The Employee Engagement Crisis

The Corporate Leadership Council has identified four cost-effective solutions to combat the decline in employee engagement that has resulted in a 3-5% reduction in employee productivity

The economic crisis has taken a toll across the workforce. The combination of widespread layoffs, reduced compensation, limited career opportunities, and organizational restructurings have challenged employees’ commitment levels.  The Council has surveyed over 500,000 employees to measure their employee engagement levels since 2004.  Those levels were largely consistent, until the start of the economic downturn.  Before the downturn, roughly 1 in 10 employees was highly disengaged, that number increased to in 1 in 5 at the end of 2008, and the preliminary data from the first quarter of 2009 is that the number has increased to 1 in 3. 

Employee Engagement Trends
However, this decline is not having an equal impact on the two outcomes of commitment: effort and retention.  Employee retention risk has not been impacted at all by the downturn, in contrast employee efforts levels have fallen dramatically.  The importance of employee engagement has shifted from being a retention issue to a performance issue.  The decline in effort levels has resulted in a 3-5% reduction in employee productivity.

In addition to the overall decline in productivity, the Corporate Leadership Council has also identified four specific employee engagement challenges organizations need to resolve during the economic downturn:

1. Employee Performance Is Declining—The number of employees exhibiting high levels of discretionary effort has decreased by 64% since it’s peak.

2. The Disengaged Are Staying—The disengaged are 24% less likely to quit in 2009 than in 2006 further dragging down organizational performance.

3. High-Potentials Are More Likely to Quit—1 out of 4 high-potentials plans on quitting in the next 12 months.

4. Senior Leaders’ Effort Has Dropped More Than Any Other Workforce Segment—Only 13% of senior executives report high discretionary effort right now compared to 29% in the second half of 2006.

The good news is that some organizations are successfully managing employee engagement during the downturn. The percentage of highly disengaged employees at organizations that participated in the Council’s Employee Engagement Survey Tool ranged from 8.7% to 28.6% in the fourth quarter of 2008.

Analyzing the key activities of leading organizations that have kept their employee engagement levels high, the Corporate Leadership Council has identified how the best organizations are responding to the downturn in employee engagement.

Challenge	Solution
Employee Performance Is Declining—The number of employees exhibiting high levels of discretionary effort has decreased by 53% since 2005.	Increase emphasis on commitment to the organization to stimulate performance.
The Disengaged Are Staying—The disengaged are 24% less likely to quit in 2008 than in 2006.	Improve managers' focus and effectiveness at reengaging or managing out the disengaged.
High-Potentials Are More Likely to Quit—1 out of 4 high-potentials plans on quitting in the next 12 months.	Overinvest in the delivery of HIPOs' retention drivers; attract key competitors' talent using attraction drivers.
Senior Leaders Effort Has Dropped—Only 13% of senior executives report high discretionary effort in the second half of 2008 compared to 29% in the second half in 2006.	For Senior Leaders, first focus on rational commitment to the organization, then overall emotional commitment.

Council Resources

• Driving Employee Performance and Retention Through Engagement: Rethinking Employee Engagement
• Engagement Survey and Analysis Tool
• Employee Engagement Database