Employee Engagement Drives Loyalty and Business Performance at World’s Most Admired Companies
PHILADELPHIA—Hay Group, a global management consultancy, and FORTUNE magazine today released their thirteenth annual World’s Most Admired Companies (WMAC) list. Hay Group also conducted supplemental research on employee engagement practices at these organizations, which found that companies at the top of the list generated stronger employee loyalty to the organization over the last two years and reported greater decreases in employee frustrations over work conditions that were not conducive to their success.
“Companies on the World’s Most Admired list are not only better at engaging employees in a way that reduces internal frustration and fosters loyalty, they are also better at sharing those metrics with influential groups outside the organization, and translating their success into new business and an enhanced customer experience.”
“The World’s Most Admired Companies have been particularly good at focusing on long-term strategies, showing little tolerance for executives that compromise long-term objectives for short-term gains,” said Mel Stark, vice president in Hay Group’s Reward Practice. “Equally important, the WMAC communicate their objectives to all employees, connecting the goals and objectives of every employee to the overall business strategy, and as a result, were able to come out of the downturn with motivated and loyal employees.”
Hay Group’s study found that 90 percent of respondents from the WMAC identified their company as very effective or effective at fostering high levels of employee engagement, compared to 71 percent of their peers. The majority of respondents from the WMAC (94 percent) believe employee engagement efforts reduced employee turnover, and 85 percent believe employee engagement efforts reduced employee performance problems, compared to 67 percent and 72 percent at peer companies respectively. In addition, only 19 percent of the WMAC experienced compensation freezes to a great extent in the past two years, compared to 36 percent of peer companies, and only 10 percent of the WMAC experienced layoffs to a great extent, compared to 23 percent at peer companies.
The study also analyzed the connection between employee engagement and a company’s business development and consumer relationship. Ninety-four percent of respondents from the WMAC believe employee engagement has created a competitive advantage in the market place, compared to 82 percent at peer companies. Additionally, 71 percent of respondents from WMAC believe their company has been successful at linking employee engagement to customer satisfaction, compared to 58 percent at peer companies.
“Employee engagement is increasingly being recognized as a major driver of business performance, revealing important information about an organization’s health and future prospects,” says Mark Royal, a senior consultant with Hay Group’s Insight Practice. “Companies on the World’s Most Admired list are not only better at engaging employees in a way that reduces internal frustration and fosters loyalty, they are also better at sharing those metrics with influential groups outside the organization, and translating their success into new business and an enhanced customer experience.”
Other findings from the study include:
73 percent of respondents at the WMAC say their ease of recruiting talent to fill key positions is much greater/greater than two years ago, compared to 57 percent at peer companies
69 percent of respondents at the WMAC say employee loyalty to the organization is much greater/greater than two years ago, compared to 49 percent of peer companies
84 percent of respondents at the WMAC believe employee engagement efforts have led to better relationships with customers, compared to 72 percent at peer companies
86 percent of respondents at the WMAC say line managers have a very high/high involvement as owners of the organization’s engagement initiatives, compared to 76 percent at peer companies
27 percent of respondents at the WMAC report that their company conducts employee opinion surveys more than once a year, compared to 14 percent at peer companies
87 percent of respondents at the WMAC rate the effectiveness of the employee survey program in generating action and change as very effective/effective, compared to 69 percent at peer companies
About the FORTUNE magazine/Hay Group World’s Most Admired Companies research
Hay Group has collaborated with FORTUNE magazine annually since 1997 to identify, select and rank the World’s Most Admired Companies and uncover the business practices that make these companies both highly regarded and successful. The World’s Most Admired Companies list can be found on the FORTUNE web site.
For the supplemental research, Hay Group surveyed senior executives at a sample of companies that participated in the 2010 Most Admired Companies survey, and compared the responses from companies that ranked in the top three in their industries in overall corporate reputation, with those of other participating organizations to better understand how the World’s Most Admired Companies approach employee engagement compared to their peers.
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About Hay Group
Hay Group is a global management consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organizations realize their potential.
We have over 2600 employees working in 85 offices in 47 countries. Our clients are from the private, public and not-for-profit sectors, across every major industry, and represent diverse business challenges. For over 60 years, we have been renowned for the quality of our research and the intellectual rigor of our work. We transform research into actionable insights. We give our clients breakthrough perspectives on their organization, and we do it in the most efficient way to achieve the desired results. For more information please contact your local Hay Group office at www.haygroup.com.
About FORTUNE
FORTUNE magazine is a global leader in business journalism with a worldwide circulation of more than 1 million and a readership of nearly 5 million, with major franchises including the FORTUNE 500 and the FORTUNE 100 Best Companies to Work For. FORTUNE Live Media extends the brand’s mission into live events, hosting a wide range of annual conferences, including FORTUNE’s Most Powerful Women and the FORTUNE Global Forum. FORTUNE publishes English-language editions in Europe and Asia, and local-language editions in China, South Korea, TK TK And TK. FORTUNE magazine’s online home is CNNMoney.com, the most visited and utilized business destination website.