Most CEOs recognize the power of highly engaged employees to boost their organization's financial success. Oscar Reyes, CEO of Manila Electric Company (Meralco), sees a much higher purpose for engagement in his company: to make the Philippines' largest energy distributor a catalyst for the entire country's growth and development.

With the Philippines being one of the world's hottest emerging markets — it's often called a new Asian Tiger — Meralco's goal of helping the country take its place on the world economic stage is one Reyes takes seriously. "Over Meralco's 111-year history, we've grown as the country has grown. In that sense, we are very strategic to the growth of the nation," he said.

Meralco employees at work, nighttime

Photos courtesy of Corporate Communications, Meralco

New Challenges

Reyes — and Meralco Chairman Manuel Pangilinan — arrived to head the company in 2010. It faced a rapidly evolving operating environment with changing customer needs; increased regulation; higher uncontrollable costs; bolder, savvier consumer activists; and increased press scrutiny.

At the same time, Meralco's workforce was rapidly shifting to include more highly educated and increasingly mobile Gen Y technical and professional staff. With the boom of multinational call centers in the Philippines, and the lure of higher pay in Singapore and other more developed economies, recruiting and retaining young engineers, technical specialists and customer-facing professionals had been a growing challenge.

Reyes's goal was to transform the highly successful, century-old electric distribution company into an even higher-performing total energy solution provider of choice offering a wider range of innovative products and services — things customers increasingly need in the booming economy. He set out to deliver greater value to these customers, the company's new shareholders — and all Filipinos. The transformation required a significant culture change.

Meralco employees at work during the day 

Since Meralco's beginning in 1903, its success has been intricately tied to the Philippines' development. Although today it provides about 55% of the country's energy and serves businesses that collectively represent 50% of the Philippines' gross domestic product, it began as a tiny Spanish-American company generating 640 kilowatts of power. Over the years, it expanded to serve a huge portion of the Luzon area of the Philippines' 7,000-island archipelago.

The new management team understood that it could best reach its business goals by building on the company's strengths: its long, rich history tied to the country's growth; its people as the real source of its power; and its corporate culture. That culture was infused with values of exceptional performance, customer service, integrity, accountability and principles expressed best by two native words: malasakit (concern for others over oneself) and makabayan (love for country).

People Power

With this firm cultural foundation, Reyes saw that his most powerful resource was his committed workforce.

"As an energy utility, our right to operate comes from our customers, the consumers who pay for electricity," he said. "Yet more than 80% of what our customers pay goes outside Meralco to generation and transmission companies, and to cover the government's charges. Where we can shine is on service and our people — those who come in contact every day with consumers — to drive high levels of customer satisfaction.

"For instance, when the super typhoon Haiyan hit our country last November, killing over 6,000, we sent our people to help out in the affected districts even though those districts were outside our franchise area. Customers remember our employees driving their trucks toward the disaster areas when everyone else was evacuating and our people working away from their families for weeks — even during the Christmas holidays — to restore power. I believe we have to institutionalize that level of extraordinary dedication in every aspect of our business every day, and that lies in the hands of our people."

To achieve his vision of a high-performing workforce, Reyes partnered with Meralco's new senior vice president and head of HR, Ramon Segismundo, who identified increasing employee engagement as the key strategy.

Segismundo explained that to drive Meralco's employee engagement rates through the roof, they would have to gain a deeper understanding of the entire workforce — from the large force of unionized line workers in the field to the new, hard-to-attract-and-retain Gen Y professionals — and identify the factors affecting their engagement. They would begin by measuring Meralco's baseline engagement levels and compare them with engagement rates in local and global utility companies. Segismundo would then share the results with all workforce segments and double up on efforts to increase engagement.

In the meantime, he led his HR management team to think outside the box about how to best collaborate with and strengthen HR's partnership with line leaders. Once the engagement results were in, his goal was to engage line leaders in addressing any workforce concerns and developing action plans.

"We needed an HR partner with superior survey technology and databases, so we turned to Towers Watson's employee survey team. Meralco had worked with Towers Watson since 1996 on workforce structure and compensation, and now we've learned they're among the best when it comes to measuring employee engagement and identifying engagement drivers."

Encouraging Survey Results Prompt Action Planning

About a year after the new management team arrived, the Meralco HR team launched the company's first employee survey, working with Towers Watson's Lucien Cepeda and his colleagues. Despite all the changes at Meralco, including a transition to a new culture, the survey results were very high: 90% of the workforce responded, and 88% of respondents were found to be highly engaged.

Employees gave the company high marks on two primary engagement drivers: career development and communication. Based on that information, HR developed an action plan to build an even stronger career development program to push engagement levels higher.

It included a program that would target top talent for future leadership positions, strategies to attract and retain young high-performing professionals, and a performance management system that would focus employees on setting and achieving high goals. The action plan specifically targeted the company's young technical professionals, engineers and customer-facing specialists — segments that in 2011 comprised 33% of the Meralco workforce and were expected to be 50% of the workforce by 2015.

HR also developed and implemented a companywide communication program in partnership with line leaders to keep each employee up to date on the company's performance and how he or she could contribute. There were communications from leadership, which the survey found to be employees' most trusted information source, as well as communications that leveraged existing and new community channels, including union meetings and the online employee newspaper.

The results of these efforts speak for themselves: In every year since the start of the engagement-building program, Meralco's key metrics have improved significantly on every measure: performance, productivity and, most important, customer satisfaction.

Checking the Meter Again

Two years after the initial survey, Meralco and Towers Watson partnered to survey employees again. Sparing no effort to increase participation, the Meralco HR team went to even greater lengths this time to make sure every employee segment participated, from the critical Gen Y high performers to the union line workers out in the field. Importantly, HR's strong partnership with line leaders helped it overcome the challenges of conducting the survey in the field.

Towers Watson's Cepeda was impressed. "Enabling line workers to complete a survey is particularly challenging, since they work various shifts and don't have access to computers during working hours. HR brought each of these workers to headquarters or another location after they'd worked a full shift so they could complete the 10-page survey on paper. It was a real testament to the HR team's conviction and how well HR had partnered with the line leaders to explain how important the engagement survey was to the company's success. Everyone wanted to participate in raising the company's engagement rate. The passion among employees was amazing, from their CEO down to the line worker."

HR's effort — and the passion it generated — clearly paid off. This time, the survey results were even more impressive: 96% of the workforce participated, and 89% were found to be highly engaged. And in addition to career development and communication, the survey identified a new engagement driver: company image.

A Virtuous Cycle

That news made Reyes and the HR team at every level and location very happy indeed. In spite of all the change in recent years, Meralco employees were proud to work for the company, and that pride helped them be more engaged in their work.

"We believe that our employees' high engagement level has been the power behind the company's very strong performance," Reyes said. "And via the survey, our people told us they're proud of where they work. A perfect example, we think, of success breeding success. And we feel certain that customer service and customer satisfaction will continue to improve as part of that success story."

Segismundo gives CEO Reyes as well as Chairman Pangilinan credit for that pride: "Following the super typhoon, they were informing the public of Meralco's efforts to help our competitors restore power. They made our workforce the talk of the town. As a result, young people are proud to work for them."

Meralco's virtuous cycle of high engagement, improved business results and rising engagement rates quickly attracted attention from outside business groups. After the first survey, two prestigious awards reinforced leadership's belief that employee engagement and business results work hand in hand.

In 2012, Meralco was named Employer of the Year by the People Management Association of the Philippines and was honored as the Top Employer Organization by the Asia CEO Organization. In 2013, Singapore's Ministry of Manpower named Meralco the Grand Winner of its Asian Human Capital Awards, in which Meralco was the only Filipino entry among 89 entrants from 11 countries. As part of its strategy to build a winning spirit and pride among employees, Meralco leaders publicized the awards internally, and the entire company celebrated.

Sharpening the Focus on Gen Y

As for those Gen Y professionals that Meralco needs to attract and retain, the jury is still out on whether the company's programs will be successful over the long term. Though optimistic, Meralco's leaders aren't resting on their laurels. New action plans are in place.

"To attract these young professionals, we're working closely with the top universities," said Vivian Cheong, head of Organization Development and HR Communication. "We're trying to enroll the best of the best graduates in our Power Campers program, which is for high-performing undergraduate students, and our Power Innovator management training program for graduates.

"We have powerful tools for retaining these crucial employees, including our career advancement programs and incentive programs tied to performance. Moreover, I think our young people are realizing that while work is very important, some of our programs that aim to bolster their wellness and spiritual well-being, and keep them whole are also valuable. These programs have been very useful in increasing engagement. We continue to look for creative ways to strengthen them and develop even more targeted initiatives to really deliver on the promise of employee engagement."

Among their creative initiatives: endeavors to make Meralco what Segismundo calls an "un-utility." "With Gen Y workers projected to make up half of our workforce by next year, we do everything we can to make Meralco a cool place to work — sort of a Filipino Google, if you will. It's part of our attraction and retention strategy. We even have a Zumba activity every week," he said.

Still, he knows that keeping Gen Ys engaged won't be as easy as providing a weekly Zumba class. "We can't be complacent. One category that didn't pass muster in the survey was stress, balance and workload. We'd been attempting to help workers manage stress by improving their resilience.

"Since the survey, we've introduced a philosophy of organizational and individual resilience," he said. "Our programs provide people with the resources they need to maintain a healthy balance mentally, physically, emotionally and spiritually. We encourage them to use these resources, and we offer training programs to help them understand what resilience really means and its relation to performance."

These efforts fit in with Meralco's tradition of providing holistic development opportunities for its nearly 6,000 employees as it has grown to be one of the Philippines' largest and most successful companies. For example, in addition to its leading people development practices, the company has a beautiful, sprawling campus that includes a theater, gym, spa, wellness center and even a church.

Moving Forward: Continuous Improvement

With the next employee engagement survey only a year away and the business ecosystem becoming ever more volatile, complex and ambiguous, Meralco is working hard to achieve even better results — especially among the increasingly important subsidiaries. Segismundo thinks the company's high hopes for improvement are justified. "We have one of the largest market capitalizations in the Philippines. Our CEO and chairman are business icons here. And we have an innovative, performance-based reward scheme for the entire workforce," he said.

"We're a company that operates in not only the private space but also the public and social spaces. Once you become a manager at Meralco, to a certain extent you get to influence the entire ecosystem in which Meralco operates. So it's not just having a job or getting to be a Meralco leader. You get to be an ecosystem leader, and I think that's really, really special — and kind of cool."

Segismundo cites Chairman Pangilinan's recent remarks at the World Economic Forum in Manila, where he said that for the Philippines to be competitive, the country must have lower electricity prices. "Now that seems to be a contrarian view for a businessman, right? What makes it remarkable is that it shows he sees a greater purpose beyond business success for Meralco, and that purpose is to make our country more competitive. So when we say we're driven by a higher calling, I think that's the consumer brand and employment brand we're trying to create here."

Tips From Meralco Leaders: Employee Engagement Survey Success

  • Get CEO buy-in. It makes a big impression on employees to have the CEO championing the survey initiative and anticipating its results. It also helps for senior leaders to openly commit to act on the survey results.
  • Assemble a unified project team. Close collaboration between Meralco and Towers Watson helped the survey team stay on schedule and fostered ideas for improving project delivery.
  • Communicate openly and often. Keeping communication channels open helps the team address issues as they arise.
  • Use technology to create easy-to-understand surveys and reports. Because the Meralco survey was easy to administer, HR could focus on maximizing participation. And because the in-depth survey reports were easy to understand, leaders could pinpoint opportunities and create focused action plans.
  • Commit to achieving full workforce participation. Meralco's unprecedented 96% response rate shows the value of HR's efforts to encourage participation. The team heavily involved line managers and supervisors, and used best practices from previous surveys.