of the lever on performance (consisting of job relevant
information, experiences, or resources) and the indirect effect of the lever on performance through emotional
and rational commitment. The numbers presented are the average across the top 100 levers.
The Councils recent study Building the High Performance Workforce presents an extensive treatment of direct
performance inflectors.

2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

12

Commitment Drives Effort and Performance

Organizations that improve commitment
will see significant returns in discretionary effort

resulting in higher performance

across the workforce

Maximum Impact of Commitment

on Discretionary Effort*

Maximum Impact of Discretionary

Effort on Performance Percentile*

Moving employees from strong noncommitment to strong commitment

can result in a 57 percent increase in
discretionary effort.

Moving from low to high

effort levels can result in a
20 percent improvement in
employee performance.
1.57

Change in
Discretionary
Effort

1.0

Strongly NonCommitted

Number
of Employees

Strongly
Committed

50th
Percentile

70th
Percentile

The 10:6:2 Rule

Every 10 percent improvement in commitment can increase an
employees effort level by 6 percent.
Every 6 percent improvement in effort can increase an employees
performance by 2 percent.

* The analysis above presents a statistical estimate of the maximum total impact on discretionary effort and performance
emotional commitment will produce. The maximum total impact is calculated by comparing two statistical estimates: the
predicted discretionary effort or performance rank for an employee who scores high in emotional commitment, and
the predicted discretionary effort or performance rank for an employee who scores low in emotional commitment.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

13

Commitment Drives Retention

Employees with high levels of commitment are significantly less likely to leave
Maximum Impact of Commitment on the Probability of Departure

10%

Moving from strong non-commitment

to strong commitment decreases the
probability of departure by 87 percent.

9.2%

Probability
of Departure
in Next 12 5%
Months

1.2%
0%

Strongly Non-Committed

Strongly Committed

The 10:9 Rule

Every 10 percent improvement in commitment can decrease an employees probability of
departure by 9 percent.

* Analyzing data from the Councils 2004 employee engagement data and attrition models from CLC Solutions,
non-linear regression was used to estimate the rate of departure for employees according to commitment level.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

14

What a Difference Engagement Can Make

A tale of two companies from the 2004 Employee Engagement Survey

Rational Commitment

Discretionary Effort

22.9%
Percentage of
Workforce
Strongly Rationally
Committed

4.9%
Organization
A

Percentage of
Workforce in
Highest Category
of Discretionary
Effort

Organization
B

15.8%
7.8%

Organization
A

Organization
B

Intent to Stay`

Emotional Commitment

42.9%

20.8%
Percentage of
Workforce
Strongly
Emotionally
Committed

4.9%
Organization
A

Organization
B

Percentage of
Workforce in
Highest Category
of Intent to Stay

13.7%

Organization
A

Organization
B

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

15

The Connection Between Engagement and Company Performance

Companies with above average employee commitment had greater one-year revenue growth
relative to their industry than those with below-average employee commitment.
Percentage of Companies by Economic Performance and Employee Commitment

Below Average
Company Performance

Above Average
Company Performance

29%
38%
71%

62%

Above Average
Company Performance

Companies with Above Average

Employee Commitment

* Company performance is determined by above or below average one-year revenue growth relative to
industry peer group. Above average employee commitment is defined as having more than 11 percent of an
organizations workforce fall into the highly committed category. Below average employee commitment is
defined as having less than 11 percent of an organizations workforce fall into the highly committed category.
2004 Corporate Executive Board

Below Average
Company Performance

Companies with Below Average

Employee Commitment

Source: Corporate Leadership Council 2004

Employee Engagement Survey.

16

Road Map for the Discussion

A Unique Point in Time

Sizing the Opportunity

The Voice of the Workforce

Reframing the Organizations Response

The Evolving Employment Contract

2004 Corporate Executive Board

17

The Corporate Leadership Councils Model of Engagement

Commitment

Rational Commitment
Team
Manager
Organization

drives effort and

intent to leave

resulting in
improved performance
and reduced attrition

Discretionary Effort

Performance

Intent to Stay

Retention

Engagement Levers

Emotional Commitment
Job
Team
Manager
Organization

* Rational commitment to day-to-day work was not measured due to its similarity to rational commitment
to the team, direct manager, and organization.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

18

Assessing the Impact of Engagement Levers

A Four-Step Approach to Testing Levers of Effort

Assessing the impact of general training on employee engagement
Step #1: Measure Presence and Effectiveness of Engagement Levers

Step #2: Measure Attitudes of Engagement

In the last 12 months, about how many hours of general training have you received
from your organization?

Example:
I believe in what I do every day at work.
Question 4 of Engagement Assessment:
I believe in what I do every day at work.

I received no general skills training in the last 12 months

Less than 1 hour
1 to 5 hours

61 to 70 hours
More than 70 hours of training

Strongly Agree

Disagree

Agree

Strongly Disagree

Somewhat Agree
Somewhat Disagree

Step #4: Calculate the Levers Total Impact

on Discretionary Effort and Intent to Stay

Step #3: Apply a Structural Equation Model

to Estimate Impact of Lever
Rational
Commitment
Team
Manager
Organization

Change in Effort
and Intent to
Leave Due to
Amount of
General Training
Received

Discretionary Effort

Engagement
Levers

Effort

Intent to
Stay

Emotional
Commitment
Job
Team
Manager
Organization

Intent to Stay

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

19

Emotional Commitment Drives Discretionary Effort

Feel Like Trying Hard?

Employees try (or dont try) as a result of emotional commitment, not rational commitment
Maximum Impact of Commitment Type on Discretionary Effort*

Emotional Commitment

A strong emotional commitment to

ones job and organization has the
greatest impact on discretionary effort.
60%

Rational Commitment

55.9%
The impact of rational commitment
is much smaller.

43.2%
38.9%
Change in
Discretionary
Effort

34.0%
30%

18.4%
13.8%
7.6%
0%
Emotional
Job

Emotional
Organization

Emotional
Team

* Each bar represents a statistical estimate of the maximum total impact on discretionary effort
each type of commitment will produce. The maximum total impact is calculated by comparing
two statistical estimates: the predicted discretionary effort level for an employee who is
strongly committed, and the predicted discretionary effort level for an employee who is strongly
uncommitted. The impact of each commitment type is modeled separately.
2004 Corporate Executive Board

Emotional
Manager

Rational
Organization

Rational
Team

Rational
Manager

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

20

Retention Problems Are Problems of Rational Commitment

Meet Employee Needs to Battle Attrition

Employees leave organizations largely out of self-interest, but emotions still play a pivotal role
Maximum Impact of Commitment Type on Intent to Stay*

60%

50.0%

Emotional Commitment

A strong rational commitment to the

organization leads to the strongest
reduction in intent to stay.

38.8%

Rational Commitment

38.6%
33.7%

Improvements in
Intent to Stay 30%

33.2%
30.0%
25.4%

0%
Rational
Organization

Rational
Team

Emotional
Organization

* Each bar represents a statistical estimate of the maximum total impact on intent to
stay each type of commitment will produce. The maximum total impact is calculated by
comparing two statistical estimates: the predicted intent to stay for an employee who
is strongly committed, and the predicted intent to stay for an employee who is strongly
uncommitted. The impact of each commitment type is modeled separately.
2004 Corporate Executive Board

Emotional
Manager

Emotional
Job

Rational
Manager

Emotional
Team

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

21

Identifying Engagement Levers

How Do We Build Commitment?

A wide variety of levers influence the degree to which employees commit to the organization
The Corporate Leadership Councils Model of Engagement

Rational Commitment
Team
Manager
Organization

Discretionary Effort

Performance

Intent to Stay

Retention

Engagement Levers

Emotional Commitment
Job
Team
Manager
Organization

* Rational commitment to day-to-day work was not measured due to its similarity to rational commitment
to the team, direct manager, and organization.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

22

Potential Levers for Driving Engagement

The 2004 Council survey examined more than 300 potential levers, the top 160 of which are listed below

401(k) Plan
Ability to Obtain Necessary Information
Manager: Accepts Responsibility for Successes and Failures
Manager: Accurately Evaluates Employee Performance
Manager: Accurately Evaluates Employee Potential
Manager: Adapts to Changing Circumstances
Amount of General Skills Training Received
Amount of Job-Specific Training Received
Amount of Travel (Actual Versus Desired)
Manager: Analytical Thinking
Manager: Appropriately Handles Crises
Manager: Articulates a Long-Term Vision for the Future
Manager: Attains Information, Resources, and Technology
Base Pay External Equity
Base Pay Internal Equity
Base Pay Satisfaction
Manager: Breaks Down Projects into Manageable Components
Manager: Cares About Employees
Cash Bonus External Equity
Cash Bonus Internal Equity
Cash Bonus Satisfaction
Manager: Clearly Articulates Organizational Goals
Manager: Clearly Communicates Performance Expectations
Onboarding: Clearly Explains Job Importance
Onboarding: Clearly Explains Job Responsibilities
Manager: Clearly Explains Performance Objectives
Commission External Equity
Development Plan: Emphasis on General Skills Training, JobSpecific Training, Skills and Behaviors, Job Experiences, Leadership
Training, and Management Training
Development Plan: Employee Influence in Creating
Development Plan: Sufficient Time to Complete
Development Plan: Use
Manager: Differential Treatment of Best and Worst Performers
Diffuse Decision-making Authority
Senior Executive Team Diversity
Domestic Partner
Education Assistance
Effectiveness of Career Advisor
Onboarding: Teaches About Organizational Vision and Strategy
Telecommuting
Manager: Values WorkLife Balance of Employees
Manager: Sets Realistic Performance Expectations
Manager: Treats Direct Reports Equally
Manager: Trusts Employees to Do Their Job
Opportunity to Work with the Senior Executive Team

Commission Internal Equity

Commission Satisfaction
Manager: Commitment to Diversity
Community Involvement
Company Performance
Connection Between Work and Organizational Strategy
Manager: Creates Clear Work Plans and Timetables
Culture of Flexibility
Culture of Innovation
Culture of Risk Taking
Customer Focus
Day-Care
Manager: Deeply Cares about Employees
Manager: Defends Direct Reports
Manager: Demonstrates Honesty and Integrity
Manager: Demonstrates Passion to Succeed
Development Plan: Challenge
Development Plan: Effectiveness
Manager: Has a Good Reputation within the Organization
Health Benefits Information
Manager: Helps Find Solutions to Problems
Manager: Holds People Accountable
Importance of Job to Organizational Success
Importance of Projects to Employees Personal Development
Importance of Projects to Employees Long-term Career
Manager: Inspires Others
Internal Communication
Onboarding: Introduces New Hires to Other New Employees
Senior Executive Team: Is Committed to Creating New Jobs
Manager: Is Friendly and Approachable
Manager: Is Intelligent
Manager: Is Open to New Ideas
Senior Executive Team: Is Open to New Ideas
Job Challenge
Manager: Encourages and Manages Innovation
Manager: Encourages Employee Development
Equity and Recognition
Fitness Program
Flexible Work Schedule
Freedom from Harassment in the Workplace
Future Orientation
Understanding of How to Successfully Complete Work Projects
Vacation
Perceived Rewards: Opportunity for Promotion
Short-Term Disability
Health Benefits

2004 Corporate Executive Board

Job FitBetter Suited for Another Position

Job FitType of Work
Job Freedom
Job Influence
Leave Benefits Information
Manager: Lets Upper Management Know of Employee
Effectiveness
Manager: Listens Carefully to Views and Opinions
Long-Term Disability
Senior Executive Team: Makes Efforts to Avoid Layoffs
Senior Executive Team: Makes Employee Development a
Priority
Manager: Makes Sacrifices for Direct Reports
Maternity Leave
Opportunity Culture
Opportunity to be Promoted
Opportunity to Help Launch a New Business, Initiative, or
Program
Opportunity to Help Turn Around a Struggling Business
Opportunity to Spend Time with a Professional Coach
Opportunity to Take Breaks
Opportunity to Work in a Different Country
Opportunity to Work in a Variety of Jobs/ Roles
Opportunity to Work in New Divisions or Business Units
Opportunity to Work in New Functional Areas
Opportunity to Work on Things You Do Best
Opportunity to Work with a Mentor
Effectiveness of General Skills Training
Effectiveness of Job-Specific Training
Employee Assistance Program
Employee Stock Ownership Program
Manager: Encourages and Manages Innovation
Perceived Rewards: Size of Annual Bonus
Perceived Rewards: Size of Annual Raise
Manager: Persuades Employees to Move in a Desired
Direction
Manager: Places Employee Interests First
Task Variety
Onboarding: Teaches About Group or Division
Work-Life Balance Information
Manager: Works Harder Than Expects Employees to Work
Total Compensation External Equity
Total Compensation Internal Equity
Total Compensation Satisfaction
Senior Executive Team: Strong in Leading and Managing
People
Senior Executive Team: Strong in Personal Characteristics

Manager: Possesses Job Skills

Prescription Drug Benefit
Profit Sharing External Equity
Profit Sharing Internal Equity
Profit Sharing Satisfaction
Provides Job Freedom
Provides Necessary Tools and Resources
Onboarding: Provides Work Immediately
Quality of Informal Feedback
Manager: Recognizes and Rewards Achievement
Organizations Reputation of Integrity
Manager: Respects Employees as Individuals
Retirement Information
Senior Executive Team: Strong in Strategy
Selection and Implementation
Sufficient People to Complete Tasks
Sufficient Time to Complete Tasks
Sufficient Tools and Resources
Manager: Respects Employees as Individuals
Retirement Information
Safe Workspace
Sick Leave
Stock Bonus External Equity
Stock Bonus Internal Equity
Stock Bonus Satisfaction
Senior Executive Team: Strong in Day-to-Day
Process Management
Retirement Medical Group Plan
Paid Time-Off Bank
Pension
Manager: Puts People in the Right Roles at the
Right Time
Safety of Tasks

23

The Universality of Engagement Levers

Not So Different After All

Most levers impact all employees to the same degree
Average Difference in Impact of Levers on Discretionary Effort Between Segment and Aggregate Workforce

Segment Type

Average Difference in Impact of

Lever Across Segments

Managers

5.04%

Regional

4.33%

Organizations

2.93%

Hourly Workers

2.70%

Front-Line Employees

2.42%

Sales People

2.03%
Gen X

Generations X and Y

1.69%

R&D and Engineering

1.68%

* Using structural equation models, the total effect of more than 100 levers for increasing discretionary effort
was measured for the aggregate population and the subsets outlined above. The average difference is found by
subtracting the total effect for the aggregate dataset from the total effect for the subset and averaging over the 100
levers. The absolute value of the difference is presented.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

24

Some Engagement Levers Much More Effective Than Others

The Power of Focus on High-Impact Levers

While the majority of levers will improve discretionary effort,
a select group of levers produce significantly higher returns
Maximum Impact of Engagement Levers on Discretionary Effort*

40%

The top 50 levers of discretionary

effort are 40 times as powerful as
the bottom 150 levers.

Change in
Discretionary 20%
Effort

0%
50

* Each bar represents a statistical estimate of the maximum total impact on discretionary effort each
lever will produce through its impact on rational and emotional commitment. The maximum total
impact is calculated by comparing two statistical estimates: the predicted discretionary effort level
for an employee who scores high on the lever, and the predicted discretionary effort level for an
employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

100

150

300

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

25

Potential Engagement Levers

Manager

Manager (Continued)

Senior Executive Team

Compensation

Benefits

Accepts Responsibility for Successes

Deeply Cares About Employees

Is Committed to Creating New

Total Compensation Satisfaction

Total Compensation External
Equity
Total Compensation
Internal Equity
Base Pay Satisfaction
Base Pay External Equity
Base Pay Internal Equity
Cash Bonus Satisfaction
Cash Bonus External Equity
Cash Bonus Internal Equity
Commission Satisfaction
Commission External Equity
Commission Internal Equity
Profit Sharing Satisfaction
Profit Sharing External Equity
Profit Sharing Internal Equity
Stock Bonus Satisfaction
Stock Bonus External
Equity Stock Bonus
Internal Equity

Health Benefits:
Health Benefits Plan
Health Benefits Information
Prescription Drug Benefit

and Failures
Accurately Evaluates Employee
Performance
Accurately Evaluates Employee
Potential
Adapts to Changing Circumstances
Analytical Thinking
Appropriately Handles Crises
Articulates a Long-Term Vision for
the Future
Attains Information, Resources, and
Technology
Breaks Down Projects into
Manageable Components
Cares About Employees
Clearly Articulates Organizational
Goals
Clearly Communicates Performance
Expectations
Commitment to Diversity
Creates Clear Work Plans and
Timetables
Defends Direct Reports
Demonstrates Honesty and
Integrity
Demonstrates Passion to Succeed
Encourages and Manages Innovation
Encourages Employee Development
Has a Good Reputation Within the
Organization

Helps Find Solutions to Problems

Holds People Accountable
Inspires Others
Is Friendly and Approachable
Is Intelligent
Is Open to New Ideas
Lets Upper Management Know of
Employee Effectiveness
Listens Carefully to Views and
Opinions
Makes Sacrifices for Direct
Reports
People in the Right Roles at the
Right Time
Persuades Employees to Move in a
Desired Direction
Places Employee Interests First
Possesses Job Skills
Provides Job Freedom
Quality of Informal Feedback
Recognizes and Rewards
Achievement
Respects Employees as Individuals
Sets Realistic Performance
Expectations
Treats Direct Reports Equally
Trusts Employees to Do Their Job
Values WorkLife Balance of
Employees
Works Harder Than Expects
Employees to Work

Jobs

Is Open to New Ideas

Makes Employee Development a
Priority

Provides Necessary Tools and

Resources

Strong in Day-to-Day Process

Management

Strong in Leading and Managing

People
Strong in Personal
Characteristics
Strong in Strategy Selection and
Implementation
Teaches About Organizational
Vision and Strategy

Leave Benefits:
Leave Benefits Information
Long-Term Disability
Maternity Leave
Paid Time-Off Bank
Short-Term Disability
Sick Leave
Vacation
Retirement Benefits:
Retirement information
401(k) Plan
Employee Stock Ownership
Program
Pension
Retirement Medical Group Plan
WorkLife Benefits:
WorkLife Balance Information
Day-Care
Domestic Partner
Employee Assistance Program
Education Assistance
Fitness Program
Flexible Work Schedule
Telecommuting

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

26

Potential Engagement Levers (Continued)

Onboarding

Day-to-Day Work

Learning and Development

Organizational Culture

Clearly Explains Job Importance

Clearly Explains Job Responsibilities
Clearly Explains Performance
Objectives
Introduces New Hires to Other
New Employees
Provides Necessary Tools and
Resources
Provides Work Immediately
Teaches About Group or Division
Teaches About Organizational
Vision and Strategy

Ability to Obtain Necessary Information

Amount of Travel (Actual Versus Desired)
Connection Between Work and Organizational
Strategy
Understanding of How to Successfully Complete Work
Projects
Freedom from Harassment in the Workplace
Importance of Job to Organizational Success
Importance of Projects to Employees Long-Term
Career
Importance of Projects to Employees Personal
Development
Job Challenge
Job FitBetter Suited for Another Position
Job FitType of Work
Job Freedom
Job Influence
Opportunity to Take Breaks
Opportunity to Work on Things You Do Best
Perceived Rewards: Opportunity for Promotion
Perceived Rewards: Size of Annual Bonus
Perceived Rewards: Size of Annual Raise
Safe Workspace
Safety of Tasks
Sufficient People to Complete Tasks
Sufficient Time to Complete Tasks
Sufficient Tools and Resources
Task Variety

Development Plan: Challenge

Development Plan: Effectiveness
Development Plan: Emphasis on General Skills

Training, Job-Specific Training, Skills and Behaviors,

Job Experiences, Leadership Training, and
Management Training
Development Plan: Employee Influence in Creating
Development Plan: Sufficient Time to Complete
Development Plan: Use
Amount of General Skills Training Received
Amount of Job-Specific Training Received
Effectiveness of General Skills Training
Effectiveness of Job-Specific Training
Effectiveness of Career Advisor Opportunity to Be
Promoted
Opportunity to Help Launch a New Business,
Initiative, or Program
Opportunity to Help Turn Around a Struggling
Business
Opportunity to Spend Time with a Professional
Coach
Opportunity to Work in a Different Country
Opportunity to Work in a Variety of Jobs/ Roles
Opportunity to Work in New Divisions or Business
Units
Opportunity to Work in New Functional Areas
Opportunity to Work with a Mentor
Opportunity to Work with the Senior Executive
Team

Community Involvement
Company Performance
Customer Focus
Diffuse Decision-Making Authority
Diversity
Culture of Flexibility
Differential Treatment of Best and
Worst Performers
Equity and Recognition
Future Orientation
Culture of Innovation
Communication
Opportunity Culture
Culture of Risk Taking
Reputation of Integrity

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

27

Reevaluating Our Tools

Direct Manager: The Rule of Three and the challenge of scale

Senior Executive Team: The importance of reciprocity

Compensation Plans: The power and limitations of financial rewards

Benefits Plans: The value of information

Onboarding: An important job from day one

Day to Day Work: Connecting employees to something larger

Learning and Development: Tangible commitment to a personalized approach

Organizational Culture: Connection, contribution, and credibility

2004 Corporate Executive Board

28

Many Thingsand No One Thing

Almost all manager activities drive employee effort
Maximum Impact on Discretionary Effort from Manager Characteristics*
Commitment to Diversity

2004 Corporate Executive Board

28.5%

Demonstrates Honesty and Integrity

27.9%

Adapts to Changing Circumstances

27.6%

Clearly Articulates Organizational Goals

27.6%

Possesses Job Skills

27.2%

Sets Realistic Performance Expectations

27.1%

Puts People in the Right Roles at the Right Time

26.9%

Helps Find Solutions to Problems

26.8%

Breaks Down Projects into Manageable Components

26.7%

Accepts Responsibility for Successes and Failures

26.6%

Encourages and Manages Innovation

26.5%

Accurately Evaluates Employee Potential

26.3%

Respects Employees as Individuals

26.1%

Demonstrates Passion to Succeed

26.0%

Cares About Employees

26.0%

Has a Good Reputation Within the Organization

26.0%

Is Open to New Ideas

25.9%

Defends Direct Reports

25.8%

Analytical Thinking

25.7%

Attains Information, Resources, and Technology

25.7%

29

Maximum Impact on Discretionary Effort from Manager Characteristics (Continued)

Makes Sacrifices for Direct Reports

Quality of Informal Feedback
Encourages Employee Development
Persuades Employees to Move in a Desired Direction
Accurately Evaluates Employee Performance
Articulates a Long-term Vision for the Future
Inspires Others
Places Employee Interests First
Provides Job Freedom
Is Intelligent
Clearly Communicates Performance Expectations
Appropriately Handles Crises
Creates Clear Work Plans and Timetables
Trusts Employees to do their Job
Advertises Employee Effectiveness
Listens Carefully to Views and Opinions
Recognizes and Rewards Achievement
Holds People Accountable
Is Friendly and Approachable
Treats Direct Reports Equally
Values Work-life Balance of Employees
Works Harder than Expects Employees to Work

* Each bar represents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through its
impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical estimates:
the predicted discretionary effort level for an employee who scores high on the lever, and the predicted discretionary effort
level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

25.6%
25.6%
25.5%
25.4%
25.3%
25.3%
25.2%
24.8%
24.7%
24.6%
24.6%
24.4%
24.1%
23.8%
23.0%
23.0%
22.7%
22.6%
22.2%
22.0%
21.7%
20.7%

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

30

The Bad News: Limited Manager Scalability

The organizational impact of good managers
is limited by narrow spans of control
Manager Spans of Control

Forty-Six Percent of Managers:

1 to 5 Direct Reports

* This group is made up of 17 percent of managers who manage 11 to 20 people, and 21 percent of
managers who manage 21 or more people.
2004 Corporate Executive Board

Twenty-Five Percent of Managers:

6 to 10 Direct Reports

Twenty-Nine Percent of Managers:

11 to 100 Direct Reports*

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

31

Senior Executive Team Levers

An Open Door Senior Team Inspires Effort

Commit to me, and Ill commit to you
Maximum Impact of Senior Executive Team Qualities on Discretionary Effort*
Reciprocity pays: Senior executives who are open to input and
commit to their employees receive heightened effort in return.

30%

22.9%
20.7%

19.7%
15.9%

Change in
Discretionary 15%
Effort

15.6%

14.4%

15.6%

15.3%

14.0%

to
-D
M ay
an P
ag r o
em ce
en ss
t

ac Per
te so
r is na
tic l
s
D

ay
-

ar
Ch

te
gy
Im Se
pl lec
em ti
e n on
t a an
t io d
n

St

ra

a n Le
ag ad
i ng i n
Pe g an
op d
le
M

ak
Av es E
o i f fo
d rt
La s
yo t o
f fs

ev

Cr Is
ea Co
tin m
g N mi
t
ew te d
J o to
bs

e lo M
p m a ke
en s E
t a mp
Pr loy
io e e
r it
y

ar
Em es A
pl bo
oy u
ee t
s

yC

ee

pl

Is
N Op
ew e
I d n to
ea
s

0%

* Each bar represents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through its
impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical estimates:
the predicted discretionary effort level for an employee who scores high on the lever, and the predicted discretionary effort
level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

32

Compensation Levers

Connect Total Compensation to Performance

Tying compensation to performance is the most influential lever of discretionary effort
Maximum Impact of Compensation Levers on Discretionary Effort*
Connection

Satisfaction

Equity

12%

10.8%

Connecting pay to performance has the greatest

impact on discretionary effort

9.9%
9.1%

while overall satisfaction with total

compensation is the next most influential.

7.6%
7.0%
Change in
Discretionary 6%
Effort

5.5% 5.4%

5.1%

2.8%

2.5%

2.1% 1.9%
1.8%
1.3% 1.3% 1.1%
1.0% 0.9% 0.8% 0.8%

Pe Co
r fo n n
r m ec t
a io
Pe Co nce n B
r fo n n a n e t w
r m ec d R e
an tio ai e n
s
To ce a n Be e
t a nd t w
lC B e
om on e n
u
B a Sa pe n s
s e t is s a
Pa f a c t io
Ca
y S t io n
sh
at n
is f
Bo
ac
nu
t io
sS
St
n
oc
at
is f
kB
a
ct
on
io
Pr
us
n
ofi
Sa
tt is
Sh
fac
ar
tio
i ng
Co
n
Sa
m
t is
m
is s
fac
Ca
io
t io
n
sh
n
Sa
Bo
t is
fac
nu
C
sI
t io
as
nt
n
h
er
Bo
n
a
nu
lE
Pr
sE
qu
ofi
x
it y
tte
Sh
rn
ar
al
i ng
Eq
ui
In
ty
t
er
To
n
al
ta
lC
Eq
ui
o
ty
B a E x t mp
se e r n e n
Pa a l s a
y I Eq t io
nt
u n
Ba
er i t y
se
na
P
Pr
lE
ay
ofi
qu
Ex
tit y
te
Sh
rn
ar
a
i ng
lE
qu
Ex
it y
te
To
rn
a
ta
lE
lC
qu
St
oc
it y
I n om
k B te p e
r
n
o n na s a
St
l E ti
u
oc
k B s I n qui on
t
er t y
on
na
us
lE
Co
Ex
qu
te
m
it y
rn
m
is s
al
io
Eq
Co
n
ui
In
ty
m
t
er
m
na
is s
lE
io
n
qu
Ex
it y
te
rn
al
Eq
ui
ty

0%

* Each bar represents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through
its impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical
estimates: the predicted discretionary effort level for an employee who scores high on the lever, and the predicted
discretionary effort level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004

Employee Engagement Survey.

33

Compensation Levers

Some More Motivated by Money than Others

The salesforce is consistently more motivated by compensation levers than the aggregate workforce
Maximum Impact of Compensation Levers on Discretionary Effort*

14%

12.9%
Aggregate Workforce
Sales Workforce

10.9%
9.5%

9.1%
Change in
Discretionary
Effort

8.1%

7.6%

7.1%

7.0%

7%

5.5%

6.8%
5.4%

5.1%

0%
Total
Compensation
Satisfaction

Base Pay
Satisfaction

Cash Bonus
Satisfaction

* Each bar represents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through
its impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical
estimates: the predicted discretionary effort level for an employee who scores high on the lever, and the predicted
discretionary effort level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

Stock Bonus
Satisfaction

Profi t-Sharing
Satisfaction

Commission
Satisfaction

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

34

Benefits Levers

Understanding the Benefits Plans That Matters Most

Brand your benefits program
Maximum Impact on Discretionary Effort Due to Benefits Programs*
Benefit
Communications

Health
Benefits

Retirement
Benefits

Leave
Benefits

WorkLife
Balance Benefits

18.0%

16.4%
15.1%

11.7%

Change in
Discretionary 9.0%
Effort

Other programs have signal value of

company commitment to employees.

Largest impact comes from clearly conveying

benefits information to employees.

11.8% 11.7%

11.5%
10.6% 10.4%

9.8% 9.6%

Ancillary benefits do
not necessarily pay off in
heightened effort.

10.5% 10.5%
9.1%

9.1%
8.2%

7.8%

7.6%

6.5%

7.0% 7.0%
5.8%

5.6%

5.3%

ne
rt
Pa

ta
s is
es

tic

As
D

om

n
io
at
uc

nc
e

e
ar

ay
C

EA

Ed

tir
Re

* Each bar represents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through its
impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical estimates:
the predicted discretionary effort level for an employee who scores high on the lever, and the predicted discretionary effort
level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

e E SO
G nt M P
Pa r ou e d
p ic
id
Pl al
Ti
an
m
e
Lo
O
ng
ff
-T
Ba
er
nk
m
D
is a
bi
li t
y
Sh
V
or
ac
t -T
at
er
io
n
m
D
is a
bi
li t
y
S ic
kL
M
ea
at
Fle
ve
er
x ib
ni
t
yL
le
W
ea
or
ve
kS
ch
ed
Te
ul
lec
e
om
m
Fi t
ut
ne
i ng
ss
Pr
og
ra
m

em

40
1(
k

Le

av
W I nf e B e
or or m ne
k a fi
L ti t s
I n i fe B o n
fo a
H r m la n
ea a c
l t ti e
Re
I n h B on
fo e n
tir
em r m e
at fits
en
io
tI
n
nf
or
m
at
H
Pr
io
ea
es
n
l
th
cr
ip
B
tio
en
n
efi
D
ts
ru
gB
en
efi
t
Pe
ns
io
n

0.0%

Source: Corporate Leadership

Council 2004 Employee
Engagement Survey.

35

Onboarding Levers

An Important Job from Day One

Tell me why my job matters as soon as I walk in the door
Maximum Impact of Onboarding Levers on Discretionary Effort*

New hires will try much harder when they

understand and believe in their jobs importance
to the organization.
30.0%

23.4%
21.9%

21.5%

20.9%

20.3%

19.2%

18.8%

17.9%

Change in
Discretionary 15.0%
Effort

0.0%
Clearly
Explains Job
Importance

Teaches
About
Organizational
Vision and
Strategy

Teaches
About
Group or
Division

Clearly
Explains
Performance
Objectives

Clearly
Explains Job
Responsibilities

* Each bar presents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through its
impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical estimates:
the predicted discretionary effort level for an employee who scores high on the lever, and the predicted discretionary effort
level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

Introduces
New Hires
to Other
New
Employees

Provides
Work
Immediately

Provides
Necessary
Tools and
Resources

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

36

Day-to-Day Work Levers

A Purposeful, Informed Connection

I need to understand not only how to do my job, but why it matters
Maximum Impact of Job Design Levers on Discretionary Effort*
Understanding how to do ones job and a belief
in the importance of it are most critical

Job Importance and

Understanding = 31%

job fit and job quality are

notably less important

Job Fit and Personal

Goals = 17%

as are access to necessary

resources and even safety.

Job Quality = 17%

Resources = 15%

Safety = 13%

40%

Change in Discretionary Effort

32.8%
30.3%

29.8%
23.9%

23.8%
22.0%
20%

21.9%
19.2%

18.8%

20.5%

18.9%
16.9%

16.5%

16.5%
14.0%

11.0%

10.5%

13.0%

9.4%

8.2%

6.9%

5.0%

C
an onn
d ec
O ti
r g on
an B
iz a e t
t i o we
O I m na l e n
r g po
S W
an r t tr a o
Su
cc U i z a t a n c t e g r k
y
es nd
i e
s f u e r o n a of
lly s t a l S J ob
Em
C o n d u cc t o
pl
es
oy I
m i ng
s
p
ee mp
s o r l e t e o f H
Pe ta
o
P
r s nc
ro w
on e
j e to
I m a l D of P c t s
po
ev r o
j
rt
a n e lop ec t s
c
Lo e
m to
e
n g of
-T P r n t
e r oj
m ec
W C a r t s to
ee
or
Yo k on r
Jo
u
b
D Th
Fi t
o i ng
Be s

st
O
Ty
pp
p
e
or
of
tu
W
ni
ty
or
fo
k
rP
Jo
ro
b
m
fo F i t
ot
rA
io
n
B
no e
t h t te
er r S
Po ui
s i t te d
io
n
Ta
sk
Va
r ie
ty
Jo
b
Ch
a ll
en
ge
Jo
b
Fr
ee
do
m
Jo
b
I
nfl
N
ue
ec A
nc
es b
Su
e
s a ili t
f fi
ry y
ci e
t
In o
nt
fo O
Su
To
r m bt
f fi
ol
at ain
ci e
sa
io
n
nd
nt
Ti
Re
Su
m
s
f fi
e
ou
ci e
to
rc
nt
Co
es
Pe
m
op
pl
et
le
e
to
Ta
Co
sk
s
m
pl
(A
et
e
ct A
Ta
ua m
sk
lV o
s
u
er n
su t o
sD fT
e s r av
ir e el
Sa
fe
d)
Fr
W
ee
or
do
kS
m
pa
fr o
ce
m
H
ar
as
sm
en
O
Sa
t
pp
fe
ty
or
of
tu
ni
Ta
ty
sk
to
s
Ta
ke
Br
ea
ks

0%

* Each bar presents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through its
impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical estimates:
the predicted discretionary effort level for an employee who scores high on the lever, and the predicted discretionary effort
level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

Source: Corporate Leadership Council 2004

Employee Engagement Survey.

37

Learning and Development Levers

Individualized Development Pays Off in Effort

Help me build skills to become more effective in my job
Maximum Impact of Learning and Development on Discretionary Effort*
An effective mentor helps
employees feel personally
connected to the organization.
Career Advisor
and Development Plan

30%

On-the-Job
Learning Opportunities

Training Programs

25.5%

Quality development
plans help employees feel
rationally and emotionally
committed.

22.4%
21.0%

20.1%

Change in 15%
Discretionary
Effort

General skills training sends

a message of credible
commitment to employees.

17.8% 17.8%

17.1% 16.6%
14.3% 13.8%

13.1% 13.0%
11.0%

10.3%

9.7%

9.4% 9.2% 9.0%

8.6% 8.5%
8.0% 7.7% 7.5%

4.6% 4.1%
2.5%

nt

ci e

f fi

Su

Ch

all

en

ge

Ef

fe

of

ct

i ve

ev

el

ne

ss

op

of

en

to
r
m
e
T
ev
n
i
m
tP
el De e
op
la n
v t
m e lo o C
en
pm om
tP
la n e nt ple
E f Pla te
Em
n
fe
pl
ct
oy
i ve
ee
ne
I
ss
Em Cre nflu
B e ph atin enc
ha a s
g ei
U v ior is o P l a n n
se
n
st S
of
o k il
D l
D
Em
ev ev s a n
e
el
ph
op lop d
as
m
is
en
on
tP
Jo
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0%

* Each bar presents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through its
impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical estimates:
the predicted discretionary effort level for an employee who scores high on the lever, and the predicted discretionary effort
level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

Source: Corporate Leadership

Council 2004 Employee
Engagement Survey.

38

Organizational Culture Levers

A Culture of Communication, Integrity, and Innovation

Give me job-relevant information, the opportunity to innovate, and a sense of pride
Maximum Impact of Cultural and Performance Traits on Discretionary Effort
Cultures of information-sharing,
integrity, and innovation drive effort.

Success invites greater effort while

the perception of failure risks
employee shirking.

29.2%

30%

27.6%
26.0%
24.7%
23.2%

23.1%
21.5%

21.5%

21.1%

20.6%
18.7%

18.5%

18.3%

Change in
Discretionary 15%
Effort

5.5%

vo
In
it y
un

m
m
Co

Be D
D
s t i f fe
i ve
an r e
rs
it y
d nt
W ia l
or Tr
s t ea
Pe tm
D
r fo e n
if f
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rm t o
e
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D
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ec
is i
on
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t h a k in
or g
it y

t
en
l ve

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k
sk
Ri

Cu
ty
ni
tu

or
pp
O

* Each bar presents a statistical estimate of the maximum total impact on discretionary effort each lever will produce through its
impact on rational and emotional commitment. The maximum total impact is calculated by comparing two statistical estimates:
the predicted discretionary effort level for an employee who scores high on the lever, and the predicted discretionary effort
level for an employee who scores low on the lever. The impact of each lever is modeled separately.
2004 Corporate Executive Board

i ng

re
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ce
s
uc
ny
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m

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ty
ui

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re

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tu
Eq

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pu

ta

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t io

of

un

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te

ica

gr

tio

it y

0%

Source: Corporate Leadership

Council 2004 Employee
Engagement Survey.

39

Revaluing Your Organizational Culture

Your Culture Is a (Very Valuable) Economic Public Good

Culture offers scale and impact across thousands of employees
A New Typology for Human Capital Strategies
Examples:
Cash Bonus

Private Good Strategies

Subtractableeach
employees use of the
strategy reduces the
quantity available for
others

On-the-Job Development
$

Mentoring

Job Rotation

Excludablestrategy
can be administered to
some employees and
withheld from others

Examples:

Public Good Strategies

Non-Subtractable
strategy is never used
up
Non-Excludable
strategy affects
all employees
simultaneously

Risk-Taking Culture

Culture of Internal
Communication

NEW RISKS

Differential Treatment of
Best and Worst Performers

Culture of Flexibility

Average Impact of Public Good Versus Private Good Strategies on Discretionary Effort*
Pure Private Good Strategies

Mixed Strategies

Pure Public Good Strategies

25%
21%

20%
17%
Change in
Discretionary
Effort

10%

17%

12%

2%
Compensation
Strategies

Benefi ts

Learning and
Development
Opportunities

Day-to-Day Work Senior Executive

Characteristics
Team Qualities

* Each bar presents an average of the maximum total impact of all the strategies within a category. The maximum
total impact for any given strategy is calculated by comparing two statistical estimates: the predicted discretionary
effort level for an employee who scores high on the strategy, and the predicted discretionary effort level for an
employee who scores low on the strategy. The impact of each strategy is modeled separately.
2004 Corporate Executive Board

Areas of
Onboarding
Focus

Direct
Manager
Characteristics

Organizational
Culture Traits
Source: Corporate Leadership
Council 2004 Employee
Engagement Survey.

40

Summary of Top 50 Levers

The Top 50 Levers of Engagement

Top 50 Most Effective Levers of Effort
Lever

Impact

Category

Lever

Impact

Category

1.

Connection Between Work and Organizational Strategy

32.8

26.

Helps Attain Necessary Information, Resources, and Technology

25.7

2.

Importance of Job to Organizational Success

30.3

27.

Makes Sacrifices for Direct Reports

25.6

3.

Understanding of How to Complete Work Projects

29.8

28.

Quality of Informal Feedback

25.6

4.

Internal Communication

29.2

29.

Career Advisor Effectiveness

25.5

L&D

5.

Demonstrates Strong Commitment to Diversity

28.5

30.

Encourages Employee Development

25.4

6.

Demonstrates Honesty and Integrity

27.9

31.

Persuades Employees to Move in a Desired Direction

25.4

7.

Reputation of Integrity

27.6

32.

Accurately Evaluates Employee Performance

25.3

8.

Adapts to Changing Circumstances

27.6

33.

Identifies and Articulates a Long-Term Vision for the Future

25.3

9.

Clearly Articulates Organizational Goals

27.6

34.

Inspires Others

25.2

10.

Possesses Job Skills

27.2

35.

Places Employee Interests First

24.8

11.

Sets Realistic Performance Expectations

27.1

36.

Flexibility

24.7

12.

Puts the Right People in the Right Roles at the Right Time

26.9

37.

Provides Job Freedom

24.7

13.

Helps Find Solutions to Problems

26.8

38.

Is Intelligent

24.6

14

Breaks Down Projects into Manageable Components

26.7

39.

Clearly Communicates Performance Expectations

24.6

15.

Accepts Responsibility for Successes and Failures

26.6

40.

Appropriately Handles Crisis

24.4

16.

Encourages and Manages Innovation

26.5

41.

Creates Clear Work Plans and Timetables

24.1

17.

Accurately Evaluates Employee Potential

26.3

42.

Ability to Obtain Necessary Information

23.9

18.

Respects Employees as Individuals

26.1

43.

Importance of Projects to Employees Personal Development

23.8

19.

Demonstrates Passion to Succeed

26.0

44.

Trusts Employees to do Their Job

23.8

20.

Cares About Employees

26.0

45.

Clearly Explains Job Importance

23.4

Onb

21.

Has a Good Reputation Within the Organization

26.0

46.

Customer Focus

23.2

22.

Innovation

26.0

47.

Future Orientation

23.1

23.

Is Open to New Ideas

25.9

48.

Lets Upper Management Know of Employee Effectiveness

23.0

24.

Defends Direct Reports

25.8

49.

Listens Carefully to Views and Options

23.0

25.

Analytical Thinking

25.7

50.

Is Open to New Ideas

22.9

Exec

Organizational Culture and Performance Traits

Day-to-Day Work Characteristics

L&D

Learning and Development Opportunities

Manager Characteristics

Onb

Areas of Onboarding Focus

Exec

Senior Executive Team Qualities

Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

41

Executive Summary

Insights into Employee Engagement

1

Taking a business-outcome approach to measuring employee engagement. Engagement is the extent to which employees
commit- rationally or emotionally- to something or someone in the organization, how hard they work as a result of this
commitment, and how long they intend to stay.

Segment-specific rules of thumb do not apply. Employee commitment is not a characteristic of group membership but is
instead a characteristic of individual employees to be won or lost, created or destroyed by their organizations.

Dramatic differences between companies. Engagement is a source of competitive advantage. Some organizations have ten
times as many highly committed, high-effort employees as others.

Engagement is the key to performance and retention. Highly committed employees try 57 percent harder, perform 20 percent
better, and are 87 percent less like to leave than employees with low levels of commitment.

Not a cure-all, but still a business imperative. Employee commitment must be managed alongside other important drivers
of performance, most importantly the recruitment of high quality talent and providing that talent with the information,
experiences and resources they need to perform at their best.

Emotional commitment drives effort. Emotional commitment is four times as valuable as rational commitment in producing
discretionary effort. Indeed, the search for a high-performing workforce in synonymous with the search for emotional
commitment.

Rational commitment drives retention. Employees leave organizations when they conclude that the organization no longer
meets their self-interest

The Maslows Hierarchy of engagement. Secure rational commitment from employees first. Employees are more likely to
commit emotionally if their self-interested needs are met.

Focus on high-impact levers. The top 50 drivers of discretionary effort are 40 times as powerful as the bottom 150 levers.

10

Take a common approach to engaging employees. Most strategies have a common impact on employee segments. Most
employees, most of the time, need the same things to commit, exert effort and perform at their best.

11

A means, not an end. The most important role of managers is to serve as a conduit for other, more valuable, forms of employee
commitment: organizational, job and team.

12

The Rule of Three. The impact of excellence in additional manager skills diminishes quickly. Build on a limited number of
existing manager strengths to maximize ROI.
Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

42

Executive Summary

Insights into Employee Engagement (Continued)

13

The problem of scale. Most managers have very limited spans of control, an inherent limitation which reduces their appeal as
an organization-wide engagement lever.

14

Communicate senior team openness and commitment to development. Employees try harder when they believe that the
senior executive team has committed to them in the form of openness to new ideas and employee development.

15

Publicize leadership strength. While less important than employee perception of senior executive commitment, specific
executive skill areassuch as leading and managing people and day-to-day process managementstill have significant impact
on discretionary effort.

16

You cant buy (much) effort. Compensation attracts talent into the organization and plays an important role in retention but
has limited impact on employee effort.

17

Connect pay to performance. The most important element of a compensation strategy for driving effort is its connection to
employee performance.

18

Brand your benefits programs. Distributing clear, compelling, actionable information about your benefits programs can have
an impact on employee effort and retention that is commensurate with the programs themselves.

19

Do not overspend on benefits programs. The impact of benefits programs on effort and retention fall precipitously after a
select group of basic need (e.g., health, retirement) and niche (e.g., domestic partner) programs are implemented.

20

Start early. The first priority of onboarding programs should be to instill an understanding of, and a belief in, the jobs
importance.

21

Get two things right about jobs. Understanding how to do ones job, and a belief in the importance of it, are more critical
in driving effort than access to necessary resources, an opportunity for promotion, or even safety. Employees need to feel
connected to be at their best.

22

Personalize the connection. Providing sound career advice, a customized development plan, and general training provide a
credible commitment to the employee.

23

Create public goods. The most effective levers of employee effort are organizational public goods, notably cultures of
communication, integrity and innovation. Infinitely scalable, non-excludable and non-subtractable, they are capable of
(simultaneously) driving effort and retention for thousands of employees at a time.
Source: Corporate Leadership Council 2004 Employee Engagement Survey.

2004 Corporate Executive Board

43

CLC120G07J

Corporate Leadership Council

Corporate Executive Board
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Washington, DC 20006
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