By Melissa J. Anderson

According to the latest Global Engagement report by Aon Hewett, employee engagement has crept up slightly in the past year. The report is based on research encompassing 9.7 million people between 2009 and 2011, and shows that total employee engagement worldwide has risen 2 percentage points from 56% in 2010 to 58% in 2011.

Segmenting engagement levels by region, the report reveals that Asia Pacific and Europe have increased slightly, with North America staying the same, and Latin America decreasing slightly. Nevertheless, Latin America’s engagement levels are still considerably higher than average at 71%, while Europe’s are at the bottom end of the spectrum at 52%.

Additionally, the study found, a few dimensions of engagement have increased significantly as well.  According to the study, “Effective leadership at the business unit/division level was 61 percent, up from 54 percent in 2010,” and “People/HR practices creating a positive work environment was 53 percent, up from 47 percent in 2010.”

Aon Hewitt believes that employee engagement can help companies increase their performance. “Engaged employees deliver better performance, which is critical for business success. They understand their role in the business strategy, have a strong connection and commitment to the company, are more involved, and strive to go above and beyond in their jobs.”

The study shows how leadership and talent management strategy in general can help increase engagement and corporate performance during turbulent economic times. The best employers, Aon Hewitt believes, strive to create a “culture of engagement.” The report says, “Their leaders are serious about employee engagement—not a survey, but about having a positive impact on employees’ motivation to say great things about their company, to stay involved, and to go above and beyond.”

Strong talent management-focused leadership can build a work environment where employees are more effective and motivated to help their company succeed, even while resources are scarce.

Economic Links

The study also found a link between engagement levels and the world economic climate. According to the report:

“…in general we see an odd trend that as GDP goes down, engagement goes up. Likewise, as unemployment rates go up (an economic indicator highly correlated with changes in GDP), we also see engagement go up. This seems puzzling on the surface, as one might guess that engagement would fall under scenarios of economic stress and worries of job security.”

But there’s a good reason for this, says Aon Hewitt. Engagement seems to trail economic indicators by a year or so. The report explains:

“From 2008 to 2009—when annual GDP growth trended negative globally and also in many regions individually—the change in engagement trended negative in the subsequent year in all global regions except for Latin America. Likewise, when GDP grew from 2009 to 2010, engagement had a positive increase a year later from 2010 to 2011 in many regions across the globe.”

This also indicates that work done by companies to increase engagement may take a year or so to take effect.

Opportunity for Growth

According to Aon Hewitt, companies should develop targeted programs to address their engagement needs in light of the insights provided by the report.

Pete Sanborn, co-president of Global Compensation and Talent at Aon Hewitt , explains, “Business leadership as well as HR programs that meet the needs of specific employee segments contributed to the uptick in engagement levels.”

“However,” he continued, “with one out of every four people not engaged worldwide, more needs to be done. As the economy improves, retaining top talent is going to be difficult. Now is the time for organizations to measure and gain insights on engagement drivers and to start doing the work necessary to improve engagement.”

Companies that take advantage of employee engagement during the economic recovery will gain an edge on their competitors, Sanborn suggests. “Our research shows that organizations with higher engagement have significantly higher total shareholder return than the average company, so organizations that focus on what matters most in connecting employees to their work will emerge as leaders, and the others will be left behind.”

Ken Oehler, global practice leader of Engagement at Aon Hewitt added, “Our global clients are becoming increasingly sophisticated in analyzing engagement results by region and business unit. We are cascading the results and insights further into organizations so that companies can implement targeted actions that will have the most impact on the engagement levels of discrete employee populations.”