Corporate Leadership Council
Achieving Maximum ROI On Your CLC Membership The Employee Engagement Service Center Key Elements Executive Summary of CLC's Employee Engagement Research Overview of CLC's Employee Engagement Service Center Case Example of Member Value Derived from CLC's Engagement Research
What Is “Employee Engagement”?
Engagement Defined Engagement is the extent to which employees commit to something or someone in their organization, how hard they work and how long they stay as a result of that commitment
Two Commitment “Types”
The Outputs of Commitment: Intent to Leave and Discretionary Effort
Intent to Stay 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.
An employee’s desire to reamain with the organization.
Retention
Discretionary Effort An employee’s willingness to go “above and beyond” the call of duty.
Performance
Source: Corporate Leadership Council 2004 Employee Engagement Survey. © 2005 Corporate Executive Board
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How Engaged Is the Workforce?
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 “Opposition”
The “Moderates”
The “Advocates”
76% 11%
13%
Characteristics
Characteristics
Characteristics
• Exhibit very little commitment
• Exhibit moderate commitment
• Exhibit very strong commitment
• 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 leave
• Higher performers who frequently help others with heavy workloads, volunteer for other duties, and are constantly looking for ways to do their jobs more effectively • Half as likely to leave the organization as the average employee
Source: Corporate Leadership Council 2004 Employee Engagement Survey. © 2005 Corporate Executive Board
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How Does Engagement Differ by Employee Segment?
No Easy Litmus Tests Quick “rules of thumb” prove inadequate, and in fact misleading, as a means of identifying the committed and uncommitted Generation X “Slackers”? 12.0%
Percentage of Employees with Highest Commitment Levels
Single Parents with Children?
11.7%
12.0%
10.6%
Percentage of Employees with Highest Commitment Levels
6.0%
0.0%
10.8%
6.0%
0.0% Employees Over 40
Employees Under 40
Single Parents with Three Children
12.0%
12%
10.8%
12.0% 11.0%
9.9%
Percentage of Employees with Highest Commitment Levels
6.0%
0.0% Managers Managers Working Working Fewer Than More Than 60 Hours per 60 Hours per Week Week
Single People with No Children
Old Timers?
“Overworked” Managers?
Percentage of Employees with Lowest Commitment Levels
11.4%
6%
0% Three Years of Tenure
Ten Years of Tenure
Source: Corporate Leadership Council 2004 Employee Engagement Survey. © 2005 Corporate Executive Board
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What Drives Employees’ Decisions to Volunteer Extra Effort on the Job?
The Power of Focus on High-Impact Strategies While most strategies will improve discretionary effort, a select group of strategies produce significantly higher returns Maximum Impact of Engagement Strategies on Discretionary Effort*
40%
The top 50 strategies for improving discretionary effort produce returns up to 40 times larger than the bottom 50 engagement strategies.
Change in Discretionary 20% Effort
0%
Categories of Engagement Drivers • Direct Manager • Senior Executive Team • Compensation Plans
• Benefits Plans • Learning and Development Opportunities • Onboarding • Organizational Culture Traits • Day-to-Day Work
Source: Corporate Leadership Council 2004 Employee Engagement Survey. © 2005 Corporate Executive Board
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Excerpted Engagement Driver Analysis: What Aspects of New Hire Onboarding Drive Engagement?
Starting Off on the Right Foot “Tell me why my job matters as soon as I walk in the door” Maximum Impact of Onboarding Strategies on Discretionary Effort*
New hires will try much harder when they understand and believe in their jobs’ importance and connection 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 strategy 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 strategy, and the predicted discretionary effort level for an employee who scores “low” on the strategy. The impact of each strategy is modeled separately. © 2005 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.
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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.
D
26.
M
2.
D
27.
M
3.
D
28.
M
4.
O
29.
L&D
M
30.
M
M
31.
M
7.
O
32.
8.
M
33.
M
9.
M
34.
M
10.
M
35.
M
11.
M
36.
O
12.
M
37.
M
13.
M
38.
M
14
M
39.
M
15.
M
40.
M
16.
M
41.
M
17.
M
42.
18.
M
43.
19.
M
44.
M
20.
M
45.
Onb
5. 6.
Demonstrates Honesty and Integrity
27.9
21.
Accurately Evaluates Employee Performance
25.3
M
D Importance of Projects to Employee’s Personal Development
23.8
D
M
46.
O
O
47.
O
23.
M
48.
M
24.
M
49.
M
25.
M
50.
Exec
22.
Innovation
26.0
O
Organizational Culture and Performance Traits
D
Day-to-Day Work Characteristics
L&D
Learning and Development Opportunities
M
Manager Characteristics
Onb
Areas of Onboarding Focus
Exec
Senior Executive Team Qualities
Source: Corporate Leadership Council 2004 Employee Engagement Survey. Š 2005 Corporate Executive Board
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Quantifying the ROI of Employee Engagement
A Tale of Two Companies Illustrative Example Situation
Action
• Alpha Company, a CLC member, and Beta Company, a nonCLC member, both face a classic problem with their sales force: a handful of sales reps generate three to five times as much revenue as the bulk of their workforce.
• Through CLC, Alpha Co. learns that a particular type of employee engagement—emotional engagement—can drive discretionary effort (how hard employees try on the job) by more than 50%, which can translate into a 20% swing in an employee’s performance ranking.
• Two-thirds of each company’s sales force generate between $500 K and $1 M a year, with the average sales person generating $1 M annually.
• Using CLC’s Engagement Survey and Analysis Tool—a service included with Council membership that enables members to survey their workforce online and on demand in the type of employee engagement that matters most for performance and retention—Alpha learns that it is significantly below the benchmark in emotional commitment.
Annual Sales Rep Performance Distribution Curve for Alpha Co. and Beta Co.
• Using CLC’s proprietary analysis of more than 300 drivers of emotional commitment, Alpha invests in 5 of the most effective drivers: 1. Connection between work and organizational strategy 2. Importance of job to organizational success 3. Managers who help find solutions to problems 4. The quality of the manager’s informal feedback
$1 MILLION
$3 MILLION+
5. A culture that is customer-focused
Result • By focusing on the most effective drivers of emotional commitment and discretionary effort, Alpha improves the sales performance of two-thirds of its sales force to $1.5–$2.5 M annually, a revenue increase of at least$10 M a year for every 10 sales reps they have in this category. • If Alpha has 100 sales reps whose performance has stagnated because of their lack of commitment and discretionary effort, that results in a payback of approximately $100 M the first year and approximately $500 M over five years beyond what their competitor, Beta Company, achieves.
© 2005 Corporate Executive Board
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Proven Solutions
Unlocking Power The Council Has Identified Best Practices For Managing Engagement and Maximizing Its Business Benefits
Leverage Point #1
Leverage Point #2
Leverage Point #3
Leverage Point #4
Focus on the Business
Focus on Key Contributors
Focus on Engagement Barriers
Focus on Culture The 3 Cs of Culture: • Connection • Contribution • Credibility
*
Strategic Engagement Gap Analysis
Solid Performer Career Pathing
Cultural Assessment Process
Leader Storytellers
Culture Change Engagement Cascade
Values Realization System
* Pseudonym. © 2005 Corporate Executive Board
Source: Corporate Leadership Council research.
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The Employee Survey and Analysis Tool Overview of ESAT
• CLC’s Engagement Survey and Analysis Tool (ESAT) enables members to survey their workforces online and on demand to determine their employees’ rational commitment, emotional commitment, intent to stay, and willingness to exert discretionary effort. • Members who survey their workforces using ESAT receive a customized assessment and action plan that identifies their high-impact engagement priorities. • ESAT allows members to benchmark their current engagement levels against one of the largest engagement databases: more than 50,000 employees from 59 organizations in 27 countries and 10 industries. • There is no incremental expense associated with ESAT as it is included in your annual CLC membership.
Source: Corporate Leadership Council research. © 2005 Corporate Executive Board
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New Tools for Driving Employee Organization Survey Your Workforce Online and on Demand Quantitative Benchmarking and Analysis
Survey your workforce to measure the types of engagement that matter most for performance and retention.
Benchmark Your Workforce Council database includes more than 50,000 employees from 59 organizations, 27 countries, and 10 industries
Online, On Demand Engagement Surveys Reveal “Red Flag” Indicators
Benchmark the engagement levels of your employees against a database of more than 50,000 employees from 59 companies in 10 industries and 27 countries.
Source: Corporate Leadership Council research. © 2005 Corporate Executive Board
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New Tools for Driving Employee Organization Track Changes in Workforce and ROI of Workforce Investment
Retention Risk in Company X Sales versus Marketing
Sales
High
Marketing
Probability of Departure in next 12 months
Low
Q1
Q2
Q3
Q4
Additional Benefits of ESAT Displace costs for workforce surveys
Included in Council membership
Cut data by region, industry, level, function, and gender
Access reports and analysis online
Secure data environment
Embed Council’s proprietary insights in employee engagement in your organization Source: Corporate Leadership Council research.
Š 2005 Corporate Executive Board
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Line Manager and Senior Executive Toolkits HR leaders can select from three vital focus areas…
Back
Forward
Stop
Refresh
…to access ready-to-use resource toolkits supporting the prioritization and improvement of organizational workforce management
!
Address:
Line Manager and Senior Executive Toolkits
1 Communication Templates: Ready-to-use cover packaging introducing HR issues and available resources to line staff and executives
Employee Retention and Engagement Leadership Development and Succession Management Performance Management
2 Business Case Briefs: Succinct, one- to twopage documents presenting key data supporting the importance of workforce management issues
Our members have asked us to assist them in broadening the reach of our work beyond the HR function by creating versions of our research written in the voice of the line manager and responding to the priorities of non-HR staff.
3 “30-Minute” Presentations: Prepackaged PowerPoint slide decks bundled with talking points and discussion questions to facilitate delivery to 6 non-HR staff
4 Diagnostics and “To Do” Lists: Tools facilitating the identification of organizational areas of weakness and next steps
5 Best Practice “Quick Views”: Brief snapshots of approaches used by other organizations to address these challenges
Source: Corporate Leadership Council research. © 2005 Corporate Executive Board
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Line Manager and Senior Executive Toolkits Tools for Facilitating Discussion and Change 1
Communications Templates
2
Business Case Briefs
Memo TO: FROM: SUBJECT:
[INSERT INTENDED AUDIENCE] [INSERT NAME, TITLE] THE IMPORTANCE OF LEADERSHIP DEVELOPMENT
I am very eager to share the following information with you, which highlights the findings of the Corporate Leadership Council. These resources detail the business case for leadership development, provide information on key leadership opportunities and risks, and profile strategies to support the improvement of our leadership bench.
Input your team’s information and send, or adapt the text of these templates to your need 3 “30-Minute” Presentations
Quickly articulate the importance of HR issues for your senior executive team and line managers using hard data as evidence of bottom-line impact 4 Diagnostics and “To Do” Lists Diagnostic 1. Are talent review conversations focused on the senior managers with the greatest potential for driving the organization’s goals?
• The Council used the metric of total shareholder return to differentiate between the performance of top-tier leadership organizations and other firms
Lead conversations internally using focused slide presentations, supported by speakers’ notes, comments, and questions to provoke discussion © 2005 Corporate Executive Board
2. Are you able to categorize departure risks in your unit according to their impact on business capabilities?
Pinpoint, with your line managers and senior executives, key areas for attention at your organization and capture next steps
5 Best Practice “Quick Views” PepsiCo institutes two sets of annual performance expectations PepsiCo institutes two sets of annual performance expectations for each employee—Business Results and People Results for each employee—Business Results and People Results Performance And Development Review Performance And Development Review NAME: Jeff Radke NAME: Jeff Radke
Business Results Business Results include traditional includemeasures traditional financial likefinancial sales, measures like sales,etc. revenues, revenues, etc.
People Results People include Results measures measures include managing people, managing people, cross-functional cross-functional teamwork, teamwork, and personal and personalgoals. development development goals.
MANAGER: MANAGER:
TITLE: Market Development TITLE: Market Development Manager Manager LOCATION: Purchase LOCATION: Purchase
SSN/ID SSN/ID
REVIEW PERIOD REVIEW From: 1/1/01PERIOD To: 12/31/01 From: 1/1/01 To: 12/31/01 DIVISION DIVISION
Business Results: Business Results: Each objective should be directly aligned with growing (or supporting the growth of): Revenue and Share, Each aligned with growing (or Flow. supporting the growth of): Revenue and Share, Pro¿ t (byobjective reducingshould costs be anddirectly improving margins), and Cash Pro¿t (by reducing costs and improving margins), and Cash Flow. OBJECTIVES OBJECTIVES 1. Achieve 2000 Financial Targets 1.• Volume Achieve– 2000 Financial Targets 105 Index to PY; Market Share – 38 Share • Volume – 105 Index to PY; Market Share – 38 Share 2. Achieve Marketplace Initiatives 2.• Brand Achieve Marketplace A and Product BInitiatives – 110 Index to PY • Brand A and Product B – 110 Index to PY 3. Distribution Momentum – 110 Index to PY Distribution Momentum 110 Index 4. 3.Product C Relaunch – 110 –Index to PY to PY 4. Product C Relaunch – 110 Index to PY
RESULTS RESULTS
People Results: People Results: Each objective should be directly tied to developing people, improving the overall effectiveness of the work Eachorobjective should be directly tiedoftothe developing group, upgrading the ‘human talent’ company.people, improving the overall effectiveness of the work group, or upgrading the ‘human talent’ of the company. OBJECTIVES OBJECTIVES 1. Reduce turnover from X percent to X percent Reduce turnover from X percent to X percent 2. 1. Achieve diversity objectives 2.• Hiring Achieve diversity objectives goals • Hiring goals • Promotion and turnover • Promotion and turnover 3. Accelerate development of Employee Y and Employee Z; ensure both 3.areAccelerate development of Employee and Employee Z; ensure both ready for next-level positions by yearYend are with ready for next-level positions by year end on new initiatives 4. Work operations to improve speed to market Work withtime operations to improve speed to market on new initiatives 5. 4.Reallocate from ‘doing’ to ‘leading’ 5.• Clearer Reallocate time from ‘doing’ to ‘leading’ communication of priorities & business results • Clearer priorities & business results • Clearer andcommunication more frequentofdelegation • Clearer and more frequent delegation
RESULTS RESULTS
Provide brief overviews of best-practice profiles in areas directly relating to the responsibilities and priorities of line managers 14
Realizing the ROI on CLC Membership Case Study: How the Regence Group Leveraged CLC’s Employee Engagement Tools to Prioritize its Engagement Activities for 2005
Situation:
The Regence Group sought to survey its employees to identify their current engagement levels by region and department.
Action:
Regence participates in CLC’s Engagement research and Regence’s dedicated Content Delivery Director delivers an onsite presentation of its customized Engagement results to its CEO and the Senior Leadership Team.
Benefit:
Regence leverages the results of its CLC Engagement survey to reinforce its high-priority Engagement actions for 2005 and avoids spending more than $100,000 on an Employee Engagement project with the consulting firm they were in discussions with at the time they joined CLC. Ultimately, Regence renews its CLC membership for 2005.
Member Quote: “Participating in CLC’s Employee Engagement research provided us with critical insight into both our corporate-wide and function-specific Engagement priorities for 2005 and beyond. We derived tremendous value in the customized report of our survey results and I am confident that we realized a strong ROI on our CLC membership.” Mark Stimpson Director of Staffing The Regence Group
© 2005 Corporate Executive Board
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Conclusion
CLC Drives ROI in Four Ways… Focus and Prioritization
New-to-World Ideas
CLC has done the heavy lifting so that members can focus on the drivers of engagement, performance, and leadership development that matter most. Prioritization is the key and CLC can help you concentrate your limited resources on those activities with the most tangible impact while avoiding those that have negligible or even negative impact.
CLC’s new-to-world intellectual capital provides its members with access to a unique combination of proprietary frameworks, decision-support tools, and proven solutions unavailable elsewhere in the marketplace.
$
THE THE UNITED UNITED STATES STATES OF OF AMERICA AMERICA
$
$
Cost Elimination
$
CLC helps its members eliminate unnecessary expenses by (1) leveraging the Council’s decision-support tools—such as ESAT—to avoid costly consulting engagements or survey projects and (2) using the Council’s research services —such as its customized research solutions—to free up time for your HR staff to concentrate on high-value internal activities.
© 2005 Corporate Executive Board
Gains in Performance, Engagement, and Leadership CLC enables its members to reap significant gains in performance, engagement, and leadership effectiveness based on its deep content expertise, proprietary quantitative frameworks, and best practices research in each area.
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Corporate Leadership Council Corporate Executive Board 2000 Pennsylvania Avenue NW Washington, DC 20006 Telephone: +1-202-777-5000 Fax: +1-202-777-5100 The Corporate Executive Board Company (UK) Ltd. Victoria House Fourth Floor 37–63 Southampton Row Bloomsbury Square London WC1B 4DR United Kingdom Telephone: +44-(0)20-7632-6000 Fax: +44-(0)20-7632-6001
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