By Melissa J. Anderson

According to a new global survey by Towers Watson [PDF], economic uncertainty over the past decade has hampered employee engagement around the world. The survey revealed that as employees are forced to do more with less, they see fewer opportunities for development and advancement – which makes the risk of attrition greater. This can exacerbate the challenges today’s companies are facing in that low employee engagement is associated with lower productivity.

Julie Gebauer, Managing Director of Talent and Rewards at Towers Watson, explained, “When workers are not fully engaged, it leads to greater performance risk for employers. It makes companies more vulnerable to lower productivity, higher inefficiency, weaker customer service, and greater rates of absenteeism and turnover.”

She continued, “Companies have known for years that employee engagement is important to business performance. We’re now seeing – in part because of the tough business climate – that engagement is quite fragile and will not be sustained over time without careful attention to very specific elements in the work environment.”

Different Phases of Engagement

The study, which polled over 32,000 full time workers at large and mid-sized companies in 29 markets around the world revealed that companies must shift their focus from getting through the short term to developing a long-term engaged workforce. Currently only 35% of employees are “highly engaged” – meaning that 65% are not engaged in their work. In fact, the largest segment of this group (and over a quarter of all respondents) was labeled “disengaged.” Disengaged employees show low scores in traditional engagement (willingness to go the extra mile at work), enablement (having the tools and management support to do their job effectively), and energy (“having a work environment that actively supports physical, emotional and interpersonal well-being”).

The report is unique in identifying three different phases of employee engagement; through an individual’s career path, his or her workplace needs change over time. For example, the study revealed that at the recruitment stage, individuals are more interested in base salary or pay and their second concern is job security. At the next level, retention, individual’s top concern is still compensation, but their second most important interest changes to career advancement opportunities.

The third stage is sustained engagement. According to the study, “This concept recognizes that employees’ perspective on and dedication to their work depends on more than their ability and willingness to help the company succeed. Put simply, engagement is fragile, especially in an era that is putting so much pressure on both employers and employees.”

The top two concerns of employees in this phase are leadership and stress, balance, and workload – quite different from the first two phases.

Leadership Development

Towers Watson believes that employers need to pay more attention to sustained engagement. Laura Sejen, Global Practice Leader for Rewards at Towers Watson, says, “Sustainable engagement is an important evolution in the science of workforce behavior — and it’s an approach well suited to the unique aspects of the current work environment.”

“It recognizes that employees need support from their employer to continue to give discretionary effort on the job, and right now, employees are telling us they’re not getting that support in the way and at a level they need,” she continues.

According to the study, almost 63% of US workers are not fully engaged at work. The firm summed this up to the need to “do more with less,” in light of global competition, changing technology, and tight cost management measures, all of which have taken a toll on employees over the past decade.

“This is an important wake-up call for U.S. companies if they hope to sustain their growth,” continued Sejen.

“When we looked at sustainable engagement scores among 50 global companies in a related piece of research and examined their one-year operating margins, we saw dramatic evidence of the impact of sustainable engagement on performance. The companies with high sustainable engagement had operating margins almost three times those of organizations with a largely disengaged workforce. That fact alone creates a compelling case for change.”

Numbers from the US in particular reveal the importance of a leadership focus. For example, almost half (47%) say their supervisors are so short on time that they can’t handle the “people aspect” of their job. Similarly, 49% say they don’t trust their company’s senior management. Finally, only 37% say senior management is doing a good job of developing their firm’s future leaders.

Workers who don’t see a clear path to leadership at their companies will begin to seek these opportunities elsewhere. By ignoring the importance of talent development, firms create a culture of attrition – which ultimately damages business even more during this challenging economic environment.