As the global economy continues its slow recovery from recession, employers face both ongoing and new challenges in managing their people. For example, opportunities for advancement have improved over the last two years, according to Towers Watson's Talent Management and Rewards Survey, a global study of more than 1,600 organizations' talent management practices.1

With increased mobility between organizations opening the door to new jobs, it is not surprising that about half of responding employers say their company has stepped up hiring, and about one-third have become increasingly concerned about attrition. A new focus on key roles is also emerging, with more employers reporting difficulty retaining critical-skill, high-potential and high-performing employees.

Given growing expectations for advancement and development among employees, many employers need to invest more in people programs. One way to chart a course is to identify employer practices that are currently attracting attention and appreciation from employees themselves. For example, if the topic of career development opportunities is trending favorably among workers, employers would be wise to reevaluate their own approaches to ensuring skill acquisition and advancement for employees.

The companies most likely to show more favorable trends in employee opinion are those with strong financial performance, providing the resources necessary for increased investment in people.

Towers Watson maintains a benchmark of employees' opinions of their high-performing employers, defined as companies whose financial performance exceeds sector averages for a range of financials, including top-line and bottom-line results as well as return to shareholders. The high-performance group, which is selected from more than 600 companies, is updated annually and includes approximately 30 multinational companies, with a total of more than 700,000 employees and a strong core of consistent members from year to year.

Trends showing increasingly favorable employee opinions for this group suggest that the best organizations invest in their people. Furthermore, the areas showing the greatest improvement over time indicate the people priorities these high-performing companies consider most vital during the post-recession recovery.

Five-year employee opinion trends in high-performance organizations

Global trends in gross domestic product began rallying in 2009, so we examined evolving employee perceptions in high-performance organizations from 2009 through 2013, a five-year period. The results show substantial gains in four major areas over this time, reflecting both broad company-wide practices and local working conditions:

  • Career development: People practices related to career planning, recruiting, training and creating long-term opportunity
  • Empowerment: Employees' voice in the workplace and ability to innovate
  • Rewards and recognition: Competitive pay and benefits and the use of intangible rewards
  • Leadership: Senior leaders' effectiveness at decision making, communication and change management

Career development

Employees in high-performance companies are increasingly satisfied with their company's emphasis on valuing and fostering talent, and the availability of long-term career opportunities and training. Figure 1 shows trends over the last five years, with improvements ranging from seven to 12 percentage points on the percentage-favorable metric, a measure of the percentage of employees selecting the top two ratings of a five-point scale, averaged over all organizations.

Figure 1. My company promotes, recruits and retains the best people and offers opportunities and training

Figure 1. My company promotes, recruits and retains the best people and offers opportunities and training

Source: Towers Watson's Employee Opinion Database

Empowerment

Employees in these high-performance environments report increasing opportunity to test new ideas — even if those ideas fail — voice their concerns and opinions, and decide independently how best to address customer needs. Figure 2 shows trends over the last five years in high-performance companies, with improvements of seven percentage points in each area.

Figure 2. My company offers the freedom to propose new ideas, speak up and work independently

Figure 2. My company offers the freedom to propose new ideas, speak up and work independently

Source: Towers Watson's Employee Opinion Database

Rewards and recognition

The trend analysis suggests that employers are increasingly sensitive to market levels of compensation and benefit programs and to the need to recognize employees' contributions and their value to the business. Figure 3 shows upward trends over the last five years, with improvements ranging from seven to eight percentage points.

Figure 3. My company offers competitive pay, benefits and nonmonetary rewards, and values my contributions

Figure 3. My company offers competitive pay, benefits and nonmonetary rewards, and values my contributions

Source: Towers Watson's Employee Opinion Database

Leadership

Employees in high-performing organizations report that their leaders are increasingly in touch with the workforce, especially regarding change management. Moreover, leaders are connecting with the need to move their businesses forward in ways aligned with the values espoused as critical. Figure 4 shows five-year trends in these areas, with improvements of six to 12 percentage points.

Figure 4. My company is well managed, leaders' decisions reflect core values and are well communicated, and changes are well paced

Figure 4. My company is well managed, leaders' decisions reflect core values and are well communicated, and changes are well paced

Source: Towers Watson's Employee Opinion Database

The payoff

The evidence suggests that investments in people are paying off, as measured by employee perceptions of company performance. Employees in high-performance organizations report that their companies are more highly regarded by customers, and their product quality and customer service are perceived as more competitive. Figure 5 shows trends over the last five years in employees' view of their employer's standing, with improvements ranging from eight to 10 percentage points.

Figure 5. My company is well regarded and in a highly competitive position

Figure 5. My company is well regarded and in a highly competitive position

Source: Towers Watson's Employee Opinion Database

Summary and implications

As the global economic recovery continues, both long-standing and new people management challenges are vying for leaders' attention. Given the need to prioritize the investment of limited resources, it is useful to understand how the best financial performers are managing their workforces — those companies most likely to have the resources to direct their focus where it will do the most good. Generalizing from these results, these companies emphasize several aspects of HR programs and facets of effective leadership. From a programmatic perspective, the emphases are on:

  • Talent management initiatives that recruit the best people and develop, promote and retain them
  • Compensation and benefit programs that are highly competitive
  • Effective nonfinancial recognition

From a leadership perspective, the emphases are in three general areas:

  • Change effectiveness: Directing the organization at the right pace
  • Authenticity: Staying true to company values in decisions and communicating effectively up and down the organization
  • Employee voice: Ensuring the work environment fosters a climate in which it is safe to speak up, meet customer needs flexibly and innovate

Focusing on these aspects of the employer-employee relationship offers an opportunity for any company to measure and benchmark its performance on topics of particular importance to some of the world's best-performing companies.


Endnote

1. The study included responses in April, May and June 2012 from 1,605 organizations across all major business sectors and regions globally. The average size of participating companies was 19,000 employees.