Employee Engagement, High Performance, and HRO

Employee engagement is down to the lowest levels seen in many years. Low engagement makes it hard to be high performing and can later raise turnover as employment opportunities improve.

• In early 2010, The Conference Board found that only 45% of employees were satisfied with their job, the lowest rate seen in the 22 years of the survey.
• This year, the 2011 Aon Hewitt Trends in Global Employee Engagement survey found that 56% of employees are engaged on average, down from 60% in the prior year, the largest year-over-year drop seen in 15 years. Declines were seen across Asia-Pacific, Europe, and North America, with only Latin America showing improvement.

My colleague, Gary Bragar, has consistently brought attention to the engagement topic because it is important and makes a difference for all: employers, employees, and HRO service providers. It can also make quite a difference! Aon Hewitt’s research indicates there is a strong correlation between employee engagement and financial performance. Organizations with high levels of engagement (65% or more) outperformed the total stock market index and had shareholder returns 22% higher than average in 2010. Companies with low engagement (45% or less) had shareholder returns 28% lower than the average.

Naturally, employee engagement that contributes to high performance business results is first and foremost a critical issue for C-level and management teams and there is a myriad of advice available, including consulting services from many of the HRO providers. Every organization, industry, and market has a life cycle and the management challenges will vary depending upon the stage. Accenture’s new book, “Jumping the S-Curve,” identifies three s-curves and outlines the critical issues for each cycle, including the importance of transitioning from one stage to another.

I see within the very insightful Accenture management advice opportunities for HRO contributions. For example, to climb the cycle of business success based on a winning idea, you need to reach a threshold of capabilities and competence and to attract and keep top talent in critical areas to maximize growth without collapse. As the cycle of achieving business success begins to end, new talent problems can arise as turnover increases due to fewer advancement opportunities and talent poaching. As a new cycle starts, a change may be needed in leadership and business competencies at the executive and other levels. Talent needs to be continually monitored, nurtured, and refreshed – all appropriate to the current and next cycle of the enterprise and what is happening in the broader market and economy.

Layering talent management services (e.g., recruiting, staffing, performance management, succession and career planning, and workforce planning) on top of a capable HR system for employee data management that’s supported by HR analytics can go a long way in helping clients see where they are now, identify gaps and emerging issues, and use HRO services and support to achieve a truly high performance-based business transformation.

Linda Merritt, Research Director, HRO, NelsonHall

The Cost of NOT Training New Hires – Option: Learning Outsourcing

A recent Human Resource Executive e-newsletter article, entitled “Ill-Prepared Workers?” cited per a just-released Conference Board report that a little under 50 percent of the employers who participated in the 2009 survey provided any workforce readiness training for newly-hired entry-level workers. The article and report further stated that the most common training technique these days was allowing employees to read materials on the intranet.

The report went on to say that employers which provided no such opportunities thought it was not their responsibility to do so, that the finger usually points to schools, but that most of the gaps seen in new hires were not about academic skills but rather centered on behaviors such as “creativity”, “ethics” and “professionalism”.

The sub-head of the article read, “In the past, most entry-level workers learned their skills on the job, but such training programs went away long ago. These days, most employers expect schools to prepare students for the workforce – and then they are disappointed with the abilities of their new hires. There is probably no easy resolution to the disconnect.” I have a slightly different view on this issue.

Obviously many work-related skills can be learned in school, but specifics’ relating to an employer’s operating procedures, or behaviors such as creativity or professionalism, require on the job training and support. Very few new hires can hit the ground running in a new job. Further, per NelsonHall and others’ research, the top reasons employees leave their current employer include dissatisfaction with their supervisor and leadership, and lack of training and developmental opportunities. And when you factor in repeated employee cost-to-hire, proper training of new hires is a much less expensive and valuable investment.

How can this be achieved? Outsourced learning (LBPO) can offer an effective middle ground to provide low-cost yet effective Web-based training for basic job skills and employee development. For the newer generations coming into the workforce, online training does need to be engaging and well-designed, but there is a lot of expertise out there. The use of social media can be another relatively low-cost way to form internal communities to engage those new to the workforce. All the outsourced and Web-based choices make more training options affordable to companies. And if the right balance of early training can bring new workers to competency faster and reduce turnover, it will more than pay for itself – whether the new hires are destined to remain with their employer for their lifetime career or just a few more productive months in high volume entry-level jobs.

Per our research, we expect LBPO contract activity to pickup by 2010 as the economy recovers and organizations’ financial positions improve, enabling the critical investment in its people to develop and retain its talent.

But in order to make this a reality, company leaders need to fully support training initiatives and, well, know how to lead. Thus, I was impressed with Kenexa’s new leadership and development offering program announced on September 17. The offering includes:

 • An audit to assess the capabilities of existing leaders

• Online leadership assessments for hiring, developing and promoting top leaders

• Developmental tools to improve leadership skills

A final thought. New entrants into the HR workforce might want to pursue their first career with an HRO provider where they’ll get significant on the job training. As HRO contracts carry high stakes, outsourcing providers have a highly vested interest in making sure their associates are well-trained.

Your thoughts?

Gary Bragar, Lead HRO Analyst, NelsonHall